Your taxes will go up with Trump's plan

[TC Talks]

Yes, up. That’s according to a new analysis from the Peterson Institute for International Economics (PIIE) assessing the winners and losers of Donald Trump’s tax agenda, including not only his income tax breaks but also his tariffs (that is, import taxes). Most people come out behind; only the highest-earners come out ahead.

Trump passed a major tax code overhaul in 2017, which lowered both corporate and personal income tax rates. The biggest benefits of this law went to the wealthiest households, both in dollar terms and as a share of their incomes, the Tax Policy Center calculates. Even so, nearly every U.S. household benefited, at least for the first few years.

Come 2025, most of Trump’s personal-income tax cuts will expire. In a second term, the presumptive Republican nominee has pledged to extend all of them (plus slash the corporate rate even further). This would lead to lower taxes for most Americans.

But these are not the only tax-related changes Trump has proposed. He has also pledged a 10 percent universal tariff on all products from every country around the world, whether friend or foe, plus a 60 percent (or higher) tariff on Chinese-made goods.

In the PIIE paper, scholars Kimberly A. Clausing and Mary E. Lovely estimate the expected costs of those import taxes based on what we know about Trump’s previous rounds of tariffs and who ultimately bore their cost. Despite Trump’s claims that other countries “paid for” tariffs, reams of research have found that his prior tariffs (on Chinese goods, global steel and aluminum, washing machines, etc.) were passed along mostly or entirely to Americans, in the form of higher prices.

Drawing on those studies, Clausing and Lovely project Trump’s additional proposed tariffs would cost the median household at least $1,700 in taxes each year. The pain varies throughout the income distribution, however.

Tariffs disproportionately burden lower-income households, which tend to spend a larger share of their income than richer households do. That is, import duties, including Trump’s, are generally regressive. In fact, the costs to lower- and middle-income Americans are so great that they would more than offset the benefits of Trump’s 2017 tax cut extensions.

For example, for those in the lowest income quintile, extending the 2017 tax changes would raise their incomes by a teeny bit (0.5 percent), but their tariff burden (4.2 percent of their incomes) would easily erase those savings. So, on net, their incomes would fall by about 3.7 percent.

Those in the top 1 percent, by contrast, would enjoy the biggest benefits of Trump’s 2017 income tax extensions, with a healthy income boost of about 2.3 percent. They also buy imported goods, of course, so they would also be hurt by import taxes, but not nearly as much as their poorer neighbors. The tariffs shave “only” 0.9 percent off their incomes. On net, their incomes would grow by about 1.4 percent. (For someone at the threshold of the 99th percentile, that amounts to an annual



bonus of roughly $8,000, courtesy of Trump.)

These are relatively conservative estimates of how regressive Trump’s tax agenda would be.

They exclude some things that might make the picture even worse. For example, they ignore Trump’s business tax provisions, which would also disproportionately benefit high-income people.

The tariff estimates also don’t include the costs of any possible retaliation from other countries. But we should probably expect retaliation, given how many countries imposed countertariffs last time, plus some recent rumblings from our European allies. Any retaliation would cause more pain for Americans, as it did before. Research on Trump’s earlier trade wars found that, though they did nothing to boost employment in his favored U.S. industries, they did kill a lot of jobs in sectors targeted by counter-tariffs (especially agriculture).

The PIIE study also doesn’t account for some other regressive parts of Trump’s fiscal agenda, such as repealing Obamacare. Doing so would eliminate tax subsidies for individual insurance plans (which would also hurt lowerand middle-income Americans) and scrap an investment tax (again, disproportionately helping the wealthy).

Catherine Rampell

[Lester The Nightfly]

Well it was not for nothin' that the cuts were set to expire in 2025. Trump figured he would win back-to-back terms and would be long gone by the time the cuts disappeared. That there might by a Democrat sitting in office at the time to take the heat on a tax bump would just be a lucky cherry on the cake.

We'll see how he 'splanes it away if God forbid he wins this fall. If Congress stays red, he might have a chance to simply do an extension. If everything goes blue he'll have a legitimate and well deserved problem on his hands, although I suspect since he won't give a shit having termed out.

Thx for bringing this up, it's one more thing to consider in making our fall choice. I wish the fourth estate would at least drop the question on him.

[MotorCityRadioFreak]

And water is wet. Of course, it goes up.

[Lester The Nightfly]

And water is wet. Of course, it goes up.

Well unless you're a business. As I understand it, their cuts will be largely remain in place after the expiration of the personal income cuts.

[MotorCityRadioFreak]

And water is wet. Of course, it goes up.

Well unless you're a business. As I understand it, their cuts will be largely remain in place after the expiration of the personal income cuts.

Yep, big business and the 1%. It's nice theft if you can manage to get it.