Once again, imagine all American households are equally divided into five boxes. The bottom box holds the 20% of households with the lowest annual income and the top box holds the 20% who make the most. The middle three boxes are the in-between groups. If the tax cuts were distributed equally, every family in each box would have received a $1600 tax cut. But that’s not how it happened.
First, the group at the bottom received just $60 per family per year. Not sixteen hundred. Not even six hundred. Just sixty. The next box up, which includes many senior citizens relying on Social Security, got $400. What happened to the other $1200? The next box up, the middle one, got $900. Not sixteen hundred. Nine hundred. The next box got eighteen hundred. But where are the missing shares from the first three boxes?
When we get to the top box, we find all the missing shares concentrated here. In this tier we find a payout of $7,600 per family, more than four times what would have been an equal share. And what about the infamous top 1%? What was their share of the tax cut?
Believe it or not, the average share of the tax cut for the top 1% was $51,000 per year. Per family. A thousand a week. While the folks in the bottom box got $60 apiece, the folks at the top got $51,000. That’s where the missing money went. Up the ladder. Up to the very top of the ladder.
In the usual lopsided way of supply-side tax cuts, the bottom 20% of families shared 1% of the money while the top 1% shared 20%. Even worse, the massive federal borrowing required to pay for these tax cuts completely undid Obama’s progress on the deficit and is projected to send our shortfall soaring back up to $1.1 trillion by 2022.
From The Ailing Nation, Chapter Ten: Curiosity