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No ‘Stealth Tax Hike’ in 2021, but Individual and Business Tax Increases Loom

Source: - Dec 8, 2020

As taxpayers and policymakers consider the prospects for federal tax policy in 2021, it is important to also consider how existing tax law may change in 2021 and over the next five years. While there are many tax changes built into the tax code over the coming years for individuals and businesses, the recent claim that lower- and middle-income Americans may see a “stealth tax increase” in 2021 due to the Tax Cuts and Jobs Act (TCJA) is untrue.

In discussing upcoming tax changes due to the TCJA, economist Joseph Stiglitz argues that “people with incomes between $10,000 and $30,000—nearly one-quarter of Americans—are among those scheduled to pay a higher average tax rate in 2021 than in years before the tax ‘cut’ was passed.” Stiglitz points to estimates by the Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT), which suggest that those earning between $20,000 and $30,000 could owe an extra $365 in 2021.

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Category: General Business