A new analysis confirms what many have been saying: The House GOP tax proposal unveiled last Thursday would disproportionately benefit the wealthiest 1 percent of U.S. taxpayers.
Release of the analysis comes on the day the House Ways and Means Committee is scheduled to take up the tax measure. And it comes two days before CHN and the Food Research & Action Center (FRAC) will host a webinar explaining why the upcoming tax battle is important and what you can do to influence the outcome. The webinar will feature Sen. Patty Murray, D-WA, Frank Clemente, Executive Director of Americans for Tax Fairness, and CHN Executive Director Deborah Weinstein. It will be moderated by FRAC President Jim Weill.
The report by the Institute on Taxation and Economic Policy (ITEP) found that not only would the wealthiest 1 percent receive the greatest share of the total tax cut in its first year of existence, but that their share would actually grow over time.
The analysis found that households in the top 1 percent collectively would receive nearly one-third (31 percent) of the tax cut in 2018, for an average cut of $48,580. Taxpayers in the middle of the income scale would receive an average cut of $750 (or a little more than $14.40 a week), while the poorest 20 percent of wage-earners would receive an average cut of $130 (or $2.50 a week).
The disparate effect of the tax cut grows the longer it is in effect, the ITEP analysis shows. By 2027, the top 1 percent of households would receive 48 percent of the benefit of tax cuts, for an average cut of $64,720. Middle-income taxpayers’ average tax cut would erode to $460 from $750, and the poorest 20 percent of taxpayers would receive an average tax cut of $110, down from $130 in 2018.
“A closer look at the details of this tax plan indicates that lawmakers are most serious about ensuring that they lower tax bills for the highest-earning households,” said Alan Essig, Executive Director of the Institute on Taxation and Economic Policy. For example, he said the tax proposal “takes great care to fully eliminate the estate tax – which only the richest 0.2 percent of households pay – while phasing out a $300 tax credit that would benefit middle-income families. Further, low- and middle-income families likely will pay for these tax cuts that mostly benefit the highest earners through reduced investments in education, health care, infrastructure, scientific research, environmental protections, and other priorities.”
The analysis found that the richest 1 percent not only would receive the greatest share of the tax cut in terms of dollars, but also as a percentage of their income. For example, while the proposed tax cut for the top 1 percent of households averages 2.4 percent of their income, the cut is just 0.9 percent for the poorest 20 percent on average, and 1.4 percent for middle-income taxpayers in 2018. By 2027, the tax cuts would fall to just 0.5 percent of income for the poorest and just 0.6 percent of income for those in the middle, while they would rise to 2.5 percent of income for the top 1 percent.
The ITEP report also tracked how taxpayers in all 50 states would fare under the tax proposal.