No one seems to agree on how the GOP tax plan, finally ready to be signed by Trump, will affect millennials. To some, it’s blatant generational theft—a last way for aging boomers to screw over the adults of the future. To others, it’s a boon; the bill may finally offer millennials burned by the 2008 crisis a chance at economic comeback.
In a way, both are true. The final plan is laced with all sorts of perks that could help Americans in their twenties and thirties—leniency on small, floundering businesses and higher deductions. The median 24-to-34-year-old makes a little more than $40,000 a year. Under the new plan, the average person making that much money will pocket a 3% tax cut. And the standard deduction will double to $12,000, a bonus for low-earners, who use it most.
But the plan also guts incentives for healthcare and balloons debt—bad news for the country’s young and poor.
Life will get better for the millennial rich
Republicans argue that one of the largest provisions of the new tax plan—its support for small business—is a gift to millennials. High start-up costs and corporate competition can discourage young, scrappy founders. Less than 2% of millennials are self-employed compared to around 8% of Generation X and boomers.
But let’s be clear—millennial entrepreneurs are overwhelmingly from rich families. They don’t possess a mysterious risk gene, just a financial safety net that makes ventures far less risky; meanwhile, middle-class and lower-class millennials are burdened by sky-rocketing student debt, which the new tax plan doesn’t address.
For the young entrepreneurs who find success, the new tax plan ensures they’ll reap more from lower corporate taxes. And for the few who achieve immense success—or intend to kickstart their businesses with inherited capital—passing down wealth just got cheaper. The bill also reduces the estate tax, allowing individuals to bequeath $11 million in non-taxable assets, and couples, $22 million.
Inheriting a dismal future
“Millennials, you just had $1.5 trillion stolen from you,” Joe Scarborough told his audience on MSNBC’s Morning Joe. The tax plan is estimated to add at least $1 trillion to the US deficit, money that might have otherwise been funneled into infrastructure, schools, or social welfare.
Republicans argue that tax cuts to the wealthiest will materialize as investment into the economy, and eventually jobs. But this theory, trickle-down economics, has been disproven repeatedly. Even CEOs of major corporations admit that most tax cuts turn into executive salary bumps (paywall).
When the deficit balloons because of corporate tax cuts, and not increased fiscal spending, it doesn’t bode well for the economy. Of 42 top economists polled by the University of Chicago, only one thought the GOP tax plan would boost the economy. Even he warned of the dangers of piling wealth at the top, and driving inequality.
Millennials are now the largest living generation and will soon be the biggest working one. Flagging growth, a burdensome deficit, and rising inequality will hit them hardest.