Trump Advisor Accidentally Raises Middle-Class Taxes

Fight disinformation: Sign up for the free Mother Jones Daily newsletter and follow the news that matters.


Here is Gary Cohn—supposedly one of the “smart ones” in the Trump administration—explaining the president’s tax plan:

The median income in the United States today is … about $56,000. You take the $24,000 away from the $56,000, you’ve got taxable income of $32,000. At a 10% rate that’s $3,000 of tax. If you have one or two or three children and we give you $1,000 tax credit, you could end up with a—you know, very marginal, single-digit tax rate to no taxes whatsoever. That, to me, is a middle-income tax cut because you’re going to owe no taxes potentially.

“Potentially” is doing a lot of work here, as David Kamin explains:

Cohn forgot to mention the fact that our tax system, as it is currently written, provides what are called “personal exemptions” to families….The plan Trump presented on the campaign trail would eliminate these personal exemptions….So when you take into account the elimination of personal exemptions, families aren’t actually getting much tax relief after all. In fact, if that family has two or more kids, they’d actually face a tax increase under the Trump plan described by Cohn.

Here this is in chart form:

This should come as no surprise. The problem is that the average family pays most of its taxes at the state and local level, and via payroll taxes. Their federal income tax rate is already “very marginal, single-digit tax rate to no taxes whatsoever,” so it’s all but impossible to cut it. This is from the Tax Policy Center:

The bottom 40 percent pays no federal income tax at all and the average middle-class person pays 6.4 percent of their earnings in federal income taxes. If you focus solely on the federal income tax—as Republicans always do—you can’t help the middle class much. Even in theory, the only people who really benefit are high earners.

Of course, you can still do a little to help middle-class workers—but only if you’re careful. Cohn wasn’t careful, so he ended up increasing middle class taxes. It’s an easy mistake to make.

TIME IS RUNNING OUT!

We have an ambitious $350,000 online fundraising goal this month and it's truly crunch time: About 15 percent of our yearly online giving usually comes in during the final week of the year, and in "No Cute Headlines or Manipulative BS," we explain why we simply can't afford to come up short right now.

The bottom line: Corporations and powerful people with deep pockets will never sustain the type of journalism Mother Jones exists to do. And advertising or profit-driven ownership groups will never make time-intensive, in-depth reporting viable.

That's why donations big and small make up 74 percent of our budget this year. There is no backup to keep us going, no alternate revenue source, no secret benefactor. If readers don’t donate, we won’t be here. It's that simple.

And if you can help us out with a donation right now, all online gifts will be matched thanks to an incredibly generous matching gift pledge.

payment methods

TIME IS RUNNING OUT!

We have an ambitious $350,000 online fundraising goal this month and it's truly crunch time: About 15 percent of our yearly online giving usually comes in during the final week of the year, and in "No Cute Headlines or Manipulative BS," we explain why we simply can't afford to come up short right now.

The bottom line: Corporations and powerful people with deep pockets will never sustain the type of journalism Mother Jones exists to do. And advertising or profit-driven ownership groups will never make time-intensive, in-depth reporting viable.

That's why donations big and small make up 74 percent of our budget this year. There is no backup to keep us going, no alternate revenue source, no secret benefactor. If readers don’t donate, we won’t be here. It's that simple.

And if you can help us out with a donation right now, all online gifts will be matched thanks to an incredibly generous matching gift pledge.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate