It also doubles the standard deduction, which is in itself a cut for some low- and middle-income Americans.
A new study details the absurdity of this claim.
Donald Trump's "once-in-a-lifetime" plan to cut taxes for "average Americans" would mainly benefit the richest 1% and deliver only modest cuts for most United States households, according to an independent analysis released on Friday. Even if tax rates for companies and families were unchanged, the debt is expected to balloon by an additional $10 trillion over the next 10 years. The top tax rate for these taxpayers is now 39.6 percent. Overall, Trump's tax cut is big enough to raise Americans' after tax incomes in 2018 by 2%.
Yet the most striking element of the plan offers a windfall to those who have the most, cutting the highest rate from 39.6 percent to 35 percent.
While most taxpayers would benefit at least modestly, taxes would increase for others, particularly those with incomes of $150,000 to $300,000.
The loss of the personal exemption, which shields $4,050 of income from federal taxes for every household member, also would play a major role in increasing taxes for some households, the analysis found - an effect that would get worse over time because the amount of the personal exemption kept pace with inflation. The tax cut for "pass-through" businesses-where profits are taxed at individual and not corporate rates-is an outright giveaway to the wealthy: More than two-thirds of income earned at these companies goes to the top 1 percent of tax filers.
For larger businesses and corporations, the framework reduces the corporate tax rate to 20 percent - below the 22.5 percent average of the industrialized world.
President Trump called for a "giant, beautiful, massive" tax cut that he said would be "the biggest ever in our country" during a National Association of Manufacturers' board meeting in Washington on Friday.
In accord with President Trump's stated goal of simplifying the tax code, the proposed tax system eliminates several existing tax measures. To make that happen, they have to come up with a plan to show that the tax cuts will be paid for beyond the first decade. Our objective is not to create tax cuts for the wealthy.
The White House has moved to defend the proposed tax overhaul, which is still being crafted, from criticism that it will unduly help the wealthiest Americans or blow a hole in the federal budget. The costly changes on the individual side are paired with eliminating personal exemptions (which now give taxpayers a $4,050 deduction for every person in the household) and eliminating the state and local tax deduction, which more than pay for the individual cuts. Mr Trump argues that the benefits of a lower corporate tax would flow primarily to workers, in the form of higher wages.
Add this to the growing file folder that can be labeled "Depressing but not Surprising": The only thing today's Republican Party knows how to do is cut taxes for the very rich. "While the plan slashes the income tax rate for the highest earners, it actually increases the income tax rate that applies to many working families". But even those proposed changes were left vague - and wouldn't remotely pay the full cost of the tax cut.
The same can not be said of the planned abolition of the estate (inheritance) tax, which would benefit only those with assets worth $5.5m or more.
Most other income groups also would see less of a tax break by 2027.
This rule of thumb was useful during the presidential campaign, when candidates promised that their infrastructure, health and tax proposals would "pay for themselves" through faster growth.
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