New Estimates Find Wealthy will Reap Greatest Savings from the Recent Tax Reform Legislation
The Tax Policy Center of the Brookings Institution has updated their estimates for individual savings resulting from last years Tax Reform Act which substantially reduced corporate tax rates. but which would also decrease some individual tax rates, while others would see an increase.
The Tax reform Act will reduce individual income taxes across all income groups, but taxpayers in the bottom income quintile (those with income less than $25,000) will only see an average tax cut of $40, or 0.3 percent of after tax income. And taxpayers in the middle income quintile (those with income between about $49,000 and $86,000) will receive an average tax reduction of about $800, or 1.4 percent.
However, taxpayers in the 95th to 99th income percentiles (those with income between about $308,000 and $733,000) will reap the greatest benefit with an average tax cut of about $11,200 or 3.4 percent of after tax income. Taxpayers in the top 1 percent of the income distribution (those with incomes greater than $733,000) will receive an average cut of almost $33,000, or 2.2 percent of after tax income.