Tuesday, May 23, 2017

Trump's 'Massive' Middle-Class Tax Cuts Are Tiny Compared To Those Promised To The Rich



Mar 1, 2017 @ 09:26 AM 30,861
Tony Nitti

•••••

As measured by the erstwhile eggheads at the Tax Policy Center, the Trump plan would result in total tax cuts of $6.2 trillion over the next ten years. Now that is certainly a massive tax cut. But is for the middle class? Or for someone else?

According to the TPC, of the $6.2 trillion in cuts, the richest 1% will enjoy 47% of those cuts, or nearly $3 trillion over ten years. The middle class, however -- should we choose to define it as those taxpayers in the wealthiest 20% to 80% of the population--would receive only 20% of the tax cuts combined. Put into simpler terms, here is how the different income classes would benefit from the President's plan:

 Income Level  Income Percentage Share of Tax Cuts Annual Tax Savings per Individual  Percent Change in After-Tax Income
 $0-$24,800 0-20% 1.1% $110 0.8%
$24,800-$48,400 20-40% 3% $400 1.2%
$48,400-$83,300 40-60% 6.6% $1,010 1.8%
$83,300-$143,100 60-80% 11.3% $2,030 2.2%
> $143,100          80-100%     77.7% $16,660 6.6%

•••••

remember to look at the percentage column, which confirms the plan's regressivity, meaning it disproportionately benefits the richest taxpayers on a percentage -- rather than absolute dollar -- basis.
If we focus on the upper reaches of the income scale, the impact becomes more dramatic. Consider the following:
 Income Level  Income Percentage Share of Tax Cuts Annual Tax Savings per Individual  Percent Change in After-Tax Income
 $292,000-$699,000 95-99% 16.3% $18,490 6%
> $699,000 >99% 47.3% $214,000 13.5%
>$3,749,600 >99.9% 24.2% $1,066,460 14.2%

•••••

In their 2016 "Blueprint for Tax Reform," Ryan and Brady did indeed propose sweeping tax cuts of their own, amounting to $3.1 trillion over the next ten years.  They have, however, somehow managed to make their proposal even less progressive that the President's plan, with the richest 1% getting nearly 77% of the tax cuts, leaving the middle class only 2.5% of the savings. It looks like so:

•••••

Under the GOP plan, middle-class taxpayers will get an annual tax break of $120 - $410, less than half of that offered by the President's plan. Meanwhile, the richest 20% of the country will, on average, enjoy additional after-tax cash of nearly $12,000, with the richest 1% getting an average tax break of $212,000. Again, the disparity isn't reconciled on a percentage basis, as the middle class will experience an increase in after-tax income of less than 1%, while the richest 1% will see their after-tax income rise by 13.4%.

•••••

No comments:

Post a Comment