As Trump’s 2017 tax cuts for the wealthy expire this year, one of his first orders of business as president is to order an extension. Trump’s 2017 Tax Cuts and Jobs Act (TCJA) effectively allowed the ultra-wealthy to hoard USD 2 trillion in wealth. The TCJA lowered the corporate tax rate and the personal tax rate for those making over USD 500,000 per year, and weakened the estate tax. The moves effectively added USD 2 trillion to the federal budget deficit as the government received far less money in taxes.
These proposed extensions to the TCJA will once again mostly benefit the wealthy. According to estimates by the US Treasury’s Office of Tax Analysis, under a full extension of the expiring individual and estate tax provisions of the TCJA, the largest tax cuts would go to the wealthiest families. The top 0.1% of earners would receive a tax cut of around USD 314,000, the total cost of these cuts amounting to USD 4.2 trillion from 2026 and 2035.
The Congressional Budget Office has estimated that extending the TCJA would add USD 4.6 trillion to the US government’s federal deficit. How will the US government reconcile this deficit caused by these tax cuts? Congressional Republicans are proposing funding these extensions, as well as Trump’s massive crackdown on migrant workers, off of the backs of working people—namely, low income people who use the public, subsidized health insurance program Medicaid. As Republicans are scrambling to find ways to pay for Trump’s proposed tax cut extensions, they have come up with a vast array of proposals including some that could introduce work requirements to Medicaid coverage that would take away healthcare coverage from 600,000 people, the New York Times reported.
According to Javier Lopez, a professor at Columbia’s Graduate School of Architecture, Planning and Preservation, the GOP’s proposed cost cuts “represents one of the largest transfers of wealth from working families to corporations and wealthy individuals in recent history.” Lopez, along with his sister Erica, conducted an analysis of the Republicans’ draft options for cost cuts, concluding that it proposes “massive tax cuts for corporations and the wealthy, creating a $1 trillion hole in government funding.”
“Who fills that hole? Working families,” Lopez concludes. According to Lopez, Congressional Republican budget proposals would entail USD 522 billion in tax cuts to corporations, which could fund healthcare for 4 million families, college education for 2 million students, and housing assistance for 3 million families.
Totality of tax proposals hurt the poor and benefit the rich
In addition, Trump has offered a variety of other tax proposals during his campaign for president, which include exempting certain types of income from taxes, reducing the corporate tax rate, repealing tax credits that were enacted as part of former President Biden’s Inflation Reduction Act, and tariffs.
When combined, Donald Trump’s tax proposals and tariffs would lead to a tax cut for the richest 5% of people in the US and a tax increase for all other groups, according to a report by the Institute on Taxation and Economic Policy (ITEP).
