When I began closely following national politics a few decades ago, the general consensus was that Republicans supported policies that primarily benefited the wealthy, Wall Street, and Big Business whereas the Democrats advocated on behalf of the working class and Main Street.
While that may have been the case in the late 1990s and early 2000s, it certainly is not true anymore.
Over the past decade or so, we’ve witnessed a political realignment that most pundits never saw coming and many still deny is taking place.
In my opinion, the shift began when Donald Trump came down the golden escalator at Trump Tower in the summer of 2015 and outlined his agenda to Make America Great Again.
Unlike his rivals within and outside of the GOP, Trump criticized globalism, insisted that the United States rebuild its manufacturing base, opposed open borders, and rejected climate alarmism. He sought to eliminate onerous regulations, and proposed a massive tax cut that would slash tax rates for the middle and working classes.
At its core, the MAGA agenda is all about reviving the American dream, which has become nearly unattainable for a large portion of hard-working Americans in the 21st century.
The reconciliation bill that is currently being debated in the House of Representatives is a prime example of the Republican Party’s shift in priorities from white-collar interests to blue-collar interests.
As it is currently structured, the bill would eliminate federal income taxes on tips, overtime, and Social Security. It would also make the 2017 tax cuts permanent, increase the standard deduction and Child Tax Credit, expand health savings accounts and 529 education savings accounts, enlarge small business tax credits, increase Opportunity Zones, and allow 100 percent expensing for new factories, improvements to existing factories, and other production facilities.
Despite all these provisions that will particularly boost workers’ take-home pay and create new good-paying manufacturing jobs, almost every Democrat on Capitol Hill continues to portray the bill as nothing more than a tax cut for the rich.
“The overwhelming majority of the benefits will go to the wealthiest 1%,” claims House Minority Leader Hakeem Jeffries (D-NY).
Senate Minority Leader Chuck Schumer (D-NY) said the bill includes more “tax cuts for billionaires paid for on the backs of working and middle-class Americans.”
This is verifiably false. As The Heartland Institute has noted in two policy studies, IRS data show that the 2017 Tax Cuts and Jobs Act disproportionately benefited working- and middle-class Americans, not the ultra-wealthy.
Consider. In terms of the percentage saved per filer, the IRS data show that filers on the lower end of the income spectrum received far larger reductions compared to those on the higher end. For example, if you earned $45,000 in 2022, under the TCJA, you received a 19 percent reduction in taxes compared to 2017. If you earned $5 million, you saved 2.3 percent.
In other words, the TCJA gave all Americans a tax rate cut; however, the rate cuts were substantially larger for the lower-income brackets. By designing the law to mostly benefit middle- and lower-income earners, the TCJA resulted in the rich paying a larger share of the overall tax burden.
This is an indisputable and vital point. It also obliterates the Left’s talking point that the TCJA was a big tax cut for the rich.
According to the IRS data, “every income bracket earning less than $200,000 [in 2022] paid a smaller share of the overall tax burden than they did in 2017.” On the other hand, “every income bracket above $200,000 paid a greater share of the total income tax burden.”
The big, beautiful bill simply extends the 2017 TCJA tax rate cuts while further reducing income taxes for millions of wage earners who rely on tips and overtime. The last time I checked, most billionaires are not compensated via tips and overtime.
While it would be a welcome surprise if at least a few Democrats supported the big, beautiful bill, I doubt that will actually happen. For some reason, Democrats think it is politically advantageous to outright oppose the entire Trump/GOP agenda, even when that means being on the wrong side of a bill that will reap huge economic gains for the very constituents that Democrats have historically claimed to support: the hardworking men and women who just want a shot at achieving the American dream.
Chris Talgo (ctalgo@heartland.org) is editorial director at The Heartland Institute.
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