In arguing why an exception should be made to Senate filibuster rules for a voting rights bill, Jeffries noted that Republicans in 2017 passed a tax cut under a parliamentary procedure that thwarts the requirement that 60 percent of the Senate agree to allow a bill to come to the floor for a final vote.
For the purposes of this fact check, we’re interested in the factoid — “83 percent of the benefits went to the wealthiest 1 percent” — that Jeffries casually tossed out. We’ve fact-checked this before, most recently when we noted that President Biden had said it three times in the month of March. (To Biden’s credit, he has not uttered this figure since that fact check.)
But this is really becoming a zombie claim, and we are going to increase the Pinocchio count. A regular reader had noted Jeffries’s comment and suggested it was time for another look, especially since Jeffries holds a prominent position in the House leadership.
Notice how Jeffries said that 83 percent “went” to the top 1 percent. He’s speaking in the past tense. But he’s relying on data for the year 2027 — six years from now — that is distorted by a decision made by the Republican tax-writers when crafting the bill.
Technically, under the budget rules agreed by Congress, the tax bill was supposed to increase the budget deficit by only $1.5 trillion over 10 years. But there was too much pressure to add in as many tax goodies as possible, so Republicans decided to allow significant provisions, such as individual tax cuts, to expire a couple of years before the end of the period budgeted for the tax cut. Without those expiring provisions, the budget deficit would have been about $2.2 trillion over 10 years. Some experts believe the revenue loss of the corporate tax cuts is much higher than estimated, potentially making the budget gap even larger.
This budget gamesmanship means that the tax tables for 2027 are distorted. The corporate tax cuts stay intact, but virtually all of the tax cuts for individuals were canceled, as Republicans bet that political pressure to keep the individual tax cuts in place would force a future Congress to extend them.
That may or may not have been a good wager. But politically it gave the Democrats a useful (if misleading) talking point. The 2027 tax tables produced by the nonpartisan Tax Policy Center (TPC) show 82.8 percent of the tax cuts will flow to the top 1 percent. The top quintile receives 107.3 percent of the tax changes — because taxes actually increase for the folks in the lowest, second-lowest and middle quintiles.
These numbers would be fine to cite in 2027, assuming the tax cuts had expired on schedule. But it makes little sense to use them now. The reality is that in 2018, TPC found that initially more than 80 percent of taxpayers would get a tax cut, with less than 5 percent getting a tax increase.
The TPC report also shows that in 2018, the top 1 percent would get 20.5 percent of the tax cuts; the top quintile would get 65.3 percent.
As we often note, since the wealthy pay most of the income taxes, they end up with most of the tax cuts in any across-the-board tax cut.
The top 1 percent in 2018 earned nearly 21 percent of adjusted gross income and paid more than 40 percent of federal taxes, according to an analysis of Internal Revenue Service data by the Tax Foundation. The Tax Foundation said that although share of income earned by the top 1 percent fell slightly from 2017 to 2018, the group’s share of federal individual income taxes rose by 1.6 percentage points, to 40.1 percent, after the tax law went into effect.
For individual taxpayers, federal income tax collections were estimated to have fallen about $80 billion from 2017 to 2019. The share of federal income taxes by the top 1 percent increased, from 44.9 percent to 45.9 percent.
The total taxes by this group went down $21.3 billion, or about 27 percent of the overall reduction. That is smaller than what this group pays as a percentage of all taxes, suggesting other taxpayers fared better.
In fact, the tax burden is estimated to go up for most of this group — all but the top 0.1 percent. The rest of the top 1 percent (taxpayers in the 99th percentile to 99.9th percentile) saw overall taxes go up almost $9 billion, as their share of taxes increased from 20.8 percent to 22.6 percent.
This also means almost $60 billion in tax cuts were distributed to everyone below the top 1 percent.
For instance, federal income taxes collected from people in the middle quintile of the income spectrum — the 40th percentile to 60th percentile of taxpayers by income — were estimated to fall about $13 billion between 2017 and 2019. Their share of income taxes fell from 1.4 percent to 0.6 percent.
People in this income category pay almost as much in payroll taxes as income taxes, and the 2017 tax cut did not affect payroll taxes. Nevertheless, when all federal taxes are included, this group experienced an overall reduction of $1.5 billion in taxes paid from 2017 to 2019.
(We should note that Treasury estimates for 2021, released this month, also indicate that the percentage of taxes of the top 0.1 percent further decreased, compared with 2017, but the rest of the top 1 percent continued to experience an increase. The taxes paid by the top 1 percent increased more than $50 billion, compared with 2017, with much of it borne by the taxpayers in the 99th percentile to 99.9th percentile. That group’s share of income taxes increased almost 1 percent since 2017, while the share paid by the top 0.1 fell 2.5 percent.)
In other words, there is no reason to keep promoting the fallacy that the wealthiest 1 percent got 83 percent of the tax cut. The tax estimates immediately after passage of the tax cut and since then have shown that most Americans received some sort of tax cut. The mega-rich (the 0.1 percent) turned out to have done rather well, but not the proverbial 1 percent.
It’s especially galling that Democrats such as Jeffries continue to promote this “83 percent” claim when it is the stated policy of the Biden administration and congressional Democrats that taxes will be increased on taxpayers making more than $400,000 to help pay for the president’s “Build Back Better” plan. Democrats hope to push through a $3.5 trillion spending plan with the same parliamentary maneuver — known as reconciliation — used to steer the tax cut through Congress.
If Democrats are successful, those tax cuts for the rich will be long gone before 2027 rolls around.
We sought comment from a spokesman for Jeffries but did not get a response.
The Pinocchio Test
In the past we have given this claim Two Pinocchios. We did that on the theory that Democrats were citing a legitimate estimate of an oddly crafted bill, but it was only half the story. (Republicans similarly told half the story of the tax bill.) We noted that given past performance by Congress, we would be shocked if lawmakers simply let the tax bill run its course and allowed it to raise taxes, as scheduled, on tens of millions of Americans.
But now it’s clear that this zombie claim needs a rating of at least Three Pinocchios. Too many Democrats claim the wealthiest Americans are getting most of the tax benefits already, not in the distant future. Moreover, the tax bill has been in place for more than three years and it’s clear from the available data that the top 1 percent did not end up with most of the tax benefits. In fact, whatever tax cuts they received may soon be taken away.
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