An article from CNBC 13 Feb 2020 explains who did and did not benefit from the Trump tax cuts. It explains how you may think you are paying more and why you are likely wrong. An older article from the New York Times (of all places) is titled “Face it you (probably) got a tax cut” affirms some things in the CNBC article.
When we look at the lowest income bracket it looks bad. If you earned under $30,000 only 32% in that group saw a tax cut. Compared to those $31,000 to over $100,000 per year; 69 to 89% saw a tax cut. So, why is it only 32% saw a tax cut under 30 thousand dollars per year? The answer is easier than you think.
If you earned less than $30,000 before the Trump tax cuts you likely got most if not all the money that was withheld for Federal Tax back. Around 33% of those earners paid a little something in Federal Tax. Therefore, only that 33% could have their taxes lowered and that turned out to be 32.1%. That means almost everyone that paid tax in that bracket got a tax cut!
It is also worth noting perception versus fact:
Household income less than $30,000
Got a tax cut 32.1%
Think they got a tax cut 30.0%
Households $30,000 to $50,000
Got a tax cut 69.1%
Think they got a tax cut 36.1
It turns out the more you made the less likely you were to think you got a tax cut. However, those in the lowest income group got it about right. I can’t be sure why that is but I have a thought. Could it be those who earn less pay more attention to their money?
What is the implication of the lowest income people understanding they did receive a tax cut? I’m thinking they might remember and vote for Trump in 2020.
Who really suffered?
Corporate tax versus personal tax
Why were the tax cuts for corporations permanent and not for people? The answer is the Democrats threatened to filibuster the tax cuts in the Senate to prevent it from going through. Trump wanted to get it done before the end of 2017. Due to one of those strange political loopholes corporations did not require a 60 vote majority for permanent tax cuts but income tax did. It will be up to future Congresses to let it expire or renew it. They would be fools to let the tax cuts for individuals expire.
See full Wikipedia article. Excerpt below:
The individual and pass-through tax cuts fade over time and become net tax increases starting in 2027 while the corporate tax cuts are permanent. This enabled the Senate to pass the bill with only 51 votes, without the need to defeat a filibuster, under the budget reconciliation process.
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