Politics

Trump Plan Could Raise Taxes For Middle Class

| by Robert Fowler

While President-elect Donald Trump ran on a populist message, his proposed tax plan could have negative consequences for the middle class. An analysis conducted by the nonpartisan Tax Policy Center found that Trump's current plan would actually increase taxes for up to 8 million middle class families.

Throughout his presidential campaign, Trump vowed to slash taxes for middle class families. While his proposed plan would provide a 2 percent tax reduction for the majority of middle class families, it would also remove exemptions that help roughly 5.8 million single parent households and 2.1 million families headed by married couples, according to the Associated Press.

An analysis conducted by visiting fellow Lily Batchelder of the Tax Policy Center found that the Trump tax plan would cut the personal exemption and the head-of-household filing status that roughly 7.9 million middle class families rely on.

For example, a single parent making $75,000 annually is currently able to deduct $9,300 from their household's taxable income using the head of household deduction. Along with other personal exemptions, they could reduce their taxable income to $53,550.

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While the Trump tax plan would allow for that single parent to deduct $15,000 from their taxable income, the removal of those other loopholes would result in them having $60,000 in taxable income overall. Despite receiving a general tax cut, they would be paying $2,440 more under Trump's tax plan than they are now.

"If you're a low- or moderate-income single parent, you're going to get hurt," said Bob Williams, a fellow at the Tax Policy Center.

Batchelder's findings also have Republican-leaning backing. Fellow analysts of the conservative Tax Foundation and the American Enterprise Institute concurred with her analysis.

The House Speaker, Republican Rep. Paul Ryan of Wisconsin, has his own tax plan that offers similarly generous tax cuts as Trump but keeps the household filing status and personal exemptions for middle class families. While the Trump administration could meld its tax plan with Ryan's own plan, their desired tax cuts would reduce tax revenue by $2.1 trillion over the next decade if they keep those loopholes intact.

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While Trump's tax plan could result in millions of middle class families paying more in taxes, it offers a massive cut to the wealthiest tier of Americans and corporations. Americans making over $700,000 would have their taxable income reduced by 13.5 percent.

Meanwhile, the president-elect's tax plan would reduce the top business tax rate by 15 percent. The business mogul has also promised to close tax loopholes for businesses.

Stephen Moore, a senior Trump economic advisor as well as senior fellow at the Heritage Foundation, said that the projected $3 trillion reduction in tax revenue over the next 10 years caused by these proposed cuts would be offset to by a dramatic reduction in federal spending, according to NPR.

In order to cap surging deficits, the Trump administration would have to cut roughly 50 percent in federal spending on law enforcement, education, transportation and research.

Sources: AP via Fox News, NPR / Photo Credit: Gage Skidmore/Flickr

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