Since the Republican Congress began debating the bill that eventually became the Tax Cuts and Jobs Act, leftists have accused the legislation of being a huge tax cut for the wealthy – funded by middle- and lower-income Americans.
In reality, the Tax Cuts and Jobs Act (TCJA), passed into law in 2017, has particularly benefited working- and middle-class Americans while increasing the total tax burden paid by millionaires and billionaires.
In 2021, The Heartland Institute released a study, “Measuring the Effects of the Republicans’ Tax Cuts and Jobs Act on Personal Income Taxes,” which found the TCJA “reduced taxes for the vast majority of filers, led to substantial improvements in upward economic mobility, and disproportionately benefited working- and middle-class households, many of which experienced tax cuts topping 18 percent to 20 percent.”
That study compared only the first year of post-TCJA IRS income tax return data.
The “Tax Cuts & Jobs Act: An Updated Study on the Effects of the Tax Cuts and Jobs Act on U.S. Personal Income Taxes,” which includes IRS data from 2018 to 2022, shows the TCJA has continued to reap big rewards to low- and middle-income Americans while making the tax code even more progressive.
In terms of the percentage saved per filer, the IRS data show that filers on the lower end of the income spectrum received far larger reductions compared to those on the higher end. For example, if you earned $45,000 in 2022, under the TCJA, you received a 19 percent reduction in taxes compared to 2017. If you earned $5 million, you saved 2.3 percent.
In other words, the TCJA gave all Americans a tax rate cut; however, the rate cuts were substantially larger for the lower income brackets. By designing the law to mostly benefit middle- and lower-income earners, the TCJA resulted in the rich paying a larger share of the overall tax burden.
This is an indisputable and vital point. It also obliterates the left’s talking point that the TCJA was a big tax cut for the rich.
According to the IRS data, “every income bracket earning less than $200,000 [in 2022] paid a smaller share of the overall tax burden than they did in 2017.” On the other hand, “every income bracket above $200,000 paid a greater share of the total income tax burden.”
It should not be a surprise that the TCJA was designed to mostly benefit hardworking Americans. President Donald Trump’s entire economic agenda of low taxes, reduced regulations, U.S. energy dominance, less government spending, and reshoring American manufacturing is an all-encompassing strategy catered to these forgotten Americans.
During Trump’s first term, before the pandemic upended the global economy, those on the bottom rungs of the economic ladder made huge gains.
As U.S. Rep. Jason Smith (R-MO), chairman of the House Ways and Means Committee, noted in 2024, “In the first two years after passage of that tax relief, real wages grew nearly 5 percent – the fastest growth in 20 years. Real median household income increased by $5,000, a bigger gain than the prior eight years combined. The officially reported poverty rate dropped to its lowest level in U.S. history, and Black and Hispanic unemployment reached historic lows.”
With Congress set to begin the sausage-making process of crafting a reconciliation bill that will extend the tax rate cuts of the TCJA, which will expire at the end of 2025, Americans should prepare for a flood of leftist groups to promote the lie that the TCJA is a just a big tax cut for the rich. That is simply not true.
