The GOP tax bill would give huge cuts to businesses — and much less for average Americans

business news

 

  • The House GOP released their long-awaited tax reform package on Thursday.
  • The Committee for a Responsible Federal Budget found that of the $1.5 trillion in net direct benefits, businesses would receive $1 trillion and individuals would receive $500 billion.
  • The analysis said that of the $500 billion in benefits to individuals, nearly $200 billion of that would come from changes to the estate tax.

The big winners from the House GOP tax reform bill released Thursday would likely be businesses and wealthy heirs, according to an early analysis of its provisions.

The Committee for a Responsible Federal Budget released a summary of the Tax Cuts and Jobs Act (TCJA), soon after its release on Thursday, breaking down who would get their tax bill reduced and by how much.

According to the CRFB’s summary of the bill’s total direct effects over 10 years, most of the benefits would go to businesses.

Those firms would see their statutory tax rates drop to 20% from the current 35% under the plan, and they could expense business investment immediately. According to the analysis, businesses would receive $2.2 trillion total in tax cuts and benefits while losing roughly $1.2 trillion in closed loopholes and deductions.

Comparatively, individuals would see benefits of $3.3 trillion from the updated tax brackets and increased standard deduction. That massive benefit, however, would be offset by $3 trillion in lost deductions, exemptions, and credits. So the total direct benefit to average Americans would be about $300 billion over 10 years. The analysis doesn’t account for which income levels and groups would benefit more or less than others.

The tax bill, according to CRFB, would also be a huge boon for heirs of large estates. The TCJA would increase the threshold for the estate tax to more than $11 million immediately and phase the tax out after six years. The total benefit from the repeal: $172 billion.

Those figures don’t include benefits that could be passed down from businesses in the form of higher wages or increased economic growth, a source of debate among economists.

SEE ALSO: The GOP finally unveiled its massive tax plan that proposes a sweeping overhaul to the system

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