A Measure of Tax Decreases for the Upper 10% of Households

I pulled this bullet point information from Josh Bivens piece on the Economic Policy Institute: “The Trump administration’s macroeconomic agenda harms affordability and raises inequality,” Economic Policy Institute. Graph showing the difference in return over 40 years versus Trump’s tax break for the wealthy in one year. It is the same return. It is interesting how this could occur and hardly a whisper by politicians.

The Trump administration’s macroeconomic agenda harms affordability and raises inequality

The Trump administration’s unwise policy agenda has the potential to do great damage to U.S. families. This is true even if it does not lead to recession or spiking inflation in the near term. This agenda does heighten the risk of recession in coming years, the greatest future damage will come from slowing growth in the economy’s supply side and raising inequality. Trump’s economic policies will cause incomes and wages for typical families to grow more slowly, and this will lead to a less affordable life for many.

How will Trump administration policies harm income growth for typical families?

• The Trump administration inherited a fundamentally strong economy from the Biden administration. Yet the Trump administration’s policy agenda has raised the risk of a near-term recession by slowing growth in spending by households, businesses, and governments (aggregate demand).
• The deportation agenda and cutbacks to the federal workforce will deeply damage the economy’s supply side as well. Deficit financed tax cuts will also put headwinds in front of growth in the economy’s supply side in coming years. These growth reductions will be small in any given year. However, the total tax break will accumulate quickly. Future income taxes will be be lower than they would have been under a different tax policy.

Finally, the 2025 Republican-led tax cuts favor the rich. The spending cuts included in the same
Republican megabill will sharply lower incomes for the bottom half of U.S. households (ranked by income) in coming years. This combination will lead to a very large spike in inequality.

• The Trump administration’s assaults on typical workers’ bargaining power and leverage, and its support for corporations with significant market power, will increase pre-tax inequality.

Policy choices that fostered excess unemployment, slow growth of the economy’s supply side, and rising inequality have all contributed to making recent decades extremely difficult for typical families. The policies of the Trump administration double down on the worst policy decisions of this period and will make typical families reliably poorer in the future, even if an outright recession or spiking inflation does not happen.

More to follow . . . .

So who does the Trump tax break benefit the most? I have added a measure of the extent of the recent tax cut by the Trump administration and who it favors. I have added this paragraph from the Josh Bivens report.

“To give readers a sense of scale of the bill’s impact, we compare the one-year change that will result directly from the 2025 megabill policy with the entire upward redistribution of income that happened between 1979–2019, a period widely recognized as one during which U.S. inequality exploded. The share of total income claimed by the top 10% of households over that period rose by roughly 10 percentage points over a period of 40 years (or about 0.25 percentage points per year).

The latest Republican megabill alone will in one year raise the share of income claimed by these top 10% of households by 1 full percentage point.

The 40 years between 1979 and 2019 saw the top 10% gain an average of 0.25 percentage points in the share of income they claim.

This means the Republican megabill will see the rate of inequality growth quadruple in its first year, and it will essentially accomplish 10% of the entire post-1979 rise in inequality in a single year.”

“The Trump administration’s macroeconomic agenda harms affordability and raises inequality,” Economic Policy Institute, Josh Bivens.