The White House insisted Thursday that the tax cuts President Donald Trump has proposed wouldn’t benefit the rich. But the blueprint suggests that wealthy Americans, including several in Trump’s administration, would likely enjoy a financial windfall.
Much of their income tends to come from investments and business profits, which stand to benefit from the proposed tax changes.
The president’s claim that rich Americans like him would actually pay more under his plan rests largely on how he’s keeping score of a plan still short on key specifics. Speaking in Indiana on Wednesday, Trump said he expected that wealthy taxpayers might phone him to complain but that he’d rebuff them.
“They can call me all they want — not going to help,” the president said. “I’m doing the right thing, and it’s not good for me, believe me.”
Voters will have to take Trump as his word that his tax bill would rise under his plan, because the president has broken a decades-long tradition among presidents by refusing to release his tax returns.
Without fuller details about the Trump tax proposal, it’s difficult to say just how much the president and his advisers would gain. Gary Cohn, a former Goldman Sachs executive who is Trump’s top economic adviser, insisted in an interview Thursday with ABC News that “the wealthy are not getting a tax cut.”
But tax experts say several provisions in the plan — including lowering the top personal tax rate to 35 percent from 39.6 percent — make it likely that the wealthiest would enjoy the biggest bounty. Those provisions include a lower corporate tax rate; favorable rates for business profits used as personal income; and the elimination of both the estate tax and the “alternative minimum tax,” which was designed to ensure that the richest Americans pay at least some income tax.
“Based on what we know, this will be an enormous tax cut for people in the top 1 percent,” said Howard Gleckman, a senior fellow at the Tax Policy Center.
Estimates by the liberal Center on Budget and Policy Priorities show that fully half the total tax cut would go to the top 1 percent of earners, saving them an average of $150,000 a year. Here are some reasons why:
The Trump plan would sharply reduce the taxes paid by businesses whose income is taxed at the owners’ personal rate. These are known as “pass-through” companies. Many are wealthy partnerships, hedge funds, real estate companies or so-called limited liability companies….