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Charts of the week: The Tax Cuts and Jobs Act

Senate Republicans moved one step closer to passing tax reform this week when they voted to begin debate on the Tax Cuts and Jobs Act, which passed in the House earlier this month. Experts from the Urban-Brookings Tax Policy Center have analyzed the proposal and below are three charts that highlight some of their findings. Click on the charts or on the links to go to the full research.

50 PERCENT OF TAXPAYERS WOULD PAY MORE BY 2027

The Tax Policy Center’s analysis shows that the Senate bill would reduce taxes on average for all income groups in both 2019 and 2025, but compared to the current law, 9 percent of taxpayers would pay more in 2019, 12 percent in 2025, and 50 percent in 2027. This proposal would also grant the largest average tax cuts as a percentage of after-tax income to taxpayers in the 95th to 99th percentiles of the income distribution.

Percent change in after-tax income of the Tax Cuts and Jobs Act.

NO DISCERNIBLE LINK BETWEEN TAX CUTS AND ECONOMIC GROWTH

William Gale, co-director of the Urban-Brookings Tax Policy Center, cast doubt on the claim that the tax cuts proposed in the House and Senate will pay for themselves by significantly boosting economic growth. The chart below shows three distinct periods of U.S. tax history, and despite large changes in taxes’ share in the U.S. economy, the average annual growth rate of GDP per person has remained around 2 percent over this entire period.

Taxes and growth by Time Period

THE TAX PROPOSAL WOULD LEAD TO AN INCREASE IN MOTOR VEHICLE DEATHS

A new provision in the Senate tax bill called the “Craft Beverage” legislation would cut federal alcohol excise tax revenues to their lowest level since at least 1950. According to Senior Fellow Adam Looney, this legislation, which is portrayed as a break for “Craft Beverage” producers, would also benefit the large corporations that dominate the alcohol industry and could increase the negative externalities of alcohol consumption like violence and motor vehicle accidents.

Alcohol Excise Tax Revenue

Author

Chris McKenna

Communications Coordinator - Office of Communications

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