Congress just passed a bill that cuts taxes for 70 percent of Americans and increases them only for about 5 percent. This may surprise you if you rely on major media outlets for your news.
“It does not help individuals who are below $100,000,” reporter Ron Insana said on an MSNBC segment with me. “In fact, it probably doesn't help individuals who are below $200,000, given the analysis we've seen thus far. It is not a middle-class tax cut.”
The Associated Press announced the House passage of the bill with a tweet saying, “House passes first rewrite of nation's tax laws in three decades, providing steep tax cuts for businesses, the wealthy.”
That AP headline was standard in that it would lead you to believe that the bill solely lowers taxes for businesses and the wealthy. This is totally false, of course. The bill doubles both the standard deduction and the child tax credit, expanding the credit to make it more refundable — meaning lower-income families can get a refund of more than they paid in income taxes. Middle-class families will see their 15 percent bracket dropped to 12 percent and their 25 percent bracket dropped to 22 percent.
Here’s something you simply wouldn’t know from reading the media accounts of the bill: This bill will shift a greater portion of the federal tax burden onto the wealthy. That’s right: Republicans are passing a bill to make federal taxes more progressive.
How does that work? About 18 percent of the bill’s tax savings go to the top 1 percent. That’s a lot of money, but as the Manhattan Institute’s Brian Riedl pointed out, that same slice of the population currently pays 27 percent of all taxes. “The bottom 80 percent of families currently pay 33 percent of all combined federal taxes,” Riedl pointed out, “yet would get 37 percent of the tax cuts.”
So the richer are paying a greater share of federal taxes under this bill, and 70 percent of Americans will get a tax cut under it. Yet, when polled just before the bill passed, only 17 percent said they believed they would get a tax cut, while 32 percent said they expected to pay more.
So of all the people who would see a tax cut, less than 1 in 4 knows it. Of all the people who expect to see a tax hike, less than 1 in 5 will.
This is a clear sign of the failure of the media to accurately cover the bill, and it also explains the bill’s deep unpopularity.
There were plenty of little lies and ridiculous stories along the way. There was the line that the bill cut taxes for corporate jets. This turned out to be a codification of an Obama-era rule clarification.
There was also the assertion, made famous by Sen. Claire McCaskill, D-Mo., that the bill hikes taxes on the poor, or something. The story here was that repealing the health insurance mandate would free some people from the fine, thus allowing them to not get Obamacare-approved insurance. If poor people are buying less health insurance, then they get fewer Obamacare subsidies, which if you just look at the numbers (without accounting for the premiums they'd have to pay) looks like it's costing them something.
Calling this a cut in benefits for the poor is like lamenting a forgone Black Friday shopping spree for all the “savings” missed.
And then there was story after story that pretended the bill didn't cut middle-class taxes. It made this pretense by ignoring the years 2018 through 2025, and focusing only on what happens when the individual tax cuts expire. Judging a provision only by what it does when it expires is odd, and probably unprecedented in policy journalism. It goes to show that some writers will resort to anything.
The tax bill Republicans are passing is deeply unpopular precisely because people don't believe it is a tax cut. What does that tell you? It says that people like tax cuts. That's a truth hard for our left-leaning press to come to terms with, and in this tax debate, they never did.