Donald Trump tax-cut plan gives 'no significant benefit for poorest families'
|
Version 0 of 1. Donald Trump's plan to offer Americans "the largest tax cut in our country's history" will offer no significant benefit to the poorest households, new analysis has shown. The US President pledged a complete overhaul of the US tax system under his leadership that he claimed would benefit the "forgotten" working and middle classes. But the poorest Americans will receive a tax break of just $60 (£45) a year, according to the Tax Policy Centre (TPC), while middle-income families will receive a cut of roughly $300 (£230). "There's no significant benefit for low-income families," said Elaine Maag, a TPC senior research associate. "It's important because when low-income families get money they tend to spend it, putting it right back into the economy. High-income families tend to save it." Republicans have backed a budget resolution that would enable Congress to pass a tax package that could add up to $1.5 trillion (£1.1tr) to the national debt over the next decade. The analysis found the majority of the cuts would benefit the wealthiest Americans, with the top 1 per cent — families making about $700,000 (£535,000) a year — receiving an average tax cut of $129,000 (£98,000). Tax breaks targeting the wealthy include lowering the top income tax rate from 39.6 per cent to 35 per cent, eliminating the alternative minimum tax, and doing away with the federal estate tax, which is only paid by people who inherit multimillion-dollar estates. Congressional Republicans dispute that their plan would ultimately help wealthy families more than it would help the middle class. They note that the plan unveiled by Trump and GOP leaders last week is incomplete. The plan would reduce the number of tax brackets from seven to three, but it doesn't include the income levels for each tax bracket. The plan would also increase the $1,000 (£765) child tax credit, but it was not yet clear how much this would be raised by. "There is simply no way for TPC or anyone to deliver these kinds of specific estimates with the information provided in the framework," said Republican Senator Orrin Hatch, who chairs the Senate Finance Committee. "To get their estimates, they filled in blanks with numbers from other proposals, added a pile of exceptionally pessimistic and biased economic assumptions, and came up with a tax plan that, for all intents and purposes, is their own. The TPC said it took numbers from a tax blueprint released by House Republicans. An analysis by the conservative Tax Foundation noted the plan's lack of details. Nevertheless, it found only modest benefits for low-income families, increasing their annual incomes by an average of less than 1 per cent. Additional reporting by AP |