Last week, right here in Indiana, President Trump unveiled more details about his proposed plan to overhaul the federal tax code. The President didn’t release his entire plan, but the analysis conducted based on publicly available information makes it apparent that this would be a boon for the top 1 percent and a bad deal for the middle class.
For instance, the non-partisan Indiana Institute for Working Families has concluded that the top 1 percent of Hoosiers would save about $218,000, enough to buy a new Maserati. In contrast, average Hoosiers making about $40,000 a year would see a negligible $4 more per week in their paychecks. Another study conducted by INSIDER Magazine concluded that those making less than $40,000 a year may actually see a TAX INCREASE as the President wants to increase the bottom rate from 10 percent to 12 percent, and eliminate key tax breaks.
Although a formal tax reform bill has not been submitted to Congress, CNBC has identified four popular middle class tax deductions or exemptions the Trump Administration may end. Among these are the workplace health insurance premium tax exemption, a tax credit for health-care expenses that exceeds 10 percent of one’s gross adjusted income, real estate tax deductions, and the deduction of state and local taxes. Currently, I (and millions of other Americans who have health insurance through their employer) do not pay tax on the portion of our insurance premiums paid for by our employer. Under the Trump plan, this will be considered taxable income.
Middle class homeowners can also deduct taxes they pay on real-estate, but this may also come to an end under the Trump plan. Furthermore, Americans may also no longer be able to deduct state and local taxes on their federal forms. This will impact middle class Hoosiers in particular, because as the Institute on Taxation and Economic Policy found, Indiana is the 10th most regressively taxed state in the country. For example, in Indiana, middle and working class Hoosiers pay upwards of 10 percent of their incomes on state, property, and sales taxes.
It’s fundamentally unfair and un-American to ask middle and working class Americans – many of whom have seen their wages stagnate and decline – to pay for massive tax breaks to the top 1 percent whose incomes have skyrocketed since the 1980s.
