Americans think Trump’s tax plan is a giveaway to the rich. These new graphs show they’re right

 

With House Republicans widely expected to pass the final version of the Trump/GOP tax plan today, a new CNN poll shows that opposition has only grown. Just 33 percent of Americans favor the plan, while 55 percent oppose it — a rise of 10 points since last month. And a whopping 66 percent say the plan will do more to benefit the wealthy than the middle class.

As it happens, this reading of the GOP tax plan is entirely correct.

The new Tax Policy Center analysis of the bill tells the story. It finds that in 2027, 53 percent of taxpayers will see a tax hike, relative to current law. That’s because the plan makes the individual rate cuts and the preferences that will benefit lower earners temporary, while establishing an inflation index that nudges people into higher income brackets over time, to limit the impact on the long-term deficit. Meanwhile, the bill makes the corporate tax cuts (which overwhelmingly go to shareholders and capital, and thus mainly to the rich) permanent.

The key to understanding the plan’s regressiveness is in the distribution of the tax cuts and tax hikes that will hit in 2027. I’ve created a chart, using the TPC’s data, that tells this story:

As you can see, the groups who see a tax hike in 2027 are heavily concentrated in the lower-income quintiles. By contrast, more than three quarters of the top 1 percent get a tax cut — an average tax cut of nearly $40,000. And more than 90 percent of the top 0.1 percent get a tax cut — an average tax cut of more than $200,000.

Republicans have said that passing this plan is key to staving off a disaster in the midterms. They are hoping to sell it to voters by claiming that at its core, it is a middle-class tax cut, and they are hoping that the tax cuts that working- and middle-class Americans see in the short term will make this claim credible.

It is true that in the short term, the vast majority of taxpayers will see a tax cut. But even in the short term, the plan is very regressive. Here’s another chart that demonstrates this, using the TPC data

Next year, the bottom three quintiles get an average tax cut of less than $1,000, while the top 1 percent gets an average tax cut of more than $50,000, and the top 0.1 percent gets an average tax cut of nearly $200,000. By 2025, the lower quintiles get approximately the same-sized tax cut, while the average tax cut for the top 1 percent jumps to higher than $60,000, and the average tax cut for the top 0.1 percent jumps to more than a quarter of a million dollars.

And over time, as the first chart shows, more and more in the lower quintiles end up paying higher taxes, even as the very wealthiest Americans continue to enjoy huge benefits. Indeed, the TPC data show that by 2027, more than 80 percent of the plan’s benefits go to the top 1 percent. As Dylan Matthews points out, this is even worse than a previous iteration of the bill.

The plan gets increasingly regressive over time. But this feature of it is essential to maintaining the GOP priorities at the core of the bill and to the GOP’s hopes of passing something that embodies those priorities. Republicans must pass the plan with only GOP votes, because Democrats will not accept a plan that lavishes such an enormous share of its benefits on the rich, and Republicans will not accept a plan that does not do that. So Republicans must pass it through the Senate by simple majority, which requires keeping it from raising the deficit over the long term. Managing that — while also keeping the tax cuts that overwhelmingly benefit the rich permanent — required them to make the tax cuts that benefit everyone else temporary. Thus, the plan’s increasingly regressive nature is essential on multiple levels.

Republicans will try to get around the awful politics of this by arguing that in the short term, the middle class gets both a tax cut and will also benefit from the explosion of growth and wages that cutting taxes on corporations will supposedly produce. But very few economists believe that the latter will come to pass. And given the size of the tax cuts for less fortunate Americans relative to those that top earners will enjoy, it is far more likely that voters will continue to see the plan as a giveaway to the rich. Which is exactly what it is.

 

 

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