Who Benefits From Donald Trump's Tax Plan?

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November 13, 20168:18 AM ET
Heard on Weekend Edition Sunday
John Ydstie

Donald Trump has proposed a very detailed tax plan — but his statements on the campaign trail don't always match what his proposal would really do.

"Just before the election, after the last debate, 51 percent of them intending to vote for Trump supported increasing taxes on high-earning individuals," says Michael Pollard of RAND.

But Trump's plan does the opposite, says Lily Batchelder, a law professor at New York University and visiting fellow at the Tax Policy Center.

"If you look at the most wealthy, the top 1 percent would get about half of the benefits of his tax cuts, and a millionaire, for example, would get an average tax cut of $317,000," she says.

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Effective marginal income tax rates on wages and salaries would be reduced by about 2 percentage points, on average, under Donald Trump’s tax plan compared to current law, the Tax Policy Center says. The top 0.1 percent of earners would see a cut of over 7 percentage points, but those with the lowest incomes would see less than a 1-percentage-point cut.

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But a family earning between $40,000 and $50,000 a year would get a tax cut of only $560, she says, and millions of middle-class working families will see their tax bills rise under Trump's plan — especially single-parent families.

"A single parent who's earning $75,000 and has two school-age children, they would face a tax increase of over $2,400," Batchelder says. That's if they had no child-care deductions; the increase in taxes comes partly because the Trump plan eliminates the $4,000 exemption for each person in a household.

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Economists disagree on whether the tax plan would be good for the economy. The Tax Policy Center says that over the first decade, the government would lose $6.2 trillion in revenue, producing huge budget deficits that could hurt the economy.

One other element of the Trump plan is worth noting: It would eliminate the federal estate tax entirely. Only the wealthiest taxpayers — less than 1 percent — now pay that tax. Ending it would lead to an even greater concentration of wealth in the U.S.

tags: income distribution