President Trump chose to come to Indiana this week to unveil his new tax plan, which he has called “the biggest tax cut in American history.” One of his aims is to simplify the tax code -- a laudable idea. However, the only thing simple about this proposal is who loses -- everyday Hoosiers.
This plan shortchanges Indiana because the vast majority of the benefits are felt at the top of the economic ladder. Instead of attempting to spur economic growth from the middle-out or bottom-up, President Trump is placing his hope that economic growth will trickle down from millionaires to the rest of us.
According to a new report from the Institute on Taxation and Economic Policy, less than 1 percent of those who file taxes in Indiana earn more than $1 million annually, however, millionaires receive almost 40 percent of Trump’s proposed tax cuts.
The top 1 percent of earners, all with incomes of at least $500,500 annually, account for 46.1 percent of the state’s share of tax cuts. These individuals would get an extra $95,940 each year ($1,845 each week). That almost $100,000 in additional cuts for the top 1 percent is more than nearly 80 percent of Hoosiers earn in a single year.
On the other end of the economic spectrum, most Indiana residents will see nothing even close to this level of benefit. For example, the group that makes up the largest percentage of Indiana tax-filers -- the 44 percent who earn less than $45,000, would receive under 6 percent of the total cuts. In addition, the bottom 60 percent of middle- and working-class Hoosiers, those earning less than $64,000 a year, account for just 11.7 percent of the planned cuts.
These individuals would get just $410 per year on average. More plainly, the majority of Indiana residents will see a benefit of about $8 per week.
This isn’t class warfare -- this is dollars and cents. Literally, a few dollars and cents each week are all most Indiana taxpayers will receive. If the raw inequality in who will benefit from these cuts was not problematic enough, it is not just working and middle-class Hoosiers who are getting the short end of the stick under this plan.
The state of Indiana would only get an 87 percent share of tax cuts relative to the state’s ratio of the U.S. population. This is the 23rd-smallest share among states.
Who is going to pay for these massive cuts? Indiana already balances its budget on the backs of working families with one of the most regressive tax systems across the country. To offset these massive reforms, which are projected to cost almost $5 trillion over the next decade, services that benefit the very individuals who lose in this proposal will be cut.
Hoosiers should call Sen. Joe Donnelly and Sen. Todd Young at (202) 224-3121 and ask them to reject the Trump sales pitch and pledge to ensure any tax reform puts working families first.