Trump Tax Plan Would Shift Trillions From U.S. Coffers to the Richest

By JULIE HIRSCHFELD DAVIS and PATRICIA COHEN,

President Trump’s proposal to slash individual and business taxes and erase a surtax that funds the Affordable Care Act would amount to a multitrillion-dollar shift from federal coffers to America’s richest families and their heirs, setting up a politically fraught battle over how best to use the government’s already strained resources.

The outline that Mr. Trump offered on Wednesday — less a tax overhaul plan than a list of costly cuts with no price tags attached, rushed out by a president staring down his 100-day mark in office — calls for tax reductions for individuals of every income level as well as businesses large and small.

But the vast majority of benefits would accrue to the highest earners and largest holders of wealth, according to economists and analysts, accounting for a lopsided portion of the proposal’s costs.

“The only Americans who are very clear winners under the new system are the wealthiest,” said Edward D. Kleinbard, a law professor at the University of Southern California and former chief of staff of Congress’s Joint Committee on Taxation, which estimates the revenue effects of tax proposals.

Repealing the estate tax, for example, would affect just 5,300 or so fortunes a year. For 2017, couples can shield up to $11 million of their estates from any taxation, leaving only the largest inheritances subject to taxation. Repealing the estate tax alone would cost an estimated $174.2 billion over a decade, the nonpartisan Tax Policy Center said.

Reducing the rate on capital gains, noncorporate business taxes and those in the highest bracket, as well as repealing the alternative minimum tax, would also ease the burden on wealthier Americans. So would the repeal of the Affordable Care Act’s 3.8 percent surtax on the investment income of high earners, put in place to subsidize health coverage for low-income Americans.

“These are all afflictions of the affluent,” Mr. Kleinbard said.

Many economists who analyzed a similar plan Mr. Trump proposed during his presidential campaign found that it would have disproportionately helped the richest. William G. Gale, an economist at the Brookings Institution in Washington, estimated that just over 50 percent of the benefits of that proposal would have gone to the top 1 percent of taxpayers.

The new proposal “loses probably something in the neighborhood of $5 trillion in revenue over 10 years with regressive tax cuts that exacerbate the inequalities that already exist in our economy,” said Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities who was a top economist in the Obama administration.

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