off the charts
BEYOND THE NUMBERS
BEYOND THE NUMBERS
Trump Favors Larger Corporate Tax Cuts Over More Help for Children in Low-Income Working Families
November 30, 2017 at 11:45 AM
Underscoring that large, permanent tax cuts for corporations are President Trump’s highest priority for the Senate tax bill, the President is reportedly opposed to a proposed amendment from Senators Marco Rubio and Mike Lee that would allow millions of children in low-income working families to receive a modestly more adequate Child Tax Credit (CTC), while slightly scaling back the bill’s corporate tax cuts, which would flow overwhelmingly to people at the top.
The Rubio-Lee amendment would modestly increase the CTC for more than 10 million children in low-income working families who would get only a token increase of $75 or less from the CTC expansion in the current Senate bill. The amendment also would allow some of the additional 16 million children in modest-income working families who would receive less than the bill’s maximum CTC increase of $1,000 per child to receive a somewhat more adequate CTC, and it would index to inflation the increased CTC maximum amount.
The amendment would pay for this change by slightly scaling back the bill’s corporate tax cut. The current bill cuts the corporate tax rate from 35 percent to 20 percent at a cost of $1.3 trillion over ten years. The amendment would set the corporate rate at 22 percent — still fully 13 percentage points below the current rate.
President Trump reportedly opposes the amendment. The President prioritizes cutting the corporate tax rate very deeply to 20 percent rather than cutting it almost as deeply, to 22 percent, ahead of giving 26 million children in low- and modest-income working families a somewhat less inadequate CTC. We calculate, based on Joint Committee on Taxation and Tax Policy Center estimates, that the additional 2-percentage-point corporate rate cut is worth roughly:
- $53 billion over ten years to the roughly 1 million households with annual incomes above $1 million; and
- an annual average tax cut of $6,380 for such households in 2027.
That’s because corporate rate cuts flow overwhelmingly to wealthy investors and highly paid executives, not typical workers.
Even if the bill is modified to include the amendment, however, its tilt to the top will still be extreme, and the harm it’s likely to inflict on children in low- and moderate-income working families over the long run will still be large. As we have previously explained, millions of low- and moderate-income families will face tax increases under the bill, and its repeal of the Affordable Care Act’s individual mandate (the requirement that most people get health insurance or pay a penalty) will cause millions more to be uninsured or pay higher premiums for health insurance. On top of that, the substantial budget cuts that are expected to come in future years in response to the tax bill’s harmful effects in swelling deficits and debt will likely result in most children of modest means ending up worse off overall.
President Trump’s opposition to the amendment underscores whose interests he, and the bill, place first.