Friday, March 31, 2017

Comptroller Stringer Releases Analysis of Trump Tax Plan

As President Trump pivots to tax reform, new analysis shows the plan could hike taxes on 40 percent of single parents in New York City while slashing tax bills for more than 90 percent of NYC millionaires
While NYC millionaires would get an average tax cut of at least $113,000, nearly half of single parents who make $25,000 to $50,000 would see a tax increase
Those with incomes above $500,000 represent less than 2% of tax filers in NYC, but would enjoy two-thirds of the tax cuts
  New York City Comptroller Scott M. Stringer released a new analysis that shows the Trump Administration’s tax plan, as proposed during his campaign, would provide significant tax cuts to nearly all millionaires in New York City — like President Trump himself — while actually raising taxes on many single parents, moderate- and middle-income New Yorkers, and working families. According to the first-of-its-kind analysis of the proposal’s impact on City residents, more than 95% of New York City taxpayers with incomes between $500,000 and $1 million, as well as over 90% of those with income above $1 million, would pay the same or less in taxes than they do today. Yet, nearly 40% of single parents in New York City would face higher tax liability. The tax plan proposed during the President’s campaign is also projected to cost a whopping $2 trillion or more in lost Federal revenue over the next decade.
Head of Household filers, typically single parents with children, would be at greatest risk under the Trump Plan. Almost 40% of New Yorkers in this filing category — more than 300,000 New Yorkers — would face higher taxes under the proposed Plan. More than one-third of all taxpayers with incomes between $50,000 and $250,000 would pay more in taxes.
Conversely, those who make over $500,000 stand to gain 64% of the overall benefit of the tax cut — despite representing less than 2% of all New Yorkers.
Based on the limited information available from President Trump’s now-public 2005 Federal tax return, his proposal to eliminate the Alternative Minimum Tax – or AMT – would have benefitted him by $31 million dollars that year. In contrast, under his tax plan, a single mother raising two kids on less than $50,000 a year would face a tax increase of $464. For the 23,000 millionaires that would benefit enormously under this proposal, there are 311,000 single parents raising children who would be worse off.
In order to make President Trump’s campaign tax proposal permanent, Congress and the White House would have to pay for the plan with cuts to federal spending – including aid to state and local governments. That could shred the City’s social safety net, further hurting low-income New Yorkers and decreasing quality of life in our City, even for those with marginally lower tax bills.
“What Trump promised during the campaign looks like a tax plan created for the Mar-a-Lago elites. It’s written by millionaires, for millionaires. President Trump wants to give his friends — and himself — a big tax cut, and force working New Yorkers to pay for it. It’s a plan that exacerbates wealth gaps at the expense of low-income, single parents. If President Trump moves forward with the tax plan he proposed during the campaign, I believe it will take New York backwards,” New York City Comptroller Scott M. Stringer said. “Embracing ‘trickle-down’ has never helped working families move up the economic ladder — it’s a sleight-of-hand that helps America’s wealthiest.”
The Comptroller’s Office analyzed tax records for 365,000 New York City households and simulated how they would be affected by President Trump’s tax plan as proposed during his campaign. Key findings include:
  • More than 95% of taxpayers with income between $500,000 and $1 million and almost 92% of those with income above $1 million would pay the same or less in taxes than they do today.
  • On average, millionaires’ tax bills would decrease by $113,000. Coupled with Trump’s proposed corporate tax reform, which would lower tax rates on business income, the average millionaire could see their taxes decrease by more than $200,000. By contrast, those who make less than $50,000 and receive a tax cut would see median savings of just $293.
  • Despite representing less than 2% of taxpayers, those with incomes over $500,000 would receive almost two-thirds of the total tax cut.
Median Tax Savings and Change in After-Tax Income
Adjusted Gross IncomeMedian Tax SavingsMedian Change in After-Tax Income
$0 to $25,000$1140.9%
$25,001 to $50,000$5662.0%
$50,001 to $100,000$1,2332.1%
$100,001 to $250,000$1,2511.0%
$250,001 to $500,000$3,7231.3%
$500,001 to $1 million$20,0464.3%
More than $1 million$76,4996.9%
  • Over one-third of those with incomes between $50,000 and $250,000 would pay more in taxes if this plan were enacted.
  • Nearly 40% of single parents would face an increased tax bill – including 47% of single parents who make $25,000 to $50,000 and 75% of those who make $50,000 to $100,000.
  • For taxpayers with incomes below $500,000, tax savings diminish – or taxes actually go up compared to current law – the more dependents one claims.
  • Overall 13% of all single filers would face an increased tax bill, and nearly half of those with incomes between $100,000 and $500,000 will pay more taxes.
Percent of Filers with Higher Tax Liability Under Trump Plan, by Filing Status
Adjusted Gross IncomeSingleHead of HouseholdMarriedAll Filers
$0 to $25,0001.6%12.0%0.0%3.6%
$25,001 to $50,00012.147.48.321.4
$50,001 to $100,00024.174.618.533.3
$100,001 to $250,00045.293.226.939.5
$250,001 to $500,00049.688.615.728.7
$500,001 to $1 million7.414.92.44.2
More than $1 million10.
The analysis of the potential tax plan comes as Federal funding for New York City is at risk from the new administration and Republicans in Congress. The President’s recently released “skinny budget” for Federal Fiscal Year 2018 proposes outright elimination of several federal aid programs that would result in at least $400 million in cuts to City programs, and unspecified potential cuts to billions of dollars in other federal aid.  Programs proposed for elimination include:
  • Community Development Block Grants (CDBG): The City has budgeted $225 million in CDBG funds in City FY 2018, which are used to fund housing code enforcement activities, including housing inspections, emergency heat and hot water repairs, lead-based paint mitigation and removal, senior centers and meals, family homeless shelter operations, vacant lot cleaning, city planning, and adult literacy programs, among others.
  • The Low-Income Home Energy Assistance Program, which helps some 770,000 New Yorkers keep their homes warm in winter ($23 million).
  • $108 million in Title II grants to DOE that help increase the number of highly-effective teachers and principals in schools.
  • Community Services Block Grants, which fund rental assistance, summer youth employment (SYEP), and adult literacy programs ($48 million).
In addition, the President’s budget would cut Homeland Security Grants that support NYPD counterterrorism, as well as funding to public housing and Section 8 rental vouchers by at least 13 percent, and would cut critically-needed public housing capital funding by fully two-thirds.
The President’s budget is silent on several critical aid programs, for example:
  • TANF: $1.8 billion in City FY 2018;
  • The Child Care and Development Block Grant, $523 million
  • The Social Services Block Grant, $206 million
  • Head Start, $131 million
  • The School lunch program, $302 million
To read Comptroller Stringer’s analysis of President Trump’s tax plan, click here.
To read Comptroller Stringer’s analysis of potential budget vulnerabilities under the Trump administration, click here.

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