I Asked ChatGPT What Would Happen If Middle-Class Families Got the Same Tax Breaks as Corporations
Written by
Jordan Rosenfeld
Edited by
Molly Sullivan
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Most Americans have probably figured out that corporations enjoy tax code benefits that work in these companies’ favor. Through strategies like deductions, depreciation and creative accounting, many large companies pay a lower effective tax rate than the average American family. Meanwhile, the middle class often feels squeezed, and sometimes resentful, watching billionaires and businesses benefit from loopholes they can’t access.
But what if the playing field were leveled? What if middle-class households could claim the same kinds of deductions corporations routinely enjoy? I asked ChatGPT to break down what that might look like.
Lower Tax Bills
Corporations reduce their tax bills by deducting everything from office space to travel. If families had access to the same tools to deduct things like child care, groceries and household supplies, their yearly tax bills could shrink by thousands of dollars, ChatGPT pointed out.
More Money To Invest
With less money going to taxes, households could redirect funds into retirement accounts, college savings plans or paying down debt. Over time, the extra savings could compound into far greater financial security.
Could It Narrow the Wealth Gap?
Right now, corporations and the ultra-wealthy grow wealth faster because of their favorable tax treatment. “Leveling the playing field would redistribute some of that advantage,” the AI said. More middle-class families would have the breathing room to save and invest, potentially narrowing income inequality.
The Policy Trade-Offs
There’s a flip side, however. Giving every household corporate-style tax breaks would slash government tax revenue. That could mean less funding for Social Security, Medicare and public infrastructure, unless taxes were raised elsewhere. “In other words, there’s no free lunch.”
By the Numbers
To get specific, I asked ChatGPT to model how these savings might look for middle-class families in 2024 under the current tax brackets.
- At $80,000 of household income, an extra $20,000 in deductions would cut the federal tax bill by about $2,400, lowering the effective tax rate from just over 7% to about 4%.
- At $100,000 of income, the same deductions would save about $2,400, dropping the tax rate from 8% to 5.6%.
- At $120,000 of income, the savings remain around $2,400, reducing the effective tax rate from almost 9% to under 7%.
What if families deducted more? With $30,000 worth of expenses written off, the annual savings jump to around $3,600. “That’s the equivalent of a year’s worth of utilities, several months of groceries or a decent IRA contribution,” ChatGPT said.
The Reality Check
It’s unlikely that the tax code will ever allow families to write off groceries and commuting the way corporations write off office furniture or marketing budgets. The individual tax code is designed differently and also requires congressional approval. Expanding deductions to everyone would come with steep trade-offs.
Still, imagining the scenario highlights how tilted the system is in favor of businesses and the wealthy. Corporations treat many costs of living as “business expenses,” while families shoulder them out of pocket.
The Takeaway
If middle-class households could claim corporate-style tax breaks, many would keep an extra $2,400 to $3,600 a year, which could change the trajectory of their savings and security.
Even though that system isn’t reality, families can still take advantage of the tax breaks that are available, such as contributing to retirement accounts, using education credits, claiming the child tax credit and maximizing deductions like mortgage interest or health savings accounts.
Your family may not get to play by corporate rules, but making the most of the available ones is the next best thing.
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