On Friday the non-partisan Tax Policy Center released a preliminary analysis of President Trump’s latest tax reform plan consisting of across the board tax cuts and revisions to the tax code with new analysis showing that the president’s tax proposals would reduce federal revenue by $2.4 trillion over the first ten years and $3.2 trillion over the second decade.
President Trump’s tax reform proposal called, “Unified Framework For Fixing Our Broken Tax Code” was unveiled on September 27th and includes a simplification of the tax brackets from 7 to 3 by adopting tax rates of 12, 25, and 35 percent for individuals, tax on pass-through business income with a top rate of 25 percent, lowering the corporate tax rate from 35 to 20 percent, and repealing a variety of taxes such as the estate tax, and alternative minimum taxes.
According to the latest analysis from Tax Policy Center, under the framework of President Trump’s tax proposal, the wealthiest Americans would receive the largest tax cuts while taxpayers in the 80th to 95th income percentiles would, on average, experience a tax increase.
In 2018 the average tax bill for all income groups would decline by nearly $1,600 on average, although the wealthiest 1 percent whose incomes exceed $ 730,000, would receive about 50 percent of the total tax benefit, and their after tax income would result in an average increase of 8.5 percent.
Taxpayer groups in the bottom 95 percent of the income distribution would see modest tax cuts, with after-tax incomes increasing between 0.5 and 1.2 percent.
Tax Policy Center analysis revealed that business income tax provisions, including those impacting corporations and pass-through businesses, are expected to lower federal revenues by $2.6 trillion over the first ten years while the repeal of estate and gift taxes would reduce another $240 billion.
During the first decade, the individual income tax provisions, excluding those related to business income, would increase federal revenues by $470 billion over the same period.
The analysis revealed that during the second decade from fiscal years 2028-2037, individual provisions would expand federal revenues by $1.4 trillion, although business provisions would result in a shrinkage of revenue by $4.1 trillion with the estate tax repeal costing an additional $440 billion.
The overall revenue loss would total $ 3.2 trillion during the period.
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