Most married couples with three or more children would also pay higher taxes, an analysis by the nonpartisan Tax Policy Center found. And while middle-class families as a whole would receive tax cuts of about 2 percent, they’d be dwarfed by the windfalls averaging 13.5 percent for America’s richest 1 percent.
Trump’s campaign rhetoric had promoted the benefits of his proposals for middle-income Americans.
“The largest tax reductions are for the middle class,” said Trump’s “Contract With the American Voter,” released last month.
The tax hikes that would hit single parents and large families would result from Trump’s plan to eliminate the personal exemption and the head-of-household filing status. These features of the tax code have enabled many Americans to reduce their taxable income.
His other proposed tax changes would benefit middle- and lower-income Americans. But they wouldn’t be enough to offset those modifications.
“If you’re a low- or moderate-income single parent, you’re going to get hurt,” said Bob Williams, a fellow at the Tax Policy Center.
Unlike Trump’s polarizing proposals on immigration and trade, his tax plan is in line with traditional Republican policy. His steep tax cuts in many ways resemble those carried out by Presidents Ronald Reagan and George W. Bush, and the Republican-run Congress is expected to welcome them.
During the campaign, Trump said his tax cuts – for individuals and companies – would energize the economy by boosting business investment in factories and equipment, while leaving consumers with more cash to spend. His proposals, he contended, would help create 25 million jobs over the next decade.
But Lily Batchelder, a visiting fellow at the Tax Policy Center and former deputy director of President Barack Obama’s National Economic Council, estimates that roughly 7.9 million families with children would pay higher taxes under his proposals. About 5.8 million are led by single parents. An additional 2.1 million are married couples.
Other analysts, including economists at the conservative Tax Foundation and right-of-center American Enterprise Institute, have agreed with Batchelder’s conclusions.
Here’s what her analysis finds:
Right now, a single parent with $75,000 in income and two children can claim a head of household deduction of $9,300, plus three personal exemptions. Those steps would reduce the household’s taxable income by $21,450, to $53,550.
Trump’s plan would more than double the standard deduction to $15,000. But that change would be outweighed by his elimination of personal exemptions and head-of-household status. So the family’s taxable income would be $60,000, and their tax bill would be $2,440 more than it is now.
A married couple with four children and income of $50,000 would absorb a tax increase of $1,090 because of their loss of personal exemptions.
Trump’s advisers deny that he will raise taxes on middle-income Americans. Stephen Miller, his top policy adviser, said Trump would provide tax-free child care savings accounts and other provisions to enable some families to reduce taxes.
But Batchelder’s analysis found that those provisions wouldn’t be enough to offset the plan’s other elements that would increase taxes for some middle income households.
More broadly, Miller said Trump would instruct Congress to avoid raising taxes on those families.