Published December 7, 2021
A new analysis of Internal Revenue Service data is receiving a lot of attention among conservatives for showing that the 2017 tax cuts reduced the income tax burden of working-class taxpayers by a higher percentage than it did for higher-income earners. But conservatives should also recognize the main reason: expanded child tax credits that most supply-siders opposed.
As the analysis, by Justin Haskins of the Heartland Institute, makes clear, taxpayers earning between $5,000 and $30,000 a year in adjusted gross income saw the biggest percentage drop in average income tax liability. People earning between $30,000 and $75,000 received the next-biggest percentage tax cut, with their 2018 income tax payments falling roughly 18 percent compared to their in 2017 tax bills. While all income groups saw an average tax cut, the size of the cut as a percentage of income declines as income increased. Those earning between $5 million and $10 million annually, for example, paid only 3.48 percent less in taxes in 2018 than they did in 2017.
That’s good news for struggling families, and a message Republicans should be proud to push. But it’s crucial to understand why that happened. The answer runs counter to some cherished supply-side dogma.
Henry Olsen is a Washington Post columnist and a senior fellow at the Ethics and Public Policy Center.