At his first presidential press conference on March 25th, Joe Biden trotted out an old Democratic talking point about the 2017 Tax Cuts and Jobs Act (a.k.a. “the Trump tax cuts”).
Mocking Republicans who have criticized the cost of his $1.9 trillion American Rescue Plan, Biden asked: “Did you hear them complain when they passed close to a $2 trillion Trump tax cut—83 percent going to the top 1 percent?”
Democrats have been making the “83 percent” claim for years. Their source? A 2017 analysis by the Urban-Brookings Tax Policy Center (TPC). Let’s take a closer look.
-President Joe Biden
Mostly false or misleading. Significant errors or omissions. Mostly make believe.
TPC examined how the Trump tax cuts would be distributed at three separate points in time: 2018, 2025, and 2027.
It estimated that the top 1 percent of income earners would receive 20.5 percent of the benefits in 2018, 25.3 percent of the benefits in 2025, and 82.8 percent of the benefits in 2027. This last figure is where the Democrats got their talking point.
The problem is that most of Trump’s tax changes for individuals expire at the end of 2025, while the corporate tax cuts are permanent. That explains why, in the TPC analysis, the top quintile of earners would receive more than 107 percent of the benefits in 2027, while the bottom two quintiles would face a tax increase.
Republicans structured the law this way to comply with the deficit rules in the budget-reconciliation process. It’s the same reason they originally scheduled most of George W. Bush’s tax cuts to expire at the end of 2010.
However, no serious observer expected Congress to allow a huge middle-class tax hike to occur in 2011, and nobody expects that to happen in 2026. President Biden himself has repeatedly declared that no one—or at least no household—making less than $400,000 a year will pay more in federal taxes under his policies.
If Biden wins reelection and keeps his word, he will be obliged to extend the Trump tax cuts for most households—in which case, his “83 percent going to the top 1 percent” argument will be complete rubbish.
In other words, the argument is highly misleading. It will be true only if Democrats decide to clobber lower- and middle-income Americans with a major tax increase in 2026. As of now, it is simply false to say that the top 1 percent of earners have garnered 83 percent of the benefits from Trump’s tax cuts.
One final note, to put the numbers above in greater perspective: In 2017, the top 1 percent of earners paid 25 percent of all federal taxes, while earning 17 percent of pre-tax, pre-transfer income, according to the Congressional Budget Office. This means they paid a significantly larger share of federal taxes in 2017 than they did in 1979 (14 percent).
Democrats rarely acknowledge that, because it undermines their “tax cuts for the rich” messaging. But it’s impossible to understand the distribution of Trump’s tax cuts without also understanding the distribution of the federal tax burden.