The report shows that this bill is much like a teaser rate on a new credit card: there are some goodies in the first couple of years, but those disappear fairly quickly, at least for those below the median income.
In 2019, the first full year that this bill would be law, the benefits are concentrated on the bottom of the income stream, with middle-class people, on average, paying just under ten per cent less in taxes than they would if the law weren’t passed. With each passing year the benefits shift upward, toward the rich.
By 2021, those making between twenty thousand and thirty thousand dollars a year are paying considerably more in taxes, those between thirty thousand and two hundred thousand see their benefit shrinking, and those making more start to see their taxes falling.
By 2027, every income level below seventy-five thousand dollars a year sees a tax increase, while everybody above that level sees a continued decrease, with the greatest cut in taxes accruing to those making more than a million dollars a year.
.. the effective tax rate—meaning the percentage that people, on average, actually pay after they take all deductions—changes in a precisely regressive form. The poorer you are, the higher your effective rate will rise. By 2027, only those making a hundred thousand a year or more will see an actual cut in their effective tax rate.
.. Feldstein is, arguably, the single most widely respected Republican-leaning scholar of tax policy, and one of the few academics who came out in favor of the bill
.. He argues that cutting individual tax rates won’t increase economic growth and will add to the deficit—which, he acknowledges, is a bad thing. But he’s so excited about the corporate tax-rate cut that he thinks the bill should pass nonetheless.
.. Its most respected defender acknowledges that three-quarters of the benefit are a wasted, harmful gift for the rich, but a quarter of the benefit goes to corporations, and we must assume they will spend it wisely.