Americans overwhelmingly want large businesses to pay more taxes rather than less. And though opinion is less unified on the question of taxing high-income households, there is still far more support for higher taxes rather than lower. A new poll from the Pew Center shows just 24 percent of Americans favor tax cuts for either large businesses or affluent families. Not even a majority self-identified Republicans like the idea of tax cuts for these groups.
That’s presumably why Donald Trump doesn’t talk about cutting taxes for big business and rich households when he talks about his tax plan.
Yet when you look at the tax reform “framework” unveiled today by congressional Republicans and Trump administration economic policy aides, one of the only clear takeaways is that they definitely want to cut taxes on big business and high-income households.
The framework is vague on many details. The child tax credit, for example, is set to increase by an unspecified amount.
By contrast, the tax breaks for rich people and big businesses are quite specific:
- Households in the top income tax bracket (i.e., individuals making more than $418,000 or married couples earning more than $470,000) will definitely get their marginal tax rate cut from 39.6 percent to 35 percent.
- Businesses that pay corporate income tax will see their profits taxed at a rate of 20 percent rather than 35 percent.
- Partnerships and other businesses that don’t pay corporate income tax will see their top tax rate cut to 25 percent. This does nothing to help the majority of small business owners whose annual profits are less than $150,000 a year and are already paying at 25 percent. But bigger, more lucrative partnerships are getting a tax cut.
Best of all, big multinational corporations who book profits overseas will no longer owe any American corporate income tax whatsoever. Giant, highly profitable, and already cash-rich companies like Apple, Google, Facebook, and Microsoft will be, by far, the biggest winners here.
These specific, highly detailed tax cuts for big businesses, rich families, and owners of the bulk of the shares of big businesses are the fixed points around which everything else in the GOP’s vague tax plan is going to have to revolve. But since there is next to no public support for these ideas, the sales job is going to have to end up focusing on other things.
Join the conversation
Are you interested in learning more about tax reform? Join us for a tax reform Q&A with economist Jared Bernstein, senior fellow at Center on Budget and Policy Priorities and former Chief Economist and Economic Adviser to Vice President Joe Biden, on September 29 at 2 PM in The Weeds Facebook group.