FACT CHECK: Does The Trump Tax Reform Plan Benefit The Wealthy At Everyone Else’s Expense?
In a tweeted video responding to President Trump’s new tax reform plan, independent Vermont Sen. Bernie Sanders said the reforms are “designed to benefit the very wealthiest people in this country at the expense of virtually everybody else.”
Tax groups estimate the tax reform framework would give middle- and low-income earners a modest tax decrease while giving high-income earners a much larger tax decrease. It does not raise the tax burden on middle-income and low-income earners to balance tax cuts to the rich.
Sen. Sanders’ statement by itself sounds like the tax framework cuts taxes only for the wealthy, and raises taxes for everyone else. Both the framework and an independent analysis show this isn’t the case.
“Our framework includes the explicit commitment that tax reform will protect the low-income and middle-income households, not the wealthy and well-connected,” House Speaker Paul Ryan said on CNBC.
The new tax reform framework consolidates the current seven tax brackets (10, 15, 25, 28, 33, 35 and 39.6 percent) to just three tax brackets: 12, 25, and 35 percent. It leaves open the possibility for a fourth tax bracket on the highest income earners.
The framework nearly doubles the current standard deduction, meaning the first $12,000 single filers make or first $24,000 married couples filing jointly make will not be taxed. It also eliminates most itemized deductions, which will reduce paperwork, but may increase the tax rate for some households.
The income thresholds for each tax bracket are not outlined in the framework and will be up to Congress, making exact impacts of the tax plan difficult to estimate. But rough estimates show a lower tax burden for middle- and low-income households.
A Tax Policy Center analysis found that while top income earners would see the largest after-tax income increase, average Americans would also see a modest increase. A different non-profit tax group, the Tax Foundation, estimated the proposals would lower the tax burden on the bottom 80 percent of households and slightly raise the tax burden on the top 20 percent of households.
Sen. Sanders’ main argument is that the tax framework would add trillions of dollars to the deficit and national debt as Republicans are pushing a health-care bill that would trim Medicare benefits that tend to help low- and middle-class citizens. There is nothing, however, in the tax framework to cut such benefits, and speculation about future action is misleading about the intent and content of the tax reform framework.