Trump Tax Plan Details
When there’s a shift of leadership in the White House from the Republican Party (the GOP) to the Democratic Party (or vice versa) one sure outcome is a change to the tax code. With Trump taking the White House under the Republican Party banner, will all income levels benefit from his tax plan?
There tends to be a belief within each party of which tax brackets should see a tax break or a hike. With Republicans in power, the focus tends to be on giving the biggest tax breaks to the wealthiest citizens. The party’s belief is that the wealthy will spend their fortunes within the country, and that this money will trickle down to lower-tax-bracket Americans and result in non-stop spending within the economy by people from all income levels.
Will Trump’s tax plan benefit the middle class? When taking a deeper look into Trump’s plan, it seems that he is remaining on course, in terms of the Republican Party’s view on tax.
Let’s take a look into how Trump’s tax plan will impact various groups of income earners.
Trump Tax Plan Brackets
Based on a study by the Tax Policy Center, Trump’s tax plan will have an impact on all individuals, no matter their income level. The new GOP tax plan, however, most benefits the people who make the most money. (Source: “A Preliminary Analysis of The Unified Framework,” Tax Policy Center, September 29,2017.)
Here is a breakdown of how the Trump’s tax plan will impact 60% of American taxpayers (the bottom 20%, the middle 20%, and the top 20%).
- The bottom 20% of American income earners, who earn less than $25,000 annually, will keep 0.5% more of their income after taxes per year. That’s equal to $60.00, on average. This would be nothing to brag about to anyone, but it keeps a little more money in these individuals’ pockets.
- The middle 20% of taxpayers, who earn between $48,600 and $86,100, will see a slight improvement over the tax break that the bottom 20% will get. The middle 20% will keep 1.2% more of their income, which is equal to $660.00, on average.
- The top 20%, who earn $150,000 or more, will retain 3.3% more of their income under the new tax plan. That amounts to $8,470, on average.
To further break down the top 20% of Americans, the top one percent—who earn $730,000 or more—will be the best off under Trump’s plan, keeping an average of 8.5% more of their income after taxes. The top 0.1%, who have incomes of $5.0 million and more, will retain 10.2% more after-tax income.
The clear outcome is that the wealthiest individuals will keep more in their pockets, compared to the majority of Americans. Thus, the rich will continue to get richer under the new tax code.
Trump’s Tax Plan Benefits Wealthy
In fact, not all individuals will get tax breaks under the GOP tax plan. Roughly 13.5% of American workers will actually end up paying an additional $1,000 in taxes. This is due to a reduction in the number of tax deductions that currently exist.
The tax proposal that was released at the end of September is just a framework, however. Of course, due to political negotiations, it’s possible that changes to the plan could be enacted. Nevertheless, considering there’s a Republican majority in the House and the Senate, and considering the GOP’s history of rewarding high-income-earners more than the rest of the population, it’s quite possible that we will see no amendments to Trump’s proposed tax reforms.