The tax proposal that House Republicans are scheduled to approve this week after pushing the global economy to the verge of collapse would provide the richest 1% of Americans more than $28 billion in tax cuts next year—but only $1.4 billion to the poorest fifth of the country.
That’s according to a new analysis of the legislation by the Institute on Taxation and Economic Policy (ITEP), which estimated Sunday that under the three new Republican bills, one of which is titled the Tax Cuts for Working Families Act, the poorest fifth of Americans would receive an average tax break of just $40 next year.
People in the top 1% of the income distribution, on the other hand, would get an average tax savings of $16,550 under the proposal, according to ITEP.
According to the revised measures, the wealthiest 20% of Americans would earn a total of $60.8 billion in tax cuts next year, despite the split Congress.
The three bills, which the House Ways and Means Committee is set to consider on Tuesday, would also reward foreign investors to the tune of $23.8 billion next year by lowering business taxes, according to the ITEP analysis, citing research that “foreign investors own 40% of stocks in American corporations and would therefore receive a significant share of the benefits from corporate tax cuts.”
According to Steve Wamhoff, ITEP’s federal policy director and the author of the new report, House Republicans’ legislative package “looks like a terrible deal for ordinary Americans and a windfall for foreign investors and the richest 1% of Americans.”
While the proposal “includes an increase in the standard deduction that would help some middle-income taxpayers,” Wamhoff pointed out that the move “would do little for those who most need help.”
The bills, which House Republicans unveiled late last week, come after the GOP used a looming debt default as leverage to impose damaging new spending caps and add harsher work requirements to federal safety net programs, including nutrition assistance—potentially depriving hundreds of thousands of older adults of food assistance.
Republicans defended their demand for spending cuts by referring to the increasing federal debt, failing to acknowledge that tax cuts under Republican Presidents George W. Bush and Donald Trump, which deprive the government of essential revenue year after year, are mostly to blame.
Wamhoff wrote Sunday that the new Republican legislation would further “increase the deficit by expanding the Trump tax cuts for corporations and other businesses.”
“Officially the cost of the new tax cuts would be offset, mostly by provisions that would roll back certain parts of President Biden’s Inflation Reduction Act addressing climate change, but the true costs are hidden by budget gimmicks,” Wamhoff observed. “The most important budget gimmick is that the legislation enacts the biggest tax cuts for only two years even though its proponents plan to extend them in the future, making them, in effect, permanent.”
House Ways and Means Chairman Jason Smith (R-Mo.) touted the alleged savings that would result from repealing the Inflation Reduction Act’s clean energy tax credits, which are aimed at accelerating the nation’s lagging transition to renewable energy, in a statement summarizing the major provisions of the tax bills.
But as Wamhoff wrote Sunday, the costs of repealing those tax credits “would ultimately fall on everyone in the form of greater climate damage.”