Which companies will be the biggest losers from a Trump tax cut?
The big winners are the big tech companies that benefit from the tax cuts, and the big losers will be smaller businesses.
The Tax Policy Center estimated that eliminating the alternative minimum tax will cost the economy $1.5 trillion over a decade, and that eliminating it would cause a $4 trillion loss in revenue.
The Trump administration is counting on its supporters to support the tax cut’s passage, and they are hoping to do so in a way that is politically palatable to voters.
The center’s analysis does not include the cost of closing loopholes, or of eliminating tax breaks that the administration claims are a “middle class advantage.”
“There are no loopholes to close and there are no deductions to eliminate,” said Steve Rosenthal, chief economist at the center.
“That’s a key reason why they’re making this claim, and a key argument they’re putting forward.”
The center found that eliminating some deductions and loopholes would save $3.5 billion a year, or about 7 percent of the revenue from the deduction for state and local taxes.
The Center on Budget and Policy Priorities, a liberal advocacy group, estimated that the elimination of the deduction would cause $4.4 trillion in revenue losses over 10 years, which it estimates would be paid for by eliminating tax loopholes, eliminating tax credits, or eliminating the estate tax.
Republicans in Congress are counting on that claim to sell their tax cuts to the public, but the data doesn’t support it.
According to the center, ending the deduction in 2024 would cost the government $1,938 per household, or $1 for every $1 spent.
That would be about $1 less than the cost the tax proposal currently stands.
Trump’s tax plan would repeal most of the tax breaks, but it would eliminate the Alternative Minimum Tax, the estate and alternative minimum taxes, and certain business-tax deductions.
“There’s a huge potential tax relief that comes with this plan, and it’s a tax plan that is far less onerous than the previous one,” said Robert Laszewski, a senior fellow at the Tax Policy Centre.
“But if you think about how much money would have to be raised in order to get there, then it becomes even more significant that there are very large tax increases that are being contemplated.”
The Tax Foundation, a conservative think tank, has estimated that repealing the Alternative Minimax Tax would cost roughly $5 trillion a year over a 10-year period, or more than twice the amount the Trump administration estimates.
“It’s a very, very significant impact,” said Roberton Williams, the group’s senior director of economic analysis.
“The more it’s phased in, the bigger the impact.
You’d have to cut $1 trillion in federal revenue by 2026 if you were to eliminate the minimum and the alternative.”
But even if the administration did cut taxes to a degree that offset the cost, the Congressional Budget Office has said that the cuts would only be temporary, and would eventually be phased out, and so would the economic impact.
“These are really big numbers, and you’re not going to see any permanent reductions in the tax base that would be offset by the tax relief in the form of lower tax rates,” Williams said.
A White House spokesperson pointed to the CBO’s analysis and said that it is “premature to assess whether these cuts will have an immediate and substantial effect on tax revenues.”
Trump’s proposal is a key component of the GOP’s plan to pass a $1tn tax cut by the end of the year.
But it’s not the only way to cut taxes, as it would affect a variety of other aspects of the economy.
For instance, the House and Senate tax bills would cut taxes on businesses, but not individuals, and also eliminate the estate taxes.
Both proposals would require that businesses pay income taxes, but Trump’s plan would require them to give up most of their deductions, which would leave them with little incentive to do that.
“I don’t think there is a real plan that would eliminate deductions,” said Michael J. Miller, an economist at George Mason University.
“If the House tax bill passes, there is probably going to be a huge tax cut for businesses.
But the tax bill is not going at a rate that will offset that.”