(The Center Square) – Democrats have argued that tax reforms implemented through the Tax Cuts and Jobs Act (TCJA) of 2017 only benefit the wealthy, and that the Build Back Better Act (BBBA) would help middle and working class Americans more.
But several non-partisan groups have found that the TCJA is reducing the tax burden on the middle and working class by up to 87% and, according to them, the $ 2.4 trillion BBBA – before the US Senate this week – will raise taxes on people. middle and middle classes. working class up to 40%.
A new analysis published by the Heartland Institute found that the TCJA reduced average effective tax rates for taxpayers in all tax brackets, but lower and middle classes reap the greatest benefits, with lower income filers benefiting from the most significant tax cuts.
The poorest Americans, with adjusted gross incomes between $ 5,000 and $ 10,000, paid 87.65% less in taxes thanks to the TCJA adopted by Republicans. While their wealthier counterparts, reporting adjusted gross income of between $ 5 million and $ 10 million, paid 3.5% less tax.
IRS data also shows that middle-class and working-class Americans enjoyed tax cuts of between 11% and 88% in 2018, at least double that of the wealthiest taxpayers, those who earn between $ 500,000 and $ 1 million receiving single digit cuts.
Tax filers with adjusted gross income between $ 30,000 and $ 40,000 paid about 18.41% less; those with incomes between $ 40,000 and $ 50,000 paid 18.2% less; and those with incomes of $ 50,000 to $ 75,000 paid about 17% less, according to the 2018 IRS data analyzed.
“Based on tax data from 2017 and 2018, the Tax Cuts and Jobs Act reduced taxes for the vast majority of tax filers, resulted in substantial improvements in upward economic mobility, and disproportionately benefited upper-class households. working class and middle class, many of whom suffered taxes. cuts ranging from 18 to 20 percent, ”reports the Heartland Institute.
Paying less taxes has also improved the standard of living and upward mobility of low- and middle-income Americans, according to IRS data.
The number of people in the lowest income bracket with adjusted gross income of $ 1,000 to $ 25,000 has fallen by over 2 million filers in one year. Households that reported incomes over $ 25,000 increased in every income bracket during the same year.
The largest increase in the number of filers occurred in the $ 100,000 to $ 200,000 income bracket, with over one million additional filers in 2018 compared to 2017.
While Democrats continue to claim the TCJA gave tax breaks to the wealthy, IRS data shows high-income earners paid more taxes in 2018 than in 2017.
For example, those who reported income of $ 500,000 or more in 2017 paid 38.9% of all personal income tax revenue; in 2018, their tax share represented 41.5%.
The Washington, DC-based nonprofit tax foundation says, among other things, that the TCJA reformed the personal income tax code by lowering tax rates on wages, investments and business income, broadened the tax base and simplified the tax code. He also drastically lowered the corporate tax rate to 21% and “moved the United States from a global tax system to a territorial one.”
The financial gains seen by low-income Americans as a result of the TCJA could be erased if the Democrats’ BBB law were passed, according to several analyzes.
The Center for Tax Policy find that “taking into account all major tax provisions, around 20% to 30% of middle-income households would pay more taxes in 2022” because of the BBBA tax changes.
President Joe Biden pledged during his campaign not to raise taxes for those who earn less than $ 400,000 a year. But the Tax Policy Center notes that this would not be the case and that many households would be again pay higher taxes in 2023 than in 2022.
Likewise, the BBBA “would also reduce the average 2023 tax cuts for low-income households, slightly raise taxes on low-income households, and significantly increase taxes on wealthier households,” the center notes.
The Tax Foundation estimates that the in-house version of the BBB Act “would reduce long-term economic output by nearly 0.5% and eliminate approximately 125,000 full-time equivalent jobs in the United States.” It would also reduce the average after tax income for taxpayers in all income quintiles over the long term.
Democratic changes to SALT (tax deductions at state and local government levels would also offer little or no benefits to low- and middle-income households, but [would] generate a substantial tax windfall for those with much higher incomes ”, the Tax Policy Center calculated.
And the Center on Budgetary and Policy Priorities argues the changes to the Democrats’ SALT deduction are not considered “tax break for the middle class.”
“There is no way to justify these tax cuts as tax relief ‘for the middle class’,” he said. “They are particularly glaring given that BBB aims to provide the most assistance to low- and middle-income households while reducing tax benefits for wealthy households.”