While conservatives hail the Republicans’ budget plan as the “biggest tax cut in history” and say that President Donald Trump’s tax plan is necessary tax relief, Trump and his allies are working to execute an enormous transfer of wealth from working Americans to the wealthiest.
Elizabeth Pancotti, a former adviser to Sen. Bernie Sanders, I-Vt., and a managing director at the Groundwork Collective, described the current GOP plan as a “triple whammy of massive redistribution in a society that is already tilted toward the wealthy.”
“The end goal here is to redistribute trillions of dollars from the middle and working class at the bottom to the one percent and the wealthy folks,” Pancotti said. “They’re doing that in three different ways.”
The first is through tariffs. Although Trump’s decision to roll back his so-called “reciprocal tariff” plan was often referred to as a pause on tariffs, this isn’t exactly the case. His administration is maintaining a 10% tariff on all imports as well as a 145% tariff on imports from China, alongside a handful of tariffs on specific industries.
Tariffs, Pancotti said, are a regressive tax that disproportionately impacts lower earners because, in essence, a tariff is a sales tax on imported goods. Because lower-income Americans spend a larger proportion of their income on goods, they will also spend a larger proportion of their income paying the tariffs on affected goods.
At the same time, Pacotti said, the Trump tax cuts, which Republicans were planning to extend, were skewed to benefit the wealthiest Americans. While the top 1% of households received an average tax cut of $60,000, according to the Tax Policy Center, the bottom 60% of households received an average tax cut of less than $500.
For comparison, the Yale Budget Lab estimated that Trump’s tariff plan will likely cost the average American household around $4,689 a year, a sum that eclipses the tax cut that most households received in the GOP’s budget plan while only being about 8% of the average tax cut the wealthiest households received. In practical terms, this means the Trump administration and his Republican allies in Congress are planning to hike taxes on most Americans while cutting taxes for the wealthiest households.
Pancotti pointed out, however, that this isn’t the only part of the GOP’s budget plan. They also passed a budget that will almost certainly result in dramatic cuts to services like Medicaid or CHIP, which serves as a safety net for the poorest Americans.
Dean Baker, an economist at the Center for Economic and Policy Research, told Salon that, in addition to this dynamic, cuts at the IRS, supported by Republicans and spearheaded by billionaire and Republican megadonor Elon Musk, will also make it easier for the wealthy to avoid paying the taxes they owe. Baker said that, in practice, it’s much easier for the wealthy and those who make money from capital investments to avoid paying taxes, saying, “Most of us have our tax deducted from our wages. We don’t have much choice in the matter.”
“So you both have, you know, the legislative changes that reduce their tax liability, but also, you know the fact of change is that if you don’t have much by way of enforcement, you have a lot of people that don’t pay their taxes,” Baker said.
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