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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% of those who file taxes in Indiana earn more than $1 million annually, however, millionaires receive almost 40% of Trump’s proposed tax cuts. The top 1% of earners, all with incomes of at least $500,500 annually, account for 46.1% 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% is more than nearly 80% 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% who earn less than $45,000, would receive under 6% of the total cuts. In addition, the bottom 60% of middle- and working-class Hoosiers, those earning less than $64,000 a year, account for just 11.7% 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% 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 Senator Donnelly and Senator Young at (202) 224-3121 and ask them to reject the Trump sales pitch and pledge to ensure that any tax reform puts working families first.
Gregory Shufeldt is an assistant professor in the Department of Political Science at Butler University. His research and teaching interests include state and local politics, political parties and political inequality.