By Michael McCurry
Last week, President Trump and Congressional Republicans released a broad framework of their new tax overhaul. As the GOP continues to struggle to get a true legislative victory, this proposed plan is seen to be the party’s redemption after their three recent Affordable Care Act repeal failures. President Trump and his congressional compatriots insist that the proposed overhaul will greatly benefit the middle-America base that put them in power. However, studies seem to point to this being untrue. In fact, for the most part, the opposite seems to be the case.
According to a recent report done by the Tax Policy Center and Brookings, Trump’s proposed plan would increase the after-tax incomes of the wealthiest Americans by 8.5 percent, taxpayers in the bottom 95 percent would see a near-unnoticeable increase averaging 1.2 percent of post-tax income next year and about 12 percent of all taxpayers would face an increase in taxes of, on average, $1,800.
Over the next 10 years, taxes would increase for about a quarter of Americans, including around 30 percent of those who make between $50,000 and $150,000 a year and 60 percent of people making $150,000 to $300,000, according to the study.
In total, the study finds that 50 percent of the tax benefits created by the plan would benefit the taxpayers in the top one percent, those who make more than $730,000 a year.
Despite grim early prospects for the proposed plan, White House Budget Director Mick Mulvaney told CNN’s “State of the Union” that it was far too early for analysts to gauge such figures, as many crucial details of the future legislation are still missing. Mulvaney continued, “[Trump] doesn’t really care what happens to the top 1 percent.”
Mulvaney’s assertion that Trump doesn’t care about the 1 percent seems pretty thin, as the eliminations of the alternative minimum tax (AMT) and the estate tax in the current plan prove to be very beneficial to the country’s top earners—especially the Trump family. The AMT prevents taxpayers from using deductions and loopholes to avoid paying a minimum amount to the federal government. According to Trump’s leaked tax returns from 2005, the then-future president paid $31.3 million in that year alone due to the AMT.
Republicans have long touted that the end to the estate tax or “death tax” would be a victory for the middle class families and farmers. However, this tax only applies to those estates worth an excess of $5.39 million, or $11 million for married couples. This could save the Trump family $1.4 billion, assuming Forbes’ estimate of Trump’s worth is accurate at $3.5 billion.
Drew student and political science major Richard Taylor (‘20) certainly is not buying this as a tax for the working class and stated, “We all knew this was coming. Obviously he was going to try to sell a plan built for himself.”
Drew student and economics major Trevor Hurst (‘19) worries about how the GOP plans to fund such cuts. “[The Trump plan] leaves major questions unanswered relating to how it will be financed. It would seem as though the plan may exacerbate the growing debt/GDP ratio at a time where many would argue deficit reduction measures should be put into place.”
The Trump administration is insisting that the combination of a curb on federal spending and the aforementioned cuts would create a friendlier business climate that will help stabilize the federal debt. The Reagan and Bush 41 administrations made similar claims to support their first term cuts. However, in both instances, the debt soared.
Image courtesy of ABC news