Home
/
RELIGION & LIBERTY ONLINE
/
3 Reasons income tax cuts (almost) always benefit the wealthy
3 Reasons income tax cuts (almost) always benefit the wealthy
Jan 12, 2026 7:36 AM

Death and taxes may be the only certainties in life, but there is a close third: e tax cuts mostly benefit e workers.

As Congress discusses tax reform, the debate about who will benefit from tax cuts is back in the news. And many people are concerned with how the changes will favor high e earners. Even President Trump has promised that the reforms won’t give wealthy Americans a massive tax cut.

The reality is that there is almost no way to cut e taxes without most of the benefits going to e workers. Here are three reasons why:

1. Americans with high es pay most of the taxes

The intended goal of reducing taxes on Americans can have a significant affect on whose taxes are being cut. For example, let’s say the goal is to cut e taxes to return a specific amount of money back to citizens—$500 billion—in the hopes of stimulating consumer spending.

If that is our goal, then we can’t cut the e taxes paid by the bottom 45 percent of American earners. Why? Because they already don’t pay any e taxes.

As Politico notes, the top 0.1 percent of earners are projected to pay more to the IRS than the bottom 80 bined. And for 2017, official government data shows the top 20 percent will pay 95 percent of all e taxes. The rich benefit from e tax cutsbecause they pay most of the e taxes.

2. Americans with lower es already have low tax rates

But what if instead of focusing on a dollar amount, we just cut e tax rates? Couldn’t we just cut the rates on the lower rungs of the e ladder? Not really, because they are already low.

The average federal tax rate for people whose earnings put them in the 21st to 80th percentile of es has fallen by 30 percent since 1979 to 13.8 percent. Rates on e people have declined even further, by 57 percent, to 3.3 percent. If we cut the lowest rate by 1 percent it might save a worker $100 a year.

“The fact that they don’t pay very much in taxes means that it’s very hard to provide them with a large tax cut,” says Adam Looney, a former deputy assistant Treasury secretary for tax analysis in the Obama administration.

3. Marginal tax cuts benefit everyone

e taxes are based on marginal rates, the amount of tax paid on an additional dollar of e. Here’s an example of a marginal tax rate bracket.

10% for e $0 to $9,275

15% for e $9,275 to $37,650

25% for e $37,650 to $91,150

28% for e $91,150 to $190,150

33% for e $190,150 to $413,350

35% for e $413,350 to $415,050

39.6% for e $415,050+

Let’s say we want to lower the taxes for everyone making $90,000 or less, so we reduce the 25 percent bracket to 20 percent, the 15 to 10 percent and the 10 to 7. (For the sake of simplicity, we’ll assume there are no deductions, including no standard deduction.)

The effect would be that someone making $9,000 a year would pay $270 less in taxes, someone making $35,000 would pay $1,750 less, and someone earning $50,000 a year would pay $2,500 less.

But the person making $100,000 would also save about $20,390 because of the lower marginal rates. The worker making $9,000 saw her taxes reduced by 3 percent but the person making $100,000 had a more than 20 percent reduction.

“It’s basically impossible to have a large tax cut that doesn’t involve most of the benefits going to e groups just because that’s who pays taxes now,” says Looney.

The real questions Americans—especially American Christians—should be asking is, “Why does it matter?” Why are we so worried that the wealthy may be getting some sort of advantage that is out of proportion to what we may be getting? Perhaps we should be less concerned on sinful class envy and more focused on developing prudent tax policies that benefit everyone and lead to greater economic flourishing.

Comments
Welcome to mreligion comments! Please keep conversations courteous and on-topic. To fosterproductive and respectful conversations, you may see comments from our Community Managers.
Sign up to post
Sort by
Show More Comments
RELIGION & LIBERTY ONLINE
Civil Rights Leader: EPA Climate Rule Will Hurt the Poor
Last June the Environmental Protection Agency (EPA) proposed a rule change on carbon-dioxide emissions that would affect energy producers, especially in states that rely on coal-fired power plants. The change is being sold as an attempt to curb global warming, though even it’s supporters grudgingly admit it won’t have much, if any, effect. The change is so small—equivalent to a roughly 6 percent cut in overall US emissions, a 1 percent cut in total global emissions—that’s it’s impact may not...
Is Christianity Driving China’s Economic Growth?
For the past three decades China has been the world’s fastest-growing major economy, with growth rates averaging 10 percent a year for 30 years. As Brian J. Grim, founder and president of the Religious Freedom & Business Foundation, notes, there are many reasons for the growth, such as market mechanisms, modern technology and Western management practices. But one factor that is often overlooked is the role of Christianity: A study by Purdue University’s Fenggang Yang (cited recently in the Economist)...
‘There’s Nothing Better Than Having Something Of Your Own’
Remember when you bought that first thing – a car, maybe – with your own first e? Remember the feeling of pride it gave you? You’d scrubbed pots and pans in the diner kitchen all summer. Or maybe you were the “go-to” babysitter for everyone in your church. You earned that money, and you bought yourself something. Now imagine living in a world where that could never happen. You are told by the government that they will care for your...
Is Christian Worldview Worth a Premium?
In an interview on Christian distance education, Dylan Pahman, the assistant editor for Acton’s Journal of Markets & Morality, talks about the education bubble, rising costs of higher education, and whether Christian worldview integration in a distance education program is worth a premium: Luke Morgan: As a blogger for the Acton Institute, you have written about the education bubble, the textbook bubble, and other items regarding what education costs, and how those things should work in a free market. Could...
Exiled, Persecuted, But Not Forgotten: The Picture Christians Project
Jeff Gardner was frustrated. As a photo-journalist working primarily in the Middle East, he is witness to the violence towards Christians on a daily basis, but the rest of the world seems unconcerned. Gardner realized it wasn’t that people didn’t care, but that they just didn’t know. It truly was an “out of sight, out of mind” situation. Gardner set out to fix this. In the fall of 2013, Gardner launched the Picture Christians Project. He hopes to a put...
Absolute Comfort Corrupts Absolutely
Lord Acton famously said that, “Power tends to corrupt and absolute power corrupts absolutely.” Joseph Pearce finds fort can play a similar role in our lives and that fort corrupts absolutely.” That is why we tend to numb ourselves with distractions, from mood-altering drugs to social media: Shortly after Odysseus and his men leave Troy, heading home after the interminable siege and ultimate destruction of that City, they land on the island of the Lotus-Eaters. After the horrors of war,...
Increase Minimum Wage Or Increase Employment?
One holdover from 2014 into the new year is the cry for an increase in the minimum wage. President Obama pledged (in a December 2014 speech) to bump the minimum wage up to $9/hour nationally. Many believe that this move will help stimulate the still-sluggish economy. Michael R. Strain, at the American Enterprise Institute, isn’t wholly against raising the minimum wage, but he’s not wholeheartedly for it, either. He thinks we are asking the wrong question. Do we need to...
Is Putin an Orthodox Jihadist?
What should Westerners make of Vladimir Putin? Some view the Russian president as a type of Western democratic politician while others think he is shaped by Chekism, the idea that the secret political police control (or should control) everything in society. But John R. Schindler, an Orthodox Christian, thinks the West may be underestimating the influence of militant Russian Orthodoxy on Putin’s worldview: In his fire-breathing speech to the Duma in March when he announced Russia’s annexation of Crimea, Putin...
Radio Free Acton: Remembering Holodomor with Luba Markewycz
In this edition of Radio Free Acton, Paul Edwards speaks with Luba Markewycz of the Ukrainian Institute of Modern Art in Chicago, Illinois about the Holodomor – the Great Famine of the 1930s inflicted on Ukraine by Josef Stalin’s Soviet Government that killed millions of Ukrainians through starvation. They discuss the Holodomor itself, and the process undertaken by Markewycz to create an exhibition of art by young Ukrainians memorate the event. You can listen to the podcast using the audio...
Why Do Black Lives Matter?
“Black lives matter.’ ‘All lives matter. These slogans may forever summarize the deep tensions in American life in 2014,’ says Anthony Bradley in this week’s Acton Commentary. “We can loudly protest that “Black lives matter” but it will mean nothing in the long run if we cannot explain why black lives matter.” Black lives matter because black people are persons. One of the greatest tragedies in American history was the myth that America could flourish without blacks flourishing as persons....
Related Classification
Copyright 2023-2026 - www.mreligion.com All Rights Reserved