The first independent analysis of the Republican tax plan is in, and its bottom line is about what you’d expect: The vast majority of benefits go to the very richest Americans.
The analysis comes from the Tax Policy Center, a joint effort by the Brookings Institution and the Urban Institute and the producer of some of the most authoritative economic analyses produced in Washington. The center calculates that by 2027 the top 20% of U.S. taxpayers (those earning $149,400 or more in 2017) would receive 86.6% of all the tax cuts in the GOP “framework” released on Wednesday and the top 1% (income of $732,800 and up) would pocket 79.7% of the benefits. The top 0.1% ($3.43 million and up) would get almost 40% of all the benefits, collecting an average break of more than $1 million a year.
Overall, the tax plan would blow a big hole in the federal budget. The center calculated that it would reduce federal revenues by $2.4 trillion in its first 10 years and an additional $3.2 trillion over the following decade.
Congressional Republicans, as one might expect, wasted no time trying to knock down the center’s estimates, calling the analysis “misleading, unfounded, and biased.” House Ways and Means Chairman Kevin Brady, R-Texas, groused that “TPC makes a variety of overreaching and unrealistic assumptions about policy decisions Members of Congress still have to make.”
Is this the most cynical congressional statement of the year? You make the call: The reason the center had to make assumptions about the tax package is that Republicans such as Brady took every possible step to not provide details of the plan. The Republicans’ nine-page “framework” comprises general proposals and aspirational rhetoric, but few hard numbers. Their goal, obviously, was to prevent groups like the TPC from doing any analysis.
They failed, because TPC is smarter than that. The center based its study on “previous proposals such as the House Republican leadership’s ‘A Better Way’ blueprint and the Trump administration’s April outline.” The center is betting that the ultimate form of the GOP tax plan won’t diverge much from those blueprints, and it’s probably correct.
In general, the TPC focuses on the probable distribution of the tax cuts in the GOP plan. In 2018, taxpayers on the bottom 95% of the income ladder would get cuts between 0.5% and 1.2% of their income. Those in the top 1% would get a cut worth 8.5% of their income.
Lower-income households might see a modest gain from the increase in the standard deduction to $24,000 (for couples). But they’d lose out from the repeal of all personal exemptions for them and their dependents. As other experts have noted, the combination of these two factors could well mean a tax increase for lower- and middle-income families with two children or more.