The richest 5 percent of Oregonians would receive nearly 70 percent of the benefit from a sweeping tax cut proposed by President Donald Trump two weeks ago, an independent analysis shows.
The Institute on Taxation and Economic Policy estimates that for households making at least $532,000, the average tax cut would be around $42,000 were the plan in place in 2018. Meanwhile, for households making between $41,600 and $66,800, the cut would average $420.
About 18 percent of Oregon households would see a slight tax increase, mostly those making between $109,900 and $223,500.
"It is, broadly speaking, going to be a tax cut for most Oregonians," said Daniel Hauser, policy analyst with the Oregon Center for Public Policy. "It's just going to be a much larger tax cut for richer Oregonians."
The 9-page plan — named the Unified Framework for Fixing Our Broken Tax Code — outlines goals and several key changes, but leaves much of the details to Congress.
Among the biggest changes are doubling the standard deduction, reducing the number of tax brackets from seven to three (at 12 percent, 25 percent and 35 percent), repealing the inheritance tax (also known as the "death tax"), and cutting the corporate tax rate.
The stated goals of the plan are focused on tax relief and simplicity for the middle class and businesses, which correspond with the general goals President Donald Trump laid out during the 2016 campaign.
Oregon Republican Party spokesman Kevin Hoar said the proposal is exactly what individuals and small businesses in the state need.
"In every instance that we've seen massive tax cuts, we've seen massive growth," Hoar said, pointing to growth after tax cuts under Presidents John Kennedy, Ronald Reagan and George W. Bush.
Trump administration officials also argue that the tax cuts will pay for themselves through growth, though economists are far from unified in this opinion.
During a hearing of the U.S. Senate Committee on Finance last week, the four economists testifying were asked by Sen. Ron Wyden, D-Ore., if tax cuts alone pay for themselves.
None of the economists answered in the affirmative.
After their answers, Wyden lambasted the concept, saying lawmakers can't rely on a "magical growth fairy."
"It is absurd," he later said in an interview. "There is no academic or other independent support to that proposition."
But, Wyden said, tax reform is something Democrats and Republicans can support. Many sides dislike the status quo, which is unusual for a major policy issue.
The standard deduction increase, for example, is something he supports — he previously introduced a bill that would triple this provision.
But the removal of other deductions creates a "one hand giveth and the other taketh away" situation, Wyden said.
Hauser, from the Oregon Center for Public Policy, said one proposed removal he found particularly troubling was the state and local tax deduction. It allows tax payers to deduct some state and local taxes from federal taxes, which is particularly beneficial in higher-tax states like Oregon.
According to IRS data for 2015, more than one in three Oregon taxpayers used the state and local tax deduction, reducing taxable income by $8.5 billion.
But Hoar said this could be a good thing for taxpayers, because the removal of this deduction incentivizes states to reduce its own taxes. This would also attract more businesses to Oregon that might have been turned away by higher taxes.
"We're in favor of seeing lower taxes in Oregon. There's no secret about that," Hoar said.
Hauser said he fears that Trump's plan would reduce revenue by so much — estimated by the Tax Policy Center to be $2.4 trillion over the first decade — that it could result in severe cuts to safety net programs, including food stamps and health care.
Wyden's general perspective is simple: It's trickle down economics.
"We've seen this movie before and it does not end well for Oregonians," Wyden said.
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