# Deconstructing the tax cut hoax

I got into a discussion recently with a wealthy Republican supporter about the tax bill. He was arguing that it would benefit everyone by pointing to Republican talking points that focus on the average value of the tax cuts. I tried to tell him that when a distribution is not roughly symmetric about the average value (also called the mean) but is skewed, then the average value is not an accurate reflection of the situation. Since he is a physician, I was surprised to discover that he did not seem to know the difference between the mean and the median.

I had to give him an example. If five people get tax cuts of \$100, \$10, \$5, \$3, and \$2, then the average tax cut, which is obtained by dividing the total amount of \$120 by the total number of people (which is five) is \$24. But one person gets much more than the average and four get less, with three getting a lot less. But the median (the value about which half the population gets more and half less) is \$5, and this more closely reflects the realities of the situation than the mean. That is why I reject all assertions about the average value of the tax cuts as meaningless because so much of it goes to a tiny fraction at the top that the distribution is highly skewed.

What is also clear is that any tax cuts for the lower income groups are front loaded to take place in the first few years and taxes will actually increase for them in later years. This chart below shows how taxes will change for a family of four making the median income of \$59,000 over time.

Naturally, Republicans are only talking about the first year cuts. And do not want to answer questions about the later years.

When The Washington Post asked Ryan’s office about this, they deferred to the House Ways and Means Committee. A spokeswoman there sent over the breakdown for how the \$59,000 family gets a tax cut in the first year, but not what happens in the following years.

Meanwhile the tax cuts for the wealthy keep growing over the years. And that is not even taking into consideration that tax accountants will be busily finding new ways to exploit all the last-minute loopholes inserted into the bill that will benefit their rich clients even more. Kevin Drum also provides a chart that shows which income range get what changes in taxes in 2019 and in 2027. That the skewed distribution in favor of the wealthy gets more skewed with time is clearly seen.

Seth Meyers analyzes the tax cut hoax.

What about all the new jobs that these tax cuts to the wealthy will reported create? Here is a cartoon by Matt Bors that describes what the taxes will really do

1. Ogvorbis wants to know: WTF!?!?!?! says

I figured it up. Because I have lots of deductions, my actual tax cut will end up being about \$3.00 per paycheck. Less than \$100 a year. Biggest middle class tax cut in history my pasty-white flabby ass!

2. Reginald Selkirk says

I haven’t calculated whether my taxes will rise or fall. That is not my basis for objecting to the bill. Seth Meyers covers the points I would make:
The bill fails as “tax reform”, since it does not close loopholes nor greatly simplify anything.
The accelerated deficit will be used as justification for cutting entitlements like Social Security and Medicare.

3. Ogvorbis wants to know: WTF!?!?!?! says

Reginald Selkirk:

Sorry.

I object to this bill on so many levels. It is a multi-layered giveaway to people who won’t even notice the extra money while at the same time screwing the poor and the middle class. I was (unsuccessfully) attempting to point out that even the middle class tax cut they are really playing up is really a negligible tax cut.

If they really wanted to create jobs, if they really wanted to jump start the economy, they should have given everyone who files a return a \$5,000 tax credit. It would have cost less and the economic boon would have been mind blowing. But no, they had to give almost all of it to the rich and then they fucking lie about it. Again and again and again . . .

4. KG says

It appears to have been designed to bring about an asset-price bubble to make that of the early 2000s look insignificant, followed by a crash that will dwarf that of 2008, or even 1929. I conclude that the so-called “Republican Party” is actually a conspiracy of dedicated Marxist-Leninists, aiming to destroy capitalism within a decade. No other explanation fits the facts.

5. anat says

KG, they are probably planning the next crash to happen when a Democrat is president.

6. busterggi says

” I was surprised to discover that he did not seem to know the difference between the mean and the median.’

Rich folks don’t need to know math, that’s why they have accountants.

7. says

If one man gets a \$1 million tax cut, and nine hundred and ninety nine get nothing, the average tax cut is \$10,000!

8. jrkrideau says

I am not too surprised that a doctor did not know what a median was. Medical doctors, as least in med school seldom get much more than a really basic stats course if that. This is only so much time for huge amount of material.

I have seen some complaints from med students about it. Even if your doctor had once learned what a median was, they had probably completely forgotten about it a day after the final exam.

9. Jockaira says

“\$9 an hour to shine my money”

Such generosity! What a fine gentleman of the upper class! He only needed to pay the federal minimum hourly wage of \$7.25 (for more than the last 10 years).

When his accountant tells him about the minimum wage, I’m sure Pops will find some way to clawback his largesse, after reducing the offered wage, of course.

10. lanir says

The chart about percentage point changes in tax rates between 2019 and 2027? Yeah… 2027 won’t look like that.

Wanna bet the best use some of those unmentionables will find for their 2019 (and later years) windfall is spending some of it on lobbying to make sure it continues indefinitely?

11. John Morales says

Thing is, Trump made a big deal during his campaign and even after about losing out in tax due to this (ahem) reform, but now he (and his personally richest-ever administration) is going to be >>\$\$\$ forever. What a Corker!

(And his supporters are cheering him on for draining the swamp, even! USA! USA! Land of Democracy, land of the free!)