So, there’s a conversation about tax reform going on. How would Nevadans fare under the key proposals from Washington?
The Indy already did a great in-depth explainer on the original outline of the plan. Here’s the bullet point highlights of the proposed changes in the Tax Cuts and Jobs Act:
There are also a couple of items that have more clear implications for Nevada – reducing deductions related to gambling and ending tax-exempt municipal bonds for professional sports stadiums – and this publication was quick to highlight those and their implications. But when you put the rest together, what does it all mean?
In the effort to promote, tweak, or kill the proposal, a lot of interest groups are putting out analyses of projected growth, deficit and debt increases, and the positive or negative impacts of various specific pieces. We turn to the Institute on Taxation and Economic Policy, a non-profit non-partisan research organization with a focus on modeling how these combined proposals will affect Americans at various income levels.
ITEP makes it clear how difficult it can be to analyze this mix of changes. Some are aimed at the middle class while others are aimed at the wealthy, some at small businesses and others at large corporations, some phase down over time while others are permanent and still others increase over time. However, here are a few key takeaways:
You should head over to the ITEP website for the charts, if nothing else. There are far too many to include here. However, I did pull a few from their Nevada analysis. Our state would see a disproportionate benefit to the top 1 percent of earners, even compared to the national average:
The good news? Fewer Nevadans will see their taxes rise than the average American. Still, unless you’re very poor or very wealthy, you’re facing between a 1-in-10 and 1-in-5 chance that your tax burden will be higher in 2027. Those aren’t great odds:
This plan is going to change – the Senate is already making tweaks as they look at securing a path to 51 votes. The difference between a tax break and a tax hike may come down to how important some of the deductions – like student debt or medical expenses – are to your family. Whether you look to personally gain or lose under the plan, whether you think a particular change is morally right or wrong, whether you support or oppose the ultimate goal of shifting the tax burden downward from top earners: Now’s the time to get educated and speak up. That’s what democracy is all about!
John Restrepo, the author of this column, is an economist and Principal of RCG Economics. He is an expert in regional economics and forecasting in Nevada and the Mountain West.
Disclosure: John Restrepo co-publishes the Stat Pack, a client of the communications consulting firm owned by The Nevada Independent’s managing editor, Elizabeth Thompson.