Tag Archives: tax cuts for the rich

When The Numbers Do Not Align With The Words

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On Sunday, The Blaze posted an article about the Tax Cuts and Jobs Act of 2017. At the time the tax cut was passed, Democrats loudly professed that the bill was only ‘tax cuts for the rich.’ The article illustrates the fallacy of that claim by reporting actual numbers. You can follow the link above to the article to read some of the ridiculous claims made by Democrat leaders.

After detailing some of the claims made by leading Democrats, the article reports:

However, new analysis shows the Republicans’ 2017 tax cuts benefited middle-income and working-class Americans the most. The Heartland Institute — a free-market think tank — analyzed data from the U.S. Internal Revenue Service. The analysis declared that assertions made by Democrats about the GOP’s tax cut law were incorrect.

The Heartland Institute examined IRS data from 2017 to 2018, the first year the tax cuts went into effect.

“The Tax Cuts and Jobs Act reduced average effective income tax rates for filers in every one of the IRS’s income brackets, with the largest benefits going to lower- and middle-income households,” the report stated.

“For example, after accounting for all tax deductions and credits, filers with an adjusted gross income (AGI) of $40,000 to $50,000 received an average tax cut of 18.2 percent,” the Heartland Institute said.

“The IRS data further show that the Tax Cuts and Jobs Act appeared to have a strong upward effect on economic mobility,” the report noted. “The number of filers with an adjusted gross income of $1 to $25,000 decreased by more than 2 million in just one year, while the number of households reporting incomes higher than $25,000 increased in every income bracket.”

The article concludes:

The Heartland Institute concluded, “The available evidence is clear: Based on tax data from 2017 and 2018, the Tax Cuts and Jobs Act reduced taxes for the vast majority of filers, led to substantial improvements in upward economic mobility, and disproportionately benefited working- and middle-class households, many of which experienced tax cuts topping 18 percent to 20 percent.”

Contrast the above with one of the provisions in The Build Back Better Bill. That bill will raise the SALT (state and local tax) deduction to $80,000. That means that you can deduct up to $80,000 in state and local taxes from your federal income tax. The tax plan instituted under President Trump limited that deduction to $10,000. Do you honestly know any middle class Americans who pay $80,000 in state and local taxes? Raising the SALT tax limit to $80,000 is indeed a tax cut for the rich.

Looking At Actions Rather Than Words

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Most of us who live in middle class America are not overly concerned with the limit placed by the Trump administration on the state and local tax (SALT tax) deduction on our federal income tax. Generally that deduction impacts people who live in New York, New Jersey, Connecticut, Massachusetts, California and one or two other states. Generally speaking, the people who are impacted by the limitations placed on that deduction are among the high earners among us who own large homes and live in states with high real estate taxes. Limiting that deduction was a way to end the practice of fiscally responsible states subsidizing fiscally irresponsible states. Limiting that deduction should have jarred the states impacted into being more fiscally responsible. Not only did that no happen, the Democrat Congress wants to end that limit–thus providing a tax break for the rich–something they continuously accused President Trump of doing.

On Tuesday Steven Hayward posted an article at Power Line Blog about the move to end the limits on the SALT deduction.

The article notes:

If you need proof that Democrats are really on the side of the plutocracy, look no further than New York’s Democratic House members, who today wrote to Speaker Pelosi threatening to vote against any of (P)resident Biden’s tax increase proposals unless the bill includes full repeal of the state and local tax (SALT) deduction limitations that were part of Trump’s 2017 tax reform. The SALT limitation was the single most “progressive” tax increase on the rich in years, but chiefly in high tax states like California, Illinois, New York, and New Jersey.

Read the letter for yourself and enjoy the casuistry: We need SALT repeal, the New York Dems day, so that our taxpayers won’t be “double-taxed,” but of course their citizens only face this problem because those states impose those extra high taxes. And most of the benefit of the SALT deductions go to high income people—the very people Dems are always telling us should pay their “fair share,” which they never define in any concrete way. “Fair share” just means “more.” Well, Trump delivered that, so what’s the problem?

I also like how the letter, in paragraph three, admits that cutting taxes on the rich will help spur job growth. I thought liberals didn’t believe in supply-side tax cuts?

This is the letter:

I guess the Democrats really do like tax cuts for the rich.

Irony At Its Best

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The Trump tax cuts made life a little easier for most Americans. They made life a little more difficult for some middle class and wealthy people in states with high taxes. Oddly enough, many of these states with high taxes are blue states with large populations and huge state budgets. Some of the most affected states were California, New York, New Jersey, and Connecticut, all reliably blue states. Those states control 116 Electoral College votes and send 106 Representatives to the U.S. House of Representatives (out of 435 total Representatives). Now, after all the complaining that the Trump tax cuts were tax cuts for the rich (which they were not), Democrats want to give the wealthy in high-tax states their tax cuts.

Real Clear Politics posted an article today about the Democrats’ plan.

The article reports:

Democrats often complain that tax cuts primarily benefit “the rich,” but apparently they only think it’s a problem when rich conservatives get a tax break, because they’re outraged that President Trump’s tax cuts scaled back a generous subsidy enjoyed by well-off taxpayers in liberal states.

A key provision of the 2017 Tax Cuts and Jobs Act was a new cap on the so-called State and Local Tax (“SALT”) Deduction, which allows taxpayers to deduct state and local taxes on their federal tax return. This provision forces taxpayers in low-tax states such as Florida and Texas to effectively subsidize those in high-tax states such as New York and California.

For years, blue-state Democrats have been able to raise state income and property taxes far higher than voters might normally tolerate. That’s because the SALT deduction softened the impact for taxpayers in those states, particularly for the rich campaign-donor class. Since the SALT deduction only applies to taxpayers who itemize their returns, its benefits naturally accrue to those in the highest income bracket.

There was previously no limit to how much taxpayers could deduct through SALT, but even though the Tax Cuts and Jobs Act capped the deduction at $10,000, almost 93 percent of American taxpayers will be unaffected. It’s likely that fewer taxpayers will elect to take advantage of SALT, since the law also doubled the standard deduction, but about 11 million of the highest-earning Americans living in high-tax states are seeing their federal income tax liabilities increase.

It’s curious that liberals who criticized Trump so vociferously for “cutting taxes on the wealthy” are so upset by an element of the tax reform plan that merely takes away a tax break enjoyed disproportionately by the wealthy.

The problem here is simple. The Democrats believe that President Trump cut taxes for the rich (which he didn’t), but it was the wrong rich. However, just for the record, since most of the tax burden falls on Americans who are relatively successful, their tax cuts are going to seem larger than those who pay little or no taxes.

The following chart is from a Pew Research article. The figures are from 2015:

People who make over $100,000 (which in some areas of the country is not a lot of spending power) pay over 80% of all income taxes paid. I think we need to reopen the discussion of a flat tax. Everyone needs to have an equal stake in the game.

Who Benefited From The Tax Cuts?

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On Friday, Investor’s Business Daily posted an article about the Trump Tax Cuts.

The article reports:

The numbers are now in. According to Congress’ nonpartisan Joint Committee on Taxation (JCT), the rich are now paying a higher share of federal taxes after enactment of the Republican tax reform plan than before.

For 2017, before tax reform, the JCT estimates those earning $1 million or more a year paid 19.5% of all federal taxes, counting income taxes, payroll taxes, and excise taxes. But for 2018, after tax reform, the committee estimates that these same millionaire taxpayers will pay 20.4% of all federal taxes.

The biggest relative tax cuts resulting from the tax reform are for those making less than $50,000 a year. Their share of federal taxes fell from 4.4% to 3.8%, a tax cut of 14%.

Indeed, the committee estimates that the federal tax burden went up for all taxpayers now making over $200,000 a year, from 49.8% before tax reform, to 51.3% this year after tax reform. You have to go down to those making between $100,000 and $200,000 a year to find taxpayers paying a lower share of federal taxes, from 29% of the federal tax burden last year to 28.8% this year.

But how could that be? The fundamental reason is the economic growth effects of tax reform.

Higher economic growth means increased wages, jobs, employment and income. As the economy grows, the share of taxes paid, especially by those earning higher incomes who still pay much higher tax rates under our so-called “progressive” tax code, goes up as well.

This is the Democrats’ biggest nightmare. That is the reason they opposed the tax cuts and tried to use the media to turn the American people against the idea of tax cuts. I believe that in the 2018 mid-term elections, we will see the Democrats attempt to campaign on the idea that the tax cuts were ‘tax cuts for the rich,’ but if American voters choose to be informed, they will recognize the lie in that statement.

The article reports more bad news for Democrats campaigning in 2018:

Those same economic effects of the tax reform amount to economic liberation for the poor, working people and the middle class. After 8 years of economic stagnation under the neo-socialist policies of Obamanomics, the rising wages, jobs, employment and income under the long overdue Trump Republican economic recovery are making America great again for those with low and moderate incomes.

Top economists estimate wages for average middle-class families are increasing by $4,000 a year due to tax reform. That’s in addition to direct tax cuts of $2,000 a year for middle class families.

These economic effects are why we now see the lowest unemployment rates among blacks in American history. And despite the lies of the Democrat fake news media, the lowest unemployment rates among Hispanics in history as well.

And these economic effects are why Trump/Republican economics is now resonating among blacks and Hispanics culturally as well, from young black Millennials like Candace Owens to hip-hop stars like Kanye West.

As John F. Kennedy stated, “A rising tide lifts all the boats.'” We have watched the tax cuts (and the ending of some over regulation) do just that. John Kennedy would probably not be welcome in today’s Democrat party. That is a shame. In spite of his questionable activities regarding women, I believe he would have been a reasonable President had he lived.

Tax Cuts For The Rich?

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The Democrats objection to President Trump’s tax plan is that it is ‘tax cuts for the rich.’ That is always their objection to any sort of tax break for Americans. Never mind that the rich pay most of the taxes, Democrats do not want to give them a break.

The graph below is from the Pew Research Center last year. It shows who is paying taxes in America:

Obviously it does not make a lot of sense  to cut taxes for people making less than $50,000 a year–they don’t pay a lot of income taxes to begin with.

Yesterday Thomas Sowell, a senior fellow at the Hoover Institution, Stanford University, posted an article at Investor’s Business Daily about the Democrats’ cry of ‘tax cuts for the rich.’

Here are some highlights from the article:

One of the key arguments of those who oppose what they call “tax cuts for the rich” is that the Reagan administration tax cuts led to huge federal government deficits, contrary to “supply side economics” which said that lower tax rates would lead to higher tax revenues.

This reduces the whole issue to a question about facts — and the hard facts are available in many places, including a local public library or on the internet.

The hardest of these hard facts is that the revenues collected from federal income taxes during every year of the Reagan administration were higher than the revenues collected from federal income taxes during any year of any previous administration.

How can that be? Because tax rates and tax revenues are two different things. Tax rates and tax revenues can move in either the same direction or in opposite directions, depending on how the economy responds.

The article explains:

Before we turn to the question of “the rich,” let’s first understand the implications of higher income tax revenues after income tax rates were cut during the Reagan administration.

That should have put an end to the talk about how lower tax rates reduce government revenues and therefore tax cuts need to be “paid for” or else there will be rising deficits. There were in fact rising deficits in the 1980s, but that was due to spending that outran even the rising tax revenues.

Congress does the spending, and there is no amount of money that Congress cannot outspend.

As for “the rich,” higher-income taxpayers paid more — repeat, more tax revenues into the federal treasury under the lower tax rates than they had under the previous higher tax rates.

That happened not only during the Reagan administration, but also during the Coolidge administration and the Kennedy administration before Reagan, and under the G.W. Bush administration after Reagan. All these administrations cut tax rates and received higher tax revenues than before.

The article concludes:

As a source more congenial to some, a front-page story in The New York Times on July 9, 2006 — during the Bush 43 administration — reported, “An unexpectedly steep rise in tax revenues from corporations and the wealthy is driving down the projected budget deficit this year.” Expectations, of course, are in the eye of the beholder.

The problem is not the revenue–it’s the spending. Unfortunately, Congress has not yet heard the cries of the American people to stop overspending. It may take another election to cause them to listen.