A new report finds that the Senate tax plan, which was just introduced on Nov. 9, would raise taxes on some families while giving the largest share of tax cuts to wealthy Americans and foreign investors. According to the Institute on Taxation and Economic Policy, of those tax cuts that would benefit households in the U.S., more than a quarter would go to the richest 1 percent and half would go to the richest 5 percent.
The middle fifth of income earners in America, households that are literally America’s middle-class, would get just about a tenth of the tax cuts.
In North Carolina, analysis shows that 50 percent of the federal tax cuts would go to the richest 5 percent of residents, and 13 percent of households would face a tax increase, once the bill is fully implemented. Importantly, as the report states, “One might think that the richest Americans would receive the largest tax cuts simply because they have most of the income. But even when measured as a share of income, the tax cuts for the richest five percent of Americans are more generous than the tax cuts for other income groups.”
In North Carolina we also find that, between 2019 and 2027, many middle-income households would see an increase in their tax load under the Senate proposal.
Over the next 10 years, middle-income households–those with incomes between 48,000 and 82,000–in our state would be affected the most: Their share of the tax increases in the plan would nearly double, going from 7 percent in 2019 to 13 percent in 2027. This contradicts what many Republican Congressional leaders have said regarding its effort to target the middle class with tax cuts.
We have previously written that the House and the Senate in Congress are currently rushing tax legislation to pass it right around Thanksgiving and ensure President Trump has a bill on his desk around the holidays. Based on this latest analysis, it is clear that rushing to pass these flawed proposals will be no gift to everyday North Carolinians.
Luis A. Toledo is a Public Policy Analyst for the Budget & Tax Center, a project of the North Carolina Justice Center.