President Trump said Friday that Republicans' proposed tax cuts will be "rocket fuel" for the economy, as he stepped up his sales pitch for the sweeping plan that aims to simplify the tax system and cut rates for individuals and corporations alike.
The Tax Policy Center estimates that the richest 1 percent of taxpayers (taxable income of $450,000 or more) would pay at least $1 trillion less over 10 years, depending on how Congress tries to pay for this. That includes more than a third of taxpayers making between about $150,000 and $300,000, mostly because of the elimination of many itemized deductions. However, it would mean a substantial tax increase for middle-income taxpayers in high-tax states like California and NY. Significant tax cuts for the rich would continue into 2027, when the top 1 percent would get almost 80 percent of tax cuts, averaging more $200,000 dollars each.
"The biggest winners will be everyday working families, as jobs start pouring into our country", Trump said.
The biggest truth: This is a tax cut primarily for wealthy people.
The outlines of the proposal involve cutting corporate tax rates from 35 percent to 20 percent, reducing the number of income tax brackets from seven to three and eliminating the so-called alternative minimum tax, which is created to cut down on tax dodging, among other changes.
"I think the wealthy will be pretty much where they are, pretty much where they are", Trump said at a bipartisan meeting on tax reform on September 13.
With these assumptions in mind, the report says the average tax bill for all income groups would go down in 2018 if the framework were to be implemented.
"Our plan is based on lowering rates, and expanding the base", he said, adding that reaching three percent annual GDP growth would bring in more revenues.
The Trump administration is trying to build momentum for the Republican tax proposal against criticism that it would heap trillions of dollars onto the national debt.
The findings were certain to fuel the Democrats' main attack line against the GOP plan: That it's a giveaway to the rich at the expense of the middle class. Republicans immediately disputed the analysis.
The TPC said that its analysis was preliminary and that numerous aspects of Trump's tax plan were still up in the air, since its principles haven't yet been crafted into legislation.
In addition to helping middle-class Californians, the reform package would also help the state's small businesses by limiting the maximum tax rate for small and family-owned businesses to 25 percent - significantly lower than the top rate that these businesses pay today.
However, he noted that the uneven effects of the tax change - with some households paying less and some paying more - is to be expected if there are fundamental changes to policy. TPC used the House Republican's "A Better Way" tax plan from 2016 to fill in those details.
"It's very hard to imagine growth rates topping 2.5 percent, let alone 3 percent", said Beth Ann Bovino, U.S. chief economist at S&P Global Ratings.
The same can not be said of the planned abolition of the estate (inheritance) tax, which would benefit only those with assets worth $5.5m or more.
The plan would cost $2.4 trillion over 10 years..
That language would change the constitution to allow for future tax code changes to be tailored to specific classes of taxpayers like, for example, residential property owners only.
So should Maya MacGuineas, president of the Committee for a Responsible Federal Budget, who said tax cuts "shouldn't be handed out like Halloween candy".
It's one thing for Donald Trump to push a giant tax cut for himself.