Online Reporter
President Donald Trump’s tax and spending law will deal a financial blow to the poorest Americans while boosting the income of wealthier households, according to a new analysis from the Congressional Budget Office.
The poorest 10 percent of households will lose an average of about US$1 200 in resources per year, amounting to a 3,1 percent cut in their income, according to the analysis released Monday of the “One Big Beautiful Bill Act.”
Households in the highest 10 percent of incomes will see about a US$13 600 boost in resources on average, amounting to a 2,7 percent increase in their incomes.
Earners in the middle of the distribution will see their annual resources grow by about US$800 to US$1 200 on average, according to the analysis.
The hit to poorer families will largely result from the loss of benefits from social spending programmes, while much of the benefit to the wealthy will come from tax benefits and cash transfers, according to the CBO.
Trump and his allies have in recent weeks blasted independent agencies for releasing numbers with which the administration disagrees. The nonpartisan CBO, led by Phillip Swagel, who served in Republican President George W Bush’s administration, has repeatedly come under fire over its growth forecasts.
The tax and spending bill, enacted last month, includes much of Trump’s economic agenda. It extends his 2017 income tax cuts while implementing a number of new and expanded breaks, including a higher cap on federal deductions for state and local taxes, an enhanced child tax credit and no taxes on tips and overtime pay.
To offset some of the cost, the law includes a number of cuts for clean energy initiatives and social spending programmes, including medicaid and food stamps.
The CBO last month said the bill would add US$3,4 trillion to US deficits over the next 10 years, not accounting for dynamic effects such as the potential growth impact. — Bloomberg
