However, 2018 tax payment data by the Internal Revenue Service (IRS) show that, as a result of President Donald Trump’s tax cuts, high earners paid more taxes to the federal government in dollar terms while the rest of the taxpayers paid less.
Puzder was a senior economic adviser to the Trump campaign in 2016 and authored the book “The Capitalist Comeback: The Trump Boom and the Left’s Plot to Stop It in 2018.”
“In 2018, 1.6 million taxpayers reported earning $500,000 or more. While the amount all taxpayers owed the IRS in 2018 declined by $64 billion, the amount these high earners owed increased by $16 billion,” he said in the op-ed.
The data suggested that taxes paid by the bottom 99 percent fell by $80 billion, as a result of the TCJA.
One reason high earners paid more individual income taxes is that their income rose in 2018. However, the data also showed that their tax liability rose faster than their incomes.
The share of total income earned by the richest 1 percent increased to 22 percent from 21.5 percent, while the share of taxes paid by them rose to 40 percent from 37.7 percent, according to Puzder.
“This is exactly what we expected would happen,” he wrote. “Going back to the 1920s (the Coolidge tax cuts), the 1960s (the Kennedy tax cuts), and the 1980s (the Reagan tax rate cuts) lower tax rates lead to more revenues and more taxes paid by the rich. The Trump tax cuts followed that pattern.”
Moore called Biden’s plan to increase taxes “a radical redistribution ideology that will make us all poorer.”
One of the reasons high earners' share of the tax burden surged is that the TCJA limited the itemized deductions they were able to claim.
The amount taxpayers claimed for itemized deductions dropped to about $650 billion in 2018 from $1.3 trillion in 2017.
“Taxpayers across the income spectrum did see a lower effective tax rate. That's true for both lower earners, and for higher earners,” Garrett Watson, senior policy analyst at the Tax Foundation, a nonpartisan tax policy group, told The Epoch Times.
Corporate and Estate TaxUnder the old tax code, individuals who itemized their deductions were able to deduct all their SALT against their federal taxable income. The TCJA, however, capped individual’s deduction for SALT payments to $10,000 a year. Any state and local individual income or property tax payments in excess of that amount are no longer deductible under the new code.
Some rich people saw their personal income taxes go up under the 2017 tax law because of the limit on deductions for SALT, however, Puzder’s analysis doesn't reflect the full picture, according to Steve Wamhoff, director of federal tax policy at the Institute on Taxation and Economic Policy (ITEP).
“Cuts in the corporate income tax mainly help the well-off (who own most of the corporate stock) and the same is true of the estate tax, which only affects very wealthy families. Put all these changes together, and the vast majority of high-income people get a significant tax cut,” he told The Epoch Times in an email.
Biden has pledged to raise the corporate tax rate to 28 percent from 21 percent. Some tax experts including Watson believe that Biden's tax plan could hurt lower-income taxpayers.
“It is true, with the corporate rate reduction, that it does accrue to those who own corporate equities, and of course corporate equities are owned—much of them are owned by the top,” Watson said.
However, the indirect economic effect of any increase in the corporate tax rate should be considered as part of Biden's tax pledge, according to Watson.
“We find, for example, in our modeling that a good portion of the after-tax income gains by those in the lower and middle-income quintiles can be attributed to the corporate tax reduction.”
He also noted that middle-class and working Americans own a good portion of corporate equities through their retirement accounts.