News Reporter: Wonkbook: 99.6% of Paul Ryan's tax cuts would go to the wealthiest 1% of households, analysis finds

Friday, 16 September 2016

Wonkbook: 99.6% of Paul Ryan's tax cuts would go to the wealthiest 1% of households, analysis finds

The latest economic and domestic policy from Wonkblog

CLEVELAND, OH - JULY 19: Speaker of the House Paul Ryan gestures to the crowd after delivering a speech on the second day of the Republican National Convention on July 19, 2016 at the Quicken Loans Arena in Cleveland, Ohio. Republican presidential candidate Donald Trump received the number of votes needed to secure the party's nomination. An estimated 50,000 people are expected in Cleveland, including hundreds of protesters and members of the media. The four-day Republican National Convention kicked off on July 18. (Photo by John Moore/Getty Images)

House Speaker Paul Ryan takes the stage at the Republican National Convention in Cleveland in July. (John Moore/Getty Images)

By Max Ehrenfreund

The House Republicans' proposal for tax relief could force the government to borrow trillions of dollars to continue operating and might even weaken the economy, according to a new analysis from the nonpartisan Tax Policy Center.

By 2025, when the reductions would be fully implemented, 99.6 percent of the tax cuts would benefit the wealthiest 1 percent of Americans, according to the analysis. This group would enjoy the greatest relief as a share of their income (increasing their incomes after taxes by 10.6 percent on average) and in terms of dollars (an average annual savings of $240,000 for each household).

Poor and working-class households would gain more modest benefits. The poorest 20 percent of Americans would see an average increase of 0.5 percent in their incomes, or about $120 a year. Households in the upper middle class, those in the 60th percentile through the 95th percentile, would pay more in taxes on average.

The Republican proposal would reduce tax rates on marginal income, eliminate the estate tax and modify the corporate tax system to allow businesses to immediately write off any capital investments while also eliminating the deduction for interest payments. The plan was published earlier this year as part of House Speaker Paul Ryan's effort to lay out a comprehensive conservative agenda amid a presidential campaign that has been lacking in detailed debates over public policy.

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While some of the findings in the Tax Policy Center's analysis surely will disappoint the speaker and his Republican colleagues, the authors of the report say their forecasts are uncertain and depend on a number of assumptions about how the economy would respond to the Republican plan. And in one respect, the analysis published Friday represents an important victory for Republicans in Congress.

Read the rest on Wonkblog.