POLITICS
12/18/2017 04:39 pm ET

Richest 1 Percent Get 82 Percent Of Benefit Of Final Tax Bill Over Time

The bill, which could pass as early as this week, offers tax cuts to many, but the gains are primarily for the rich in the long run.

WASHINGTON ― While most households would get a tax cut from the Republican tax bill, 82 percent of the benefit would go to the wealthiest 1 percent over time, according to an analysis of the latest version of the legislation

Congress could send the bill to the White House for President Donald Trump’s signature as soon as this week. The bill would sharply cut taxes for corporations and individuals, though many of the tax cuts for individuals expire as a budget gimmick to make the bill look less costly.  

The average household would pay $1,600 less in taxes next year, increasing after-tax incomes 2.2 percent, according to the nonpartisan Tax Policy Center.  But the benefits skew toward the wealthier households, especially over time. 

In 2025, the last year before the individual tax cuts expire, 76 percent of households would pay about $2,500 less in taxes. But by 2027, only a quarter of taxpayers would see a cut. 

The rich would greatly benefit from the plan, despite Trump’s repeated claims to the contrary.

In part because the corporate tax cut would remain in effect in 2027, the richest 1 percent of households would reap 82.2 percent of the benefit of the proposal, compared with just 25.3 percent in 2025. 

Republicans say that a future Congress wouldn’t let the individual cuts expire, but they weren’t willing to make the same bet with the top corporate rate, which permanently falls from 35 to 21 percent under the plan. 

Whether a given household benefits from the proposal depends on several factors. The plan offers lower tax rates but eliminates deductions that benefit households with children and households in states that have high local taxes. 

CONVERSATIONS