Vast Majority of Americans Would Likely Lose From Senate GOP’s $1.5 Trillion in Tax Cuts, Once They’re Paid For
End Notes
[1] This paper draws on Isaac Shapiro and Chye-Ching Huang, “Vast Majority of Americans Would Likely Lose From Trump Tax Cuts, Once They’re Paid For,” CBPP, August 17, 2017, https://www.cbpp.org/research/federal-tax/vast-majority-of-americans-would-likely-lose-from-trump-tax-cuts-once-theyre.
[2] Robert Greenstein, “Greenstein: Senate GOP Budget’s Regressive Tax Cuts Would Swell Deficits, Likely Lead to Budget Cuts Hitting Most Americans,” CBPP, September 29, 2017, https://www.cbpp.org/press/statements/greenstein-senate-gop-budgets-regressive-tax-cuts-would-swell-deficits-likely-lead.
[3] Chuck Marr, “Republican Leaders’ Tax Framework Provides Windfall to High-Income Households, With Working Families Largely an Afterthought,” CBPP, updated October 2, 2017, https://www.cbpp.org/research/federal-tax/big-six-tax-framework-provides-windfall-to-high-income-households-with-working.
[4] William G. Gale, Surachai Khitatrakun, and Aaron Krupkin, “Cutting taxes and making future Americans pay for it: How Trump’s tax cuts could hurt many households,” Tax Policy Center, August 15, 2017, https://www.brookings.edu/research/cutting-taxes-and-making-future-americans-pay-for-it-how-trumps-tax-cuts-could-hurt-many-households/. For our discussion of that TPC analysis, see Shapiro and Huang, op. cit.
[5] Chye-Ching Huang, “Decoding ‘Deficit Neutral’ Tax Bill: Low-Income Program Cuts Pay for Tax Cuts for Wealthy,” Center on Budget and Policy Priorities, June 15, 2017, https://www.cbpp.org/blog/decoding-deficit-neutral-tax-bill-low-income-program-cuts-pay-for-tax-cuts-for-wealthy.
[6] The Senate budget resolution does both: see Greenstein, op. cit.
[7] Tax Policy Center, “A Preliminary Analysis of the Unified Framework,” September 28, 2017, http://www.taxpolicycenter.org/publications/preliminary-analysis-unified-framework/. The tax cut plan unveiled last week costs more than $2.4 trillion over ten years, with a cost of $227 billion in 2027, TPC estimates.
[8] Dollar cutoffs are based on the TPC’s projection of the income distribution in 2027, in 2017 dollars. If a $1.5 trillion tax cut followed the same timing patterns as the Trump and congressional Republican plan unveiled last week, it would lose $141 billion in revenues in 2027. We therefore scale TPC’s 2027 distribution of the tax cuts by a ratio of $141/$228, holding the share of the tax cut that each income group would get constant. Under these assumptions, the $1.5 trillion tax cut package in 2015 would deliver a tax cut of about $130,000 on average to households in the top 1 percent (a 5 percent increase in their after-tax incomes) and a tax cut of about $630,000 on average to households in the top 0.1 percent (a 6 percent increase in their after-tax incomes). Households in income groups in the bottom 80 percent of the income distribution would receive average tax cuts of cut between $31 and $280 (increasing their after-tax incomes by just 0.2-0.3 percent).
[9] For further discussion of how the costs of tax cuts cannot be postponed indefinitely, see William G. Gale, Isaac Shapiro, and Peter R. Orszag, “Distribution of the 2001 and 2003 Tax Cuts and Their Financing,” Tax Analysts, June 21, 2004, http://webarchive.urban.org/publications/1000663.html.
[10] Within each income group below the 95th percentile, there could be some small number of “winners” who have a net tax cut, but they would be far outnumbered by the “losers.” Also note that if the dollar tax cuts for those in the bottom and middle of the income distribution were assumed to be same as in the Trump/GOP plan costing $2.4 trillion, low- and middle-income filers would still be net losers, once financing is considered.