A common liberal theme is the claim that Republican tax cuts
mostly help the rich. We are hearing this again, now that the Republicans are
trying to reform the tax code. Is this always true? Let’s think about that for a moment.
First of all, about 45% of Americans (77.5 million
households) pay no tax at all, because they don’t make enough money to reach
the first tax bracket. So of course tax cuts never affect them.
The top 1% of Americans, who have an average income of more than $2.1 million,
pay 43.6% of all the federal individual income tax in the U.S.; the top 0.1% —
just 115,000 households, whose average income is more than $9.4 million — pay
more than 20% of it.
If you rank household income into 5 bands,
the middle 20% (the so-called middle class) pay only 9.2% of the federal taxes.
The top 40% pay 86.5% of the federal
taxes. (the lowest 40% pay only 4.2% of
the total federal taxes)
So since the rich pay most of the federal taxes
paid, of course any tax cut helps them most. It could hardly be otherwise,
given the math, since they pay most of the tax in the first place.
But of course facts never seem to overcome political emotions. The claim is still a good
one-liner for aspiring liberal politicians, and lots of voters probably are
sucked up by the populist appeal, since they don’t understand the math.
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