Analysis: Tax plan would cost $2.4T, benefit wealthy most

http://thehill.com/policy/finance/353126-analysis-tax-plan-would-cost-24t-benefit-wealthy-most

By Naomi Jagoda and Niv Elis - 09/29/17 02:00 PM EDT

The tax framework that President Trump and congressional Republicans rolled out this week would reduce federal revenues by $2.4 trillion in its first 10 years and provide the biggest tax cuts to the wealthiest Americans, according to an analysis released Friday by the nonpartisan Tax Policy Center (TPC).

The plan would also cost $3.2 trillion in its second decade, the TPC said.

The group’s analysis is preliminary, as the revenue and distributional effects may change as Congress fills in the details of the tax framework.

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Every income group, on average, would see a reduction in their tax bill in the first year under the plan, according to the TPC, but the nation’s wealthiest would get the lion’s share of savings.

The bottom 95 percent of earners would see on average an increase in their after-tax income of 1.2 percent or less. The top 1 percent, meanwhile, would see an 8.5 percent increase, TPC said.

In the plan's first year, taxpayers on average would receive a tax cut of $1,570, while those in the top 1 percent would see their taxes decrease on average by about $130,000. About 12 percent of taxpayers would see their taxes go up that year — including more than one-third of people making between about $150,000 to $300,000, largely due to the repeal of many itemized deductions, TPC said.

Over time, the effect of the tax changes would decrease on the lower end of the income spectrum.

“About 80 percent of the total benefit would accrue to taxpayers in the top 1 percent, whose after-tax income would increase 8.7 percent” by 2027, the report said.

By that point, about 25 percent of taxpayers would see their taxes go up, particularly among the middle and upper-middle class. Almost 30 percent of earners with incomes between $50,000 and $150,000 would see their tax bill go up, as would 60 percent of those making between $150,000 and $300,000, TPC said.

In 2027, taxpayers would receive a decrease in taxes of almost $1,700, but those in the top 1 percent would see an average cut of more than $200,000 and those in the top 0.1 percent would see a average reduction of more than $1 million, according to TPC. Taxpayers in the middle fifth of income would on average see a reduction in taxes of $660.

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