December 1, 2016 4:10PM # 78% of Trump Tax Cuts Are for Businesses — not Individuals By [Alan Reynolds](https://www.cato.org/people/alan-reynolds) --- SHARE The Urban-Brookings Tax Policy Center produced some estimates of the tax revenues supposedly lost by the most recent (September) [Trump tax plan](http://www.taxpolicycenter.org/publications/analysis-donald-trumps-revised-tax-plan), which raised the top tax rate from 25% to 33%. These estimates are being widely misunderstood by the [Wall Street Journal](http://www.wsj.com/user/personalization/profile/E1_C5M9q1G8wgWDpSMwdS9vxA%3D%3D_E1), [New York Times](http://www.nytimes.com/2016/12/01/opinion/trumps-flip-flop-on-taxes.html) and others, so it may help to actually see the TPC 10-year totals organized by tax changes proposed for individuals, corporations and pass-through businesses. The estimates themselves are questionable as are related estimates of the *distribution* of tax cuts by income groups. I will deal with those issues in separate posts. What most needs emphasizing at this point is that although reporters are writing as though the Trump package is about *personal* income tax cuts, that only accounts for 22% of the estimated revenue loss (relative to [bloated CBO estimates](https://www.cato.org/blog/cbo-projections-no-basis-claiming-tax-reform-loses-money)). Moreover, the 10-year $1.5 trillion loss of revenue from modestly lower individual income tax rates is *much* smaller than estimated revenue *increases* from repealing personal exemptions ($2 trillion) and capping itemized deductions ($559 billion). The only significant net reduction in taxes on non-business income is from (1) repeal of the alternative minimum tax ($413 billion), and (2) more than doubling the standard deduction ($1.7 trillion) – neither change being of any help to top-income taxpayers. TAX POLICY CENTER ESTIMATES OF 10-YEAR REVENUE LOSS FROM TRUMP TAX PLAN, 2016–2026, $ billions | Repeal Obamacare 3.8% investment income tax | -145 | |---|---| | Repeal alternative minimum tax | -413 | | Repeal head of household filing status | 131 | | Repeal personal exemptions | 2,000 | | Individual income tax rates of 12, 25, and 33 percent | -1,490 | | Increase standard deduction to $35,000/couple ($24,000 in GOP plan) | -1,688 | | Cap itemized deductions at $100,000 ($200,000 joint return) | 559 | | Childcare refundable tax credit | -132 | | Repeal estate, gift and GST taxes but tax capital gains at death. | -174 | | TOTAL INDIVIDUAL TAX LESS PASS-THROUGH BUSINESS = 22% of Total | **-1,353** | | | | | Elective flat rate of 15 percent on pass-through income | -895 | | Shifting of wages and salaries to 15% business income (tax avoidance) | -649 | | Allow expensing of non-corp investment & disallow interest deduction for those electing to expense | -689 | | Tax carried interests as ordinary business income | 10 | | Repeal certain pass-through business tax expenditures | 58 | | TOTAL PASS-THROUGH BUSINESS = 35.2% of Total | **-2,164** | | | | | Reduce corporate rate to 15% & repeal corporate AMT | -2,355 | | Allow expensing of corp investment & disallow interest deduction for those electing to expense. | -593 | | Deemed repatriation 10 yrs. of untaxed foreign earnings then tax foreign subsidiaries on accrued profit | 148 | | Repeal certain corporate tax expenditures | 167 | | | | | TOTAL CORPORATE BUSINESS = 43.8% of Total | **-2,633** | | | | | TOTAL STATIC REVENUE LOSS | -6,150 | ##### Related Tags [Government and Politics](https://www.cato.org/government-politics), [Tax and Budget Policy](https://www.cato.org/tax-budget-policy) [![Creative Commons License](/build/cato_2020/images/creative-commons.svg)](http://creativecommons.org/licenses/by-nc-sa/4.0/) This work is licensed under a [Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License](https://creativecommons.org/licenses/by-nc-sa/4.0/).