Rarely has allowing taxpayers to keep more of their own money brought out so much trauma and hysteria. Reforming the tax code to boost economic growth and make the country more competitive will trigger Armageddon, warned House Minority Leader Nancy Pelosi. Others have declared what happened Wednesday to be the end of America.
The coastal elites have not been so overwrought since President Donald Trump was elected — his old nemesis, comedian Rosie O’Donnell, jokingly offered $2 million bribes to key GOP senators if they would vote no.
Media outlets are trumpeting the fact that a majority of Americans oppose the measure because they believe it hurts the middle class and benefits only wealthy individuals and corporations. Well, of course they believe that. It’s the message Democrats and their media allies have been pounding the public with for weeks.
And it is true that in terms of total dollars those who pay most of the taxes will reap most savings.
But there’s plenty of relief for everyone else, too.
Even the left-tilting Brookings Institute calculates that 80 percent of taxpayers will receive a reduction in their obligation, while just 8 percent will see their outlays rise, largely because they live in states with enormously high local and state taxes.
For a true picture of how much everyday Americans will benefit from the package that passed Congress and is now headed to Trump’s desk, turn to the Joint Committee on Taxation’s distributional analysis.
The lowest income earners, those making less than $40,000 a year, will not be affected at all, because they pay no federal income taxes, according to the JCT.
Those making $40,000 to $50,000 annually will see a hefty 56 percent reduction in their tax bill. Earners in the $50,000 to $75,000 range will keep an additional 25 percent of their earnings; $75,000 to $100,000 earners will save 18 percent, while those up to $500,000 in income will average a 14 percent tax cut.
The truly wealthy, those making between $500,000 and $1 million and those making more than $1 million, will see cuts of 11.6 percent and 6.4 percent respectively.
That seems to be a fair distribution of the tax breaks, and defies Democratic claims the rich will claim most of the benefits.
Individual Americans will be able to judge the impact themselves beginning in February, when the lower tax rates begin showing up as higher take home pay.
But the key piece of the Republican bill has always been the effort to make U.S. businesses more competitive.
Reducing the corporate tax rate to 21 percent from 35 percent will put the United States closer to the average rate of the industrialized countries; currently it has the highest tax.
That means more dollars available for investment, and more of that investment will stay at home. In terms of benefits for the middle class, the reward is more jobs and higher wages. Those who doubt the payoff will trickle down should note that immediately following passage, communications giant AT&T announced it would increase capital spending by $1 billion and give a $1,000 special bonus to more than 200,000 U.S. employees
The Republican tax reform has turned a great number of Democrats, who stood by silently while the national debt was doubling under former President Barack Obama, into deficit hawks.
It’s been stated as indisputable fact that the cuts will add $1.5 trillion to the deficit over 10 years. Not necessarily so, says Grover Norquist, the veteran Washington tax reformer. He says if annual economic growth hits 3.5 percent because of the stimulative effect of tax breaks, the revenue generated will more than cover the cost of the cuts. He believes growth, which averaged less than 2 percent since 2009, can be sustained at 4 percent a year.
Understand that many of those who are trash-talking this bill have an incentive in denying it is a win for Republicans and Trump.
But wait until February, look at your pay stub and decide for yourself whether you’ve come out a winner.