Eric Herr: They paid more, but got greater tax breaks than the poor

To The Daily Sun,

Bruce Jenket’s letter to the editor asserted the Trump Tax Cut and Jobs Act of 2017 was a tax increase for the rich, “those making more than $500,000 per year paid 56.5% more in income taxes in 2022 than 2017.” But federal income taxes paid are determined by the number of households, their mean income, and the effective tax rate paid. The number of high income households increased substantially over that period. Likewise, incomes rose. To understand the effect of Donald Trump’s TC&JA on federal income tax bills look at what households paid as a percentage of adjusted gross income: the Effective Federal Income Tax Rate (EFTR).

EFTRs over the 2017-2022 period tell the story. Per the National Taxpayers Union, in 2017, for the bottom half of the income distribution the EFTR was 4%. In 2022, that figure dropped to 3.7%. In 2017, EFTR for the top 1% of income earners was 26.8%. Their 2022 EFTR dropped to 23.1%.

The U.S. Federal Income Tax Code remains progressive and high income households pay the lion's share of federal income taxes. Trump’s TC&JA cut taxes for most taxpayers, high income earners included. But EFTRs imply that the upper end of the income distribution benefited disproportionately. The EFTR paid by the bottom half of the income distribution dropped 0.3 percentage points over five years versus 3.7 percentage points for the top 1%. For every $1 tax cut for the bottle half, TC&JA delivered at least a $162 cut for the top 1%.

Eric Herr

Hill