Wealthy, not middle class, would be big winners in GOP tax plan, study says

 In Business

Gary Cohn and Steven Mnuchin are pictured. | AFP/Getty Images

The report comes one day after National Economic Council Director Gary Cohn (left) said “the wealthy are not getting a tax cut under our plan,” and Treasury Secretary Steven Mnuchin (right) said the plan would generate so much economic activity that it would pay for itself. | Brendan Smialowski/AFP/Getty Images

About 30 percent of those earning between $50,000 and $150,000 would pay more under the Republican plan, according to the nonpartisan Tax Policy Center.

Updated


The top 1 percent would be the biggest winners under Republicans’ plans to rewrite the tax code, according to a new analysis, while some moderate-income people would face tax increases.

Though the administration says the wealthy would not see their taxes go down under the proposal, the Tax Policy Center said Friday that they would actually reap the biggest cuts — about half of all the tax benefits in the GOP plan. In 2018, the wealthiest 1 percent would take home a $129,000 tax cut, the group found, boosting their after-tax incomes by 8.5 percent.

Story Continued Below

Most other people would see their taxes decline as well, albeit not by nearly so much. Those in the center of the income spectrum would see a $660 tax cut, the group said, which translates into a 1.2 percent increase in after-tax income.

By 2027, about 30 percent of those earning between $50,000 and $150,000 and 60 percent of those taking home between $150,000 and $300,000, would pay more under the Republican plan.

The proposal released this week by the “Big Six” congressional and White House negotiators would cost $2.4 trillion over the next decade, the non-partisan TPC said. It also found the plan, in aggregate, would raise taxes on individual taxpayers while cutting them for businesses — a politically perilous combination for lawmakers.

The assessment — which included a number of assumptions about how the GOP plan would work — undercuts Republicans’ assertions that their plan is focusing on helping the middle class, not the well-to-do, and hands Democratic critics reams of ammunition.

Mark Mazur, head of the group, pointed to GOP plans to eliminate the estate tax and alternative minimum tax, as well as its plans to cut the top income tax rate and the levy on so-called pass-through businesses, which pay taxes through the individual tax code.

“All of those things benefit high-income individuals either exclusively or largely, and so it’s hard to see how, if you continue to have those provisions in a tax reform proposal, that doesn’t benefit high-income individuals and high-income households disproportionately,” said Mazur, who was Treasury assistant secretary for tax policy in the Obama administration.

The report comes as Republicans argue their plan is focused on average Americans.

“Our framework ensures that the benefits of tax reform go to the middle class, not the highest earners,” President Donald Trump told the National Association of Manufacturers Friday.

On Thursday, National Economic Council Director Gary Cohn said “the wealthy are not getting a tax cut under our plan,” while Treasury Secretary Steven Mnuchin said it would generate so much economic activity that it would pay for itself.

Republicans on Friday slammed the TPC report.

“This belongs in the fiction aisle,” said White House spokeswoman Sarah Sanders. “The Tax Policy Center analysis is useless and misleading because the unified framework does not include details that are necessary to determine either the cost or distributional effects of the framework. They either ignore — or use inaccurate assumptions — about important proposals like the size and availability of the child tax credit and other provisions.”

But it gave Democrats grist to attack the tax plan.

Recent Posts
Get Breaking News Delivered to Your Inbox
Join over 2.3 million subscribers. Get daily breaking news directly to your inbox as they happen.
Your Information will never be shared with any third party.
Get Latest News in Facebook
Never miss another breaking news. Click on the "LIKE" button below now!