Report: Trump tax plan gives Montana’s richest 1 percent 51 percent of cuts
Montana residents who earn the most would benefit the greatest under President Donald Trump’s proposed tax plan, with the richest 1 percent receiving an average cut of more than $113,000, a new study suggests.
In comparison, the average cut for the bottom 60 percent of Montana’s earners would average just $760, directing just 8.6 percent of the proposed tax cuts to low- and middle-income earners.
“The administration’s proposed tax cuts will largely benefit the wealthy and would come with a heavy dose of cuts to investments and vital services for Montana communities,” Heather O’Loughlin, co-director of the Montana Budget and Policy Center, said Thursday.
“At a time when many Montana families are working hard for low pay and living month to month, these tax cuts would give the wealthiest 1 percent a tax cut nearly three times the average annual wage in Montana.”
According to the Institute on Taxation and Economic Policy, which analyzed the effect of Trump’s tax plan across all 50 states, 1 percent of Montana’s top earners are projected to make roughly $1.8 million in 2018 and would receive 51 percent of the cuts.
In comparison, the analysis found, the middle fifth of taxpayers are projected to make $47,000 next year and would receive 6.5 percent of the cuts. All told, the bottom 60 percent of earners in Montana would receive 8.6 percent of the tax cuts under the president’s proposal.
“Federal proposals for tax cuts for the wealthy will eliminate critical federal revenue that will further restrict Montana’s already tight budget,” O’Loughlin said. “We have seen firsthand in Montana the struggles of dealing with lower revenue.”
The study, released on Thursday, was triggered earlier this year after the Trump administration released a broad proposal to overhaul the federal tax code. At the time, officials aligned with the president said the tax plan would help the middle class, though the study disputes that claim.
The bottom three-fifths of Montana taxpayers, which represent 60 percent of state earners, are projected to make less than $60,400 in 2018. Tax cuts to the state’s wealthiest residents alone more than double that amount.
“Politicians who propose tax cuts sometimes argue that no one should be surprised if they mostly benefit the rich,” the study suggests. “They argue that the rich make most of the income, so of course they receive most of the tax cuts.”
But the study calls that argument misleading since the richest 1 percent receive a larger tax cut than anyone else, even when it’s measured as a percentage of their income.
“In Montana, the richest 1 percent would receive a tax cut equal to 6.2 percent of their income,” the study says. “The bottom three-fifths of taxpayers in the state would receive a tax cut equal to just 1.1 percent of their income.”
According to the Institute on Taxation and Economic Policy, the president’s tax proposals would reduce total federal revenue by at least $4.8 trillion over 10 years.
While that may lead to higher government deficits in the short term, the long-term impacts would likely prompt Congress to cut major programs, including Medicare, Medicaid and food assistance to offset the cots.
The study argues that such cuts would hurt low- and middle-income earners even more.
“In sum, the plan would lose $4.8 trillion in federal revenue over the next decade, putting at risk critical investments in communities,” the study says. “In Montana, federal fund transfers represent nearly half of the state budget and is the largest single source of revenue for the state.”