A number of public policy research institutes have opined on how the Tax Cuts and Jobs Act will impact Americans. One side continues to insist that the law is nothing more than “tax cuts for the rich.” This is non-sense considering that the law creates cuts that cover just about the entire gamut of income brackets.
The law rewrites dozens of code sections, eliminates certain deductions, and changes the rates. There is a new deduction for small business owners and the corporate tax rate was slashed from 35% to 21%. According to the Tax Policy Center, the majority of Americans will get a tax cut in 2018 and beyond. See: http://www.taxpolicycenter.org/publications/distributional-analysis-conference-agreement-tax-cuts-and-jobs-act.
In fact, at least four out of five taxpayers will see their taxes cut under the Jobs Act. The average taxpayer will likely see their after-tax income rise by about 2.2%. Already the IRS adjusted the W-4 withholding charts for employers to account for the law changes. Because of that, people are now getting more in their paychecks every month due to the reduced tax burden.
According to the Tax Policy Center’s numbers, citizens earning between $48,600 to $86,100 annually will see their net income grow by about 1.6%. Those earning from $307,900 to $732,800 will see an increase of about 4.1%. Does that constitute “tax cuts for the rich?” The fact is higher income taxpayers pay the overwhelming bulk of taxes to begin with. They are naturally going to see a greater percentage reduction in their liabilities when there’s a cut.