Here's What You Need to Remember: The tax reform law, which was the first major legislative move of the Trump Administration, reduced taxes both for individuals and businesses. President Biden, in his American Family Plan, is expected to propose raising the top marginal tax rate to a number comparable to what it was prior to the passage of the Trump tax reform.
A new nonpartisan government report states that the American Rescue Plan, the bill signed into law by President Biden in March, delivered a large tax cut to lower-income Americans--larger than the one that was delivered in the 2017 tax reform bill, known as the Tax Cuts and Jobs Act of 2017, that was signed into law by former President Trump.
According to the report by the nonpartisan Joint Committee on Taxation, as cited by CNN, taxpayers with an income less than $75,000 will pay no tax, on average, in 2021, with most lower-income Americans instead receiving refunds.
As for those making between $75,000 and $100,000 a year, the report says they will play an average tax rate of 1.8 percent.
In 2018, the first year after tax reform passed, those earning between $50,000 and $75,000 paid an average tax rate of 2.4 percent, a number that dropped to zero in the American Rescue Plan.
However, the report made it clear that the low rate brought into existence by the American Rescue Plan are not permanent.
"The key thing to remember is that it's only temporary," Howard Gleckman, senior fellow in the non-partisan Urban-Brookings Tax Policy Center, said, per CNN. "This is a temporary phenomenon. In a sense, it's a little bit misleading because it's only for a year.”
Per the report, as described by CNN, “the bottom 20% of taxpayers will receive a 20.4% boost in after-tax income and a $2,850 reduction in federal taxes, on average, from the relief law.” By contrast, the tax reform in 2017 provided more benefit to those closer to the top of the income ladder.
“The top 20% and the top 1% both received a 2.2% boost in after-tax income and saw their federal tax bills decline by nearly $5,800 and by $32,650, respectively,” the Tax Policy Center told the news network.
The American Rescue plan made 160 million households eligible for stimulus checks, worth up to $1,400 per person, although those checks are for less money for those with higher incomes. Many lower-income individuals also benefited from the expanded child tax credit, which the president and allies in Congress are now seeking to expand even further.
The tax reform law, which was the first major legislative move of the Trump Administration, reduced taxes both for individuals and businesses. President Biden, in his American Family Plan, is expected to propose raising the top marginal tax rate to a number comparable to what it was prior to the passage of the Trump tax reform. That plan will be detailed in the president’s address to a joint session of Congress on Wednesday night.
Stephen Silver, a technology writer for The National Interest, is a journalist, essayist and film critic, who is also a contributor to The Philadelphia Inquirer, Philly Voice, Philadelphia Weekly, the Jewish Telegraphic Agency, Living Life Fearless, Backstage magazine, Broad Street Review and Splice Today. The co-founder of the Philadelphia Film Critics Circle, Stephen lives in suburban Philadelphia with his wife and two sons. Follow him on Twitter at @StephenSilver. This article first appeared earlier this year.