Senate Tax Bill Increases Progressivity

AWall Street Journal op-ed last week by liberal billionaire Tom Steyer complained that the proposed Republican tax cut “overwhelming helps the wealthy.” He said that the American people will be furious “if they see a bill passed that hands out filet mignon to the wealthy while leaving them struggling over scraps.”Steyer ’s op-ed had more rhetoric than data, but he did cite aTax Policy Center (TPC) analysis of the Senate bill. So let ’s look at the TPC data. The table below summarizes the Senate tax cuts for 2019 and compares them to current-law taxes.Looking at the block on the right, TPC finds that 62.2 percent of the tax cuts would go to the highest quintile, or fifth of U.S. households, and 15.3 percent would go the top 1 percent. Just 13.5 percent of the cuts would go the middle quintile. Does that mean filet mignon for the top and scraps for the middle?No, it does not. We need context. We need to know how much tax those groups are currently paying, but TPC does not show that in its analysis of the Senate plan. You have to dig throughTPC ’s website to find it here. TPC ’s estimates of current law taxes for 2019 are below in the block on the left. “All Federal Taxes” includes the taxes shown plus payroll and excise taxes.Without any tax cut, the top quintile will pay 67.0 percent of all federal taxes in 2019, and the top 1 percent will pay 26.7 percent. Since the tax cut shares for those groups are less than that, the cuts will make federal taxation mor...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs