Extending Trumps 2017 Tax Cuts

Trumps 2017 Tax Break Extension chart and explanation . . .

Sources: CBO (for most provisions), *JCT( R&E provision), **CRFB (Interest provision)

New estimates from the Congressional Budget Office (CBO) put a price tag of nearly $5 trillion on extending all the Trump-GOP tax law, which is mostly scheduled to expire at the end of 2025. That is more than double what the law originally cost when it was enacted in 2017. The Trump-GOP tax law was an expensive failure that did little to boost workers wages, create jobs, or increase economic growth. Instead, it mostly funneled sorely needed revenue to the ultra-wealthy and foreign investors, while exacerbating wealth inequality.

2017 Trump Tax Law Was Skewed to High Income Brackets

Similar to the Bush tax cuts, the 2017 tax law benefits high-income households more than low- and moderate-income households. Extending the Trump tax cuts expiring at the end of 2025 (the law’s individual income and estate tax provisions) provides more windfall benefits to high-income households. The cuts come on top of the large benefits they already receive from the 2017 tax law’s permanent provisions.

2017 Law Created New Tax Advantages for Wealthy People and Profitable Corporations

Costly Provisions Primarily Benefiting the Well-off

Large, permanent corporate tax cuts. The centerpiece of the law was a deep, permanent cut in the corporate tax rate — from 35 percent to 21 percent.

20 percent deduction for pass-through income. The law adopted a new 20 percent deduction for certain income benefiting owners of pass-through businesses.

Cutting individual income tax rates for those at the top and weakening the alternative minimum tax (AMT). Cuts the top individual income tax rate from 39.6 percent to 37 percent for married couples with over $600,000 in taxable income (higher gross income). The law weakens the AMT. A law ensuring higher-income people taking large deductions and other tax breaks pay a minimum tax.

Doubling the estate tax exemption. Doubles the amount the wealthiest households can pass on tax-free to their heirs, from $11 million to $22 million (indexed for inflation) for married couples.

For low and moderate incomes, there was deductions and also offsets countering the deductions.

In addition to the top 1 percent receiving large tax cuts, the 2017 law delivered the largest average tax cut measured as a percentage of pre-tax income to households in the 95-99^th percentiles. The tax cut from the 2017 law amounts to 3.2 percent of their pre-tax income, on average (or nearly $13,000, on average). This is 3+ times the ~1 percent average percentage income gain of the bottom 60 percent. (See Figure 2.)

The 95-99^th percentile group roughly consists of people with incomes in the $400,000 to $1 million range (TPC). Itis often referred to as the “upper middle” class, a misleading characterization. They the top 5% by income in one of the richest countries in the world. They also have high levels of resources of which median net worth was over $3.9 million in 2022, (Survey of Consumer Finances). Below $400,000 in income having just ~$169,000 and ~$52,000 for those having incomes in the lower 50% of income.

I have not touched up corporate income taxes. Neither have I discussed how this compares to the 2001 and 2003 Bush tax cuts. At a later time, I will get to those. The link is there if you wish to geta ahead of my dialogue.

“CBO: Extending Trump Tax Cuts Will Cost Nearly $5 Trillion.” Americans For Tax Fairness

“The 2017 Trump Tax Law Was Skewed to the Rich, Expensive, and Failed to Deliver on Its Promises,” CBPP

“Budgetary Outcomes Under Alternative Assumptions About Spending and Revenues,” CBO