Late last week, Senate Finance Chair Orrin Hatch unexpectedly lost his cool during a committee hearing after his Democratic colleague, Sherrod Brown of Ohio, suggested Republicans were crafting a tax plan that would primarily benefit wealthy Americans. What made the exchange remarkable was that Hatch actually seemed sincere. “I come from the poor people, and I have been here working my whole stinkin’ career for people who don’t have a chance, and I really resent anybody that says I’m doing it for the rich,” Hatch said, practically quivering in anger. It was as if nobody had told the man what his own legislation would actually do: shower six-figure tax cuts on multi-millionaires.
Today, the Tax Policy Center released its analysis of who would benefit the most under the Senate’s bill, which has passed out of committee but has yet to receive a floor vote. Much like the score published by Congress’s Joint Committee on Taxation, it shows the spoils disproportionately go to the rich; the top 1 percent of Americans get just over one-fifth of the cuts; the top 5 percent get just under half of the them.
But rather than just spew numbers and percentages at you, I thought it would be fun to put them into a little context, by paring the tax cut that Americans at each rung of the income ladder can expect with what it might actually pay for. (“Fun.”) There are, of course, winners and losers under the Senate plan, so I’ve chosen to focus on the average cuts among the three quarters of Americans whose taxes would actually fall in 2025, when all of its provisions are in effect.
Top 0.1 percent: Average tax cut, $360,430, enough to pay the average salary of an American anesthesiologist. Your tax cut is literally worth all the things that slogging through seven years of medical school might afford you. All of the things.
Top 1 percent: Average tax cut, $77,190, enough to pay for a nice Lexus LS.
Top 95th to 99th percentile: Average tax cut, $14,200, roughly the cost of a highish-end bathroom remodeling job in Mississippi (but not in New York).
90th to 95th percentile: Average tax cut, $4,780, enough to cover a year of tuition at a Catholic elementary school.
80th to 90th percentile: Average tax cut, $3,390, almost enough to cover the average cost of tuition for one year at a community college.
60th to 80th percentiles: Average cut, $2,230, almost enough to pay for the 6-night sample vacation package Disney World is currently showing off on its website.
40th to 60th percentiles: Average cut, $1,250, enough for this Frigidaire two-door refrigerator.
20th to 40th percentiles: Average cut, $530, probably enough to replace the brake pads on your car.
10th to 20th percentiles: Average cut, $150, enough to pay for a couple of dinners for four at Chili’s.
So some lucky members of the middle class gets a trip to Disney, or a decent appliance. Not bad! Meanwhile, the very rich get the equivalent of another highly educated professional in their household working full time. Seems like a better deal.
To be fair, the Senate’s bill is at least less regressive than the legislation recently passed by the House. Under that legislation, members of the top 0.1 percent who get tax cuts would eventually see their IRS bill go down by $621,000, on average.
Perhaps that explains Hatch’s anger. Compared to what his counterparts in the House produced, he and his fellow GOP Senators have written a bill that is in fact less geared to the interests of the very rich. In the bizarro-world of conservative economic-thinking, giving multi-millionaires tax cuts worth a doctor’s annual income might almost seem populist. The rest of us aren’t grading on that kind of curve.