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Trump’s Tax Reform Raised Taxes On Rich, Liberated The Poor
By Lew Uhler and Peter Ferrara

As congressional Republicans returned to their states and districts for the Memorial Day week, they were buoyed by recent election results and forecasts for November. The generic poll shifted to congressional Republicans as “progressive” Democrats — too liberal for their districts — won nominations throughout the nation.

Concurrently, the benefit of Republican tax reform for low and middle-income taxpayers — challenged repeatedly by Democrat congressional leaders — was confirmed by a key congressional source. That shoots down the Democrats’ main claim to leadership restoration, which will likely only further nosedive as conservatives wage their campaign for Tax Reform Protection and Expansion.

The numbers are now in. According to Congress’ nonpartisan Joint Committee on Taxation (JCT), the rich are now paying a higher share of federal taxes after enactment of the Republican tax reform plan than before.

For 2017, before tax reform, the JCT estimates those earning $1 million or more a year paid 19.5% of all federal taxes, counting income taxes, payroll taxes, and excise taxes. But for 2018, after tax reform, the committee estimates that these same millionaire taxpayers will pay 20.4% of all federal taxes.

The biggest relative tax cuts resulting from the tax reform are for those making less than $50,000 a year. Their share of federal taxes fell from 4.4% to 3.8%, a tax cut of 14%.

Indeed, the committee estimates that the federal tax burden went up for all taxpayers now making over $200,000 a year, from 49.8% before tax reform, to 51.3% this year after tax reform. You have to go down to those making between $100,000 and $200,000 a year to find taxpayers paying a lower share of federal taxes, from 29% of the federal tax burden last year to 28.8% this year.

But how could that be? The fundamental reason is the economic growth effects of tax reform.

Higher economic growth means increased wages, jobs, employment and income. As the economy grows, the share of taxes paid, especially by those earning higher incomes who still pay much higher tax rates under our so-called “progressive” tax code, goes up as well.

Tax Reform ‘Liberation’

Those same economic effects of the tax reform amount to economic liberation for the poor, working people and the middle class. After 8 years of economic stagnation under the neo-socialist policies of Obamanomics, the rising wages, jobs, employment and income under the long overdue Trump Republican economic recovery are making America great again for those with low and moderate incomes.

Top economists estimate wages for average middle-class families are increasing by $4,000 a year due to tax reform. That’s in addition to direct tax cuts of $2,000 a year for middle class families.

These economic effects are why we now see the lowest unemployment rates among blacks in American history. And despite the lies of the Democrat fake news media, the lowest unemployment rates among Hispanics in history as well.

And these economic effects are why Trump/Republican economics is now resonating among blacks and Hispanics culturally as well, from young black Millennials like Candace Owens to hip-hop stars like Kanye West.

Winning The Culture War?

Trump is emerging as the gallant victor of America’s new cultural Civil War. That is why Republicans are now moving ahead of Democrats in national generic polls for this year’s midterm elections.

Because working families making less than $50,000 a year pay virtually no federal income taxes, due to Republican tax cuts going back to Reagan, the Trump Republican tax cuts slashed a bigger percentage of federal taxes for these families than for those earning higher incomes.

Every taxpayer received some tax cut under the Republican tax reform. But the tax cuts make up a bigger relative share of the taxes paid by lower income workers than for the highest income workers.

Democrats openly abandoned blue collar workers in the 2012 election. Then, Obama squeaked by with the voter turnout of his hip “rainbow” coalition. But blue-collar workers, formerly the Democratic Party’s backbone, got revenge by voting for Trump and his Republicans in 2016. Now it looks increasingly like blue-collar voters will let their voices be heard for tax reform in 2018.

 

  • Lew Uhler is Founder and President of the National Tax Limitation Committee and National Tax Limitation Foundation (NTLF). He worked with Ronald Reagan and Milton Friedman in California and across the country.
  • Ferrara teaches growth economics at Kings College in New York City. He serves as senior fellow for legal affairs with the Heartland Institute, and as senior policy advisor to NTLF. He served in the White House Office of Policy Development under President Reagan. He also held the post of associate deputy attorney general under President George H.W. Bush.
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