House Speaker Paul Ryan says that improving the lives of low-income Americans is a top priority. To do that, the GOP plans to help businesses first.
.. In Ryan’s oft-touted policy agenda, “A Better Way,” he argues that social services may help Americans cope with poverty, but they do little to eliminate it. That’s why it’s no surprise that in the GOP’s anti-poverty plan, the welfare system—also called the “entitlement” system, depending on who you ask—is to be a main target for cutbacks.
.. But Ryan made it clear during his speech that altering policies specifically aimed at reducing poverty won’t be an immediate priority. Instead, the GOP will focus on tweaking policies they think will help businesses grow and provide more opportunities for low-income Americans: removing business regulations and cutting taxes, classic conservative solutions for jumpstarting economic growth.
.. Cutting taxes comes next and will most likely ease the tax burden on corporations and the wealthiest Americans. Under his proposals, top individual income tax rates would drop from 39 percent to 33 percent, and corporate tax rates would fall from 35 to 20 percent.
.. The problem for Ryan’s approach is that even if the economy does grow from removing business regulations and cutting taxes, it’s not clear that that growth will come in the form of wages for the poorest Americans. More than half of the country’s income growth in the last decade went to the wealthiest 1 percent of American families.
.. That means the traditional Republican plan of spurring growth in order to boost the economic standing of the poorest Americans won’t do much to end poverty unless they can also ensure the money is going to those who need it most.
Will Donald Trump Cave on Social Security?
Sam Johnson, the chairman of the House Social Security subcommittee, introduced a billthat would slash Social Security benefits for all but the very poorest beneficiaries. To name just two of the bill’s benefit cuts, it would raise the retirement age to 69 and reduce the annual cost-of-living adjustment, while asking nothing in the way of higher taxes to bolster the program; on the contrary, it would cut taxes that high earners now pay on a portion of their benefits.
.. most current retirees rely on Social Security for more than half of their income, and future retirees are expected to rely even more on the program.
Recently, he put forth a proposal to reform the budget process by imposing automatic spending cuts on most federal programs if the national debt exceeds specified levels in a given year. If Congress passed Mr. Trump’s proposed tax cut, for example, the ensuing rise in debt would trigger automatic spending cuts that would slash Social Security by $1.7 trillion over 10 years, according to an analysis by the Center for American Progress, a liberal think tank. This works out to a cut of $168 a month on the average monthly benefit of $1,240. If other Trump priorities were enacted, including tax credits for private real estate development and increases in military spending, the program cuts would be even deeper.
How Trump’s tax cuts (and hikes) will impact you, explained in one simple chart
Great news for those in the 35% and 40% brackets. Not so great for those earning less than $18,550, where, according to HowMuch.net, the tax rate would actually go up by 2 percentage points to 12%.
.. Of note, Amoros points out that the graph doesn’t account for other aspects of Trump’s plan, like the increase of standard deductions and a cap on itemized deductions.
Team Trump’s New Pledge on Tax Cuts
Among the famed top 1 percent, inflation-adjusted average income has nearly doubled to $1.4 million in the last 25 years
.. The middle class and poor have done much worse, with median household income rising a mere 7 percent, to $56,500.
.. Every year, each household in the top 1 percent saves more than $100,000 on average in exemptions, through benefits for mortgage interest, pensions and many other things.