House Speaker Mike Johnson (R-LA) left after the House passed a Republican budget resolution in Washington on February 25, 2025.
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When Congress debates how to deal with tax breaks that expired trillions of dollars, lawmakers on both sides have already Lobbing claims About which consumers will see the greatest benefits of expanding them. Economists and tax experts say the answer is not that simple.
In short: whose benefits depend on your frame of reference.
House Republicans Budget plan passed Tuesday was to expand the basis of the Tax Cuts and Jobs Act, a package of tax cuts enacted in 2017 during President Trump’s first term.
Many cuts for individual taxpayers Will expire After 2025, unless Congress takes action, the Republicans can do this by using a special legislative maneuver in Congress with a simple majority vote.
Richard Neal, a ranking member of the House Tax Committee, said Wednesday that the Republican policy plan (the core of cutting Trump’s tax revenue at the heart of the estimated cost of more than $4 trillion) is a “reverse Robin Hands scam” that brings the rich and gets them from the poor.
Meanwhile, Republicans say low-income and middle-income families will win under the plan.
“Cutting Trump’s tax cuts brings the greatest relief to a generation of working-class Americans and small businesses,” Rep. R-Missouri, chair of the Roads and Means Committee, said Tuesday.
Experts say both sides have advantages in their arguments.
“It’s interesting that both of these can be true, depending on how you explain what they mean,” said James Hines, a professor of law and economics at the University of Michigan.
Trump law cuts taxes for most people
President Trump spoke on December 20, 2017 about the passage of tax reform legislation on the South Lawn of the White House.
Saul Loeb | AFP | Getty Images
Experts say the tax cuts and employment bill reduces taxes for most U.S. households.
The legislation, they say, is broad and benefits Americans within income range – aligned with Republicans’ claims.
Experts say changes in larger child tax credits and expanded standard deductions have cut income taxes for many low-priced and middle-income earners, while lower marginal tax rates and tax breaks for business owners have helped the rich in a large extent.
If the TCJA regulations are extended, 62% of taxpayers You will see lower tax bills According to the Tax Foundation, compared with the expired measure in 2026. (In other words, tax bills for many people will increase next year without extensions.)
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With these rules, Americans will receive an average of 2.9% revenue growth in 2026, according to the Tax Foundation. It said revenue would grow by 3.4% if the broader impact of tax cuts on the U.S. economy was taken into account.
U.S. Treasury Department Report Similar findings were made on the day of the Biden administration’s decline: average people would receive a 2.2% tax cut by expanding Trump laws. (It is estimated to be the 2025 budget year.)
The Ministry of Finance said all income groups will promote after-tax income.
The rich are the “big winners”
U.S. House Minority Leader Hakeem Jeffries (D-NY) was joined by Rep. Pete Aguilar (D-CA) and Rep. Katherine Clark (D-MA), after the House passed a remark on February 25, 2025 that Republicans made remarks after the budget settlement of the spending bill.
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However, with the extension, the tax cuts for the largest income households are the largest.
According to one July 2024 analysis By Urban-Brookings Tax Policy Center. It said they will receive more than 45% of the benefits of extending the Tax Cuts and Employment Act.
Penn Wharton’s budget model analysis of the impact on a wide range of Republican tax plans There are similar findings.
The lowest 80% of income earners will receive 29% of the total value of the proposed tax cut in 2026, according to a Wharton Commodity analysis released Thursday. It says the top 10% will receive 56% of the value.
This dynamic claim is the Democrats’ argument, especially if possible Cut spending Used for programs Like Medicaid and food stamps. Such programs benefit people with income to a large extent.
Wharton estimates that even after economic growth accounts for economic growth, the reduction and reduction of Wharton tax breaks and reduction plans will make “low-income households worse.”
Some tax analysts view after-tax income as one of the best reference frameworks to assess policy impacts, as it estimates that household purchasing power has improved. However, others say it is difficult to control other economic variables that may change income.
The Tax Policy Center says the top 1% of households (making $1 million or more a year) will receive 3.2% of tax revenue by extending the Trump law in 2027. In the U.S. dollar, their tax savings average about $70,000.
By comparison, middle-income households will receive a 1.3% increase in income or a tax cut of $1,000.
Rich “most taxes”
Experts say that in a sense, this dynamic is expected because the U.S. income tax system is progressive. This means that high-income earners generally bear more overall tax burden than low-income earners.
“If you ask, ‘who gets the dollar,’ it’s mostly rich taxpayers,'” said Hines of the University of Michigan. “But it’s because it’s a tax cut, and they pay most of the taxes.”
According to recent tax foundation data analyze. The lowest 90% paid a quarter of the total income tax (28%).
“The Democrats say that most of the taxes are to the rich: they are absolutely right,” Hines said.
However, the TCJA is proportional to the tax rate for working families than the tax rate for wealthy families, a White House spokesman said.
Experts agree to the assessment.
“Republicans say,’ but the cuts do not tend toward the rich compared to the salary they paid in the first place,” Hines said.
President Donald Trump signed a copy of his previously signed legislation before signing the tax reform bill at the Oval Office on December 22, 2017.
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For example, according to the Tax Foundation, the lowest 50% of Americans dropped their average federal tax rate by 15% from 2017 to 2018 after the Trump tax cuts came into effect. (Their rates drop From 4% to 3.4%)
By comparison, the average rate for the highest 1% of people fell by a smaller percentage (about 5%) during this period, down 25.4% from the average rate of 26.8%.
“The reason the debate is so broken is that both sides have elements of truth,” said Garrett Watson, director of policy analysis at the Tax Foundation. “It’s a battle of indicators and what everyone can put.”
