Rep. Andy Harris denies that the Republican tax overhaul represents another attempt at trickle-down economics. “Oh, no, not at all,” Harris told NPR Morning Edition host David Greene this week. “This is not trickle down.”
And I agree with the extremely conservative Maryland congressman. It’s not trickle down economics at all. It’s trickle up.
More precisely, it’s gush-up.
There’s a real gusher of cash, in the form of tax cuts, going to corporations and the wealthiest Americans at the top of the income scale. The Tax Policy Center says the biggest benefits will accrue to households making between $308,000 and $733,000.
How many people flying in that rare financial atmosphere do you suppose Harris serves?
There are 272,561 households in the 1st Congressional District, and only 6.2 percent of them have a median income above $200,000, according to the Census Bureau.
The median household income in the district, which spans the Eastern Shore and part of Carroll, Harford and Baltimore counties, is about $69,000.
Nearly 70 percent of the households have incomes below $99,000, and while many Marylanders in that group will see a tax cut, it will be much smaller, percentage-wise, than what the rich get, and the benefits won’t last as long, according to analysts.
As Howard Gleckman, a fiscal policy expert with the Tax Policy Center, put it in his TaxVox blog, the tax cut for the middle class will pay for about seven months of gasoline while the cut for wealthy Americans will get them a Mercedes C Class Coupe, assuming they don’t already have one or two.
Here’s what the Tax Policy Center says about the bill that Harris and other Republicans are crowing about, which passed Wednesday: “Higher income households receive larger average tax cuts as a percentage of after-tax income, with the largest cuts as a share of income going to taxpayers in the 95th to 99th percentiles of the income distribution.”
So Harris and other Republicans can — and will — keep calling their tax package a benefit to the middle class, but its primary purpose is to reward the rich, run up deficits and eventually starve the federal government of essential revenue for just about every function outside of defense.
Gleckman, a Tax Policy Center senior fellow, says middle-income taxpayers would pay about $900 less than under current law, about 1.6 percent of after-tax income.
“By contrast,” he says, “the highest-income one percent of households, who make about $733,000 and up, would get an average tax cut of roughly $50,000, or 3.4 percent of their after-tax income. Those in the top 0.1 percent, who will make $3.4 million or more next year, would get an average tax cut of about $190,000, or 2.7 percent of their after-tax income.”
But Harris, in his interview on NPR, insisted that “the individual taxpayers who are going to benefit most proportionately are the middle class.”
He offered an example of how the radical Republican overhaul would benefit a “clearly middle class” family with an income of $114,000. (About 18 percent of households in Harris’ district have incomes between $100,000 and $149,000.)
That family, Harris said, would take a $24,000 standard deduction, leaving a taxable income of $90,000. As a result of the Republican bill, Harris said, that family would pay “more than $3,000 less in taxes.”
But Gleckman challenges that assumption.
First of all, Harris’ hypothetical family, at $114,000, is living on nearly twice the median household income of the congressman’s district. So, if anything, the example he described on NPR leans toward the upper end of families he represents.
Secondly, says Gleckman, the Tax Policy Center estimates that most American households earning between $86,000 and $149,000 will see an average tax cut of about $1,800, and some families in that bracket will actually pay more in taxes in 2018 than they do under present law.
A lot of the Republicans tax package is idiosyncratic, Gleckman says: “Any benefits depend on how big your family is, how you make your living and whether you live in a high-tax state.”
Maryland is considered a high-tax state, Gleckman says. When the Tax Policy center ran numbers for a sample family living here — a married couple with two children, and an adjusted gross income of $135,000 — the result was a tax increase of $792 for 2018.
So Andy Harris’ example on NPR, boasting more than $3,000 less in taxes for a family making $114,000, might not hold for his own constituents. Which means the congressman oversold the deal, as a practical matter for the Marylanders he represents, and that should surprise no one.
What’s more, according to his organization’s calculations, Gleckman says, two-thirds of households making between $90,000 and $150,000 will be paying more in taxes by 2027 than they do under current law.
So voters beware, if you’re not already there: The Republicans have offered us a few sprinkles of gelt for the middle class for 2018, but much larger portions — a real gusher — for the wealthy and for corporations. Based on recent history, not much trickles down. It goes up, and stays up.