The federal tax reform measure supported by President Donald Trump increased taxes on some wealthy property owners in high-tax jurisdictions such as Illinois and New Jersey and decreased tax burdens on the middle class.
(The Center Square) – The 2017 Tax Cuts and Jobs Act, harpooned by progressive Democrats as a handout to wealthy corporations, turned out to be more progressive in practice, new data from the federal government revealed.
The top 1% of earners, those with income over $540,009, paid 40% of all income taxes, according to the data. That’s despite the tax reductions they’d received under the new tax code change.
Internal Revenue Service data released in December, analyzed by the National Taxpayers Union Foundation and Wirepoints, show the federal tax overhaul that took effect in 2018 didn’t necessarily become the tax break for the wealthy as it was criticized as.
This was coupled with a doubling of the standard income tax deduction, which removed more people from the income tax rolls when coupled with more refunds.
“NTUF has compiled historical IRS data tracking the distribution of the federal income tax burden back to 1980 and this is the highest share recorded over that period, topping 2007’s 39.8 percent income tax share for the top 1 percent,” the NTUF said in its report. “The amount of taxes paid in this percentile is nearly twice as much their adjusted gross income (AGI) share.”
“That just hammered folks who have high property taxes and high-income states like Illinois, Connecticut, and New Jersey,” said Mark Glennon, founder of Wirepoints. “There were a lot who had those deductions taken away but it didn’t affect the middle class because they don’t hit that $10,000 cap.”
Where the federal government made some money back was from the cap on the state and local tax, or SALT, deduction.
This, as Moody’s Analytics noted in 2019, resulted in a $1 trillion reduction in home prices.
In its assessment of the data, Wirepoints said taxpayers in high-tax states such as Illinois, New Jersey, and New York got hit with the majority of the new tax burden because the SALT deduction was capped at $10,000. This meant residents with expensive homes could not deduct state-based costs on federal returns.
Glennon said it was that “blind partisanship” that kept many from taking an objective look at the legislation and seeing its progressivity.
In 2017, then-House Minority Leader Nancy Pelosi, D-California, called the legislation the “worst bill in the history of the United States Congress” and an attempt to “plunder the middle class to put into the pockets of the wealthiest 1% more money.”
“The bill got branded as ‘the worst form of greed by some rich oligarchy in America,’” he said.
By Cole Lauterbach | The Center Square
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Reposted with permission