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In Washington, facts are often the first victims of politics. That's nothing more clear than the debate on the 2017 Tax Cuts and Employment Act (TCJA) or the debate on President Donald Trump's signature tax reform law. Whether the debate extends individual tax cuts at the TCJA, whether leftist politicians and legacy media are increasing the usual misinformation campaigns.
We've all heard the point of conversation. The TCJA was a “gift to billionaires” or a “wealth transfer,” the “wealthy” who took away the “billionaires,” a “billionaires,” a “reverse robinhood” scheme, which is my personal favorite.
There's only one problem. That's not true. It's not even nearby.
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In early April, I co-authored a new policy survey from the Heartland Institute, which examines the latest IRS personal income tax data. Our goal is whether Republican tax laws still save taxpayers money, and if so, how much?
New research shows that Trump can point to the success of his tax-cutting strategy in support of the middle class.
What we found was that low- and middle-income Americans are receiving the largest tax credit for the TCJA. These are not small quantities either. The Republican tax reform law estimates tens of millions of filers have saved thousands of dollars. This is currently at risk if Congress is unable to extend the cuts before it expires at the end of 2025.
Unless you are a partisan activist pretending to be a journalist, the evidence is clear, persuasive and impossible to ignore.
Massive tax cuts for the middle class
Using government data, we were able to calculate how much tax the average filer for each IRS income class, paid annually between 2017 and 2022, would calculate taxes. The TCJA was passed to the law in 2017, but did not come into effect until 2018.
IRS data shows that all revenue brackets received tax cuts due to the TCJA, but taxpayers who received the biggest cut in terms of percentage savings went to those earning under $75,000.
For example, the average IRS filer with $40,000 under $50,000 paid 18.8% less tax on taxes in 2022 than in 2017.
Similarly, the “$50,000 under $75,000” bracket filer's tax bill is 16.5% less than 2017 in 2022.
For comparison, I earned between $5 million and $10 million, and was paid 2.3% less over the same period. That's all for the story of “billionaire tax cuts.” (You can find other revenue bracket data on published papers. This is available here.)
Some TCJA critics argue that middle-income Americans have cut tax rates significantly, but these rate cuts did not save a significant amount of money on the total. However, these claims are also false. Many middle-class Americans have saved thousands of people for the TCJA.
A new analysis of IRS tax data shows that everyone benefited from Trump's tax cuts, but those who earned under $75,000 received the majority of their savings. (Samuel Column/Bloomberg via Getty Images)
Analyses discovered between 2018 and 2022 show that winners between $50,000 and $75,000 per year saved an average of $4,516 for tax cuts for individuals included in the TCJA. For brackets between $75,000 and $100,000, savings jumped to $5,923. And those who made between $100,000 and $200,000 saved an astounding $9,638 over five years.
However, these numbers don't tell the perfect story. As the latest IRS data available is from 2022, total savings estimates do not include numbers for 2023 and 2024. To explain these years, we developed forecast numbers using the average amount saved between 2018 and 2022.
After expanding the analysis into 2024 using consistent annual trends, the numbers become even more impressive. In 2022, over 50 million middle-class filers were classified as brackets, with an average total savings average of between $6,322 and $13,494.
Even low-income and working-class Americans saw substantial relief. It estimates that households earned between $30,000 and $50,000 have saved between $2,537 and $3,833 over the same period.
More Progressive Tax Code
Ironically, the very Law Democrats are blessings because the rich have made more progress in US tax laws. This conclusion was reached by examining the tax burden paid by each IRS income class in 2017, before the TCJA came into effect, compared to the burden for the subsequent years.
What we found was that in 2022, the most recent year in which data was available, all income brackets paid a share with less than $200,000 in income tax burdens than in 2017. Conversely, brackets over $200,000 paid every share.
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That is, all income groups received tax cuts for the TCJA, but Trump's tax cuts have led wealthy filers to pay more of their personal tax revenue pie than they did last year.
The clock is ticking
If Congress does nothing, the TCJA's personal income tax cuts will expire at the end of 2025. That means tens of millions of Americans will face a stealth tax hike. For many middle-income families, that may mean paying more than $900 in taxes each year.
After expanding the analysis into 2024 using consistent annual trends, the numbers become even more impressive.
The Washington elite may not feel that, but working families certainly do.
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That's why this fight is so important. This is not about President Donald Trump or partisan point scoring. It's about whether the government should take more from families struggling under the weight of inflation and stagnant wages.
There is data. The verdict is clear. Tax cuts and employment laws worked for everyone, especially for working class and middle-income Americans. It's time to tell the truth about tax cuts and make it permanent.
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