The Republican tax framework unveiled this week would create an immediate tax cut for all income levels, but the top 1 percent would receive 50 percent of the total tax benefits in 2018 and would stand to gain more over time than everyone else, according to a report released Friday.
The House’s top tax-writer dismissed the report as a misleading look at the bare bones of a plan Congress has yet to write.
But the study is sure to provide material for critics of President Trump’s tax plans who argue that the outline is skewed to benefit the wealthy — a charge that the White House and congressional Republicans have been working furiously to beat back in recent days.
In 2018, taxes would decline by nearly $1,600 on average, with taxpayers in the bottom 95 percent of income levels seeing a 1.2 percent tax cut and people making more than $730,000 seeing after-tax incomes increase 8.5 percent, according to the report from the Tax Policy Center released Friday.
About 12 percent of taxpayers — including one-third of people making between $150,000 and $300,000 — would pay more, mostly because of the loss of itemized deductions, the report said.
And by 2027, taxpayers making less than $150,000 would receive an average tax cut of 0.5 percent or less, while the top 1 percent would see after-tax income increase 8.7 percent, the report found. Taxpayers making between $150,000 and $300,000 would on average pay $800 more in taxes in 10 years.
By that time, taxes would also rise for a quarter of taxpayers, including 30 percent of people making between $50,000 and $150,000 and 60 percent of people making between $150,000 and $300,000.
That’s in part because the plan replaces personal exemptions people can take for family members, currently indexed for inflation, with credits for children and non-child dependents that aren’t indexed, the report said.
The center said its analysis was based partly on proposals outlined in the House GOP’s “Better Way” tax agenda unveiled last year and the Trump administration’s outline unveiled in April.
The study also says the proposal would reduce federal revenues by $2.4 trillion over the next decade and $3.2 trillion in the ten years after that.
The study accounts for some behavioral changes as result of the tax plan but assumes the tax changes don’t affect the overall level of economic activity. The center said it will be releasing supplemental estimates that look at macroeconomic effects soon.
Republicans have repeatedly said they prefer a robust “dynamic” scoring model that factors in macroeconomic effects of tax policy changes, and that such models will show that their tax cuts will at least in part pay for themselves.
House Ways and Means Committee Chairman Kevin Brady, the House’s top tax-writer, said in response that the “so-called study” is “misleading, unfounded, and unbiased.”
“TPC makes a variety of overreaching and unrealistic assumptions about policy decisions Members of Congress still have to make as we draft pro-growth tax legislation,” said Mr. Brady, Texas Republican.
He said Republicans are unified in delivering tax reform that will lower taxes on middle-class Americans.
“We will deliver on this promise and our bill will improve the lives of all Americans,” Mr. Brady said.
White House budget director Mick Mulvaney said earlier Friday it’s difficult to make assumptions about the effects of the tax plan when so many details have yet to be filled in.
“Keep in mind: We don’t even know where the brackets kick in yet,” Mr. Mulvaney said on Fox Business Network.
“So I think folks [who] come out and say that they know exactly what this plan is going to do to this individual family or that individual business [are] simply jumping to political conclusions and not going through the serious process of looking at how we make” laws, he said.