Summary: We present budgetary and distributional estimates for three potential versions of the lump-sum payment that President Trump announced earlier today. All three options increase the after-tax income of low income households the most. However, higher-income households have more children on average and would receive larger cash payments unless additional adjustments are made.
Option 1: Non-taxable payments | |||||
---|---|---|---|---|---|
Income group | Average benefit | Percent change in after tax income | Share of benefit | Share of federal taxes paid | |
Under current law | Under the proposal | ||||
Bottom quintile | $1,180 | 39.2% | 20.0% | 0.0% | -2.1% |
Second quintile | $1,505 | 6.6% | 19.6% | 2.3% | 0.5% |
Middle quintile | $1,595 | 3.7% | 20.0% | 10.2% | 9.2% |
Fourth quintile | $1,895 | 2.5% | 20.6% | 19.1% | 19.0% |
80-90% | $2,250 | 1.9% | 10.0% | 15.0% | 15.5% |
90-95% | $2,355 | 1.4% | 4.9% | 10.9% | 11.6% |
95-99% | $2,345 | 0.8% | 3.9% | 16.4% | 17.7% |
99-99.9% | $2,375 | 0.3% | 0.9% | 12.7% | 14.0% |
Top 0.1% | $2,310 | 0.0% | 0.1% | 13.0% | 14.4% |
Note: “Income” is defined as AGI plus: above-the-line deductions, nontaxable interest income, nontaxable Social Security benefits, nontaxable pensions and annuities, employer-side payroll taxes, and corporate liability. For this short-run analysis, the corporate income tax is assumed to be borne entirely by the owners of corporate equity. Federal taxes included are individual income, payroll, and corporate income taxes.