The good news – American median household income rose to $59,039 in 2016. The bad news – this figure is still below the 1999 U.S. peak when factoring in accounting changes in methodology.
Our economy is improving, but too many people are reaping absolutely no benefit from it. The unfortunate truth is that although we as a country are making more money than ever, the very wealthy are overwhelmingly the ones who are making that money. Despite massive gains in productivity over the last few decades, with 72.2% growth in productivity from 1973 to 2015, the average worker’s wage increased by just 9.2% in that same time frame. The gains from that productivity aren’t disappearing, they’re just being further focused towards an increasingly small number of wealthy Americans.
We may not be able to fix or eliminate inequality through our tax code, but let’s not make it worse. There’s absolutely no reason that, at a time when the rich have never done better, tax “reform” should give enormous tax cuts to the wealthy. But that’s exactly what President Trump’s tax plan does. Nonpartisan studies predict that 80% of the benefits of his plan would go to just the top 1%. In fact, just the top 0.1% would have savings nearly twice as large as that of the bottom 99% combined. This isn’t tax reform, it’s a handout to people who don’t need it.
As we look at tax reform, we should be considering not only how it affects the present, but also how it will affect our future. This tax plan wouldn’t just give more money to the wealthy, in many cases it would actually take money away from people who need it. One quarter of households would actually see a tax increase (and you can be sure those aren’t wealthy households).
According to a study done by PERE at the University of Southern California, America is in the midst of a large demographic shift, with rising diversity among the youngest Americans. In fact, projections point to a majority “people of color” nation by 2044. The nation’s public schools have already reached that milestone. This growing population increasingly has a stake in public policy at all levels–including federal tax policy.
The President’s tax plan, by eliminating the personal exemption in favor of increasing the standard deduction, would disproportionately hurt minority families with more children. Currently, you can take a $4,050 exemption for each dependent child in the home. Under the new plan, that exemption would no longer exist. The plan does propose an increase in the child tax credit, but gives no specifics. Hopefully that increase would cover the difference, but the lack of details, in a plan that is full of specifics details about tax cuts for the rich, is a concerning display of priorities.
There are many problems with President Trump’s tax plan, but it’s not too late to stop it. We need to make it clear to the President and to Congress that this plan is unacceptable. Real tax reform should help all Americans, not just those at the top.