| Unleash Prosperity Hotline Issue #150 11/1/2020 |
| 1) What Trump Tax Cut For the Rich, Joe? Joe Biden keeps slamming Trump’s “tax cuts for the wealthy,” and he continually claims that “$1.3 trillion of the $2 trillion of the tax cuts went to the top 1/10th of 1 percent” of earners. Huh? Actually, a new analysis by Andy Puzder finds just the opposite happened after the Trump tax cut. Instead of paying LESS tax, tax payments by the top 1% rose by $16 billion in 2018 the first year of the tax cut and the most recent year that the IRS has published tax payment data. Taxes paid by the bottom 99% FELL by $80 billion. Yes, some of this was due to the fact that the share of total income earned by the top 1% rose slightly from 21.5 to 22% of total income. Median household income through 2019 ROSE by $6,400. As for the rich, their tax liability rose faster than their incomes. So the SHARE of taxes paid by the richest one percent rose from 37.7% to 40%. That is at or near an all-time high of the share of income taxes paid by the top 1%. Someone, please explain to us how Trump CUT taxes on the rich? Joe, they paid MORE TAX, not less. This is exactly what we expected would happen. Going back to the 1920s (the Coolidge tax cuts), the 1960s (the Kennedy tax cuts), and the 1980s (the Reagan tax rate cuts) lower tax rates LEAD to more revenues and more taxes paid by the rich. The Trump tax cuts followed that pattern. The left keeps bragging about following “the science.” Trump’s tax cuts were a scientific experiment: we cut tax rates because we wanted to create more jobs, higher incomes, and help the middle class. The Democrats claimed this would never happen. But it did – and they still want to repeal the tax cuts. This isn’t science, it is a radical redistribution ideology that will make us all poorer.  But did the Tax Cuts and Jobs Act (TCJA) disproportionally benefit high earners? Comparing the income tax data for 2017 (the year before the TCJA became law) with 2018, clearly demonstrates that it did not. According to the nonpartisan Tax Foundation, the TCJA reduced effective tax rates “for all income groups in 2018.” Because we have a progressive tax system, high earners pay the highest rates and received the largest rate reductions. However, lowering rates for a group of taxpayers does not necessarily reduce their share of the tax burden. Let’s look at the TCJA’s impact on the top one percent of taxpayers. In 2018, 1.6 million taxpayers reported earning $500,000 or more. While the amount all taxpayers owned the IRS in 2018 declined by $64 billion, the amount these high earners owed increased by $16 billion. Their share of the tax burden also increased. They accounted for 22 percent of total income in 2018 (a 0.5 percentage point increase over 2017) but their share of total income taxes rose to 40 percent (a 2.3 percentage point increase). By the way, you read that right. About 1.6 million, or one percent of all taxpayers, bore 40 percent of the income tax burden due to the federal government. So, as a result of the TCJA, high earners paid more taxes to the government, while everyone else paid less. They also paid a larger percentage of all taxes, while everyone else paid a smaller percentage. But what about the middle class specifically? While there is no accepted definition for “middle class,” median family income in 2018 was $63,179, so let’s look at taxpayers making between $50,000 and $100,000. In 2018, there were about 35 million taxpayers in this bracket, an increase of roughly one million over 2017 (a growing middle class). In total, they owed $31 billion less in 2018 than in 2017. In other words, the middle class got nearly half of the $64 billion decline in taxes owed under the TCJA. As for their share of the tax burden, it also declined. While they accounted for 22 percent of total income (roughly the same as in 2017) their share of income taxes was 13 percent (over a percentage point less than in 2017). Let’s look at taxpayers making under $25,000. The number of taxpayers in this bracket was 52 million in 2018, a drop of 2.3 million taxpayers from 2017. In total, their tax liability declined 16 percent or $4 billion, from $25 billion in 2017 to $21 billion in 2018. Their share of the tax burden also declined. Those taxpayers accounted for 4 percent of total income (roughly the same as in 2017) but their share of taxes was one percent (slightly less than in 2017). So here are the results of the Trump tax cuts: The income tax burden for high earners increased $16 billion to 40 percent of the total owed. The income tax burden for middle class earners decreased by $31 billion to 13 percent of the total owed. The income tax burden for low wage workers decreased by $4 billion to 1 percent of the total owed. Doesn’t sound much like a tax cut for the wealthy. So why does Joe Biden keep saying what he says? To quote Ronald Reagan: “It isn’t so much that liberals are ignorant. It’s just that they know so many things that aren’t so.” One reason high earners share of the tax burden increased is that the TCJA reduced the itemized deductions they were able to claim. High earners generally benefit more from itemizing deductions. Lower earners generally benefit more from the standard deduction. In total, the TCJA cut the amount taxpayers claimed for itemized deduction in half from $1.3 trillion in 2017 to about $650 billion in 2018. The TCJA’s elimination of the deduction for state and local taxes (SALT) alone was responsible for $240 billion or 37 percent of that decrease. The SALT deduction primarily benefits high earners in high tax blue states. Despite claiming that he wants to increase taxes on high earners, Biden supports restoring the SALT deduction — which would reduce them. As for middle and lower-wage earners, the number of tax returns claiming the standard deduction increased in 2018 by 29 percent to 134 million. Because the TCJA increased this deduction, the amount those taxpayers deducted increased $1.4 billion or 156 percent from $900 million to $2.3 billion. In reality, thanks to the TCJA, working and middle class Americans were earning more and keeping more of what they earned following the Trump tax cuts. That meant bigger paychecks and an easier time meeting household expenses. As a group, high earners were paying more and bore a greater percentage of the income tax burden. Biden can claim otherwise but that won’t make it so. |
https://www.foxbusiness.com/politics/truth-trump-tax-cuts-biden-andy-puzder
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