The White House and Congressional Republicans are gearing up to overhaul America’s famously complex tax code and “make taxes simpler, fairer, and lower for hard-working American families.” But if the legislation that eventually reaches Congress looks anything like the ideas floated by the Trump administration so far, average Americans might not have much to celebrate. That’s the conclusion of a report from the Institute on Taxation and Economic Policy. However, some states are more affected than others.
Proposals to streamline tax brackets, eliminate the alternative minimum tax, and get rid of many itemized deductions would result in $4.8 trillion in total tax savings through 2027. But 61.4% of all those savings would go to the top 1% of taxpayers, the organization concluded, and 14% of middle-income taxpayers would end up paying more in taxes, not less.
A tax cut for the richest Americans?
In addition to disproportionately benefiting the rich — who would receive tax cuts equivalent to 6.9% of their income, compared to 1.4% for the middle 20% — the suggested tax reforms would also benefit some states more than others. Generally, states with more rich people win big, while those with poorer people lose, though the possible elimination of deductions for state and local taxes makes the “picture somewhat more complicated,” according to the institute.