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US Senate Tax Bill Best For America's Top Earners

by Mike Godfrey, Tax-News.com, Washington

05 December 2017


Individual tax cuts in the Senate's US tax reform bill would disproportionately cut taxes for wealthy individuals, says the Tax Policy Center.

The Tax Policy Center has released distributional estimates of the Tax Cuts and Jobs Act based on the bill passed by the Senate on December 2, 2017.

According to the TPC, compared with current law, "taxes would fall for all income groups on average in 2019, increasing overall average after-tax income by 1.6 percent. In general, tax cuts as a percentage of after-tax income would be larger for higher-income groups, with the largest cuts as a share of income going to taxpayers in the 95th to 99th percentiles of the income distribution."

"The pattern of tax changes across income groups would be similar in 2025 (the last year before nearly all the individual provisions sunset) although the magnitude of average tax decreases would be slightly smaller for most income groups."

"In 2027, the overall tax reduction would be just 0.3 percent of after-tax income. On average, relative to current law, low- and middle-income taxpayers would see little change and taxpayers in the top one percent would receive an average tax cut of 1.1 percent of after-tax income."

In terms of its impact on the economy, the TPC estimated that the legislation would boost GDP by 0.7 percent in 2018, and by 0.1 percent in 2027.

The analysis stated that the increase in taxable incomes would reduce the revenue loss arising from the legislation by USD179bn from 2018 to 2027.

In comparison, the White House Council of Economic Advisors have predicted higher GDP growth of between 3 and 5 percent as a result of the tax plan. The Joint Committee on Taxation in its latest dynamic scoring of the Senate proposal suggested a lower economic impact, of boosting GDP growth by 0.8 percent.

TAGS: individuals | tax | interest | law | legislation | United States | tax reform | individual income tax | Tax

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