GOP Tax Plan: The Biggest Winners and Losers

Within a decade, the top 1 percent would enjoy fully half the benefits from the bill, according to one analysis

Sen. Ted Cruz speaks during a news conference on tax reform earlier this week. Credit: Tom Williams/Getty Images

The Republican tax plan now up for debate in the House is a budget-buster, creating $1.7 trillion in new deficits over ten years. It's another mark of ideological bankruptcy from a party that, just a few years ago, shut down the government – and threatened to throw America into default – rather than raise the debt limit.

More surprising for a Republican tax plan, the proposal is not an across-the-board tax cut. In fact, tens of millions of Americans would ultimately face a tax hike, according to Congress' Joint Committee on Taxation, while fewer than half of U.S. households would pocket a yearly tax cut of more than $100. By 2027, according to the independent Tax Policy Center, "at least 25 percent of taxpayers" would pay more to the IRS. Their average tax increase: $2,080. In that year, the analysis concludes, "Taxpayers in the top 1 percent would receive nearly 50 percent of the total benefit."

The biggest beneficiaries of the GOP tax plan are corporations – the corporate tax rate plummets from 35 percent to just 20 percent. Corporations that have dodged taxes by stashing more than $2.6 trillion offshore would get an even sweeter break, paying as little as 5 percent on that wealth. In another huge break, the top rate on wealthy "pass through" businesses would drop from nearly 40 percent to just 25 percent.

The GOP tax plan does include a few unambiguously good ideas like ending the mortgage-interest deduction for vacation homes, repealing a tax break that subsidizes sports stadium construction, and (modestly) taxing the richest private college endowments. But the bill also promotes some spectacularly bad public policy.

Here we break down the proposal's biggest losers – and its least deserving winners.

THE LOSERS

Student loan borrowers
The GOP plan would scrap the tax deduction for student loan interest payments. Under current law, nearly anyone with student loans can subtract as much as $2,500 in interest payments from their income before calculating taxes. The GOP plan would stick student loan borrowers with a tax hike of up to $625 a year.

Ph.D. students
The plan is an assault on higher education. It taxes free tuition as though it were earned income. Imagine you're a science Ph.D. student working in a lab. Despite years of training, you're not very well paid, making $30,000 a year or so. But you can get by because the university waives your tuition, which might otherwise cost $50,000 a year. The Republican tax plan would redefine that $50,000 in unpaid tuition as income; so instead of paying taxes on $30,000 in salary, you would suddenly get taxed on $80,000 – with no additional cash in your budget to pay the IRS.

Teachers
The GOP plan would end the $250 tax break for teachers who spend their own money on class supplies. (The average teacher spends more than $500 out of pocket for their classroom.)

People in states with higher income taxes
Republicans say they hate double taxation. But their plan would impose federal income tax on money you already paid in state and local income taxes. This is a disproportionate blow to residents of wealthier blue states like New York and California, which tend to have higher taxes – and also an affront to conservative principles. (While hitting families hard, the GOP plan lets businesses deduct state and local taxes as usual.)

Families who adopt
Adoption is an expensive process, and can easily cost $40,000. The GOP tax plan eliminates a one-time tax credit of up to $13,570 that helps families of modest means afford to adopt.

People who move for work
The GOP tax plan ends the deduction for moving expenses related to changing jobs.

Electric vehicle buyers
The bill would axe the $7,500 tax credit for electric cars.

Wind energy producers
Wind generators now enjoy a production credit of 2.3 cents per kilowatt-hour; the GOP tax plan would slash that to 1.5 cents.

The sick
Under the current tax code, if you wind up with huge medical bills – or longterm care costs – in any given year, you can deduct the portion that's more than 10 percent of your income. The GOP bill repeals this tax relief. There's no replacement.

THE WINNERS

Donald Trump's children
The estate tax is a 40 percent tax on accumulated wealth. The GOP tax plan would initially double the estate tax exemption – allowing rich couples to pass down up to $22 million untaxed to their heirs. The GOP bill would then fully eliminate the estate tax after six years. This is a boon to the scion billionaires – Forbes estimates the Trump kids could get an extra $1.2 billion based on their dad's current net worth. It would cost the rest of us a reported $172 billion in the first decade alone.

People with aggressive accountants
The GOP tax bill repeals the alternative minimum tax, or AMT – an anti-tax-avoidance measure put in place to make sure Americans don't whittle down their tax burden with tricks and abusive tax shelters. We know little about Donald Trump's taxes, but in 2005 he paid $38 million, including $31 million he owed only because of the AMT. Abolishing the AMT benefits about five million taxpayers; it would reportedly cost the rest of us $695 billion.