The just-announced Republican tax plan, which President Donald Trump is trumpeting as a boon for the middle class, would disproportionately benefit the rich and actually result in moderate tax increases for one in four U.S. households, according to an analysis by a nonpartisan group of experts.
The report, compiled by the Tax Policy Center, finds that in 2018 households with incomes above $730,000 — placing them in the top 1 percent — would receive about half of the plan’s total tax benefit. Their after-tax incomes would also rise the most — by an average of 8.5 percent, or $129,030. And the top 0.1 percent would hang on to an extra nearly $723,000, increasing their after-tax earnings by a full 10 percent, the report estimates.
The poorest Americans, meanwhile, would see their after-tax income increase by no more than 1.2 percent.
The effects aren’t much better for the middle class. The report concludes the majority of the upper-middle class — meaning those earning between $150,000 and $300,000 — would actually see their taxes rise, because the plan would repeal most itemized deductions. And for those right in the middle, with household incomes around $65,000, taxes would be only marginally reduced, by about 1 percent, saving them about $650 on average.
“A major feature is tax collections would shift dramatically, from businesses to individuals,” explained Eric Toder, a co-director of the Tax Policy Center, in an interview with the Washington Post.
The report also concludes that the tax plan would dramatically reduce federal revenues, thereby increasing the deficit by $2.4 trillion over the first decade, and $3.4 trillion over the second — an effect the party of fiscal responsibility used to campaign against.