On Capitol Hill and in the media, there is a great deal of debate about the fairness of the Senate bill, especially after the November 16 release of the distribution tables from the Joint Committee on Taxation. (Doc JCX-58-17 at www.jct.gov). Below is a visual summary of one of those tables with some (nonpartisan) embellishment by your author.
The figure shows the two most defensible and conventional ways of measuring distributional changes of tax bills: (1) percentage change in tax and (2) percentage change in after-tax income. If the blue and red lines were horizontal—that is, if those percentage changes were the same for all income categories (of course, impossible to do in reality—just a point of reference)—the tax bill would be distributional neutral. In other words, if you like the current distribution of the tax burden and after-tax income, the tax bill is fair.
The figure shows that taxpayers with income between $20,000 and $30,000 unambiguously suffer a percentage tax increase and reduction in after-tax income. Taxpayers making between $30,000 and $40,000 break about even. (This is one of five tables produced for two-year intervals in the 10-year window. All the tables before expiration of individual tax cuts look roughly the same as this.)
Importantly, matters are worse than shown for the earning-under-$40,000 crowd because the JCT estimates do not include—even though JCT revenue tables do include-- the reduced Medicaid benefits and insurance company subsidies these taxpayers drop when they are no longer subject to the Affordable Care Act’s individual mandate. The JCT for some reason counts these reductions in spending as tax increases in its revenue table (which helps Congress meet the $1.5 trillion net tax cut limit in reconciliation instructions), but does not include them in the distribution table (that is supposed to reflect burden across income categories).
The figure also shows that at the high end, taxpayers with over $1 million of income do less well than the middle and upper middle class. That’s a plus for high-end progressivity, but the underlying JCT estimates do not include the effects of estate tax relief, which primarily benefit the wealthiest.
You cannot boil this all down to a talking point—at least, if you want to be accurate. By citing selective statistics, Democrats can say the well-off pay less at the expense of the poor and Republicans can say the bill focuses on middle-class tax relief. But at least now you know the facts and can make up your own mind about fairness.