Trump Tax Plan To Benefit "Top 1%" Most, Cost $2.4 Trillion, Middle Class To Pay More Taxes

Based on what we already know about the proposed Trump tax reform, which can be summarized as follows:

  • collapse the seven individual income tax rates to three (12, 25, and 35 percent),
  • increase the standard deduction,
  • eliminate personal exemptions,
  • increase the child tax credit,
  • eliminate most itemized deductions,
  • repeal the individual and corporate alternative minimum taxes,
  • repeal the estate tax,
  • reduce the corporate tax rate from 35 to 20 percent, tax pass-through business income at a top rate of 25 percent,
  • allow businesses to fully expense investment in equipment and machinery for at least five years,
  • adopt a territorial tax system that would exempt the foreign earnings of US corporations from US tax

... moments ago the Tax Policy Center released its analysis of what the practical impacts of the Trump tax plan will be on the broader population. Below we present the key findings.

The tax plan will cost $2.4 trillion over the first decade and $3.2 trillion over the second dacade, on a static basis

  • The proposal would reduce federal revenues by $2.4 trillion over the first ten years and $3.2 in the second decade. This means that absent a matched deduction in spending, US deficit and debt will increase by a similar amount. This is a problem as a Senate GOP budget resolution unveiled on Friday only allows for adding $1.5 trillion to the debt, implying a revenue shortfall of just under $1 trillion.
    • The business income tax provisions—including those affecting corporations and pass-through businesses—would reduce revenues by $2.6 trillion over the first ten years. Elimination of estate and gift taxes would lose another $240 billion. The individual income tax provisions (excluding those related to business income) would increase revenues by about $470 billion over the same period.

While many Americans will benefit, the biggest gains will go to the 1%, whose after-tax income would increase by over 8%.

  • In 2018, the average tax bill for all income groups would decline: taxpayers in the bottom 95 percent of the income distribution would see average after-tax incomes increase between 0.5 and 1.2%. However, and where the Democrats will have a field day, taxpayers in the top 1 percent (incomes above $730,000), would receive about 50 percent of the total tax benefit; their after-tax income would increase an average of 8.5 percent.
  • Between 2018 and 2027, the average tax cut as a share of after-tax income would fall for all income groups other than the top 1 percent. In 2027, taxpayers between the 80th and 95th percentiles of income (between about $150,000 and $300,000) would experience a slight tax increase on average.

The problem is that at the same time, taxes for substantial portion of taxpayers will go up:

  • In 2018, about 12% of taxpayers would face a tax increase of roughly $1,800 on average. Where it gets worse is that many of those who form the backbone of the upper-middle class, or more than a third of taxpayers making between about $150,000 and $300,000, will pay more, mainly because most itemized deductions would be repealed.

Fast forward to 2027, when the overall average tax cut would be smaller than in 2018, increasing after-tax incomes 1.7 percent. Taxpayer groups in the bottom 80 percent of the income distribution—those making less than about $150,000—would receive average tax cuts of 0.5 percent or less of after-tax income. However, taxpayers making between about $150,000 and $300,000 would on average pay about $800 more in taxes than under current law. And the one item which Democrats will love: about 80% of the total benefit would accrue to taxpayers in the top 1 percent, whose after-tax income would increase 8.7 percent.

It gets worse: by 2027, taxes would rise for roughly one-quarter of taxpayers, including nearly 30 percent of those with incomes between about $50,000 and $150,000 and 60 percent of those making between about $150,000 and $300,000.

According to the Tax Policy Center, the number of taxpayers with a tax increase rises over time. This is because the plan would replace personal exemptions, which are indexed for inflation, with additional credits for children and non-child dependents that are not indexed for inflation. In addition, indexing tax brackets and other parameters to the slower-growing chained Consumer Price Index means that over time more income is subject to tax at higher rates.

Finally, there is of course, the repeal of the state and local tax deduction, a move which is expected to be widely hated by homeowners across the US, but as the chart below shows, by democrat states far more than republican states.

As BofA writes, blue states with high state and local taxes will be the most adversely impacted from the loss of this deduction. Thus, opposition in the Senate will mainly come from Democrats, while Republicans will mostly be on the same page. But, the situation should be more contentious in the House. Data from the Tax Policy Center reveals that 26 of the top 50 districts in terms of SALT deduction usage had a Republican representative. Republicans will likely face more internal pushback from these members. Ultimately, a House bill would fail if two dozen Republicans (and every Democrat) were opposed.

More in the full report below (link):

Comments

Hal n back JimmyJones Fri, 09/29/2017 - 15:42 Permalink

only if they have use the std deduction now. for a single person, Its 6300 going to 12000-or a 5700 benefit, minus the loss of exemption of 4600 so they pick up 1000 in lowering income.if a single has more than 12000 iremized deductions and has state income tax and property tax which pushes them over the 12k, they lose.The whole thing is a pile of crap. rememebr the market has been thinking 15% corp rate and now its 25%. but if the people have les smoney to spend then its a bust for the econoy.veru high incoem folks win here--they had lost their itemized deductions based on phaseout. Ya cannot take away whats already been taken awaybut they wil see the incremental   tax rate reduced to 35%-4% for each 100k or they pick up 40k if they have 1 mil of taxable ncome.its an insult 

In reply to by JimmyJones

Escrava Isaura Kotzbomber747 Fri, 09/29/2017 - 15:59 Permalink

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…..Benefit "Top 1%" Most …..Data from the Tax Policy Center reveals that 26 of the top 50 districts in terms of SALT deduction usage had a Republican representative.  This bill is so dead that we should not even bother commenting about it.  

In reply to by Kotzbomber747

sickavme YUNOSELL Fri, 09/29/2017 - 17:35 Permalink

Dude, who cares about the 1%... Thats a classic(and obsolete) manufactured political football by the democrats...All that really matters is the REAL driver of the economy, SMALL/MEDIUM business, gets the tax lowered. Which it does... and its all that trump needs to get reelected... Seriously, the dems are BANKRUPT... Do you really think a classic argument such as the 1% crap is really gonna save their asses??? Hell fuckin no! They are DONE! They are the LOSERS! Fuck em. 

In reply to by YUNOSELL

beemasters IH8OBAMA Fri, 09/29/2017 - 19:19 Permalink

Trump: "Nothing to see here... NFL, NFL, NFL....Oh did I mention NFL?"

And his popularity soars. Sad to see how the population is so easily manipulated. Trump only looks after the Trumps. As I said, he is a businessman; he couldn't care less about the National Anthem. As always, public perception is all that matters.

In reply to by IH8OBAMA

jeff montanye ergatz Sat, 09/30/2017 - 04:15 Permalink

your link is largely correct imo and still i'd rather trump than hillary as president.  as with the repeal of obamacare, this tax plan doesn't seem likely to be passed into law.  indeed trump seems unlikely to pass much legislation at all.  where he may have some benign effects, eventually, are in foreign policy and law enforcement.  meanwhile it is the farce of the legacy media, as one, opposing him, threatening impeachment, etc., using false flags such as russiagate and charlottesville to push their false deep state narrative, that enlightens and radicalizes the base of the republican party and the sanders/gabbard wing of the democrats.  the neocons/zionists are increasingly holed up in the clinton wing of the dnc and vulnerable, to a degree, to crossfire from the others.

In reply to by ergatz

jeff montanye political_proxy Sat, 09/30/2017 - 04:31 Permalink

judicial placements do matter (lifetime tenure) as do foreign policy and law enforcement, two areas where presidential control reigns nearly supreme compared with congressional oversight.  9-11 was against the law but it still happened.  possession is nine tenths of the law.http://www.voltairenet.org/article179295.htmlhttp://www.whale.to/b/isra….   http://topdocumentaryfilms.com/everything-rich-man-trick/https://smile…

In reply to by political_proxy

inhibi sickavme Fri, 09/29/2017 - 22:07 Permalink

Youre stupid.Who do you think buys from small businesses? The middle class.The lower class cant afford small business products, because the cheapest products are always made/sold by the largest corporations (economies of scale).When you lower the middle classes purchasing power, BYE BYE SMALL BUSINESS.Also, when you dont enforce anti-trust laws BYE BYE SMALL BUSINESS.So in effect, BYE BYE SMALL BUSINESS.

In reply to by sickavme

Demon Slayer sickavme Sat, 09/30/2017 - 00:22 Permalink

The top 1% pay the vast majority of federal income tax. Any reduction of taxes, of course, will benefit them....but that's not the point. It IS a phony Democratic Party talking point.Regulations on businesses if cut to reasonable levels, also benefit everyone, but the Dems would say that Trump wants to kill you by polluting the water and air.It's all such bullshit. We had clean air and water regulations in the late 70's, so why did Obama add 40,000 pages or new regs every year for eight years? Because he's a communist devil and wants to Cloward and Piven the US into the ditch, so they can come on with their devious plans.Since Obama's new bs regulations, doctors have to hire more lawyers than nurses just to comply..It's madness...The Dems are hell bent to collapse the US though mass third world immigration, inter racial hatred and chaos, feminizing the men. dumbing down our kids in the schools with drugs, Common Core moron math, and everything else under the sun...These bitches swear an oath to the constitution and then trash it the next day and every day thereafter..Hang them all..How TF did it become legal to push communism in the US?

In reply to by sickavme

jeff montanye Demon Slayer Sat, 09/30/2017 - 04:48 Permalink

the top one percent doesn't even pay a majority of the federal income tax.  https://duckduckgo.com/?q=what+percent+of+federal+income+tax+is+paid+by… to fix obamacare?  do single payer.  like every other advanced nation in the world; pay half as much and get better results.http://www.visualcapitalist.com/u-s-healthcare-system-global-outlier-no… republicans and democrats push for immigration, just somewhat different sorts: reps want cheap labor both menial and professional, dems want families together and votes.  the schools teach obedience and both parties as well as the deep state welcome that and the drugs.  ditto both parties trashing the constitution (george w. bush invented the patriot act).  you have a partisan point on "feminizing" men though the hard core feminists would probably put the point more "stop the men from killing/abusing the women".  you can't and won't "hang them", even some.  it's always been "legal" to push communism in the u.s. (first amendment) whether or not it was in practice (mccarthy, palmer raids, etc.).vote them out.  bust 9-11.  those can actually be done, whether they will or not remains to be seen.

In reply to by Demon Slayer

JimmyJones Hal n back Fri, 09/29/2017 - 16:30 Permalink

Agreed, somewhat, but I have to think that the majority of people use the Standard deduction and don't itemize.  If my assumption is true than that would have a net increase in peoples overall disposable income since the people that itemize are a small minority. I don't see the harm in just keeping itemization and also increasing the standard deduction but then again I am not a "Power that be".  One thing that isn't in there that was campaigned on is the deduction for Childcare that would be adjusted based on the median price in your local area.Raising the Child Tax Credit phase out limit to 150,000 Household income is also a pretty good deal for the regular working family.I wouldn't call it an insult just not what you or I wanted in its entirety.  But as the saying goes if you try to please everyone you wind up pleasing no one.

In reply to by Hal n back

evokanivo NiggaPleeze Sat, 09/30/2017 - 03:40 Permalink

the mortgage interest deduction is a bullshit freebie thrown in for voters (often homeowners) while the poorest (renters) get double-fucked. i don't like the bill, but that's definitely not what i would pick out as upsetting. that's one of the few things he got right - don't you agree that we should tax people the same and then let them make whatever decisions they want? buy a house, have 20 kids, whatever - long as i don't pay, do what you want.

In reply to by NiggaPleeze