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

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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%

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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%

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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:

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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%.

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