How Trump Taxed the Rich

As Democrats in Congress and the White House make the case for tax hikes this year, expect a lot of disinformation that will somehow escape the attention of Facebook and Twitter censors. In particular there will be voluminous and erroneous claims about the landmark 2017 Trump tax reform and its impact on wealthy filers. Therefore this is perhaps the perfect moment for a preemptive reality check.

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The Internal Revenue Service (IRS) has released data on individual income taxes for tax year 2018, showing the number of taxpayers, adjusted gross income, and income tax shares by income percentiles. The new data shows how taxes changed in the first tax year after passage of the Tax Cuts and Jobs Act (TCJA) in December 2017.

The data shows that the U.S. individual income tax continued to be progressive, borne primarily by the highest income earners…

The share of reported income earned by the top 1 percent of taxpayers fell slightly, to 20.9 percent in 2018 from 21 percent in 2017. Their share of federal individual income taxes rose by 1.6 percentage points to 40.1 percent.

Since 2001, the share of federal income taxes paid by the top 1 percent increased from 33.2 percent to a new high of 40.1 percent in 2018.

In 2018, the top 50 percent of all taxpayers paid 97.1 percent of all individual income taxes, while the bottom 50 percent paid the remaining 2.9 percent.

The top 1 percent paid a greater share of individual income taxes (40.1 percent) than the bottom 90 percent combined (28.6 percent).In sum, the richest Americans took on more of the tax burden. Meanwhile, “average tax rates fell for taxpayers across all income groups,” adds Ms. York.

Source: How Trump Taxed the Rich