Home
/
RELIGION & LIBERTY ONLINE
/
3 Reasons income tax cuts (almost) always benefit the wealthy
3 Reasons income tax cuts (almost) always benefit the wealthy
Dec 28, 2025 4:37 PM

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
Video: Arthur Brooks on ‘The Moral Promise of Free Enterprise’
Prager University has a new course up and running. The lecturer? Arthur C. Brooks, president of the American Enterprise Institute and author of Gross National Happiness: Why Happiness Matters for America—and How We Can Get More of It as well as the recently published The Road to Freedom: How to Win the Fight for Free Enterprise. Brooks’ lecture, titled “Earning Happiness: The Moral Promise of Free Enterprise,” makes a case for the free market as the economic system most conducive...
Tomas Bogardus’ logical case for religious freedom
Need a logical defense of religious freedom? Look no further thanFirst Things‘ “On the Square” web exclusive, where future University of St. Thomas assistant philosophy professor Tomas Bogardus tackles a proposed restriction of an idea long taken for granted in free countries. Peter Singer, the Ira W. DeCamp Professor of Bioethics at Princeton University, recently published an article, “The Use and Abuse of Religious Freedom,” which proposes to limit “the legitimate defense of religious freedom to rejecting proposals that stop...
Why School Bus Drivers and Oil Lobbyists Have Green Jobs
What does a school bus driver, a garbage collector, an antiques dealer, and an oil lobbyist all have mon? According to the Department of Labor, they all have “green jobs.” This exchange between House mittee chairman Darrell Issa House and senior U.S. Labor Department officials is both absurd and amusing. But it’s also an important reminder that there can be a wide gap between the official government denotation of a term and its popular connotation (such as “green jobs” referring...
‘Truth Gives Freedom Its Direction’
In a post about the “Nuns on the bus” tour, National Review Online’s Kathryn Jean Lopez reminds us that “at a time when the very ability of church organizations to freely live their mission of service has promised by federal mandates, it is especially important to debate the role of government with clarity and charity.” In her essay, she brings in the the PovertyCure project and Rev. Robert A. Sirico’s new book, Defending the Free Market: A Moral Case for...
How soccer won’t decide the Euro crisis, but still matters
In what was dubbed the “Bailout Game” of the 2012 European Championships, the German national team defeated their Greek counterparts, the 4-2 score only slightly representative of the match’s one-sidedness. The adroit, disciplined Deutscher Fuβball-Bund owned 64% of the ball, prompting at least one economic retainment joke and the asking of the question: What does this game mean for Europe? Not much, according toIra Broudway of Bloomberg Businessweek, who last week issued a preemptive “calm down” to the throngs of...
A Church on Mission
Raleigh Gresham is senior pastor at Fellowship Bible Church in Colorado Springs. His passion is to help people understand that church is more than what we do on Sundays but reaches into all areas of our lives. He has begun a new way of interacting with the congregation through a concept called “Gathered & Scattered.” Join us as we listen to his hopes and dreams for the church today and a powerful example of a small win he sawwhile leading...
Interview: Rev. Sirico responds to ‘What if ‘Social Justice’ Demands Small Government?’
In the final installment of a three-part interview with Patheos, Joseph E. Gorra interviews Acton Institute president and co-founder Rev. Robert Sirico about social justice and his interpretation of its right societal implementation. In the interview, Sirico outlines some of the principles highlighted in his new book, Defending the Free Market: The Moral Case for a Free Economy. To begin, Gorra asks Sirico about the proper interaction between politics, specifically economics, and religion. What follows is an intriguing discussion on...
New Video: HHS Mandate and Religious Liberty
What would Diedrich Bonhoeffer have to say about the HHS mandate? Eric Metaxas–best selling author of the biographies on William Wilberforce and Bonhoeffer:Pastor, Martyr, Prophet, Spy gives us some insight in this 2 minute video that explains the real issue behind the HHS Mandate: Religious liberty He’s joined by economist Jennifer Roback Morse, a Catholic economist and founder and president of the Ruth Institute. The short video distills the fact that opposition to HHS Mandate is not about the morality...
Rev. Sirico on the Duquesne Unionization Drive
The New York Times interviewed Rev. Robert A. Sirico about a movement by professors at Duquesne University, a Catholic school in Pittsburgh, to organize a union. The Times writes that, “Duquesne is arguing that its affiliation with the Spiritans, a Roman Catholic order, affords it a special exemption from the jurisdiction of the National Labor Relations Board. It’s a conflict between church and state, the school’s lawyer argues, to allow workers to file for a union election.” Rev. Sirico, Acton’s...
Entrepreneurship, Poverty, and Abraham Kuyper
Joe Gorra of the Evangelical Philosophical Society concludes his excellent series of interviews with Acton University speakers by discussing entrepreneurship, poverty, and Abraham Kuyper with Peter Heslam: Gorra: The role of faith in building social capital is fascinating. Social scientists increasingly agree that social capital is fundamental to business success, economic development and wellbeing and that Christianity is one of its key contributors. Heslam: Through innovative research and instruction we aim to channel the rising concern about global poverty in...
Related Classification
Copyright 2023-2025 - www.mreligion.com All Rights Reserved