Trump’s Tax Plan: Rich Get Richer, Working Class Left Behind!

The tax plan proposed by Republican presidential candidate Donald Trump, which aims to lower the U.S. corporate tax rate from 21% to 15%, would disproportionately benefit the wealthiest Americans while adversely affecting those in the lower half of the income spectrum, a study from economists at American University revealed on Thursday.

Released just over a month ahead of the critical November 5 election, this analysis evaluates the potential macroeconomic effects and distributional outcomes of the corporate tax rate proposals suggested by Trump and Democratic nominee, Vice President Kamala Harris. Harris advocates for a rise in the corporate tax rate to 28%.

According to the study, Trump’s proposal would likely result in a minor reduction in the nation’s gross domestic product (GDP), a decrease in government revenues, and a marked increase in economic inequality. This is primarily because the wealthier segments, who predominantly own corporate stocks, would benefit from the tax reductions proposed by the former president.

The findings suggest that “the income share for the top 5% would rise by approximately 1.6%, whereas it would decline by about 4.8% for the bottom 50%,” according to the projections.

In contrast, Harris’s plan is projected to slightly enhance U.S. GDP, boost federal revenue, and reduce inequality. It would decrease the income share of the top 5% by around 1% and increase that of the bottom 50% by roughly 4.7% compared to the current policy.

This analysis follows a report by the Congressional Budget Office, which indicated that from 1989 to 2022, the richest 1% of Americans saw their portion of national wealth expand to 27%. Meanwhile, families in the bottom half of the income spectrum maintained just 6% of the nation’s wealth over the same period—an imbalance that further cuts in corporate taxes would likely worsen.

Trump highlighted the reduction of the corporate tax rate to 15% as a key feature of his speech last month at the Economic Club of New York, as reported by Bloomberg.

When Trump assumed the presidency in 2017, the official corporate tax rate was 35%. Later that year, he and Republican lawmakers introduced a tax cut initiative that reduced the corporate rate to 21%. This law, which was broadly unpopular, favored the wealthy substantially while offering minimal benefits to the working class.

Reducing the corporate tax rate further to 15% would provide about $50 billion in annual tax reductions to the 100 largest and most profitable companies in the U.S., an analysis by the Center for American Progress Action Fund recently found.