By David Morgan
WASHINGTON (Reuters) - The wealthiest Americans would benefit the most from President Donald Trump's proposed tax cuts while many upper middle-income people would face higher taxes, independent experts said on Friday in the first detailed analysis of the plan.
A U.S. Senate panel took Trump's proposal, announced on Wednesday, a step forward by unveiling a budget plan for the coming fiscal year that acknowledges lost revenues from tax cuts, while Trump pressed ahead with selling the plan to the public.
A report from the non-profit Washington-based Tax Policy Center found that in 2018, about 12 percent of taxpayers would face a tax increase of roughly $1,800 on average.
That includes more than a third of taxpayers making between about $150,000 and $300,000, mainly because most itemized deductions would be repealed including for state and local taxes, it said.
Its analysis showed that the Republican tax proposal would fuel the growing federal deficit, providing $5.99 trillion in tax cuts while reducing federal revenues by a net $2.4 trillion in the next 10 years.
Trump, who promised major tax cuts as a candidate, has called his proposal "a miracle for the middle class," but the report concluded it would provide middle-income taxpayers uneven tax relief. In 2018, all income groups would see their average taxes fall, but some taxpayers in each group would face tax increases, it found.
Taxpayers in the top 1 percent of incomes - above $730,000 - would receive about 50 percent of the total tax benefit from the tax overhaul, with their after-tax income forecast to increase an average of 8.5 percent, the group said.
"The biggest share of people with increased taxes will be ... people who might be considered upper-middle-income people, high-income professionals, people whose income is between $150,000 and $300,000 in a year in 2017," Tax Policy Center co-director Eric Toder said.
The bottom 95 percent of taxpayers could expect a tax cut of 0.5 to 1.2 percent, according to the analysis.
The proposed tax cuts for corporations and small businesses would reduce federal revenue by $2.6 trillion over a decade and largely would benefit high-income taxpayers, it said.
Trump, a real estate mogul-turned-politician, had pledged that the tax plan would not benefit the rich, himself included.
BUDGET RESOLUTION
The budget resolution released by the Senate Budget Committee, which would pave the way for Republicans to avoid potential Democratic procedural moves to block it, builds in $1.5 trillion in reduced revenue from tax cuts over the next decade.
The White House and Republicans in Congress aim to have the tax proposal passed by the end of the year. Republicans control the White House, the Senate and both chambers of Congress.
The resolution is vital to plans by the Republicans to move tax legislation through the Senate, which they control by a slim 52-48 majority, using a parliamentary process that lets them pass legislation without a customary 60-vote threshold that would necessitate some Democratic support.
The proposal calls for slashing the corporate tax rate to 20 percent from 35 percent, the small business rate to 25 percent from 39.6 percent and the top individual rate to 35 percent from 39.6 percent.
Democrats call the tax plan a giveaway to the rich and corporations that would balloon the federal deficit.
"The Senate Republican budget is the clearest sign yet that Republicans are intent on pursuing a tax plan that would blow a huge hole in the deficit and stack up debt, leading to cuts in programs that middle-class Americans rely on," Senate Democratic leader Chuck Schumer said in a statement.
Trump talked up the tax proposal during a speech on Friday to the National Association of Manufacturers business lobbying group in Washington, calling it "a giant, beautiful, massive -- the biggest ever in our country -- tax cut."
"The biggest winners will be everyday working families, as jobs start pouring into our country," Trump said.
The U.S. national debt stands at about $20 trillion and the proposal provided few details on how to offset the federal revenues that would be lost with the tax cuts.
Trump has failed to secure passage of any major legislation since taking office in January, with a healthcare overhaul collapsing in the Senate, money to build his promised wall along the border with Mexico failing to materialize and infrastructure spending legislation never getting off the ground.
(Reporting by David Morgan; Additional reporting by Steve Holland and Makini Brice; Writing by Will Dunham; Editing by Alistair Bell)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)