President Trump's Tax Cuts: A Burden for the Young, a Benefit for the Elderly
US President Donald Trump's tax cut bill has passed the House of Representatives and is awaiting Senate approval, but young people are paying the price.
The bill offers some relief to parents, students and hourly workers, but just beneath the surface are deep cuts and a $3 trillion increase in public debt that will deplete the financial futures of younger generations, drive up interest rates, put pressure on mortgages and raise taxes.
The plan is expected to push the federal debt to $36.2 trillion, forcing future governments to spend more on debt servicing than on programs that support younger generations. “Future generations will suffer,” said Kent Smetters, director of the Penn Wharton Budget Model.
The model shows that a 40-year-old with an average income would lose $7,500 over his or her lifetime if the bill passes, while a 70-year-old in the same income bracket would gain $17,500. The generational wealth gap is becoming increasingly apparent.
Public debt pushes home prices and education costs out of reach
There are several reasons for this impact. First, young people tend to have lower incomes, so they benefit less from the income tax cuts. Second, the bill cuts funding for student aid and Medicaid, two programs that young people use heavily. Medicaid covers 4 in 10 hospital births in the United States, so the cuts directly affect young parents.
“The short-term benefits are skewed toward higher incomes, which tend to be older,” said Jessica Riedl of the Manhattan Institute. But the biggest problem is the debt. Adding trillions of dollars to the national debt would raise interest rates, making it harder for the next generation to own a home or get a loan. John Ricco of the Yale Budget Lab predicts that by 2055, when today’s babies turn 30, the average mortgage could increase by as much as $4,000 a year as a result of the bill.
Republicans see this as part of a long-term solution. They say cutting Medicaid would make the program more sustainable, and tax incentives for overtime and tips would help young workers. But the benefits are small and temporary compared to the long-term costs.
The elderly get preferential treatment, the young take the financial burden
The bill adds some family incentives like $1,000 savings accounts for newborns and an expansion of the child tax credit, though the final version differs between the House and Senate. Steve Scalise, the No. 2 Republican in the House, said the plan would increase the median household’s take-home income by $4,000 to $5,000. But that figure does not include the increased costs for health care, food, and student loans caused by other cuts.
The Congressional Budget Office and other analysts confirm that the costs will outweigh the benefits for low- and middle-income households. While the child tax credit has been expanded, it has not been fully extended to low-income families—the group that needs the help the most.
Same goes for seniors. The bill includes tax breaks specifically for those over 65, a Trump campaign promise. “The tax cuts have little impact on the bottom half of low-income seniors,” says Brendan Duke of the Budget Policy Center. But the wealthiest seniors benefit greatly. They also keep their Medicare and Social Security benefits intact.
Costs for both programs are skyrocketing as the population ages. While Medicaid, which is heavily used by the young and poor, is facing cuts, Medicare and Social Security are not affected. Both Trump and his Democratic opponents have pledged to “leave it alone.” But both face a funding shortfall starting in 2033, with no real solutions in sight.
This suggests that the problem and the financial burden will fall on the next generation. “Republicans and Democrats have been engaged in generational theft for years,” Jessica Riedl notes. But the Trump bill has brought the problem to a head. The rich and the elderly benefit; the young are left with the debt.
Source: https://tintucbitcoin.com/nguoi-gia-duoc-uu-tien-trong-tien-dien-tu/
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