AAA Spark Meeting of Regions

Which Individual Taxpayers Benefitted from the Tax Cuts and Jobs Act

• In Event: Effective Learning Strategies Poster Session A
  In Poster Session: Room 1

Abstract

During the 2020 election season discussion arose as to whether the Tax Cuts and Jobs Act (TCJA) was harmful to the poor and beneficial to the wealthy. The repeal of the law was mentioned. The purpose of this paper is to objectively determine which groups of individuals benefitted from the TCJA and which were harmed.
To find the answer, we examined hypothetical families with varying income levels. The income levels ranged from $20,000 to $500,000 in $40,000 increments. We also examined four family compositions: married filing jointly with 2 children (under age 17), married filing jointly with no children, head of household with two children (under age 17), and single. We assumed all taxpayers owned a fully mortgaged (newly purchased during tax year) home valued at three times income with a mortgage interest rate of 2.75%. We also assumed property tax at 1% of home value, prepaid state income tax of 5% of income, medical expenses less than the AGI threshold, full-year health insurance coverage provided by an employer, charitable giving at 3% of income, and investment income (qualifying for the capital gains tax rate) of 1% of income. We examined these hypothetical families (taxpayer age 50 and/or spouse age 50) for 2017 (prior to TCJA) and 2018 (after TCJA). In the three-dimensional analysis, we examined each type of family, at each income level, for each year as described below.

Authors

• Anne C Duke, University of North Georgia

• J. Kent Poff, University of North Georgia

• Ellen Edwards Best, University of North Georgia