Trump's tax plan just got its first brutal review showing how it would benefit rich Americans but almost no one else

donald trump
donald trump

(Donald Trump.Getty Images/Pool)

President Donald Trump's new tax plan may result in the richest getting richer and the middle class eventually seeing a slight tax increase, a study released Friday found.

In an initial analysis of the nine-page framework for tax reform, the Urban Institute and Brookings Institution's Tax Policy Center found that Americans among the top 1% of earners would see the bulk of the plan's benefits, while lower- and middle-class Americans — even most upper-class people — would see few benefits.

The TPC said that its analysis was preliminary and that many of the aspects of Trump's tax plan were still up in the air, since its principles haven't yet been crafted into legislation.

The report also used static scoring, which does not factor in potential economic growth in the years after the plan's implementation. The White House prefers dynamic scoring, which assumes higher tax revenues from more economic growth.

The report says the average tax bill for all income groups would go down in 2018 if the framework were implemented — but what's eye-popping is how much the highest-earning Americans would save.

"Taxpayers in the bottom 95 percent of the income distribution would see average after-tax incomes increase between 0.5 and 1.2 percent," the TPC's report said. "Taxpayers in the top 1 percent (incomes above $730,000), would receive about 50 percent of the total tax benefit; their after-tax income would increase an average of 8.5 percent."

During that time, some Americans would see their tax bills increase, the report said. The TPC found that households earning between $150,000 to $300,000 annually would "experience a slight tax increase on average."

The TPC analysis says the average household in the top quintile would see its tax bill decline by $8,470 in 2018 under the plan — a drop of 2.4 percentage points from the average federal tax rate. For people in the middle quintile, making between $48,601 and $86,100, it would mean a decrease of just $660 — or 1 percentage point.

But the top 0.1% of income earners (those making above $3.43 million) would get a tax break of $722,510 on average, or a decrease of 6.8 percentage points.

The TPC estimated that in later years, the middle class would shoulder more of the load of the tax plan.

"By 2027, taxes would rise for roughly one-quarter of taxpayers, including nearly 30 percent of those with incomes between about $50,000 and $150,000 and 60 percent of those making between about $150,000 and $300,000," the study said. "The number of taxpayers with a tax increase rises over time."

The report says that in 2027, people making between $150,000 and $300,000 annually would see an annual tax increase of $800 on average, and that 80% of the benefit from the plan would go to people in the top 1%.

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Screen Shot 2017 09 29 at 12.08.29 PM

(Tax Policy Center)

Trump has repeatedly said the tax plan would not unfairly benefit the wealthy.

"I think the wealthy will be pretty much where they are, pretty much where they are," Trump said at a bipartisan meeting on tax reform on September 13.

The analysis also estimates the plan would increase the federal deficit by $2.4 trillion in the first decade after its implementation.

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Screen Shot 2017 09 29 at 12.13.25 PM

(Tax Policy Center)

Most of the lost revenue would come from the proposed cuts to corporate and business taxes, while overall revenue from individual taxes would increase, the study found.

"Over the first 10 years, the individual income tax provisions — excluding those related to the taxation of corporations, pass-throughs, and estates — would raise $470 billion, the business provisions would reduce revenues by $2.6 trillion, and repealing the estate tax would cost another $240 billion," the study said.

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