Analysis: GOP tax plan would benefit super-rich the most

WASHINGTON — The Republican tax plan would give the biggest benefit to the super-rich in coming years — and slightly raise upper earners’ taxes — while reducing them for everyone else, according to an analysis released Friday by a nonpartisan think tank.

The sweeping tax changes, which include slashing the corporate rate and lowering the top individual rate, also would increase the federal budget deficit by $2.4 trillion over the first decade and $3.2 trillion over the next one, according to the group’s analysis.

The findings by the Tax Policy Center contradict assertions by the White House and congressional Republicans that the plan unveiled this week would not benefit the wealthy — including Trump himself.

“In 2018, the average tax bill for all income groups would decline,” the analysis said. “Taxpayers in the top 1 percent (incomes above $730,000), would receive about 50 percent of the total tax benefit; their after-tax income would increase an average of 8.5 percent.”

Middle-income households would see a 1.2 percent increase in their aftertax income in 2018. Upper earners — those with annual incomes between about $150,000 and $308,000 — would see their after-tax income increase by about 0.75 percent.

But because of changes in the tax plan to how brackets and other benefits are indexed for inflation, the effects of the tax cuts would lessen over time for most people — but not the superrich.

In 2027, middle-income households would see a 0.5 percent increase in after-tax income. But upper earners would see their after-tax income decline by about 0.35 percent.

The top 1 percent of earners would do better in 2027, with the plan reducing their after-tax income by 8.7 percent. That’s a whopping 80 percent of the total tax benefit.

The ultra-rich would top that. People with incomes of more than $5 million would have nearly 10 percent more after-tax income under the plan.

But within even those breakdowns, which are averages, there also are winners and losers. In 2027, about 10 percent of poor households would see tax increases. About 30 percent of middleincome households and about 60 percent of upper-income earners would see their taxes go up.

Just 10 percent of those with incomes over $912,000 in 2027 would see a tax increase, the study said.

The preliminary study is based on assumptions about crucial details the Republican tax overhaul has yet to spell out, including income levels for new tax brackets.

The analysis also doesn’t factor in the effects of increased economic growth from the plan, which Republicans are counting on to offset the tax cuts. Tax Policy Center analysts said those calculations take longer, but they are not expecting significant changes to their estimates based on their previous analysis of similar plans from Trump and House Republicans.

On Friday, Trump repeated his assertion that the tax plan benefited the middle-class more than the wealthy.

“By eliminating the tax breaks and special interest loopholes that primarily benefit the wealthy, our framework ensures that the benefits of tax reform go to the middle class, not the highest earners,” he said in a speech to the National Association of Manufacturers in Washington.

The centerpiece of the Republican plan is reducing the corporate tax rate to 20 percent from the current 35 percent, which is the highest in the industrialized world.

Republicans also want to reduce the taxes paid by so-called pass-through businesses, such as partnerships, which pay through the individual tax code. The highest individual rate right now is 39.6 percent. The Republican plan would set a maximum tax of 25 percent on such businesses.

The Tax Policy Center said those changes skew the plan toward helping businesses instead of individual taxpayers. The business provisions would reduce federal tax revenue by $2.6 trillion during the first 10 years.

The changes in the individual tax code, which include nearly doubling the standard deduction and eliminating personal exemptions, would increase federal tax revenue by about $470 billion during that same period.

Tax Policy Center experts said their breakdown of the plan’s benefits could change depending on decisions of lawmakers working to turn the outline into legislation.