A new analysis of IRS tax data revealed that President Trump’s Tax Cuts and Jobs Act (TCJA) of 2017 most benefited the middle class and working class, contrary to Democrats’ claims.
According to a report from the Heartland Institute, the tax reform law in its first year into effect “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 revealed that after accounting for all tax deductions and credits, filers with an adjusted gross income (AGI) OF $40,000-50,000 saw an average tax cut of 18.2 percent from 2017-2018. Furthermore, filers between $30,000-40,000 in AGI received a tax cut of 18.41 percent. However, the most significant tax cut occurred to filers between $5-10,000 in AGI saw an 87.65 percent tax cut.
Despite severe criticism from Democrat leaders, insisting the tax reform law would disproportionately benefit wealthy income earners, the lowest tax cuts of nearly 3.5 percent were given to filers with between $5 million to $10 million in AGI.
Moreover, the report finds that higher-income earners paid a larger share in the tax burden in the first year of TCJA implementation. This reveals that the tax reform law may have made the tax code more progressive.
“In 2017, filers earning $500,000 or more paid 38.9 percent of all personal income tax revenues. In 2018, the same income bracket paid 41.5 percent of total income tax revenues,” the report states. “This finding contradicts the countless statements made by Democrats over the past four years criticizing TCJA as legislation that favored wealthier filers.”
The report further saw an increase in upward income mobility, with filers with AGI of $1-25,000 decreasing by more than two million in one year, and the number of households with incomes higher than $25,000 increasing in every income bracket.
“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,” the report stated.
Despite the success the TCJA has had on American families, Democratic leaders have continually bashed the tax law as helping the rich at the expense of the middle-and working-class.
Sen. Chuck Schumer, D-N.Y., during a Senate debate on Trump’s tax law, said, “every independent analysis has shown that it will end up raising taxes on millions of middle-class families. The Tax Policy Center estimates that 60% of middle-class families will see a tax increase at the end of the day, while folks making over $1 million a year will get an average tax cut of $40,000.”
Speaker of the House Nancy Pelosi, D-Calif., incorrectly claimed that “86 million middle-class families will see a tax increase while they advertise it as a middle-class bill” and “80 percent of the tax cuts in the bill benefit the top 1 percent in our country.”
This report comes as the Biden administration plans to raise taxes, up to 30 percent, on middle-class households through the “Build Back Better” bill.