Trump/Republican Tax Reform Delivers – to the Wealthy, Huge Corporations, Wall Street

December 19, 2017

The Trump/Republican tax plan that is poised for a vote in Washington over the next several days is a national disgrace.  It provides huge benefits to the top 1 percent of all income earners and little help for those who struggle each day to make ends meet.

Large corporations, already flush with cash, will benefit from a significant tax cut from 35 to 21 percent.  Plus, the combination of tax bracket squeeze, reduction in the availability of the state and local tax deduction and the removal of the individual mandate which will cause health insurance premiums to spike will all strike at the heart of working men and women. 

The Institute of Taxation and Economic Policy examined the impact of this measure on the national economy:

  • Number of Pennsylvania Taxpayers With Tax Increases in 2019
    Sources: ITEP, “Compromises” Under Discussion for the State and Local Tax Deduction Do Not Fix Flawed Tax Bills” (Dec. 10, 2017). Number of taxpayers in each income group from ITEP, “National and 50-State Impacts of House and Senate Tax Bills in 2019 and 2027” (Dec. 6, 2017). Average tax hike from ITEP’s microsimulation model, shared with ATF.

    Focusing on the bill’s benefits for Americans, in 2019 more than half will flow to the richest 5 percent of taxpayers, and more than a quarter will flow to the richest one percent of taxpayers;

  • The bill would go into effect in 2018 but the provisions directly affecting families and individuals would all expire after 2025; 
  • In 2019, the bottom three-fifths of Americans will receive smaller average tax cuts, as a share of income, than other groups. In 2027 the bottom three-fifths of Americans will see tax hikes, on average;
  • In 2019, the average impact for the middle-fifth of taxpayers will be a tax cut of $800. The richest one percent of taxpayers will receive an average tax cut of more than $55,000.

 

In Pennsylvania, according to the Pennsylvania Budget and Policy Center/Americans for Tax Fairness the Republican plan will have extreme and far-ranging affects:

  • Allowing for a $10,000 deduction for combined income and property taxes, nearly 364,800 Pennsylvania taxpayers (5.7%) would face tax increases in 2019, averaging $890; 
  • A substantial numbers of upper middle-class Pennsylvanians will see their taxes go up as a result of the limitation on state and local tax deductions. These taxpayers are likely to be concentrated in the suburbs of Philadelphia, where a high percentage of taxpayers take the state and local deduction; 
  • Among Pennsylvania taxpayers as a whole, 28 percent use the state and local deduction for sales and income taxes. There is substantial variation among Congressional districts, however; 
  • According to PBPC, the overall impact in Pennsylvania in 2019 shows that the bottom 60 percent of Pennsylvanians with an average income of $34,100 will get an average tax break of $400 while the richest 1 percent of Pennsylvanians, with an average income of $1.8 million will get an average tax cut of $53,580.

 

 

Here’s what 
Happens in 2018

Here’s what 
Happens in 2025
Lowest quintile gets an average tax cut of $60 gets an average tax cut of $70
Second quintile gets an average tax cut of $380 gets an average tax cut of $390
Middle quintile gets an average tax cut of $930 gets an average tax cut of $910
Fourth quintile gets an average tax cut of $1,810 gets an average tax cut of $1,680
Top quintile gets an average tax cut of $7,640 gets an average tax cut of $7,460
     
Top 1 percent gets an average tax cut of $51,140 gets an average tax cut of $61,090
Top 0.1 percent gets an average tax cut of $193,380 gets an average tax cut of $252,300
Source: Tax Policy Center analysis of GOP tax plan