As far as tax policy is concerned, the details are complicated, but the story is often simple. President Trump’s so-called Tax Savings and Jobs Act (TCJA), for example, benefits the rich excessively. This is not controversial. Yet some opinion makers get lost with big megaphones in the details and come to conclusions that only create more confusion. The Washington Post’s Glenn Kessler gave the most recent example this week, arguing that Senator Bernie Sanders was wrong when he said, ‘You just remember a few years ago when Trump and my Republican colleagues paid nearly $ 2 trillion in tax exemptions for the richest voted. people in this country and the largest corporations. ”
Kessler’s disagreement with Sanders is based in part on a silly misreading of the word ‘everything’ in Sanders’ statement, and the senator’s interpretation is that the cost of $ 2 trillion of the 2017 law is everyone “Tax concessions for the richest people in this country and the biggest businesses.”
A reasonable interpretation is that the senator intended to say the tax cuts are “mainly” or “mostly” or “disproportionately” for the rich and corporations. Sanders could also simply call them ‘tax cuts for people with high incomes’ because the tax cuts mainly benefit the owners of corporate shares, which are mostly rich and with high incomes.
This should not be controversial. Kessler himself cites a report by the Tax Policy Center, which contains a bar graph on page 2 showing that the largest increase in revenue after tax increased to the richest five percent as a result of the tax law. The same report gives a table on page 3 that shows that more than 65 percent of the benefits went to the richest 20 percent in 2018, and about 43 percent of the benefits went to the richest five percent.
ITEP’s estimates of TCJA are very similar. We found that 71 percent of the benefits in 2018 went to the richest 20 percent of tax filers and their families, with about a quarter going the highest 1 percent and another quarter going to the next richest 4 percent.
Both ITEP and TPC use micro-simulation models – computer models that calculate taxpayers in a large database representing the population of the United States. This is the same method used by Congress’s income calculators, the Joint Committee on Taxation (JCT). Both TPC and ITEP model the changes to the personal income tax. We both explain how the reduction in the company’s income tax mainly helps the owners of corporate shares and other business assets, but also offers working people benefits (although this last part is debatable) to be consistent with the methods used by JCT for Congress . .
The estimates themselves are not controversial. So, what is Kessler arguing about? Aside from the question of whether Bernie meant tax cuts ‘all’ or ‘disproportionately’ to affluent and corporations, Kessler also seems to have added some facts illogically.
First, he writes that ‘the share of the tax cuts for the highest 1 per cent was not as much as the share they pay in taxes’, which is misleading and irrelevant. This is misleading, because if you calculate all the federal, state and local taxes that we all pay, the top 1 percent do not pay a portion of the tax that is much larger than its share of the total income.
But that is not the case either. If a quarter of the benefits of TCJA go to the richest 1 percent, it is not changed or refuted by the fact that the richest 1 percent pay a large portion of taxes.
To put it concretely, consider the federal estate tax. It is paid for exclusively by wealthy families (families with millions of assets to pass from one generation to the next). One can say, without expecting any argument, that lowering the estate tax will benefit the rich. According to Kessler’s strange logic, he would apparently object: ‘But the rich pay the bulk of the estate tax’, which is not an argument but rather an attempt to change the subject.
Kessler also objects to Sanders saying that “the largest companies” are reaping the rewards if some companies pay more now (despite the fact that Kessler himself provides evidence that company taxes have been reduced in general). He mentions that other businesses besides companies have received tax cuts, and he cites a report from Trump’s Treasury Department finding that these business tax cuts mostly benefit the richest 5 percent, which Kessler admits.
Given all the information Kessler cites, which shows that the tax cuts in 2017 will go mainly to high-income individuals and corporations, it’s surprising that he found fault with Sanders’ statement. Maybe he’s getting to the end of the Trump administration, which has attracted thousands upon thousands of Kessler’s famous “Pinocchios”?