Winners
- Plutocrats: True, the top individual rate remained at 39.6 percent, but the overall changes to the tax brackets still result in a cut, and the big picture items are the corporate tax cut, which will enrich shareholders, and the phased abolition of the estate tax.
- Upper-middle class people in red states: The increased standard deduction and the new 12 percent bracket will help. The 401(k) escaped the chopping block, at least for now. The SALT and mortgage interest deduction limitations won’t matter much here due to relatively low property values and state taxes.
Losers
- Upper-middle class people in blue states: Elimination of most of the SALT deduction and the capping of mortgage interest may result in an overall tax increase for some of these people.
- The real estate and development industries: Demand for expensive housing will be reduced by the SALT and mortgage interest changes.
There is no economic rationale for rewarding upper-middle class people in red states and punishing the same people in blue states; that’s all about trying to turn blue states red. I addressed that in a previous post. I’m sure the decisions to phase in the estate tax repeal and keep the 39.6 bracket will be spun as a preference for middle-class people over the wealthy. Don’t believe it, because it simply isn’t true.