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inequality
Nonpartisan Analysis Confirms: GOP Tax Cuts Would Come Nowhere Close to Paying for Themselves
Economic activity spurred by the tax breaks—which are largely an extension of soon-to-expire provisions of the 2017 Trump-GOP tax cuts—would increase federal revenues by roughly $103 billion between 2025 and 2034, according to JCT.
That would barely put a dent in the overall projected cost of the tax cuts, bringing it down to $3.7 trillion from $3.8 trillion.
"I'm sorry, it is so funny that JCT says the GOP tax provisions pay for only 2.7% of themselves," Bobby Kogan, senior director of federal budget policy at the Center for American Progress, wrote in response to the analysis. "Republicans are out here pretending their tax bill will be the single greatest boost to the economy ever, and JCT says they only get a minuscule boost."
A separate analysis published Thursday by the Institute on Taxation and Economic Policy (ITEP) shows that the benefits of the Republican bill's tax provisions would flow disproportionately to the wealthiest Americans.
"The $121 billion in net tax cuts going to the richest 1% next year would exceed the amount going to the entire bottom 60% of taxpayers (about $90 billion)," said ITEP, whose analysis did not factor in the impact of the legislation's unparalleled cuts to Medicaid and federal nutrition assistance, which would deliver a major blow to the household resources of lower-income Americans.
Amy Hanauer, ITEP's executive director, said Thursday that "it's not surprising that this bill was written behind closed doors and rushed through in the night before Americans had a chance to see what it contains."
"This bill extends enormous tax cuts to those who have the most," said Hanauer. "It will increase inequality, reduce health coverage, and take food from people's tables, all to shower the wealthiest people in this country and foreign investors with tax breaks. In the end, this reconciliation bill redistributes resources up the income scale, widening the already-huge chasm between the rich and the rest of us."
Dynastic Wealth of Ultra-Rich American Families Wins Again With GOP Tax Bill
This would continue a decades-long effort to weaken a critical tool to prevent the hoarding of wealth from one generation to the next.
Less than a generation ago, the estate tax was much more robust, with an individual exemption of $675,000 in 2001. Adjusted for inflation, that would amount to an exemption of $1.2 million per individual today. Even so, the tax was paid by just a tiny fraction of Americans; just 2.14 percent of all estates were subject to the tax in 2001.
But since then, lawmakers have weakened the estate tax four times, most significantly via the 2017 Trump tax law. That law doubled the estate tax exemption, bringing it to about $14 million today ($28 million for couples). This would revert to roughly $7 million if the Trump tax provisions expire at the end of this year as scheduled.
As we explained in a 2023 report, these cuts have taken the tax to historic lows. The most recent data from the IRS, from 2019, show that just 0.08 percent of all deaths resulted in estate tax liability that year, when the estate tax had an exemption of $11.4 million per person.
People across the country, including many Republicans, are expressing concern about the breadth and depth of proposed cuts to food assistance, health care, and other public services that are part of the reconciliation package the House is currently moving forward. At the same time, overwhelming majorities of Americans think that wealth inequality is a problem that leaders need to solve.
Given this, the least that lawmakers can do is allow the estate tax to drop slightly back down in 2026 instead of cutting it for the wealthiest families yet again.
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