Plans unveiled this week for broad-based US tax cuts would mostly benefit the very rich while lowering government revenues by US$2.4 trillion over a decade, according to an analysis released yesterday.
Furthermore, while most income groups would see lower taxes on average in 2018, in a decade some middle-class taxpayers would on average end up paying higher taxes, according to the non-partisan Tax Policy Center.
Opposition Democrats continued to hammer at the plan yesterday, which they have described a giveaway to the rich.
The White House said the plan would be a boon to the middle class and create prosperity for all, by increasing growth to pay for the tax cuts.
But senior economic advisor Gary Cohn said he could not guarantee that every taxpayer would see a tax cut.
“Despite the president’s promises, it is implausible that this plan would permanently boost the economy,” Howard Gleckman, a senior fellow at the TPC, wrote in presenting the findings. “Trillions of dollars in lost revenue would add to the federal debt, raise interest rates, and make it more costly for businesses to invest.”
US President Donald Trump joined Republicans this week in rolling out the plan, which calls for doubling standard deductions income earners can use to reduce their tax burdens, lowering the top tax bracket and cutting corporate taxes from 35 percent to 20 percent.
It would also reduce taxes on “pass-through” corporate entities, where a company’s earnings are passed through to its owners, and eliminate the socalled Alternative Minimum Tax, which is designed to prevent tax avoidance by wealthy individuals who claim excessive deductions.
At an event yesterday, Trump said under the plan US businesses and workers would “thrive, compete and grow,” calling it a “giant, beautiful, massive, the biggest ever in our country, tax cut.”
Under the broader proposal, corporations would see their top tax rate cut from 35 percent to 20 percent. Seven personal tax brackets would be reduced to three: 12 percent, 25 percent and 35 percent. But the information released didn’t include the income levels applied to the rates, making it difficult to know how a typical family’s tax bill may be affected.
According to the TPC analysis, the top one percent of earners, or those making more than US$730,000 a year, would receive about half of all tax benefits created by the plan, with their after-tax incomes rising by an average of 8.5 percent. Starting in 2027, those earning between US$150,000 and US$300,000 would see a slight increase.
The Republican proposal would also reduce federal government revenues by US$2.4 trillion over the next decade and then by US$3.2 trillion over the decade after that, according to the study.
Anger grows in Puerto Rico. US military and emergency relief teams were ramping up their aid efforts for Puerto Rico yesterday amid growing criticism of the response to the hurricanes which ripped through the Caribbean island.
“This is not a good news story,” San Juan Mayor Carmen Yulin Cruz told CNN following comments made the previous day by a top Trump administration official. “This is a peopleare- dying story.”
Trump, who will travel to the US territory early next week, meanwhile defended the response to the disaster on the island, which has been virtually without power, water and telecommunications since getting a twin walloping from hurricanes Irma and Maria.
Trump has been on the defensive over his handling of the crisis in Puerto Rico. He lauded the relief effort yesterday and said it has been complicated by the fact that the US territory is an island.