Should the country spend trillions on tax breaks for the rich, or use that money to support families who are struggling?
In the last few years, the U.S. government has passed tax laws that gave very large tax cuts to wealthy people and big companies. Supporters say these cuts help the economy grow. But many experts say the opposite is happening.
The tax cuts have made it harder for the government to pay for important programs that help millions of low-income families. If the promised $2,000 per person is sent out to everyone in 2026, more programs for low-income families will need to be cut.
Cuts are currently being made to Health-Care Insurance subsidies in the Affordable Care Act which not only affects millions of Americans using this program, but these cuts also affect other insured people because of a ripple effect on core insurance companies.
Who are these families?
- Low income: Less than about $770 per week
- Middle income: About $770 to $2,310 per week
- Upper-middle income: About $2,310 to $6,730 per week
- Top 1%: More than about $10,580 per week
Studies show that when the Top 1% pays less in taxes, the government brings in less money. For example, after the Trump Administration’s 2017 Tax Cuts and Jobs Act, the government lost an estimated $1.5 trillion in income over 10 years.
- Because of this, Congress later proposed more than $200 billion in cuts to food and health programs between 2018 and 2021. These programs include SNAP and Medicaid, which help families buy food and get medical care.
Reports also show that most of the benefits from recent tax cuts went to wealthy households. According to the Tax Policy Center, in 2020,
- The top 1% of earners received an average tax cut of $50,000.
- Middle-income families got about $800, and
- Low-income families got less than $40.
- This means rich families save thousands of dollars, while poor families save very little or nothing.
Economists say that tax cuts for wealthy people over the last 40 years have made income gaps worse. A major study from the London School of Economics looked at 18 different tax cuts since 1980. It was found that these cuts raised the incomes of the richest people by more than $3,000 a year but did not help the economy grow faster or create more jobs. The benefits went mostly to those already doing well.
Another concern is the national debt. When the government cuts taxes without making up the money lost, it often must borrow more. After the 2017 tax law passed in the Trump Administration, the government borrowed almost $1 trillion more between 2018 and 2020, according to the U.S. Treasury. Part of this is because of the $1,500 Trump sent to Americans.
- Higher debt means the government must spend more money paying interest instead of supporting health care, food programs, or schools.
Experts say extending the tax cuts for wealthy Americans will be extremely expensive. Keeping the 2017 tax cuts in place for another 10 years could cost $3.3 trillion—about the same amount the country spends on SNAP, WIC, and school meals combined.
This raises a tough question: Should the country spend trillions on tax breaks for the rich, or use that money to support families who are struggling?
Author: Ed H.