In their first major victory of the year, the Republicans’ tax cut bill was passed in both houses of Congress Wednesday along a party-line vote. The president signed the bill Friday morning before heading to Mar-a-Lago, his Florida resort.
Rep. Erik Paulsen (R-Minn.) has touted the tax bill as a “once-in-a-generation” achievement. Indeed, it is a singular accomplishment, for rarely has such a massive transfer of wealth been implemented so shamelessly during a time of rising income inequality.
Paulsen, who had a major role in crafting the bill, celebrated its success by publishing a laudatory press release online. “Today marks a new beginning for hardworking, middle-income Americans who will be able to keep more of the money they earn, better provide for their families, and save for retirement,” the statement reads. “Families and businesses across the country will no longer be held back by a broken, outdated tax code and can instead have hope in a prosperous future.”
But despite Paulsen’s insistence, the bill wasn’t crafted for “middle-income Americans.” Rather, the bill functions as a giveaway for big corporations and the ultra-rich. Corporations saw their tax rates fall from 35 to 21 percent, and over 80 percent of the long-term tax cuts will benefit the extremely wealthy.
Steve Bell, former staff director for the Senate Budget Committee during the Reagan administration, said, “The slant towards upper-income earners and people who run corporations is great, and the losers here are average taxpayers. Don’t fool people by saying it’s tax reform. It’s not. It’s a tax cut for businesses with some contradictory stuff for individuals.”
While the corporate tax cuts are permanent, the individual cuts expire within eight years. An analysis from the Tax Policy Center has found that in a decade, half of all taxpayers will be paying more in taxes than they are now. TPC’s anaylsis also found that while the bill will likely reduce taxes on average for all income groups in both 2019 and 2025, “In general, higher income households receive larger average tax cuts as a percentage of after-tax income, with the largest cuts as a share of income going to taxpayers in the 95th to 99th percentiles of the income distribution.”
An even more recent analysis found that households earning over $1 million would see their after-tax income rise by 3.3 percent, while a household earning $50,000 to $75,000 would see their average after-tax income increase by just 1.6 percent.
Stan Collender, a former member of both the House and Senate Budget Committees, said, “You’ve got folks who will get a tax increase, and they all tend to be lower and lower-middle class folks. It’s a very complicated tax bill. When you put everything together and look at its various provisions, the average lower-income person is almost certainly going to see their federal taxes rise.”
By 2027, taxes would actually increase slightly for the low and middle-income groups while decreasing slightly for the highest-income group. In other words, the tax plan that Rep. Paulsen helped shepherd into law is anything but a windfall for the middle class.