5 Things to Know About the Final Republican Tax Reform Bill
On Wednesday, the U.S. House of Representatives passed a historic Republican tax reform bill, after a Democrat tantrum in the U.S. Senate delayed the bill. President Donald Trump is expected to sign it at any moment.
Democrats have pushed a constant narrative that the GOP tax reform would hurt the poor and middle class while benefitting the wealthy, corporations, and Republican donors. This narrative is false.
Here are five things the tax reform bill actually does, and why Democrat posturing has actually harmed government revenues, poor college students at a particular college, and homeschool families.
1. Huge income tax cuts for the middle class.
The Republican tax bill will slash income tax rates across the board, but the middle class will experience the greatest tax cuts. The Cato Institute's Chris Edwards noted that under the bill, "higher earners will pay an even larger share of the overall income tax burden than they do now. Our highly 'progressive' income tax will be even more progressive."
Edwards pointed out that the Joint Committee on Taxation (JCT) released an analysis of the final bill, but that the JCT slanted the results by including payroll and excise taxes.
According to Edwards' analysis, the income tax changes will deliver huge benefits to those making between $40,000 and $75,000 per year, and much smaller cuts for people who earn even more money.
Income under $40,000 is not taxed at the federal level. Overall, those who make between $40,000 and $50,000 would pay $11.9 billion in 2019 under the current tax scheme. Under the new tax bill, they will pay $6.7 billion less — a tax cut of 56.3 percent. Those who make between $50,000 and $75,000 currently would pay $90.3 million, but they will pay $23 billion less, a 25.5 percent cut.
Even those who make $75,000 to $100,000 will experience an 18.1 percent tax cut. Those who make $1 million or more per year will experience the largest dollar amount cut ($36.9 billion overall), but their percentage cut will only amount to 6.4 percent.
Democrats can, if they wish to be dishonest, note that the wealthiest earners will get the greatest "cut" in dollar terms. This would be extremely misleading, however — as the percentage makes the most difference.
Currently, 70 percent of federal income taxes are collected from the top 10 percent of earners. The middle class does not pay that much income tax, and the Republican tax bill would cut the amount they do pay even further.
2. Corporate taxes slashed.
Democrats seem to have a much stronger case when it comes to corporate tax rates. The Republican tax reform bill will indeed cut the corporate tax rate, but that does not mean it is a special interest gift to big business.