After the House President Mike Johnson (R-LA), the House passed the Republican budget proposal on the bill spent in Washington on 25 February 2025.
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As Congress argued Labing claims Which consumers will see the greatest benefits by expanding them. Economists and tax experts say that the answer is not so straightforward.
In short: which benefit depends on the frame of your reference.
House Republicans A budget plan passed On Tuesday gives groundwork to deduct tax and expansion of Jobs Act, a package of tax brakes implemented in 2017 during the President Donald Trumpfirst term.
Many cuts for individual taxpayers Will end After 2025, until the Congress acts – and GOP can do this with a simple majority vote in the Congress using a special legislative maneuver, which is called budget reconciliation.
Rape. Richard Neil, D-Mas., House Wes and Means Tax Committee ranking member, said on Wednesday that the policy plan of Republican-which is an extension of the trump tax cuts, estimates that it is estimated that the cost of more than $ 4 trillion is estimated-the amount of “reverse Robin Hood Scam” which gives the rich and gives the poor.
Meanwhile, Republican says that lower and medium-or-Item houses stand to win under the plan.
“Trump tax cuts provide the greatest relief for working class Americans and small businesses in a generation,” rape. Jason Smith, R-Mo., Chairman of Wes and Means Committee, said on Tuesday.
Experts say that both sides have merit in arguments.
James Hines, a law and economics professor at the University of Michigan, said, “Interestingly, you explain how you are saying what they are saying.”
Trump law cut taxes for most people
President Trump speaks about the passage of tax reform law on the South Lawn of the White House on December 20, 2017.
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Experts said the Tax Cuts and Jobs Act reduced taxes for most American homes.
He said that the law was widespread, which benefits Americans in the income spectrum – which widely conforms to the claims of Republican, said.
Experts stated that income taxes are cut for a large child tax credit and an extended standard deduction for many low and medium -income people, while low marginal tax rates and tax deductions for business owners helped rich to a large extent.
If TCJA provisions are increased, 62% tax filer Will see the bill reduced In 2026, according to the Tax Foundation, if the measures are finished, compared. (Put another way, many people will move the tax bills without any detail next year.)
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With those provisions, Americans will increase the income by 2.9% on an average after taxes, according to the Tax Foundation. If there is factoring in the widespread impacts of tax cuts on the US economy, the income will increase by 3.4%.
A US Treasury Department Report There was a similar discovery issued in the vanning days of the Biden administration: the average person will get 2.2% tax deduction by expanding the Trump law. (It is estimated for 2025 budget year.)
Treasury said that all income groups will get a boost to post -tax income.
The rich are the ‘biggest winners’
US House Minority Leader Hakim Jeffrees (D-NY), Rape Pete Agiiller (D-CA) and Rape Catherine Clarke (D-MA), the house commented after passing the Republican budget proposal on the expenditure bill on 25 February, 2025.
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However, with an expansion, the biggest tax cut will earn the highest -income families, the Treasury said.
House in top 5% – which earn more than $ 450,000 per year, roughly – the “biggest winners” July 2024 analysis By Urban-Brookings Tax Policy Center. He said that it would be more than 45% of the benefits of tax deduction and enhancing jobs act.
A pen wharton budget model analysis on the impacts of Broad Republican Tax Plan There was a similar discovery,
According to the Wharton analysis released on Thursday, the lower 80% of the total value of the tax deduction in 2026 will be released to those earning income. Top 10% will get 56% value, it said.
It talks to the arguments of dynamic democrats, especially when possible with possible Cost cut For programs Mediced -like And food tickets. Such programs benefit a large extent earnings.
Wharton estimates that a combination of tax reduction and decrease in expenses for programs such as medicid and food stamps will leave the “low -income homes worse” even after accounting for economic development.
Some tax analysts look at the post -income income as the best frame of reference to assess the policy effect, as it estimates how much improvement in the purchase power of a house. Other people disagree, however, stating that other economic variables are difficult to control that can change income.
The tax policy center stated that the top 1% of the families (which are made in about $ 1 million or more years) will get a boost 3.2% in tax income in 2027 through the expansion of the Trump Act. In terms of dollars, their tax savings will be an average of $ 70,000.
Comparatively, in moderate-or-Items, according to the tax policy center, 1.3% income will be boosted, or a tax deduction of $ 1,000.
Rich ‘pay most taxes’
In a sense, this dynamic should be expected as the American income tax system is progressive, the experts said. This means that high -earnings are generally more than the overall tax burden than those who earn less.
Hines of the University of Michigan said, “If you ask, ‘Who meets the dollar,’ this is mostly rich taxpayer,” said Hines of the University of Michigan. “But this is because it is a tax cut and they pay most taxes.”
According to the recent tax Foundation, the top 1% paid 40% of all the US income tax collected in 2022 AnalysisBelow 90% paid about a quarter of the total income tax – 28% -.
“Democrats say that most of the tax dollars moved into the rich: they are absolutely correct,” said Hines.
A White House spokesperson said TCJA cut more taxes for families working than rich families on a proportional basis.
Experts agreed to assess that assessment.
“Republican says,” but the cuts were not slanting for the rich, people who were originally paid, “” which is generally correct, the Hines said, Hines said.
President Donald Trump signed a copy of the law before signing a tax reform bill at the Oval Office on December 22, 2017.
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For example, 50% of the Americans below saw a 15% decline in their average federal tax rate from 2017 to 2018, after the Trump tax cut, according to the tax foundation. (Their rate is reduced 4% to 3.4%,
Conversely, the top 1% saw a decline in average rate of low percentage (about 5%) during that period, which was 26.8% to 25.4%.
“Why is the debate so fracture so fracture, the elements of truth for both sides,” said Garat Watson, director of the policy analysis at the Tax Foundation. “This is a battle of metrics, and what weights have to be on each of them.”
