Commentary: After months of speculation, the Trump Administration, along with Congressional Republicans, today released a plan for overhauling America’s tax code—the first of such in several decades. What’s being lauded today as "tax reform" is little more than tax cuts for wealthy individuals and corporations. The plan proposed by this “Big 6” group slashes the corporate tax rate from 35% to 20%, and the rate for wealthy individuals from 39% to 35%. Additionally, it raises taxes for the poorest Americans in the lowest tax bracket from 10% to 12%.
Prosperity Now and our Turn It Right-Side Up campaign advocates for a bipartisan, deficit-neutral tax plan that doesn't cut taxes for those who need it least: the wealthiest individuals and corporations. Today’s disappointing Big 6 plan falls far short of that. Despite doubling the standard deduction, the elimination of personal exemptions combined with raising the bottom tax rate provide—at best—a marginal benefit to working families, and potentially a net loss. These "benefits" pale in comparison to the millions in cuts afforded to the wealthy. As written, the proposed tax cuts being handed out to the wealthy would amount to $1.5 trillion in revenue loss for the federal government, potentially jeopardizing federal programs such as Social Security, Medicare and Medicaid.
We believe that true tax reform must shift the focus from tax cuts to the wealthy to redistributing tax expenditures to those who need it most. The current tax system offers large and powerful incentives for savings and investment that facilitate wealth building—but they are poorly targeted and inequitable, and actually contribute to and exacerbate the problem of wealth inequality. Of the $677 billion spent by the federal government through the tax code last year, the vast majority benefited the wealthiest, building their savings and investments and opportunities for higher education, retirement and homeownership. The proposal put forth today maintains the status quo, providing little to no opportunity for low- and moderate-income Americans to get ahead. What our country really needs is an historic investment in the financial security and economic opportunity of all Americans.
Prosperity Now will continue to advocate for a tax plan that prioritizes real relief for working families. Today’s plan misses that mark. We're going to keep fighting to ensure that not one penny in tax cuts goes to the wealthy. Prosperity Now is committed to turning our current tax code “right-side up”, and we hope that you’ll fight with us to make prosperity achievable for all.