Senate Tax Plan, Effect on Individual Filers

Once a bill actually gets passed, the details of the plan become public. This makes numbers wonks like me happy, because we can stop arguing about it using assumptions and guessimates and aggregated effects, and actually run the numbers and find out what the tax plan does to different people at different income levels.

Here tis:

Image for post
Image for post

So…….the guys in the Senate who actually work for a living did a pretty good job of meeting all of Trump’s campaign promises. There’s a spike at the median wage level (50–60K) which means that the promise of sending the bulk of the tax relief to the middle class is met. The low income earners get the second most. After that, there’s a dropoff to a long plateau at the 100K to 180K levels, who get @ a 17% tax decrease, and then that drops off to almost nil as you earn more and more.

One of the things that I thought was curious about this graph is how LONG that 17% tax cut line was, going all the way to $180,000, which is ….. pretty high; if you make 180K, you’re in the top 3% of all wage earners in the country. BUT, then I realized that if you make more than 60K or so, you’re probably itemizing, and probably taking a deduction for mortgage and state/local taxes or the sales tax equivalent. Those deductions are going away, so the people who are getting that 17% tax cut are actually getting much less, because they’re losing those deductions. This graph is for single filers who are not self employed and do not itemize.

Be advised: this is not in conflict in analyses which show the rich getting the bulk of the benefit in gross dollars. I’m pretty sure you could give the rich as little as a 1% tax break, and they’d still come out ahead on gross tax revenue.

Written by

Data Driven Econophile. Muslim, USA born. Been “woke” 2x: 1st, when I realized the world isn’t fair; 2nd, when I realized the “woke” people are full of shit.

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store