Cut taxes for everyone
Donald Trump
"Everybody is getting a tax cut, especially the middle class."
Trump-O-Meter
Compromise
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As a presidential candidate, Donald Trump pledged to make everyone better off from a tax perspective.
"Everybody is getting a tax cut, especially the middle class," Trump said in an interview during the campaign.
On Dec. 19 and 20, the Senate and the House passed the final version of the tax bill, which will go to the president for his signature.
The bill does give a lot of Americans a tax cut, at least in the early years after passage. But at no point does "everybody" get one.
As we've noted before, every income group on average would pay less in taxes in 2019, according to a nonpartisan analysis of the final tax bill by Congress' Joint Committee on Taxation.
But this doesn't mean that every single taxpayer in each income group will get a tax cut. However, at least early on, there will be far more winners than losers in every income group. For all but the top 1 percent of earners, no income group studied by the Urban Institute-Brookings Institution Tax Policy Center has more than 7.6 percent of its members losing ground under the tax bill in 2018.
Over time, these broad-based tax cuts dissipate, however, due to the sunsetting of some key tax credits and a change in how inflation is calculated.
By 2027, according to the Joint Committee on Taxation, every income group below $75,000 will actually see a tax increase. Only those income ranges above $75,000 will still see a cut by 2027. And according to the Tax Policy Center, only taxpayers higher than the 90th percentile -- that is, those earning about $225,000 and above -- will have better-than-even odds of getting a tax cut in 2027.
That's a significantly different pattern than in the bill's early years.
So the tax bill -- at its start -- does come close to providing tax relief for all income groups, and for most members within each income group. But it's doesn't give a tax cut to "everybody," and by 2027, most taxpayers, including those in the "middle class," will actually be paying more than they would have under the previous law. We rate this a Compromise.
PolitiFact, "What's in the final version of the tax bill?" Dec. 18, 2017
PolitiFact, "Who wins and who loses from the tax bill?" Dec. 19, 2017
Joint Committee on Taxation, "Distributional Effects Of The Conference Agreement For H.R.1, The Tax Cuts And Jobs Act," Dec. 18, 2017
Urban Institute-Brookings Institution Tax Policy Center, "Analysis of the Tax Cuts and Jobs Act," accessed Dec. 20, 2017
Email interview with Patrick Newton, spokesman for the Committee for a Responsible Federal Budget, Dec. 19, 2017
Interview with Joseph Rosenberg, senior research associate at the Urban Institute-Brookings Institution Tax Policy Center, Dec. 21, 2017
President Donald Trump campaigned on a tax reform plan that made one thing clear: If elected, Americans would see smaller portions of their paychecks going to the federal government.
The day before the 2016 West Virginia Republican primary, Trump told CNN's Chris Cuomo, "Everybody is getting a tax cut, especially the middle class."
One caveat, Trump said, was that he might have to raise taxes on the wealthy. "I'm not going to allow it to be increased on the middle class," he added.
The Trump administration's 2017 tax legislation framework, released on Sept. 27, proposes deep rate cuts, fewer taxable income brackets, increases to the standard deduction and eliminating several tax breaks. Some details -- necessary to get an exact picture of how proposed legislation would affect each individual and household -- were not included in the plan, such as the thresholds for the income brackets.
However, by filling in the gaps with details from previous proposals by Trump and other Republican leaders, the Tax Policy Center was able to publish a preliminary analysis that projected initial across-the-board income tax decreases followed by increases on certain income levels within the next decade. By 2027, nearly 30 percent of individuals making between $50,000 and $150,000 and 60 percent of people making between $150,000 and $305,000 would see tax increases, the analysis found.
The center noted that the top 1 percent of earners would receive about 80 percent of the tax benefit. This income group would see its after-tax income increase 8.5 percent, whereas the bottom 95 percent of earners would see an average 1.2 percent increase.
Taxpayers with certain types of family and income characteristics could also see their taxes increase, partly due to the proposed elimination of state and local tax deductions. Treasury Secretary Steven Mnuchin said in an interview on ABC's This Week that committees working on the legislation are trying to figure out a way to prevent states such as California and New York from drastic federal tax hikes.
When asked whether he could guarantee that all middle class individuals will receive a tax cut, Mnuchin acknowledged that he could not.
Final details of the plan have yet to be determined, but early analysis shows that the current framework struggles to ensure tax cuts for everyone. It also appears to favor cuts for wealthier individuals and could increase taxes on some middle class groups. We'll see if the actual tax legislation falls in line with Trump's promise, but for now we rate this Stalled.
U.S. Treasury Department, 2017 tax code framework, Sept. 27, 2017
Tax Policy Center, "A Preliminary Analysis of the Unified Framework," Sept. 29, 2017
CNN, clip of Donald Trump interview with Chris Cuomo, May 9, 2016
ABC, Transcript of "This Week," Oct. 1, 2017