Here's exactly how Paul Ryan's tax plan is a giant tax cut for millionaires

Source: Win McNamee/Getty Images

President Donald Trump and congressional Republicans may tackle tax reform as early as late spring, White House press secretary Sean Spicer said

But what that tax overhaul will look like is a detail the White House and Republicans still have to hammer out. 

Republicans have proposed two tax reform proposals: Trump’s plan and House Speaker Paul Ryan’s.

White House press secretary Sean Spicer listens to a question during the daily press briefing at the White House.
Source: Evan Vucci/AP

Lower taxes for the top 1%

While Trump’s plan represents a bigger cut for the wealthiest Americans — and a bigger drag on federal revenue — Ryan’s would also cut taxes for the rich.

Currently, there are seven tax brackets, the lowest marginal tax rate being 10% and the highest 39.6%. Ryan’s plan would reduce that number to three: 12%, 25% and 33%. 

Under the current tax code, a single filer earning $100,000 pays 28% of their income, or $28,000, in tax. 

Under Ryan’s plan, the same filer would pay 25%, or $25,000, in tax — a savings of $3,000. Meanwhile, under the current tax code, a filer earning $500,000 pays 39.6% in tax, or $198,000. Under Ryan’s plan, the same filer would pay 33%, or $165,000 — a savings of $33,000.

House Speaker Paul Ryan speaks to the media after after a House Republican closed party conference.
Source: Mark Wilson/Getty Images

Capital gains

But that isn’t the whole picture. Ryan’s plan would also cut taxes on investments, dividends and capital gains by about half, a major boon for the top 1%. In 2013 (the most recent year for which data are available), the top 1% earned 38% of their income in capital gains, according to the Congressional Budget Office.

The Tax Policy Center, a liberal tax policy think tank, estimates that, under Ryan’s plan, those with incomes greater than $1 million would pay $302,000 less in tax in 2025 — an 11% increase in after-tax income. The bottom 80%, meanwhile, wouldn’t see their after-tax incomes change by more than half a percent in either direction. People making between $40,000 and $50,000 would see an extra $120, TPC estimates.

How much do you trust the information in this article?

Taylor Wofford

Taylor is a reporter who covers politics. Before Mic, he worked at Newsweek.

MORE FROM

Election Assistance Commission official on meeting about voting threats: “There was a real urgency”

The race is on to shore up the election system before the next vote.

3 key takeaways from Republicans’ failure to repeal Obamacare

Republicans knew what they didn't like about the Affordable Care Act, but they never released a plan that would fix the problems they railed against.

Russia is retaliating against new US sanctions. Here’s what that actually means.

Here's what's happening with the new sanctions on Russia.

“Skinny repeal” bill fails, putting Republicans back at square one in effort to repeal Obamacare

Senate Republicans have exhausted their three potential Obamacare repeal bills, delivering a devastating blow to President Donald Trump's agenda.

A look inside the candidate boot camp training the next wave of progressive political hopefuls

"We need to elect badass leaders ... at every level of government.”

Election Assistance Commission official on meeting about voting threats: “There was a real urgency”

The race is on to shore up the election system before the next vote.

3 key takeaways from Republicans’ failure to repeal Obamacare

Republicans knew what they didn't like about the Affordable Care Act, but they never released a plan that would fix the problems they railed against.

Russia is retaliating against new US sanctions. Here’s what that actually means.

Here's what's happening with the new sanctions on Russia.

“Skinny repeal” bill fails, putting Republicans back at square one in effort to repeal Obamacare

Senate Republicans have exhausted their three potential Obamacare repeal bills, delivering a devastating blow to President Donald Trump's agenda.

A look inside the candidate boot camp training the next wave of progressive political hopefuls

"We need to elect badass leaders ... at every level of government.”