Republicans Forced to Defend their Tax Plan
The Donald Trump administration has been forced to defend its proposed tax reforms in response to an outcry from the Democrats and non-governmental groups, who are saying that the plan disproportionately favors corporations and the rich over middle-class Americans.
According to an analysis by the nonpartisan group Tax Policy Center, under the Republican tax plan, the highest-earning 0.1 percent of Americans would have 10.2 percent more income after taxes, and the top one percent of Americans would have about 8.5% more after-tax income under the plan. In contrast, the middle class would only see up to a 1.2% increase in after-tax income. Poor Americans would be the most disadvantaged, only seeing about 0.5% more income after taxes.
The reforms proposed by the Republicans would also cut corporate tax rates from the current 35% to just 20%.
Meanwhile, the number of income tax brackets would be reduced from the existing seven to just three. The income tax rate for the highest bracket will be at most 35%, which is down from the present 39.6%.
Treasury Secretary Steve Mnuchin rejected the findings of the study, saying that corporate tax cuts will boost business activity in the economy and create more jobs, thus helping the middle class. Mnuchin also claimed that reductions in the top tax bracket will be offset by eliminating “almost every single type of deduction.”
Republican House Speaker Paul Ryan also disputed the notion that the tax reforms disproportionately help the rich. “The entire purpose of this is to lower middle-class taxes,” said Ryan.
The Republicans’ tax reform document fails to provide details on how the government will compensate for the loss of tax revenue. It also leaves out details about exactly which income groups will fall under the new tax brackets.
These missing details, unless addressed clearly by the Republicans, will likely continue to raise questions about Trump’s economic agenda.
“Republicans defend tax plan as a middle-class tax cut,” The Washington Post, October 1, 2017.
“The numbers are in: Trump’s tax plan is a bonanza for the rich, not the middle class,” Vox, September 29, 2017.