Trump and Biden Tax Policies

Chris EdwardsPenn-Wharton ’s budget teamhas produced new estimates of the effects of Joe Biden ’s fiscal proposals. This post looks at PW’s tax distribution estimates.PW presents estimated effective tax rates by income group, including individual income taxes, corporate income taxes, and payroll taxes. The estimates assume that corporate taxes land partly on capital income and partly on labor income. Effective tax rates are taxes paid by an income group divided by the group ’s income.Joe Biden ’scampaign site says, “President Trump spent the remainder of his first year in office fighting for a $1.5 trillion tax giveaway primarily for large corporations and the wealthy … But middle‐​class Americans were largely left out.” This refers to the Tax Cuts and Jobs Act (TCJA) signed into law by Trump in 2017 .In my view, the PW estimates show that this Biden claim is not correct. The table below shows the PW estimates of effective tax rates in 2021 with and without the TCJA. I  added a column showing the percentage tax cut for each group. For the bottom group, for example, the law cut the tax rate from 2.5 percent to 1.1 percent, which is a 56 percent tax cut.The TCJA provided the largest percentage tax cuts to the bottom two quintiles —that is, the bottom 40 percent of U.S. households. All other groups received roughly similar percentage cuts ranging from 8 to 13 percent. It is not true that middle‐ or lower‐​income groups were “largely left out” ...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs