Analysis: Potential Impact of Trump's Plan to Extend 2017 Tax Cuts on Wealthy Donors
Discover how wealthy donors stand to benefit from former President Donald Trump's proposed extension of the 2017 tax cuts. A recent fundraising dinner unveiled record contributions, hinting at substantial gains if Trump reclaims the White House.
At a recent fundraising dinner for former President Donald Trump, wealthy donors contributed a record $50.5 million. They may stand to gain significant advantages if Trump is reelected to the White House.
During the dinner, which was hosted by billionaire investor John Paulson, Trump emphasized that one of his main priorities for a second term would be extending the broad tax cuts that were passed by congressional Republicans in 2017. While the Tax Cuts and Jobs Act did result in tax reductions for most Americans, the wealthy received a disproportionately larger benefit.
The speech highlighted another difference between Trump, the likely Republican presidential candidate, and President Joe Biden. Biden is running on a platform of increasing taxes on the wealthy to fund his social programs, while ensuring that those earning less than $400,000 a year are not affected by tax increases. Biden's team quickly criticized Trump for offering tax breaks to billionaire donors.
According to Sarafina Chitika, a spokesperson for Biden's campaign, Trump is signaling to his wealthy friends that he will prioritize tax breaks for the ultra-rich. This comes as he pushes to dismantle healthcare, Social Security, and Medicare, while also raising expenses for working families.
The fate of the 2017 law’s individual tax provisions, which are set to expire at the end of next year, will depend on the outcome of the White House and Congress control in November.
According to the Tax Policy Center, a nonpartisan research group, if these provisions are extended, over 60% of the benefits would primarily benefit those in the top 20% of income. Additionally, more than 40% of the benefits would go to individuals in the top 5%.
Former president Donald Trump delivers remarks at a campaign rally at the SNHU Arena in Manchester, New Hampshire, in January 2024.
Former president Donald Trump delivers remarks at a campaign rally at the SNHU Arena in Manchester, New Hampshire, in January 2024.
Jabin Botsford/The Washington Post/Getty Images
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If re-elected, Donald Trump has made 15 promises for his second term campaign. According to estimates, individuals earning between $400,000 and $1 million would receive an average tax cut of $15,000, increasing their after-tax incomes by 3.1%. Those making $1 million or more would see an average tax cut of $50,000, boosting their after-tax incomes by 2.3%.
Only around 25% of people in the lowest income bracket would benefit from tax cuts. On average, they would receive a $100 tax cut, leading to a 0.5% increase in their after-tax income.
The wealthy have already benefited greatly from the Tax Cuts and Jobs Act, which also made various changes to corporate taxes.
Howard Gleckman, a senior fellow at the center, pointed out that while most people in all income groups received a tax cut, those with the highest incomes benefitted the most.
The tax law made changes such as lowering individual and corporate income tax rates, eliminating personal exemptions, raising the standard deduction and child tax credit, placing limits on some itemized deductions, and doubling the estate tax exemption.
Editor's P/S:
The article highlights the potential conflict of interest between former President Trump's tax policies and the interests of his wealthy donors. Trump's emphasis on extending tax cuts that disproportionately benefit the wealthy raises concerns about whether his priorities align with the needs of the broader population. Conversely, President Biden's proposed tax increases on the wealthy to fund social programs present a contrasting approach that aims to address income inequality.
The potential consequences of the Tax Cuts and Jobs Act's expiration also warrant attention. If the individual tax provisions expire, over 60% of the benefits would primarily accrue to the top 20% of income earners. This could exacerbate existing economic disparities and undermine the goal of a more equitable tax system. The outcome of the White House and Congress control in November will ultimately determine the fate of these provisions and the impact they will have on American taxpayers.
