Narrative-Busting Data: Every Income Group Got a Tax Cut in 2018...Except Millionaires

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Posted: Jul 16, 2019 1:35 PM
Narrative-Busting Data: Every Income Group Got a Tax Cut in 2018...Except Millionaires

As data continues to pour in, the facts are once again affirming what many of us have known for quite some time: The GOP-passed tax reform law, which was opposed by every single Democrat in Congress, has reduced taxes for a lopsided supermajority of Americans.  Despite a torrent of disinformation and false messaging from the collective Left, the overwhelming majority of US taxpayers saw their federal tax burden reduced in 2018.  Even the New York Times fact-checked this claim and found the Democratic mantra to be inaccurate.  Now, based on the latest available numbers from the IRS, the nonpartisan Tax Foundation confirms that the Left's deceitful talking points aren't just misleading -- they're actually the opposite of the truth:

Critics of the TCJA have claimed that the law’s tax cuts only benefit high-income individuals and businesses. However, the visual below shows that total tax liability fell for all income groups except those earning over $1 million in 2018...The initial data shows that the TCJA expanded the use of several credits and deductions, made the standard deduction more favorable than itemizing, reduced tax refunds, and lowered taxes for most Americans.

And here's the chart demonstrating that reality:


In every single group, the green bar is lower than the blue bar, including for working and middle-class Americans.  Only the super rich, those making more than $1 million annually, have seen a very slight increase, on average.  Compare that to the rhetoric surrounding the law.  The gap between the political spin and the actual results is staggering.  As many supporters of the law pointed out during the public debate, the reason this law would benefit so many Americans was that it doubles the standard deduction, which was already being used by a large majority of filers.  As expected, the number of people choosing to take advantage of the increased standard deduction (as opposed to itemizing) has increased dramatically:

One of the most significant changes introduced by the TCJA was the expansion of the standard deduction. The standard deduction increased from $6,500 to $12,000 for single filers, and from $13,000 to $24,000 for those married filing jointly, in 2018. This change had a significant impact on the ease of filing for many taxpayers, as taking the standard deduction simplifies the tax filing process. As shown below, the percent of taxpayers who itemized went down at all income levels. Overall, the percentage of the population that itemizes decreased from 30 percent to 10 percent.

Only those earning $250,000 or more are still itemizing more than taking the standard deduction.  Everyone else is going with the simpler option, which is also allowing them to keep more of the money they've earned.  As for the size of tax refunds, which is not necessarily indicative of total tax burdens going up or down, that picture is a mixed bag.  One last point from the Tax Foundation analysis: The increased child tax credit, pushed by a number of conservative Senators, has resulted in many more people claiming it and benefitting from it, across all income groups (except millionaires).  Mike Lee and Marco Rubio like what they're seeing:

U.S. Senators Marco Rubio (R-FL) and Mike Lee (R-UT) released statements after the Tax Foundation’s report on 2018 tax return data showed the positive impact the expanded Child Tax Credit (CTC) had for millions of American families. Their efforts secured a provision in the Tax Cuts and Job Act of 2017 that doubled the CTC from $1,000 to $2,000, expanded eligibility, and increased the refundability of the CTC from $1,100 to $1,400. The data from 2018 tax returns makes it clear the benefits of this effort. The number of people who received the CTC doubled, benefiting American families in every income bracket, with the exception of top income earners. [Lee said]: "Twice as many parents took the credit in 2018 as did before our reforms. Families in every income bracket below the super-rich saw the value of the child credit more than double, and the greatest beneficiaries were middle class families. I once again commend the president, Marco Rubio, Ivanka Trump, and the rest of the coalition fighting for family tax reform. In light of this great news, Republicans should start working to increase the child credit again as soon as possible.”

Read the full analysis here.