LYNCHBURG, Va. (WDBJ7) The republican tax bill made its way through the house and senate today.
The measure passed 227 to 203, but some missed provisions will need to be taken out, so it can be sent back to the house for a final vote tomorrow.
As it is expected to pass, a Lynchburg College professor and student developed an independent report to see how it would affect people in our area.
“We came up with hypothetical…family arrangements. So, single parents, married with kids, married without kids, business owner, elderly,” said Dr. Gerald Prante, Assistant Professor of Economics and co-author of the report.
Prante and LC student Alison Turek then took the tax bill and applied it to those hypothetical families using average numbers from the most recent Lynchburg census.
While the calculations are based off Lynchburg numbers, the findings are standard across Central and Southwest Virginia.
“We ran through their hypothetical tax return for 2018 under current law and then what happens if the law is passed,” said Dr. Prante.
According to their findings, almost everyone in the Lynchburg area will see a tax cut. For example, a family making around $80,000 with two children would see a tax cut of about $2,200.
One of the reasons families with children will see more substantial tax cuts is because the child tax credit is doubling from $1,000 to $2,000.
Business owners with children will see an even higher tax cut. The bill adds a new rule for businesses that allows for a 20 percent deduction. A married business owner couple with one child living in Lynchburg would see a tax cut of over $3,000.
On a national level, the bill benefits corporations with a steep tax rate cut from 35 percent to 21 percent.
Central and Southwest Virginia will not be affected as much by the tax bill because of the area’s lower property taxes. However, states like California, New York and New Jersey might see a tax increase.
For other hypothetical families in Lynchburg, any changes will be slight.
“An elderly couple is probably not going to benefit much. They don't benefit from the rate reduction, so they're taxable income is pretty low,” said Dr. Prante.
While people could be seeing higher paychecks starting in March, over time the gain is not as rich.
“The tax cut will get smaller and smaller over the next years and then eventually go away unless something happens and who knows who is going to be in congress, who is going to be president in 2-4 years,” said Dr. Prante. “That will determine largely what happens.”
Dr. Prante says this all does come at a cost, the national debt is expected to go up by anywhere between 1 and 1.5 trillion dollars. The bill is set to expire in 2025.