A massive tax giveaway to those at the top financed by working-class Americans.
By Colin Seeberger
Senior Adviser, Communications
The Center for American Progress
Introduction
New budget plans from Republicans in Congress propose sweeping new tax cuts for the wealthiest Americans. Specifically, among other changes, the budget plans seek to extend the individual income and estate tax provisions of the 2017 Tax Cuts and Jobs Act. According to the U.S. Treasury Department, doing so would cost nearly $4.2 trillion over the next decade—with nearly 60 percent of the tax cuts, or about $2.5 trillion, going to the top 10 percent of taxpayers, who earn more than $228,060 annually. Meanwhile, the top 1 percent of earners—those making at least $743,247 annually—would see their taxes reduced by more than $1.24 trillion over the next decade, accounting for roughly 30 percent of the total tax cut.
These budget plans would make America’s working class foot the bill for wasteful tax cuts for the wealthy. The strategy is threefold:
- Cut vital programs that working-class Americans rely on.
- Eviscerate tax credits that benefit low- and moderate-income Americans.
- Increase the debt and deficit by allowing trillions of dollars in tax cuts to go on America’s credit card, making it more expensive for consumers to finance basic purchases.
Making It Harder for People to Afford Health Care and Food
Among the ways the Republican budget plans propose to pay for these wasteful tax cuts for the wealthy is to cut programs that help working-class Americans remain financially secure. The programs at risk of suffering some of the greatest cuts include Medicaid ($880 billion cut), which ensures 72 million people, or more than 1 in 5 Americans, are able to obtain health care, and the Supplemental Nutrition Assistance Program ($230 billion cut), which helps 42 million people, or more than 1 in 8 Americans, avoid going hungry. In the end, these cuts would kick millions of Americans off of both safety net programs while also slashing the benefits, such as long-term care, available to enrollees. Put another way, cuts to these two programs alone could be roughly equivalent to the total net tax cut for the top 1 percent of earners.
Slashing Tax Policies That Save the Working Class Money
Another way the Republican budget writers aim to burden the middle class at the expense of the wealthy is through weakening tax policies that benefit working people. Specifically, the plans aim to stop the country’s development and expansion of clean energy and energy-efficient technologies, which helped millions of families save a combined $8.4 billion on energy bills and energy-efficient home improvements in 2023 alone. Repealing these investments is likely to increase electricity prices by 10 percent and raise gasoline prices by more than 20 cents per gallon.
Other policies being considered would slash tax refunds for working families to the tune of hundreds of billions of dollars. These proposals include eliminating the child and dependent care tax credit, making it more onerous for taxpayers to claim the child tax credit, substantially lowering the home mortgage interest deduction cap, and eliminating tax credits for qualified education expenses.
Terminating or reducing these tax credits for millions of families is a particularly devastating blow for America’s middle class—especially if Congress also allows the enhanced premium tax credits available to those who buy health insurance on their own to expire at the end of this year. Notably, these tax credits have helped the typical marketplace enrollee save $800 a year on health insurance premiums.
Increasing Borrowing Costs for Consumers through Higher Deficits
In addition to making massive cuts to programs and tax benefits that strengthen America’s working class, congressional Republicans have made clear that they are willing to increase the debt to the tune of $2.8 trillion in unfunded tax giveaways. According to the Congressional Budget Office, higher deficits and the associated greater borrowing costs lower the pool of available resources for private investment, leading to lower wages and salaries over time. This crunch in capital for the private sector also drives up borrowing costs for consumers—which means working-class people pay the price through higher interest rates on financed purchases, such as home mortgages, car loans, credit cards, and beyond.
Americans already feel squeezed by the cost of living, which is why it is unconscionable to pass a tax package that gives more than $1.24 trillion in tax cuts for the top 1 percent while making daily living expenses even more of a burden. Worse yet, not only do the largest tax cuts accrue to those at the very top; they go to the same people who are best positioned to pay for major expenses in cash, insulating them from higher borrowing costs and giving them yet another leg up over America’s working class.
Conclusion
For decades, working families have felt stretched by an economy where wages grow too slow and prices grow too high. It’s a key reason why nearly 80 percent of U.S. adults worry that their children will be worse off than they were. Responding to that anxiety by gutting investments in Americans’ health care and nutrition assistance, taking away their tax benefits, and forcing them to pay more for a home, a car, or energy in order to give the wealthiest people in this country more tax breaks is both cruel and unpopular.
Originally published by The Center for American Progress, 02.26.2025, republished with permission educational, for non-commercial purposes.