The 2017 Republican tax reform bill did little to change the fact that the top 20 percent of income earners in America pay a higher share of income taxes.
The top 20 percent of income earners in 2018 will pay roughly 87 percent of income taxes, an increase of 3 percent from 2017, The Wall Street Journal reported. Some one million households in the top one percent of income earners will cough up 43 percent of all income taxes paid in 2018. Each of those filers earns around $730,000 a year.
Income tax is the largest, most important sources of federal revenue and is expected to raise 50 percent of the total federal revenue in 2018.
The lower 60 percent of households will pay no net federal income tax in 2018, but will receive only 27 percent of total income. The reason the lower 60 percent will effectively pay zero income tax is because Congress decided decades ago that they provide benefits and breaks to lower income earners through income taxes.
President Donald Trump signed the GOP tax reform bill into law in late December.
Instead of shrinking the number of tax brackets from seven down to four, as Trump campaigned for in 2016, the bill included seven brackets with stratified rates for income earners. The lowest income earners, under the Republican bill, pay 10 percent and the highest income earners pay 37 percent. All of the tax breaks for individuals expire in 2026.
The bill doubled the standard deduction. Those who itemize their deductions, like taxpayers in New York and California, could see their overall tax bill rise in 2018.
It also cut the rates for the majority of American businesses, permanently lowered the corporate income tax rate to 21 percent and solidified a rate for corporations to repatriate capital from overseas.
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