All eyes right now are on the U.S. presidential campaign (especially the narrowing gap between Hillary Clinton and Donald Trump).
What that means is Americans’ attention is diverted away from other politics and policies, such as the House GOP’s tax plan—the so-called “Better Way”—which would overwhelmingly benefit the richest 1 percent. It would allow the tiny group at the top to keep, via tax cuts, more of the surplus they manage to capture.
The plan would reduce the top individual income tax rate to 33 percent, reduce the corporate rate to 20 percent, and cap at 25 percent the rate on profits of pass-through businesses (such as sole proprietorships and partnerships) that are taxed under the individual income tax. Individuals could deduct half of their capital gains, dividends, and interest, reducing the top rate on such income to 16.5 percent.
Overall, the plan would cut the average tax bill in 2017 by $1,810, increasing after-tax income by 2.5 percent. Three-quarters of the tax cuts would benefit the top 1 percent of taxpayers and the highest-income taxpayers (0.1 percent of the population, or those with incomes over $3.7 million in 2015 dollars) would experience an average tax cut of about $1.3 million, 16.9 percent of after-tax income. Households in the middle fifth of the income distribution would receive an average tax cut of almost $260, or 0.5 percent of after-tax income, while the poorest fifth of households would see their taxes go down an average of about $50, or 0.4 percent of their after-tax income. In 2025, the top 1 percent of households would receive nearly 100 percent of the total tax reduction. Households in some upper-middle income groups would have tax increases on average, and households at other income levels would have smaller average cuts, relative to after-tax income, than in 2017.
And, since the plan would reduce total federal revenues (by $3.1 trillion over the first decade of implementation and by an additional $2.2 trillion in the second decade), it implies massive cuts to federal programs, many of which benefit working-class households, thus making the plan even more regressive.
The better way, it turns out, is just another version of conservative trickledown economics