Soon after President Donald Trump signed the Tax Cuts and Jobs Act into law in December 2017, he traveled to his private club in Florida. There, surrounded by the wealthy men and women who’d paid hundreds of thousands of dollars to belong to the private club, Trump offered his assessment of the change the policy made.
“You all just got a lot richer,” he crowed. And he was correct.
The Trump White House had argued that this was simply a side effect of legislation it presented as helpful to Americans generally. There was an effort to present the top-heavy tax cuts as a nonetheless-positive change for the public, an effort which at one point involved a dubious analogy about buying beers. But the argument broadly was akin to a claim that even table scraps could be filling.
On Monday, the Tax Policy Center presented a graph offering a direct comparison between that legislation and the pandemic-relief bill, which is likely to be signed into law this week by President Biden. It broke out the population into five groups, from the fifth of taxpayers with the lowest pretax income to the fifth with the highest.
But because there’s a very big difference between an income at the 80th percentile and one at the 95th, the numbers were broken out further to show the 95th to 99th percentile and then the top 1 percent. So we get seven groups, from lowest to super-highest income, like so.
If you’re curious, there are about 44.3 million “tax units” — individuals or couples — at the lowest level, which averages about $14,400 in income before taxes. There are about 1.2 million units in the top 1 percent, a group which averages nearly $2.3 million in pretax income. There are 38 “tax units” in the lowest income group for every unit in the top 1 percent, but the top 1 percent makes 158 times as much in income.
So how did Trump’s tax cuts compare with the expected coronavirus relief bill? The change in after-tax incomes (including all provisions of the 2017 law) looks like this.
In 2017, the benefits increased as the income quintile or percentile moved up the ladder. In 2021, it decreased.
Notice that these are percentages. If we look at the actual average change in federal taxes, the lopsided benefits for the richest Americans becomes even more apparent.
The scale of the benefit for the richest Americans under the 2017 legislation makes it difficult to see the distribution of the benefits under the 2021 bill. If we break that out, it looks like this.
It’s hard to see, but the bar for the top 1 percent actually descends below the line: The average tax burden for the richest Americans actually went up an infinitesimal amount.
Again, the pandemic relief bill has not yet been signed into law. But with it having been passed by the Senate and requiring only a final approval from the Democrat-majority House, that seems likely. Particularly since there’s been little effort on the right to organize against the package.
Conservative commentator Erick Erickson explained why in a tweet.
I know a lot of smart people are out there saying the GOP was so focused on Dr. Seuss that they couldn't mount effective opposition to the COVID plan. I think they need to learn what I've started learning — more voters will remember Seuss when they vote than the COVID plan.— Erick Erickson (@EWErickson) March 9, 2021
It’s possible that more Americans will remember the dispute over the Dr. Seuss estate’s decision to stop publishing six books than will remember the quiet passage of a sweeping economic passage. Democrats seem to be betting, though, that a 2022 or 2024 effort to highlight the distinction between the package, which will likely pass this week, and drawings in decades-old children’s books will work out OK.