Donald Trump and Treasury nominee Steven T. Mnuchin vowed there would be no tax cut for the rich. Yeah. Right.
The president has raised expectations among his working-class supporters that “the rich will pay their fair share,” and that “special-interest loopholes that have been so good for Wall Street investors, and for people like me, but unfair to American workers” will be eliminated. Mr. Mnuchin, soon to be one of the administration’s top economic policy officials, promised “a big tax cut for the middle class.”
Yet analyses of the president’s and the House Republicans’ plans consistently conclude that the wealthy will receive the largest tax cuts by far.
Start with the House blueprint, which at the moment is the closest thing to a working draft that exists. The nonpartisan Tax Policy Center, a joint project of the Urban Institute and Brookings Institution, found “high-income taxpayers would receive the biggest cuts, both in dollar terms and as a percentage of income.”
How big? “Three-quarters of the tax cuts would benefit the top 1 percent of taxpayers,” if the plan were put into effect this year, it said. The highest-income households — the top 0.1 percent — would get “an average tax cut of about $1.3 million, 16.9 percent of after-tax income.”
Those in the middle fifth of incomes would get a tax cut of almost $260, or 0.5 percent, while the poorest would get about $50.
That split would worsen down the road, the Tax Policy Center says: “In 2025 the top 1 percent of households would receive nearly 100 percent of the total tax reduction.”
Those wary of any potential liberal bias could turn to the conservative-leaning Tax Foundation. Its analysis found a smaller gap between the wealthy and everyone else, but a gap nonetheless. The foundation concluded that four out of five taxpayers would see only a 0.2 to 0.5 percent cut in after-tax income, while those in the top 1 percent of the income scale would save at least 10 times as much, or 5.3 percent. That’s nearly $40,000 extra for those at the top, compared to $67 for those smack dab in the middle of the income scale.