Tiny, I wish I could find the article I cited in a thread quite a while a ago. The average family in this country has a net income of around $62,000. They saw an average increase of 1.6% in their net income due to the tax reform. Those families with an income in the $200,000 range saw an average increase of 4.2%
in their net income due to the tax reform. These statistics are from memory so may be somewhat off.
Here is another source which illustrates what I am saying (Table 5).
The lower the income group, the lower the percentage benefit from the tax reform. This is true until you get to the top 10% of income groups.
https://taxfoundation.org/benefits-t...-middle-class/
Originally Posted by SpeedRacerXXX
SpeedRacer, please be open minded. If I can get you to see the light on this I will achieve nirvana and my life will be complete.
The Tax Foundation estimates are consistent with the table in the Joint Tax Committee report, which was my first link and what CNN was trying to use to criticize the tax cuts in your link.
The Tax Foundation is looking at increases in after tax income. It's not looking at the % cut in income taxes paid. From what I google on the web, around 45% of people don't pay income tax. According to your second source, the Brookings Institute, this is misleading. They note that actually 28% of households pay no federal taxes at all, as there are those who make Social Security and Medicare contributions but don't pay income tax.
Social Security and Medicare for lower wage earners are a great deal. Unlike upper income earners, on average they get multiples of their contributions back, or at least that's what I read years ago.
The Tax Foundation article indicates the after tax INCOME INCREASE for the bottom 40% of Americans is small. Of course it is. If someone's not paying any income tax, presumably he gets no tax cut. If he's paying at an effective 5% tax rate and he gets a 10% cut, then his income increases by 0.5%. If an upper income earner is paying at 30% effective rate and he gets a 10% cut, then his after tax income increases 3%, or 6X the other guy.
The item of significance I'd take away from your tax foundation article, if their analysis is reasonable, is that the top 1% end up with a 7.5% increase in static after tax income in 2018 and 3.3% in 2017. This is actually what pissed me off about the tax cut*. It's caused by Congress and Trump playing favorites and awarding businessmen with pass through entities that have lots of depreciation expenses (like Donald Trump) and labor expenses to get significant tax cuts while others didn't.
However, your link is causing me to rethink this. What really matters is the "dynamic" analysis. When you factor in jobs growth and economic growth and look at the effects in the longer term, what's the effect on Americans? It shows all of us making around 4.5% more income in 2027. And the top 10% actually benefit less than the bottom 90%.
They say, "According to the Taxes and Growth model, long-run GDP growth will increase by 3.9 percent above what it would have done otherwise, wages will rise by 3.1 percent higher wages, and we’ll create 975,000 more full-time equivalent jobs. Those dynamic effects should increase after-tax income by 4.5 percent for those in the second-lowest quintile, and by 4.6 percent for those in the middle quintile."
I fell into the same trap as Barrack Obama, when he spoke with the reporter Charlie Gibson back around 2008. Gibson asked Obama why he'd want to increase the capital gains tax rate if it caused the actual amount of capital gains taxes collected to decrease. (If government taxes you too much on asset sales, you won't sell assets.) Obama replied something like it makes for a fairer, more equal society. Or translation, fuck the rich even if it makes everyone worse off. I imagine a good part of the 975,000 increase in the number of jobs may be a result of the tax cuts for the pass through entities that have large labor costs, something I didn’t like because it’s playing favorites.
The Achilles heal of course is the increase in the deficit. Hopefully Congress and the President will plug this by spending more efficiently. Anyway, the results of the Tax Foundation analysis, if you believe it, should be clear. If you leave more money in the hands of Americans and the government takes less, we're more prosperous. Again, that's why countries like the USA, Switzerland, and Singapore are better off than other countries, excluding tiny places and the petrostates.
Footnotes
*This isn't entirely true. What really pissed me off about the "tax cut" was that it increased my taxes, a lot.
Originally Posted by Hotrod511
