The Trump administration unveiled a major tax overhaul Monday that will allow taxpayers to deduct their federal income taxes from their federal tax bills.
But some conservative groups, including the Club for Growth, said it was too little, too late and would result in millions of Americans losing their tax deductions.
The tax plan will allow for the elimination of most deductions, and it will also eliminate the Alternative Minimum Tax, or AMT, which penalizes low- and middle-income Americans.
The plan, which was presented to Congress by Secretary of Treasury Steve Mnuchin and House Ways and Means Chairman Kevin Brady, is expected to be unveiled in the coming weeks.
The elimination of the AMT will result in a total elimination of approximately $9.3 trillion in tax deductions over 10 years, according to the nonpartisan Tax Policy Center, a nonpartisan think tank.
This means the vast majority of taxpayers who file their taxes on a federal return will see their tax bills decrease from their current levels by a significant amount.
But conservatives, including former Vice President Joe Biden, warned that the tax bill could lead to the loss of a number of deductions that help lower-income taxpayers, including:The AMT eliminated some deductions that were often cited as a key way to help lower the tax burden for many Americans.
For example, people who itemize deductions on their tax return could potentially save $6,000 over the next decade.
In addition, the tax plan would also eliminate most tax breaks that help people in low-income households, including state and local tax credits and tax breaks for health insurance.
For example, those with low incomes who qualify for the Earned Income Tax Credit (EITC), a credit that gives some Americans a tax break to help pay for their health care costs, could see their credit cut by nearly $2,000.
Other deductions, like the deduction for state and city property taxes, could also be eliminated under the plan.
The Congressional Budget Office estimated the elimination would cost the federal government $8.6 trillion over 10-years.
Critics also expressed concern that the plan could lead many low-wage earners to lose their tax breaks and could lead them to spend more on health care premiums.
The Tax Policy Centre’s analysis also showed that a repeal of the Alternative minimum tax would result the loss for most taxpayers of nearly $1,300 in federal tax deductions that are typically taken for tax purposes, including mortgage interest, charitable contributions and state and property taxes.
Additionally, the Tax Policy Coalition, a conservative policy group, warned the plan would allow the wealthiest Americans to keep much of their tax benefits and deductions, even if they lose other tax breaks.
The Trump administration is expected release a revised version of the tax proposal later this week.