President Trump’s arrival in the White House was in part precipitated by the promises he made about cutting tax during the election campaign.
A lot of the coverage at the time focused on the fact that this policy would disproportionately benefit the wealthiest households in America, while failing to make any discernible difference for lower earners.
After almost two years in office, it’s now easier to get an overview of the real impact of the changes that the Trump administration has implemented. So when it comes to the tax breaks, were widely held assumptions correct, or is there more to this story than meets the eye?
Feeling the Pinch
Taxation is all about scale. Someone who earns $30,000 a year and pays 20% income tax will not have a lifestyle-changing amount of extra cash to spare at the end of the year if their contribution requirements are cut by one or two per cent. For someone earning $300,000 a year, that same reduction results in a larger chunk of disposable income ending up in their bank account. As you go higher up the income ladder, that gap only continues to widen.
