Trump, Ryan differ on middle-class tax cuts
President favors a larger reduction than speaker’s plan.
President Donald Trump and House Speaker Paul Ryan both want to re-write the tax code, but their proposals differ on how much tax relief to give the middle class.
Trump wants a tax cut across the board, according to the plan he published during the campaign. He has proposed relief for the wealthy especially, but also for less affluent households. The plan that Ryan, R-Wis., and his colleagues in the House have put forward would not substantially reduce taxes for the middle class, and many households would pay more in the upper middle class.
Trump’s plan would be extremely costly for the government, and the president’s past comments suggest he would be willing to put the federal government deeper into debt to fund breaks for the middle class.
Ryan’s plan would simplify and streamline the tax code in accordance with conservative orthodoxy, eliminating goodies for households with modest incomes that Trump would preserve or expand.
In all, taxpayers with roughly average incomes could expect a tax cut of around $1,100 a year under Trump’s plan, compared with just $60 under Ryan’s plan once the proposals were fully implemented.
Now, after even a united Trump-Ryan effort on health care failed to win over enough Republicans to get through the house, their hopes of passing a tax plan depend on getting on the same page quickly.
During the campaign, Trump proposed a plan that would have reduced taxes drastically, especially for the wealthy but also for the poor and working class.
After a decade, 99.6 percent of the tax relief Ryan proposed would have accrued to the wealthiest 1 percent of the country. In Trump’s plan, 50.8 percent of the relief would have gone to that group, according to analyses by the nonpartisan Tax Policy Center.
In terms of taxes on the rich, both plans would reduce the marginal rate paid by the wealthiest taxpayers on individual income from 39.6 percent to 33 percent.
And among those in the poorest fifth of households, the typical taxpayer would save about $100 under Ryan’s plan and about $120 under Trump’s.
The two plans would repeal some of the taxes that Obamacare imposed on the rich, and both plans also repeal the estate tax, which rich families pay when one of their members dies. Repealing the tax would return $300 billion or so to those families over a decade, according to the center, depending on the details of the plan.
Meanwhile, both plans would increase the amount that many families can earn without paying taxes — to $30,000 for a married couple in Trump’s plan and $24,000 in the proposal from Republicans in the House.
In Trump’s plan, parents would be allowed to deduct child care expenses from their income. Ryan’s plan would prevent taxpayers from making deductions from their income — except for interest on their homes and donations.