The wealthiest 1 percent of Louisianans will get the greatest share of the tax cut plan proposed by the U.S. House of Representatives. And the share of the tax cuts going to the top 1 percent would grow through 2027, according to a 50-state analysis of the House tax plan released today by the Institute on Taxation and Economic Policy (ITEP).
Meanwhile, the value of the tax cut would decline over time for every income group in the state except the very richest.
House leadership continues to tout this tax proposal, which will increase the federal deficit by $1.5 trillion over the next decade, as a plan to boost the middle class. But a closer examination of the bill’s provisions reveals that it is laser-focused on tax cuts for the nation’s highest earning households. The wealthiest Louisianans’ share of the state’s tax cuts would grow over time due to phase-ins of tax cuts that mostly benefit the rich and the eventual elimination or erosion in value of provisions that benefit low- and middle-income taxpayers. For example, after five years, the bill eliminates a $300 non-child dependent credit that benefits low- and middle-income families while fully repealing the estate tax in year six for the very large estate subject to the tax.
“A closer look at the details of this tax plan indicates that lawmakers are most serious about ensuring that they lower tax bills for the highest-earning households,” said Alan Essig, ITEP’s executive director.
According to the 10-year outlook for the plan, the share of the tax cuts going to the richest 1 percent in Louisiana would increase from 32 percent in 2018 to 48 percent in 2027, according to the 10-year outlook for the plan, for an average cut of $60,090. Middle-income taxpayers’ average tax cut would erode to $160 from $540, and the poorest 20 percent’s average tax cut would decline from $100 to $90.
“This bill may cut taxes for some low- and middle-income households, though it also raises taxes on some of these families and others see no benefit at all. But let’s be clear: it is still the case that it will primarily benefit the rich, across the nation and in Louisiana,” said Jan Moller, Director of the Louisiana Budget Project. “These tax cuts that mostly benefit top earners will add to the nation’s annual deficits and come at the expense of low- and middle-income families who will likely lose more from cuts to education, health care, infrastructure or other public services than they gain from the small cuts they would receive.”
The House Republican tax bill would cut taxes by roughly $150 billion per year in the United States. That’s equal to the combined cost of:
To read the entire report or get more Louisiana-specific details, go to http://itep.org/housetaxplan