Wednesday, May 17, 2017

Trump Tax Plan Would Give 400 Highest-Income Americans More Than $15 Million a Year in Tax Cuts

Under the current tax system, those in the top income groups are already gaining an increasing share of income and wealth. How are they suffering?

I suggest reading the whole article at the following link:

May 17, 2017
by Brandon DeBot

President Trump’s tax plan contains specific, costly tax cuts for the wealthy and profitable corporations but only vague promises for working families.[1] Even accounting for his proposal to restrict most itemized deductions, the top 1 percent would still receive annual tax cuts averaging at least $250,000 per household. But the tax cuts at the very top would be far larger. Their annual tax cuts would be more than five times the typical college graduate’s lifetime earnings. The 400 highest-income taxpayers — whose incomes average more than $300 million a year — would get average tax cuts of at least $15 million a year each, we estimate from IRS data. Their annual tax cuts would be more than five times the typical college graduate’s lifetime earnings.[2] (See Figure 1.) The total tax cut for these 400 households would be at least $6 billion annually.

The Trump plan prioritizes these tax cuts for the highest-income Americans over many worthy programs that need more resources. For example, $6 billion is more than the federal government spends on grants for major job training programs to assist people struggling in today’s economy. An additional annual investment of $6 billion could enable roughly 1.5 million adults each year to train for a new career.[3]

Also, $6 billion is roughly the cost of providing 600,000 low-income families with housing vouchers that would help them afford decent, stable housing. That additional investment could eliminate homelessness among impoverished veterans, families with children, and people with mental illness or other disabilities, and reduce housing instability among these and other at-risk groups.[4]

Yet, far from investing in these areas, President Trump has proposed to sharply cut the budget area (non-defense discretionary programs) that funds job training and housing vouchers, even as his tax plan delivers massive tax cuts to the top.

Our estimates are based on the tax cuts that the top 400 would receive from just two provisions of the Trump plan: reducing to 15 percent the tax rate on “pass-through” business income (income from businesses such as partnerships, S corporations, and sole proprietorships that is claimed on individual tax returns and is taxed at the same rates as wages and salaries) and repealing the 3.8 percent Medicare tax on unearned income that high-income households receive.


The top 400 would receive average tax cuts of at least $15 million annually from just these two provisions (assuming they have similar income levels and income sources as in 2014). This estimate likely significantly understates the tax cuts for the top 400 because it covers only two provisions that represent about one-third of the Trump tax plan’s overall cost.


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