So, let’s do some math. Paul Ryan’s claim is that the tax cut saves the average family of four $1,182. Here is Paul Ryan’s cherry picked family: Steve and Melinda, with two middle school-aged children:
"As a result of lower tax rates, a significantly larger standard deduction, and an enhanced Child Tax Credit and Family Flexibility Credit, Steve and Melinda will pay over $1,182 less in taxes than last year, reducing their total tax bill from $1,582 to only $400. "That’s more money they can use for whatever is important to them, whether it’s paying bills, purchasing a new refrigerator, or putting away savings for the future."
The GOP is talking up the increased standard deduction, but they do not talk a lot about losing personal exemptions, which actually close to net each other out. When you have a family of four and the standard deduction increases from its current level of $12,700 to $24,000, but the personal exemption for four persons ($4,050/person) goes from $16,200 to $ 0 (zero), you are going from:
$12,700 + $16,200 = $28,900 subtracted from gross income
to:
$24,000 + $ 0 (zero) = $24,000 subtracted from gross income
At some point, some pointy-head in the GOP figured this out, said “oh shit” and they came up with the concept of increasing the child tax credit.
So let’s take a look at this $1,182 savings. As it happens, savings is almost entirely a result of increasing the child tax credit from $1,000 to $1,600.
$1,600 — $1,000 = $600 per child. Steve and Melinda have two children,
2 children x $600/child = $1,200.
But wait! Steve and Melinda only save $1,182. Isn’t that less than $1,200? Why, yes, it is! Here is that math:
$1,182 — $1,200 = a negative number! (it’s negative eighteen dollars)...so that means, that without the $600 tax credit, the rest of the great GOP cut-cut-cut bill is actually making even the most cherry picked of the non-itemizing, young-child-having (the child tax credit is only until the child is 16), not-making-too-much-money (the child tax credit phases out at higher incomes), married (single parents lose Head of Household status) middle class family pay more. Not a lot more, but more. But, they have that credit, right? So Steve and Melinda are OK? Well, they’re OK for five years, because in five years, that credit gets snatched away.
What if you itemize (30% of families)?
What if your kids are older, or you don’t have kids (a lot of families)?
What if you’re a single parent, or you’re divorced (don’t get divorced, Steve and Melinda)?
Sorry, you’re screwed. This only works for Steve and Melinda. And only for five years. After five years, they’re paying more taxes like everybody else.
So, let’s step back from Paul Ryan’s middle class family, and take a look at what they say this is going to cost (which, of course is a lot less than it inevitably will cost...but let’s take them at their word right now).
This for-married-couples-only-who-have-young-children-and-don’t-itemize-and-don’t-make-too-much-to-take-the-tax-credit, so-called “middle class tax cut” which will last for five years is going to cost, even Republicans acknowledge, 1.5 trillion dollars over 10 years.
I had to look it up.
A trillion has 12 zeros. Here is 1.5 trillion dollars:
$1,500,000,000,000.00 over ten years
(this by the way is roughly twice as much as the Obama stimulus package that not.a.single.Republican voted for in the House...because, you know, at that time, deficits were bad)
So let’s be generous, and say that Paul Ryan is correct when he says this is the average tax savings that non-corporate human people will see, at least for the first five years after the “tax cut.” In 2015 there were about 160 million “tax units”, and on average, 60 million of those paid no tax. So let’s say 100 million “tax units”— individuals, families — save an average of $1,182 every year for five years. How much is that?
100,000,000 “tax units” x $1,182/year for each “tax unit” x 5 years = $591,000,000,000.00
wait! that’s less than what they’re borrowing...it’s only, like a *third* of what they’re borrowing!
Wow...so even using Paul Ryan’s cherry-picked numbers for his cherry-picked family, only 1/3 of the money that we’re borrowing is going to the middle class…
Where is the rest of it going? I wonder...