The recently released report by Congress's Joint Committee on Taxation has confirmed what many experts have long suspected: the Trump administration's tax cuts, enacted in 2017, have disproportionately benefited high-income earners and corporations, while placing a significant burden on the middle class and low-income Americans.
Key Findings
- In the first year of the tax cuts, the top 1% of income earners received an average tax cut of $51,140, while the bottom 20% saw an average reduction of just $45.
- Over the next decade, the top 1% will receive an average tax cut of $82,800 per year, compared to $110 for the bottom 20%.
- The tax cuts are estimated to add $1.9 trillion to the national debt over the next decade.
Impact on the Middle Class
The tax cuts have provided little benefit to middle-class earners. In fact, many households in this group have seen their taxes increase due to the elimination of personal exemptions and the cap on state and local tax deductions.
For example, a family with an income of $75,000 and two children will see their taxes increase by an average of $1,000 per year. This is because they can no longer deduct the full amount of their state and local taxes, which typically account for a significant portion of their tax burden.
Impact on Low-Income Americans
The tax cuts have had a devastating impact on low-income Americans. The elimination of the Earned Income Tax Credit, a refundable tax credit designed to help low-income working families, has pushed millions of people into poverty.
In addition, the increase in the standard deduction has reduced the benefit of the Child Tax Credit, which provides a tax break to families with children. This means that low-income families with children are now receiving less money from the government.
Corporate Tax Windfall
Corporations have been the biggest beneficiaries of the tax cuts. The corporate tax rate was reduced from 35% to 21%, resulting in massive savings for large companies.
For example, Apple Inc. saved $14.5 billion in taxes in 2018, while Amazon.com Inc. saved $11.2 billion. These savings have not been reinvested in the economy or used to increase wages for employees. Instead, they have largely been used to buy back stock, enriching shareholders.
Conclusion
The Trump administration's tax cuts have been a disaster for middle-class and low-income Americans. The cuts have disproportionately benefited high-income earners and corporations, while increasing the tax burden on those who can least afford it.
The report by the Joint Committee on Taxation provides irrefutable evidence that the tax cuts have failed to deliver on their promises of economic growth and job creation. Instead, they have increased the national debt and exacerbated income inequality.
It is clear that the tax cuts need to be repealed and replaced with a fairer tax system that benefits all Americans, not just the wealthy and well-connected.
