Figure 2

If tariffs are maximized, lower- and middle-income Americans would lose greater shares of after-tax income with little to no offsetting tax cut benefits

Percentage change in after-tax income due to revenue maximizing tariffs and equally-sized income tax cuts

Notes: This tariff distribution methodology follows Clausing and Lovely (2024). Tax cuts are assumed to only affect those paying positive federal income taxes, so the full tax cuts are distributed among the top three quintiles and the top 1 percent according to the Treasury distribution tables outlined in Cronin (2022), table 6. Income tax cuts are assumed to be spread across the individual and corporate tax bases in proportion to the size of the underlying tax bases in each income group.
Source: Authors' calculations based on consumer expenditure survey data from the US Bureau of Labor Statistics and tax and income distribution data from the US Treasury.