Earlier today, House Republicans unveiled their version of the tax cut proposal that President Donald Trump and Congressional Republican leaders want to pass by the end of the year. Despite some recent tweaks, it still largely mirrors what Republicans first proposed last month. That means the richest 1% of Americans would still enjoy the lion’s share of tax cuts, while everyone else is at risk of paying higher taxes and/or bearing the brunt of painful budget cuts.
What’s the rush for tax cuts?
During his visit to Las Vegas last month, Rep. Mark Amodei (R-Carson City) said, “I expect the reconciling process to be fast. [House Speaker] Paul Ryan [R-Wisconsin] wants to do tax reform by Thanksgiving. I think he means it.”
Earlier today, House Republican leaders signaled they want to stay on this timeline with the release of their tax plan. They also indicated that despite the public’s strong opposition to Republicans’ tax cut proposal, they’re rushing to pass this tax cut package while pushing back other legislative items, such as the DREAM Act and health insurance stabilization, that enjoy much broader public support.
“The plan is overwhelmingly tilted to high-income individuals.”
– Chuck Marr, Center on Budget and Policy Priorities
Last month, the Center on Budget and Policy Priorities’ (CBPP) Chuck Marr explained to us how the Republican tax plan would provide lucrative benefits for the wealthiest Americans at the expense of nearly everyone else. On a press call earlier today, Marr stood by his earlier analysis. He stated, “The plan is overwhelmingly tilted to high-income individuals.”
At first glance, the new House Republican plan appears fairer by keeping in place the current 39.6% top personal income tax bracket. However, Marr explained how the super-rich benefit by the elimination of the alternative minimum tax, which limits the amount of deductions for taxpayers who earn over $130,000 per year, and the corporate tax rate cut, from 35% to 20%.
Marr also pointed to the proposed reduction, from 39.6% to 25%, in the “pass through” tax on certain corporations that wealthy Americans can use to pay less in taxes. “This is obviously for very high-income people. They’re generally the only the only ones who use this,” Marr said.
“Congress has passed a resolution that allows them to pass $1.5 trillion in tax cuts, but they’ve used gimmicks to hide the true cost of [it].”
– Chye-Ching Huang, CBPP
Marr then mentioned another tax cut in the Republican plan that exclusively benefits the ultra-wealthy: the estate tax. “This goes to the wealthiest 0.2% of Americans, as they’re the only ones who pay the tax,” Marr stated. “They double the exemption from $11 million to $22 million, providing for a $4.4 million tax cut. They then completely eliminate the estate tax halfway through the [ten year] budget.”
CBPP’s Chye-Ching Huang then argued that the phased-in estate tax repeal and other clever accounting maneuvers in this bill obfuscate the total cost of the overall tax plan, which Republican leaders currently claim to be $1.5 trillion. “Congress has passed a resolution that allows them to pass $1.5 trillion in tax cuts, but they’ve used gimmicks to hide the true cost of [it],” Huang explained.
“The biggest losers are the ones who will have to pay for it.”
– Chuck Marr, CBPP
Marr went on to discuss how Republicans’ proposed cuts to the child tax credit would hit middle-class and working poor households. “The bill is specifically designed to leave out 10 million people, including 6 million right now. At the same time, they are increasing the child tax credit for people earning up to $200,000 a year.” Marr explained how, under the Republican plan, a family of four earning $200,000 a year would receive a $3,200 credit while a single parent who earns minimum wage and raises two children would receive $0.
Marr and Huang later explained why Republican leaders are probably hiding the true full cost of their tax plan. They reminded everyone on the call that Republican leaders are also eyeing cuts to safety net programs like Medicare, Medicaid, federal K-12 education funds, and college student aid. If Congress ultimately decides on these budget cuts to pay for this tax cut proposal, it will result in a “reverse Robin Hood effect” of taking from the poor to care for the rich.
Towards the end of the call, a reporter asked who would lose the most under this latest version of the Trump Tax Plan. Marr replied, “The biggest losers are the ones who will have to pay for it.”