The Tax Deal's Biggest Losers: 40 Million Low-Wage Workers Who Will See Their Taxes Go Up This Year

On December 6, the President said "there is no reason that ordinary Americans should see their taxes go up next year." Apparently, the Administration staff who negotiated the deal found a reason. According to the estimates of the Urban-Brookings Tax Policy Center, some 51 million taxpayers overall who will see part of the tax cuts they received in 2010 go away in 2011. The vast majority of them—40 million tax units—are low-wage workers with incomes below $35,000. Low-income workers are the only income group that will lose income this year compared to 2010 under the deal. Other groups, including most middle-income families and nearly all high-income ones will receive a bigger tax cut in 2011 than in 2010.

Although a few news outlets have reported this fact, it is not widely understood by the public, or even by most advocates and analysts working on policy related to low-income families. This is partly due to the White House's failure to acknowledge the hike. Instead, when it announced the deal, the White House Press Secretary touted the extension of some tax cuts for low-income families with children and stated that "working families won't see their tax cuts go away next year." Also contributing to the lack of understanding is the failure of some prominent organizations that supported the deal, ones that are looked to by many as having particular expertise in tax policy related to low-income people, to make the cut clear. For example, in his statement endorsing the deal, Bob Greenstein of the Center on Budget and Policy Priorities, described the tax provisions as "protect[ing] low- and middle-income workers and ... boosting their incomes," "achieving everything [the White House] sought for low- and middle-income families," and "not compromising on these issues." (Kudos, on the other hand, go to the Urban Institute's Roberton Williams and Howard Gleckman and EPI's Andrew Fieldhouse for their accurate analysis of deal's impact on low-wage workers).
GO HERE to read more.