A 50-state analysis of the GOP tax framework reveals that in Pennsylvania, the top 1 percent of taxpayers would receive a substantial tax cut worth $67,970 while many upper middle class Pennsylvanians would face a tax increase. This plan is bad for Pennsylvania and our country.
A 50-state analysis of the GOP tax framework reveals that in Pennsylvania, the top 1 percent of taxpayers would receive a substantial tax cut worth $67,970 while many upper middle class Pennsylvanians would face a tax increase. This plan is bad for Pennsylvania and our country. At a time when incomes are rising for the very rich and relatively stagnant for everyone else, a plan that lavishes tax breaks on the top 1 percent, and pays for it in part by taxing others, should not be the starting point of our tax reform debate
The Washington-based Institute on Taxation and Economic Policy released the 50-state numbers today. While GOP leaders have pitched the plan as a tax cut for the middle class, the analysis shows that this is not true for the nation as a whole or for Pennsylvania. While most Pennsylvanians would receive a modest tax cut, on average that cut would amount to less than one percent of their income. The wealthiest 1 percent of the state’s residents, by contrast, would reap a financial windfall, receiving 49.7% of the total tax cuts going to Pennsylvania. Further, 15.6% of state taxpayers would endure a tax hike.
Because the plan eliminates the state and local tax deduction from federal income taxes, it is problematic for high state and local tax states and states that are in the middle like Pennsylvania. This feature of the plan pushes taxes up for 15.6% of all Pennsylvanians and almost 40% of upper-middle class Pennsylvanians with incomes between $106,000 and $550,000. Many people in this group would be willing to contribute more for education and improving the social safety net but not to give billionaires a tax cut.”
The GOP will try to sell this plan as a boon to the economy. But as we will show in more detail soon, cutting taxes on the very rich rarely leads lead to faster economic growth and certainly makes no sense for an economy that is finally recovering from the Great Recession. The huge new deficits created by the GOP tax plan is likely to lead to inflation and then higher interest rates which could well cut off this recovery long before working people and the middle class have received the full benefit of it. And the tax cuts will starve the federal, and then state governments, at precisely the time that the retirement of the baby boom generation will place additional demands on federal spending.
To read the entire report or get more details about Pennsylvania, go to www.itep.org/trumpgopplan.