Tax Fairness: The most frequently repeated complaint about the Republican tax cuts is that they are a massive "giveaway" to the rich. New evidence shows that this claim, like almost every other attack on the tax bill, is false.
XIn the run-up to the passage of the tax reform plan, which President Trump signed into law on Dec. 22, critics attacked it on several fronts.
They said there was no way the tax cuts would spur extra economic or job growth. But after the tax cuts went into effect, several economists sharply increased their growth forecasts for 2018.
They said the plan would raise taxes on the middle class. Nancy Pelosi claimed as recently as this month that the tax bill will boost taxes on "86 million middle-class families." Even the Washington Post called her out for this falsehood.
They said none of the benefits of the corporate tax cuts would "trickle down" to workers. That would be news to the more than 4 million workers who've received bonuses, wages, or improved benefits as a direct result of these cuts.
They also said the tax bill was a budget buster that would never come close to paying for itself. But the latest CBO report shows that the extra economic growth created will offset a substantial portion of the tax cuts.
Giveaway To The Rich?
However, the most frequent charge leveled against the GOP tax cuts was that it would make the tax code less fair. It was, they said, a "huge," "massive," "the most insane" (pick your over-the-top adjective) giveaway to the rich.
Now we know that this, too, is false.
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Boston University economist Laurence Kotlikoff, along with University of California, Berkeley, economist Alan Auerbach, conducted a detailed analysis of the winners and losers of the tax bill.
They found virtually no change in the progressivity of the tax reforms. The rich, they concluded, "will pay essentially the same share of taxes" as before.
Data from the nonpartisan Tax Policy Center shows the tax code getting more progressive under the Republican tax cuts, according to a report on the data in the Wall Street Journal.
Top 0.1%, for example, will see their share of federal income taxes paid climb to 22% this year, up from 18.9% last year.
The share of income taxes paid by the top 1% will reach 43.3% this year, compared with 38% last year.
How is this possible, given that the law cuts the top income tax rates?
Millions More Pay Nothing
Because while it cut taxes for the relatively few rich in the country, the law also cuts taxes for the vast middle class — through lower rates, a much larger standard deduction, and doubled per-child tax credit.
The law also kicks many families off the tax code entirely. According to the Tax Policy Center, 45.8% "tax units" will owe nothing in federal income taxes this year, or will get a net refund thanks to tax credits. That's up from 43.4% under the old law.
So, thanks to the GOP tax cuts, the rich will pay either the same or a greater share of the nation's income tax bill and millions more will pay zero income taxes. How exactly is this a "giveaway" to the rich?
Indeed, by the Democrats' own definition, the Republican tax reform — which zero Democrats voted for — has made the tax code more fair, not less.
Just don't expect them to ever admit this.
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