How much would Scott’s proposal cost Americans who currently pay no federal income tax? Scott’s plan – which chairs the Republican National Senate Committee, the deep-pocketed group coordinating the push for a GOP majority in the Senate — offers no details.
Tax policy groups have filled the void. Adopting Scott’s plan, calculated the Institute on Taxation and Economic Policy, “would raise taxes by more than $1,000 on average for the poorest 40% of Americans.” In Mississippi, about 50% of households in the state would face tax increases.
The Institute assumes that Scott’s plan would levy at least $1 in federal income tax from every American. How could a minimum federal income tax of $1 make some Americans more than $1,000 poorer? Under Scott’s “minimum tax” approach, poor families would lose the benefit of the various existing “tax credits” intended to benefit all eligible Americans.
An example: in 2020, all Americans with children could claim a tax credit of $2,000 for each child under 17. Families whose total credit is greater than the tax payable could receive a refund of the excess credit amount up to a maximum of $1,400 per child.
In other words, a single mother with a single child who owed $600 in taxes would receive, as part of the federal child tax credit, a check for $1,400 from the IRS. This single mother, under Scott’s federal minimum income tax, would lose that $1,400 benefit. Scott’s plan, in essence, would leave families earning $400,000 a year with a full benefit of $2,000 for each child and leaving low-income families with at best only a fraction of that total benefit.
Globally, said According to Howard Gleckman of the Tax Policy Center, Scott’s plan for “Rescue America” would raise more than $100 billion in new taxes, with more than 80% coming from households earning around $54,000 or less. The Center assumes that every household nationwide should pay at least $100 in federal income tax under the Scott Plan.
“Low-income families with children would pay the most,” notes the Tax Policy Center analysis, “Achieving Scott’s goal would reduce their after-tax incomes by more than $5,000, or more than 20 percent.”
Meanwhile, pointed out an analysis by Patriotic Millionaires, those “ultra-wealthy Americans who avoid federal income tax through a series of loopholes that allow them to claim little or no income” would continue to face only a tiny tax on their mega millions under the Scott’s 11 points.
“Ultimately,” the Patriotic Millionaires summed up, Scott’s plan comes down to “a wink and a nod to his wealthy donors to keep them flying.”
The roughly 750 billionaires who called the United States home last year added $1 trillion to their combined fortunes, according to an Americans for Tax Fairness review. Forbes Data revealed earlier this year. Private equity giant KKR co-founders Henry Kravis and George Roberts last year each collected over $100 million in dividend and deferred interest income.
These sorts of races have given America’s wealthiest—masters of the universe like Rick Scott and his well-endowed cronies—the political power to tilt the country’s tax system in a surprisingly big-fortune-friendly direction. They have left us with a society that never seems to be able to afford the services and support that families of modest means once thought they could count on.
We must bring power back to the people. Enough with Rick Scott and his minimum income tax. We need a maximum income.
Sam Pizzigati co-edits Inequality.org. His latest books include The case of a maximum wage and The Rich Don’t Always Win: The Forgotten Triumph Over Plutocracy That Created America’s Middle Class, 1900-1970. Twitter: @Too_Much_Online.