How did Bellingham do under Trump tax cuts? You can calculate it for yourself
President Donald Trump has said it’s time to consider another tax cut — as evidence mounts that wealthier taxpayers in the Bellingham area and around the nation benefited a lot more than others from his first one.
“We are going to be doing a major middle income tax cut if we take back the House, and we will be talking about that sometime later,” Trump said earlier this month. Democrats now run the House, while Republicans control the Senate.
The new cut, the president said, would be “mostly devoted to middle income (taxpayers) who have really been big beneficiaries of the (last tax cut) that we did which was the largest in the history of our country.”
But data on the impact of the tax cuts, enacted two years ago, shows in great detail what other studies have found: Those with big six-figure incomes were bigger beneficiaries.
Paul Turek, Washington state labor economist, said the impact of the tax cut is difficult to precisely assess. “Did it have a significant impact? Yes. Did it have a dramatic impact? Probably not,” he said.
The economy in the state and the nation has grown and business investment and consumer spending are at high levels. It appears that the tax cuts “took a decent economy and made it very good,” Turek said.
2018 tax cut analysis for Bellingham
A congressional district-by-district analysis of benefits by the nonpartisan Tax Foundation found that regardless of the district, the pattern holds: The wealthy got roughly twice as big a break, as measured by the percent change in after-tax income, than those with adjusted gross incomes of less than $200,000.
Results from the two Bellingham-area districts are similar.
In Washington’s 1st district, people with adjusted gross incomes of $25,000 to $50,000 got a cut of $870, or 2.4%. That dropped to a 2.2% cut for those making $75,000 to $100,000 and 2.3% for people making $100,000 to $200,000.
But the percentage jumped to 5.5% for people with adjusted gross incomes of more than $200,000.
In the 2nd district, people with adjusted gross incomes of $25,000 to $50,000 got a break of $820, or 2.2%. The percentage was 2.2% cut for those making $75,000 to $100,000 and 2.3% for people making $200,000. Higher incomes got a 5.2% break.
You can calculate it for yourself here.
According to the U.S. Census, of the 87, 080 Whatcom County households in 2018. 3,990 made more than $200,000, or 4.6%. The largest income group of 32,454 Whatcom County households made $50,000 to $100,00 a year.
Taxpayers nationwide
The Tax Policy Center had similar conclusions. It found taxpayers nationwide with incomes below $25,000 would see a tax cut of $40, or 0.3% of after tax income. Those earning $49,000 to $86,000 would get a cut of about $800, or 1.4% of after-tax income.
The percentages keep going up with income, so that those earning between $308,000 and $733,000 get an average cut of about $11,200, or 3.4% of income Those earning more get a cut of about $33,000, or 2.2%.
“The tax cuts were tilted towards higher-income households,” said Frank Sammartino, senior fellow at the nonpartisan Tax Policy Center in Washington.
The constituent clamor is clear across the country. “The 2017 Tax Cuts and Jobs Act is not turning like President Donald Trump and the Republicans hoped it would — at least, based on the public opinion data we have to date,” Frank Newport, senior scientist at the Gallup Poll, wrote as the income tax filing season ended in April.
After that 2019 income tax filing deadline — the first time most people filed returns affected by the Trump tax law — Gallup found 49 percent disapproved of the law while 40 percent approved. Other independent polls had similar results.
The tax law, approved in Congress without any Democratic support, reduced tax rates and limited many popular itemized deductions, notably state and local taxes, while increasing the standard deduction substantially. The Tax Policy Center estimated that 60 to 76 percent of people would get a tax cut, and the law is credited with simplifying the taxpaying process.
Washington taxpayers fared slightly better than the national average. The center found 68.2% of state taxpayers saw lower taxes, compared to the national average of 64.8%, while 5.8% had higher taxes, less than the national average of 6.3%.
Debate over tax cut data
Taxpayer groups eagerly dispute claims that the cuts were unfair to middle and lower income consumers.
They note that tracking who benefited depends on what data go into an analysis. They cite a study from Congress’ Joint Committee on Taxation that found the highest percentage tax breaks went to people with incomes ranging from $20,000 to $50,000. The percentages then slide downward as incomes go up.
“If you factor in items such as the estate tax changes or the distribution of the corporate tax cuts, or the new deduction for businesses that declare profits and pay tax through 1040 tax returns, that’s going to show a different picture from examining only taxpayers filing returns with non-business income,” said Pete Sepp, president of the National Taxpayers Union.
But Steve Wamhoff, director of federal tax policy at the Institute on Taxation and Economic Policy, pointed out that the congressional analysis does not include the new break on estate taxes, which helps the wealthy disproportionately.
The Tax Foundation analysis takes into account the impact of corporate and business-related taxes.
”High-income earners tend to derive a higher proportion of the earnings through items like capital gains and dividends, which increased in value after the corporate rate cut and raised their after-tax incomes,” said Garrett Watson, special projects manager at the Tax Foundation.
Whatever data one uses, a public perception remains — the rich got richer — and the White House is actively looking for ways to cut taxes for the middle class. So are congressional Democrats.
This story was originally published November 26, 2019 at 5:00 AM.
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