June 12, 2023

ITEP Analysis: New Proposed Tax Cuts Would Flow Primarily to Wealthiest Americans and Foreign Investors

news release

Contact: Jon Whiten ([email protected])

The trio of tax bills that House Republicans plan on moving forward this week include huge tax cuts that would mostly benefit the wealthiest Americans and foreign investors, according to a new analysis released Sunday by the Institute on Taxation and Economic Policy.

The bills, which are set to be considered in committee on Tuesday, would next year deliver:

  • $60.8 billion in tax cuts to the richest 20 percent of Americans
  • $23.8 billion to foreign investors
  • just $1.4 billion to the poorest fifth of Americans

This means that the poorest fifth of Americans would receive an average tax cut of just $40 next year while the richest one percent would receive an average $16,550 tax cut next year.

The new tax cut proposals come just weeks after Republicans threatened to cause a catastrophic default on the federal debt to address an alleged budget crisis, and – if made permanent – would cost more than $1 trillion over the next decade, according to the Committee for a Responsible Federal Budget.

ITEP’s new analysis examines the five most significant provisions that would cut taxes in the legislation. These five measures make up 95 percent of the cost of tax cuts in the new bills. Four of them would expand corporate and business tax breaks that were enacted in 2017 as part of the Trump tax law, the Tax Cuts and Jobs Act. The fifth would increase the standard deduction, which would lower the tax liability for some middle-income people.

The analysis does not address who ultimately bears the burden of the revenue-raising provisions (which would repeal clean energy tax credits) because their burden would ultimately fall on everyone in the form of greater climate damage.

“Even if you ignore the tax increases on clean energy in this Republican legislation, this still looks like a terrible deal for ordinary Americans and a windfall for foreign investors and the richest one percent of Americans,” said Steve Wamhoff, ITEP’s Director of Federal Policy and the author of the report.