Senate Republicans are gearing up to pass their tax reform legislation next week, and while more has become known about the bill, projections of who the widespread tax cuts primarily stand to benefit have essentially stayed the same.
A new analysis from the nonpartisan Tax Policy Center showed that the Senate GOP plan's benefits for middle and low-income earners have been heavily front-loaded, and completely disappear by 2027. Roughly 50 percent of taxpayers will see a sharp tax hike in 2027.
But there's another problem: In general, about 80 percent of the benefits derived from corporate tax cuts goes to shareholders and capital. Only 20 percent of corporate tax cut benefits will go to labor.
"By 2027, all that’s really left is a big corporate tax cut,"Joseph Rosenberg, a senior research associate at the TPC, told The Washington Post. "This primarily benefits high-income people — people with a lot of capital income — shareholders, people who have capital gains dividends, and people who have interest income."
The plan becomes increasingly regressive over time, and tax cuts for the four lower income quintiles are gone by 2027, with the lowest two quintiles seeing either a tax increase or no change.
On the other hand, in 2027 "the top one percent sees an average tax cut of more than $30,000, and the top 0.1 percent sees an average tax cut of more than $200,000 — more than double what it was in 2019, and a good deal more than it was in 2025," the Post reported.
The Post elaborated:
Why does this happen? Because the Senate plan front-loads the benefits for lower- and middle-income groups. It cuts individual income taxes for all groups and gives lower-income groups various tax preferences, but those things are temporary, and expire after 2025. But three things remain permanent: The individual mandate repeal; a new inflation metric that continues pushing people into higher tax brackets; and the corporate tax rate remains at 20 percent, down from 35 percent.
The whole point of zeroing out the tax cuts for lower-income groups, resulting in a tax hike for so many people, is to fund the continued corporate tax cuts, so they don’t add to the deficit in the long run, allowing Republicans to pass the bill via a simple majority vote.
The plan largely follows the simple model that was laid out by Speaker Paul Ryan, R-Wis., himself: the country will foot the bill for $1.5 trillion in tax cuts because social services and entitlement programs will be gutted.
The Senate GOP plan also includes a repeal of the Affordable Care Act mandate, which would cancel out the tax cuts given to many households because of sharp premium increases, according to Axios.
A repeal of the individual mandate will help pay for the slashes in taxes, but it ultimately places a financial burden on millions of middle-income Americans.
In other words, it's it's the perfect Republican tax plan