The Debate Over Tax Reform’s “Winners and Losers” Masks Its Real Value

Sometimes it’s not about picking your battles, it’s about picking your battlefields. Democrats exercised this principle to perfection in the debate over tax reform. What should have been a debate on the Republican-friendly territory of economic growth instead got turned by Democrats and complicit media into a zero-sum discussion about winners and losers.

“Winners and Losers of the Senate Tax Bill,” said a matter-of-fact Forbes headline. “Trump, GOP tax reform bill: JCT analysis on winners and losers,” writes a word salad of Business Insider headline. “4 winners and 3 losers in the Senate tax bill,” blares a Vox headline. “Meet the Winners and Losers of the GOP Tax Reform Bill,” “Who Wins and Who Loses From the Republican Tax Plan, “Redefining ‘Winners and Losers’ on Taxes,” the list literally goes on and on.

Tim Kane explains the problem for RealClearPolitics:

The first objection to this narrative angle is the question: Is the zero-sum burden game the only thing that matters about tax policy? Distributional analysis, as wonks call it, seems to be the only thing the media is talking about. The storyline presumes class warfare, or at least political favoritism. Neglected storylines would focus on economic growth, international competitiveness, wages and employment.

Instead, cable TV hosts tend to weaponize the winners-and-losers narrative . . .

Democrats, for their part, were happy to take the narrative that tax reform must create “losers” and run with it. Rather than just settle on an attention-grabbing headline and a divisive storyline, Democrats took it a step further, blatantly misrepresenting the effects of tax reform to serve their political ends.

“The fact they’re saying there’s a middle class tax cut is not true. It’s wrong,” House Minority Leader Nancy Pelosi said in one instructive example. “And when they come forth with their tax bill, we’ll see more clearly, but what the Republicans did today was to give, was to give an open path to this assault, an assault. It’s a rip-off, a shakedown, a looting of the middle class.”

This idea was then regurgitated under an aura of journalistic integrity by partisan lapdogs like the New York Times, which trumpeted that: “By 2027, people making $40,000 to $50,000 would pay a combined $5.3 billion more in taxes, while the group earning $1 million or more would get a $5.8 billion cut.”

So successful were these types of stories that Americans actually came to believe that Republicans’ tax cut bill was actually going to raise their taxes. A CBS poll found that a plurality—42 percent of Americans—believed that the tax bill would actually increase their taxes, while only 25 percent believed it would lower them.

But none of it is true.
Take, for instance, an analysis of the Senate bill by the left-leaning Tax Policy Center, which found that about 9 percent of taxpayers in 2019 and 12 percent in 2025 would get a tax cut. The average middle-income family would receive a cut of approximately $850 per year through 2025, and all five income groups would see a reduction in their average tax bills.

Or the score given by the nonpartisan Joint Committee on Taxation, which found that in 2019 people earning between $20,000 and $30,000 would see their taxes fall by 10.4 percent; for those earning between $50,000 and $70,000, the reduction would be 7.1 percent, while millionaires would receive a 5.3 percent tax cut.

So how do Democrats get around these facts to claim that Republicans are hiking taxes on the middle class? Simple, by myopically focusing on the year 2027, when the individual tax cuts expire, and ignoring what happens in the intervening nine years. Brian Reidl, writing for National Review, explains how ludicrous this is:

At that point, Congress would have to vote to extend most of the family tax cuts. This vote would probably be a formality, as a similar vote five years ago to extend the Bush tax cuts for middle-class families passed the Senate 89–8. There is no appetite in Congress to steeply raise middle-class taxes.

Even in the worst-case scenario, where the cuts fully expire, the typical middle-income family would receive a cumulative $7,000 tax cut in the early years, followed by a (roughly) $100 annual tax increase later. Still a good deal.

How do critics portray this as a middle-class tax hike? By simply ignoring the $7,000 tax cut in the early years, assuming a full expiration after 2025, and then implying that the later tax hike is much larger. That is flat-out dishonest.

In other words, Democrats and the media are obsessing over one data point (one that exists in a fictional universe in which Congress allows middle-class tax hikes) and ignoring everything else that doesn’t fit the narrative.

Sadly, it’s been remarkably effective. And because Republicans have to spend so much time proving that Democrats’ claims are untrue, there is little time to talk about what is indisputably true: That the tax reform plan will lead to faster economic growth, more jobs, and higher wages.