Trump Tax Cut Massive Gift to Wealthy
Top 1% in Wisconsin would get more than half the tax cut.
The federal tax reform plan outlined by President Trump in April would fail to deliver on its promise of largely helping middle-class taxpayers, according to a new analysis from the Institute on Taxation and Economic Policy (ITEP). Their July 20th report concludes that the President’s proposals would shower 61.4% of the total tax cut on the richest 1 percent of Americans.
ITEP’s analysis examines the overall effect of the Trump tax plan on federal revenue, as well as its impact on taxpayers in each of the 50 states. In sum, the plan would slash federal revenue by $4.8 trillion over the next decade.
The proposed tax cuts that primarily benefit the very wealthy would come with a heavy cost for vital program and services. Reducing investments in education, health care, food assistance, and other critical programs is too steep a price to pay for giving the very rich a tax cut that exceeds twice the income of the typical Wisconsin worker.
In Wisconsin, the top 1 percent of the state’s residents would receive an average tax cut of $117,100, compared with an average tax cut of $500 for the bottom 60 percent of taxpayers in the state.
The ITEP analysis for Wisconsin concludes that the richest 1 percent of taxpayers would receive slightly more than half of the proposed tax cut, compared to 12.9% for the bottom three-fifths of taxpayers.
The large tax cuts for the richest Americans would also amount to a much larger portion of their income than the tax cuts for middle and low-income taxpayers. In Wisconsin, for example, the average tax cut for the wealthiest 1 percent would be 6.6% of their income, compared to just 1.6% for middle-income Wisconsinites and less than 1% for the poorest fifth of Wisconsin taxpayers.
Once Congress passes or sets aside the proposals to repeal the Affordable Care Act, tax cuts are expected to be a focal point of federal lawmakers’ efforts. The President’s tax plan would repeal the estate tax, the 3.8% tax on investment income for the very wealthy, and the Alternative Minimum Tax.
Trump’s proposals also include:
- reducing the corporate income tax rate from 35% to 15%;
- replacing current income tax brackets with three brackets of 10%, 25%, and 35%;
- repealing personal exemptions and doubling the standard deduction;
- creating a new deduction and tax credit for child care; and
- eliminating all other itemized deductions except those for charitable giving and home mortgage interest.
For a more detailed breakdown of how the tax plan would affect Wisconsin taxpayers, go to: https://itep.org/wp-content/uploads/trumptaxreport_WI.pdf