President Trump’s Tax Reform Proposal Prioritizes Tax Cuts for the Wealthy and Corporations
Late last week, President Donald Trump released his tax reform plan to the American public. President Trump focused a large part of his political platform on promoting tax reform for American families. The White House has since called this new plan “the most significant tax reform legislation since 1986 – and one of the biggest tax cuts in American history.”
The tax cuts in the president’s plan disproportionately benefit wealthy Americans and large corporations. When the United States has an increasing wealth gap and an increasing racial wealth gap, the last thing we should be focusing on is giving tax breaks to the wealthy.
President Trump’s tax reform plan would implement four large changes to our current tax code:
- All corporations will only pay at most a 15 percent business income tax. Our current corporate tax rate is 35 percent, which means this is a tax cut of over 50 percent for wealthy corporations.
- Reduces the current seven income tax brackets to three, which would include rates of 10 percent, 25 percent and 35 percent.
- Eliminates the Estate Tax.
- Eliminates the Alternative Minimum Tax (AMT).
These changes will give further tax breaks to the top 1 percent of Americans, while doing little to help low and middle-income families. The plan does not mention any efforts to help families afford childcare, which President Trump previously said would come through tax credits.
The Estate Tax is applied to the wealthiest individuals who inherit property after the death of a loved one. The Estate Tax lessens the wealth gap through taxing inherited wealth that has accumulated financial worth for generations. It also limits tax breaks for the wealthy through taxing wealth that otherwise remains untaxed. The Tax Policy Center estimates that only about 5,090 estates will owe the Estate Tax in 2017. Only an estimated 1 percent of these taxed properties will belong to small farms and businesses according to the Tax Policy Center. The Estate Tax brings in necessary revenue for critical anti-poverty programs, which would be stripped away under this proposed tax plan.
While this tax reform plan is marketed as a tax cut for all Americans, it gives the largest tax cuts to the wealthiest Americans while cutting revenue that funds programs that help low-income families. The Urban-Brookings Tax Policy Center estimates that reducing the corporate tax rate to 15 percent, like President Trump has proposed to do, would decrease our federal revenue by $2.4 trillion in the next ten years. Offsetting that large loss in revenue could require cuts to necessary anti-poverty programs that feed families, house families and help American workers secure jobs.
As Congress starts considering how to reform our tax system, RESULTS is focused on reducing wealth inequality and the racial wealth gap, and creating opportunities for all Americans to build wealth. Instead of giving tax cuts to the top 1 percent that reduce the resources for investments in basic health and nutrition programs, many advocates are focused on creating jobs, investing in infrastructure, and helping American families pay for the exceeding costs of expenses like child care and housing.