U.S. House tax plan: Benefit for richest 1 percent in Michigan grows over time

For Immediate Release
November 6, 2017

Contact:
Alex Rossman
arossman@mlpp.org
517.487.5436

LANSING—A new 50-state analysis of the House tax plan released by Congress last week reveals that in Michigan the wealthiest 1 percent of Michiganians will receive the greatest share of the total tax cut in year one and their share would grow through 2027. Further, the value of the tax cut would decline over time for every income group in Michigan 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 Michiganians’ share of Michigan’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 estates subject to the tax.

More specifically, the 10-year outlook for the plan reveals that by 2027, the top 1 percent of households in Michigan’s share of the tax cut would increase from 33 percent in 2018 to 47 percent by 2027, for an average cut of $77,380. Middle-income taxpayers’ average tax cut would erode to $590 in 2027 from $730 in 2018, and the poorest 20 percent’s average tax cut would decline from $110 in 2018 to $100 in 2027.

“This bill may cut taxes for some low- and middle-income households, but it also raises taxes on some of these families and many others will see no benefit at all. But let’s be clear: it is still the case that this plan will primarily benefit the rich, across the nation and in Michigan,” said Karen Holcomb-Merrill, Vice President of the Michigan League for Public Policy. “We have sent our elected officials to the nation’s capital to represent us, but what they are saying is just as important as what they are not saying. 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, healthcare, infrastructure or other public services than they gain from the small cuts they would receive.”

Following are some highlights of how the plan specifically affects Michigan:

  • Richest 1 percent of Michigan taxpayers would receive largest tax cut as a share of income under the House tax proposal in 2018 and 2027.
  • The share of low- and middle-income Michigan taxpayers seeing a tax hike under the House proposal increases between 2018 and 2027.
  • Average tax cuts to top 1 percent of Michigan taxpayers dwarf those going to all other income groups under the House tax proposal in 2018 and 2027.

To read the entire report or get more details about Michigan, go to http://itep.org/housetaxplan.

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The Michigan League for Public Policy, www.mlpp.org, is a nonprofit policy institute focused on economic opportunity for all. It is the only state-level organization that addresses poverty in a comprehensive way.