In Washington state in particular, people should be especially concerned about the proposal to gut the federal tax code. That’s because our state tax code is already heavily rigged in favor of the wealthiest and most powerful, and it disproportionately harms people of color. People with low and middle incomes already pay up to seven times more in state and local taxes as a share of their income than the top 1 percent. And this takes a heavier toll on many Black, American Indian, and Latino Washingtonians, who make up a disproportionately larger share of those income groups than whites do – because of historically racist policies that have denied them equitable access to opportunity.
According to analysis by the Institute on Taxation and Economic Policy, 63 percent of federal tax cuts for Washingtonians in the Trump-GOP tax plan would go to the top 1 percent. As the chart below shows, people with low and middle incomes would see a very small tax reduction on average. While people in the lowest-income group in Washington state would see an average tax cut of $100 under the plan, people in the wealthiest 1 percent would receive an average tax cut of more than $100,000. (Of note, the average annual income among the top 1 percent of Washingtonians is about $2 million.)
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The enormity of the tax cuts under this plan can’t be rationalized by the top 1 percent’s comparatively higher income levels, either. Even when Trump’s proposed tax cuts are calculated as a share of income, the tax cuts at the top would be much higher than those at the bottom. The wealthiest 1 percent would get a tax cut that amounts to a 5.2 percent of their annual income. By contrast, those making the least would see a tax cut that amounts to just 0.6 percent of their incomes. People in the middle don’t fare much better. In fact, every income group in the bottom 95 percent would see an average tax cut that amounts to less than 1 percent of their income. In other words, any lawmakers who are saying this plan is designed to help the middle class are lying.
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Further, it’s important to note that not all Americans – or Washingtonians – would get a tax cut under this plan. One in six Washingtonians would actually see a tax hike under the plan. Ultimately, many of those in the middle would contribute more while the top 1 percent get a break. That is not sound policy – especially in our state, where working families are already paying more than their fair share while the wealthiest get a special deal.
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Adding insult to injury, this plan does not include other sources of revenue to offset the huge tax cuts for millionaires. As a result, these giveaways will create a gaping hole in the federal budget. Without other revenue to fill that hole, investments that strengthen our economy will be at risk. And it’s a safe assumption, given this presidential administration, that those cuts won’t come at the expense of the top 1 percent. Instead, the shortfall will be used as an excuse, either now or in the future, to undermine investments that help low- and middle-income Americans – by cutting programs like health care, education, job training, and the like.
This tax plan, the latest in a series of federal proposals designed to benefit the very wealthiest, lacks any foresight about the real needs of everyday Americans now and into the future. Washingtonians need a plan that actually helps all families have the opportunity to thrive – not a plan that only serves to exacerbate our upside-down tax code.