I wrote a good bit about the republican’s tax cuts that would benefit mainly the wealthy back in 2017 when it was first passed into law. Since then, I have only mentioned it in passing for the most part. But today I would like to revisit the topic. A lot of middle income wage earners are just now figuring out that it was not much more than a shell game whereby they saw a slight increase in their weekly pay, but at the end of the year, when it came time to file their taxes, they were left slack-jawed, wondering why, for the first time in decades, they owed money at year end.
If you have found yourself in that situation, take heart, for some people truly did receive a benefit from the 2017 tax cuts! Companies like Amazon, Chevron, General Motors, Delta, Halliburton, and IBM paid NO income taxes for the year 2018! Aren’t you happy? Aren’t you dancing a jig? According to the Institute for Taxation and Economic Policy (ITEP), some 60 Fortune 500 corporations were highly profitable, yet paid no income tax, and in some cases even received rebates!
Take Netflix, for example. The company earned $845 million, its highest profit ever, and paid not a single dime in income taxes. In fact, they recorded a $22 million federal tax rebate. Then there was Amazon who nearly doubled their pre-tax income from $5.6 billion in 2017 to $11.2 billion in 2018, yet paid $0 … that’s right Zero, Nada, Zilch … in income taxes. The tax cuts for the wealthy in 2017 lowered the maximum corporate tax rate from 35% to 21% and allowed companies to write off the total cost of capital equipment in the year of purchase, rather than via a depreciation schedule over the course of the life of the equipment. Look at the results for the top earning Fortune 500 companies …
U.S. Income (millions)
Federal Tax (millions)
Effective Tax Rate
|Delta Air Lines||$5,073||–187||–4%|
|American Electric Power||$1,943||–32||–2%|
|Goodyear Tire & Rubber||$440||–15||–3%|
|Penske Automotive Group||$393||–16||–4%|
|Performance Food Group||$192||–9||–4%|
Source: Institute on Taxation and Economic Policy
Still feeling really good about that extra $20 on your weekly paycheck? Let’s take a look at your tax rates. If you were single and earned between $38,701 and $82,500, your effective tax rate was 22%, or between $8,514 and $18,150. Sure, you probably paid less if you had any deductible expenses, but still … look again at the chart above.
- The Tax Cuts and Jobs Act will substantially increase income, wealth, and racial inequality.
- The Tax Cuts and Jobs Act will continue to substantially increase the deficit.
- The Tax Cuts and Jobs Act is not significantly boosting growth or jobs.
- The Tax Cuts and Jobs Act continues to be very unpopular.
- Despite the Tax Cuts and Jobs Act’s lack of popularity and ill effects, many Republican lawmakers are calling for even more tax cuts for the wealthy and corporations.
Next time somebody tries to tell you that the 2017 tax cuts were to benefit the middle class, remember this post and tell them in your loudest voice: HOGWASH! And in case your blood pressure isn’t already through the roof, take a gander at this …