President Trump’s Tax Cuts and Jobs Act which was signed in 2017 was supposed to allow the middle class to grow and lessen the tax burden for many Americans. Two years later, this doesn’t seem to be the case, according to two economists who say the new tax system favors the rich.
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Emmanuel Saez and Gabriel Zucman of the University of California at Berkeley wrote a book called: “The Triumph of Injustice.”
The book looks at how the tax systems in America are drastically getting worse, so much so that these two prominent economists claimed that the 400 richest families in America are paying lower taxes than the middle class for the first time in over 100 years.
“In 2018, for the first time in the last hundred years, the top 400 richest Americans have paid lower tax rates than the working class,” the duo wrote. “This looks like the tax system of a plutocracy.”
Watch how radically taxes on the wealthy have fallen over the past 70 years:
— David Leonhardt (@DLeonhardt) October 7, 2019
The aforementioned super-rich reportedly only pay a total rate of 23 percent, which is comparable to the middle class that pays about 24 percent, the New York Times reported. Saez and Zucman argue that the tax system now rewards the rich, while the lower-income and middle class are being punished.
“In 1970, the richest Americans paid, all taxes included, more than 50% of their income in taxes, twice as much as working-class individuals,” they wrote in the book. “In 2018, following the Trump tax reform, and for the first time in the last hundred years, billionaires have paid less than steelworkers, schoolteachers and retirees.”
One of the main points the two argue is how the ultra-wealthy make their money from ventures such as investments and capital. The everyday American is reliant upon an income, which is systematically taxed more so than investments, CBS News reported.
“The only category of income that does not benefit from any exemption, deduction, reduced rate or any other favor is wages,” Zucman and Saez wrote. “At any income level, wage earners are thus more heavily taxed than people who derive income from property.”
Democratic candidates are promising to fix the broken tax system, which could influence how those who are tired of being gouged by the federal government will vote in 2020.
There is no doubt this will become one of the focal point in the upcoming election.