Redistributing Wealth to the Top

The Washington Post writes: “More than 80 percent of the benefits of a tax change tucked into the coronavirus relief package Congress passed last month will go to those who earn more than $1 million annually. ..... The provision has fueled criticism by congressional Democrats and some tax experts who have called it a giveaway to the wealthy and real estate investors, who frequently face large losses on their investments. ..... An analysis by the JCT found suspending the limit overwhelmingly benefits higher earners. About 82 percent of the benefits of the policy go to about 43,000 taxpayers who earn more than $1 million annually. Less than 3 percent of the benefits go to Americans earning less than $100,000 a year, the analysis found.” The data was released by the nonpartisan congressional Joint Committee on Taxation (JCT).

Senate Republicans inserted a change that temporarily suspends a limitation on how much owners of businesses formed as “pass-through” entities can deduct against their nonbusiness income. That will cost taxpayers about $90 billion in 2020. Other tax changes will add about $170 billion to the national deficit over the next 10 years. 

Income data for the top 1% of earners are summarized here for each state. Income research indicates that income inequality increased in all states since the 1970s. Also, inequality increased in most states in the post–Great Recession era.

It is no wonder that the president and the Trump Party want to keep this kind of government spending as hidden as possible. These optics are not good.