Trump Tax Plan Would Shortchange Indiana, Middle Class & Working Families (But Would Let Them Eat Cake)
Tuesday, August 15, 2017
Andrew
Bradley, Senior Policy Analyst
The Trump
Administration’s proposed tax plan would shortchange Indiana as a state, especially
its middle-class and working families, while top earners would pocket a
windfall. Although the administration hasn’t yet released full details of the plan,
their public statements show that Indiana wouldn’t get its fair share of tax
cuts, which would disproportionately benefit the nation’s very wealthiest and
would likely be offset by damaging cuts to vital services.
A new analysis of the Trump tax plan
from the Institute for Taxation and Economic Policy shows that Indiana would only
get an 87% share of tax cuts relative to the state’s ratio of the U.S.
population. This is the 23rd-smallest share among states. In part because
the plan is aimed at high-income households and Indiana is a poorer state, no
matter how you slice it, Indiana gets shortchanged compared to the average
state by Trump’s plan.
Middle- and low-earning
Hoosier families together really get the short end of the Trump tax stick,
while the wealthiest earners profit big-league. Added together, the three low-
and middle-earning quintiles (making up 60% of Indiana’s population) would only
get 11.7% of the planned cuts, while the top 1% alone would take home 46.1% of
the state’s share of tax cuts. The top 1%, all with incomes of at least
$500,500 annually, would get an extra $95,940 each year (at $1,845, enough to
pop the corks on three cases of Moët & Chandon
champagne every single week). That $95,940 in additional cuts for the top 1% is
more than nearly 80% of Hoosiers earn in a year.
By contrast, the bottom 60% of middle- and working-class Hoosiers, all with annual
incomes less than $64,000, would get just $410 per year on average (at $7.88
each week, barely enough for a small
cake from Wal-Mart). So while the outcome
of Trump’s tax plan would shower the wealthiest with luxurious benefits, it
would lead to the destruction of the safety net that provides a measure of economic
security for middle-class and working families. (But it would let them eat cake.)
The upside-down nature
of the Trump tax scheme would only exacerbate Indiana’s regressive state tax
structure, and would do nothing to improve inequality and stagnant incomes for the
vast majority of Hoosier families. Indiana already makes the ‘Terrible
10’ list of most-regressive state & local tax systems that tax lower
& middle-income residents at far higher rates than wealthy earners. Meanwhile,
the same top 1% of earners who benefit most from Indiana’s regressive tax
structure (and who would get the largest payoff from the Trump plan) already saw
incomes grow by 86.9% since 1979. By contrast, the other 99% of earners - largely
shortchanged by the Trump plan - saw their incomes grow by only 2.3% over that
same time period. Even with outsized earnings at the top, Indiana had the fourth-lowest
real median income growth since 2000.
Trump’s tax cuts
wouldn’t come without strings attached. The tax proposal would cost at least
$4.8 trillion over the next decade,
and would mean higher government deficits, forcing a planned $1.85
trillion in devastating cuts in safety net programs, including $116
billion in cuts to SNAP alone. The
puny share for middle & lower-earning Hoosiers would pale in comparison to
gutting services that lift over
a million Hoosiers out of poverty.
Hoosiers should call
the U.S. Capitol switchboard at (202) 224-3121 to let Congress know that voting
for Trump’s tax plan would be choosing benefits for the elite over standing
with Indiana’s middle class & working families. Ask what they will do to
make sure this damaging Trump tax plan never sees the light of day!
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