11-13-2017, 01:35 AM
Great take on the Republican tax proposals, by David Kamin in Medium (click to read the whole article).
The Senate Bill Really Is Regressive
(Or Why You Shouldn’t Use Percent Change in Tax Liabilities!)
Last night, the Joint Committee on Taxation released new distributional tables showing the effects of the newly introduced Senate tax legislation across the population. Upon the tables’ release, Senate Finance Committee Republicans declared that the tables demonstrated that their tax plan was progressive with the middle class winning the most, and a number of news reports have picked up on this.
However, the legislation is in fact regressive, by any truly meaningful measure. These claims rely on the use of a misleading distributional metric and the opacity of deficit-financed legislation, hiding who really wins and loses in the end. Take a look at two figures below showing the effects of the Senate bill in 2027 and adjusted to include the effects of estate tax cuts which JCT leaves out of its estimates. I use the 2027 figures to capture more permanent effects (though plan to post 2018 figures as an addendum as soon as I have time to actually enter them into a spreadsheet).
As these show, when you look at how these tax bills actually effect the lives of families, it is clear who wins the most: the top. Yes, millionaires — as in earning $1 million per year — apparently get somewhat less as a percent of after-tax income than almost-millionaires. But that doesn’t exactly sound like a progressive change, when those millionaires still get double as much as a share of their incomes as an average family making $40,000 to $50,000 — and one hundred times as much in average dollars per family.
Finally, when you take into account who is likely to pay for the deficit-financed tax cuts in the end, low- and middle-income Americans arelikely to not just end up winning less, but actually be left worse off helping to pay for the tax cuts at the top.
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![[Image: 1*Gm4lKYmFypkO2xa9uS11Fg.png]](https://cdn-images-1.medium.com/max/1600/1*Gm4lKYmFypkO2xa9uS11Fg.png)
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![[Image: 1*OObzTSu4SBAlobLU7OcntA.png]](https://cdn-images-1.medium.com/max/1600/1*OObzTSu4SBAlobLU7OcntA.png)
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Some Better Than Others: Different Metrics, Different Answers
However, proponents of the Senate bill are using the JCT distributional tables to argue that their tax bills are in fact doing more for those with lower incomes than with higher incomes. How can this be? It’s all about misleading measures of tax progressivity (and a little bit about JCT leaving out the estate tax). These claims tend to rely on two closely-related distributional measures: percent change in tax liability and change in share of total taxes paid. These two metrics are designed to mislead as to the actual effects of tax changes on people’s lives, as well as to the likely long-run effects of the legislation. [Continue read here]
The Senate Bill Really Is Regressive
(Or Why You Shouldn’t Use Percent Change in Tax Liabilities!)
Last night, the Joint Committee on Taxation released new distributional tables showing the effects of the newly introduced Senate tax legislation across the population. Upon the tables’ release, Senate Finance Committee Republicans declared that the tables demonstrated that their tax plan was progressive with the middle class winning the most, and a number of news reports have picked up on this.
However, the legislation is in fact regressive, by any truly meaningful measure. These claims rely on the use of a misleading distributional metric and the opacity of deficit-financed legislation, hiding who really wins and loses in the end. Take a look at two figures below showing the effects of the Senate bill in 2027 and adjusted to include the effects of estate tax cuts which JCT leaves out of its estimates. I use the 2027 figures to capture more permanent effects (though plan to post 2018 figures as an addendum as soon as I have time to actually enter them into a spreadsheet).
As these show, when you look at how these tax bills actually effect the lives of families, it is clear who wins the most: the top. Yes, millionaires — as in earning $1 million per year — apparently get somewhat less as a percent of after-tax income than almost-millionaires. But that doesn’t exactly sound like a progressive change, when those millionaires still get double as much as a share of their incomes as an average family making $40,000 to $50,000 — and one hundred times as much in average dollars per family.
Finally, when you take into account who is likely to pay for the deficit-financed tax cuts in the end, low- and middle-income Americans arelikely to not just end up winning less, but actually be left worse off helping to pay for the tax cuts at the top.
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[/color][color=rgba(0, 0, 0, 0.84)]
[/color]Some Better Than Others: Different Metrics, Different Answers
However, proponents of the Senate bill are using the JCT distributional tables to argue that their tax bills are in fact doing more for those with lower incomes than with higher incomes. How can this be? It’s all about misleading measures of tax progressivity (and a little bit about JCT leaving out the estate tax). These claims tend to rely on two closely-related distributional measures: percent change in tax liability and change in share of total taxes paid. These two metrics are designed to mislead as to the actual effects of tax changes on people’s lives, as well as to the likely long-run effects of the legislation. [Continue read here]