The NYT editorial board this morning published an article spelling out why higher wages, and not tax cuts, are the key to economic growth.
One of the great successes of the Republican Party in recent decades is the relentless propagation of a simple formula for economic growth: tax cuts.
The formula doesn’t work, but that has not affected its popularity. In part, that’s because people like tax cuts. But it’s also because people like economic growth, and while the cult of tax cuts has attracted many critics, it lacks for obvious rivals.
IRS data on the 2018 tax season released in May 2019 shows that savings for taxpayers were uneven. For example, the average refund was $90 higher, nationally, in 2018 than 2017. But the taxpayers who saw the largest refund increases had an adjusted gross income (AGI) of at least $200,000. Tax returns showing an AGI of less than $100,000 paid less income tax overall, but returns with an AGI just above $100,000 (many middle-class families) owed more tax, on average. Note that this AGI is per tax return, not per taxpayer: A married couple where each spouse has a salary of $65,000 could very well have an AGI of just above $100,000 if they file jointly.
On the whole, low-income families appear to have received the least savings, while high-income families saved the most. Middle-class families saw mixed results. The biggest winners from Trump’s tax cuts were probably businesses. Between 2017 and 2018, corporations paid 22.4% less income tax. The total value of refunds issued by the IRS to businesses also increased by 33.8% nationally.
In order to get more money to its chronically underfunded schools, a group in Arizona got Proposition 208 on the November ballot.
A "yes" vote supported this ballot initiative to:
* enact a 3.50% income tax, in addition to the existing income tax (4.50% in 2020), on income above $250,000 (single filing) or $500,000 (joint filing) and
* distribute the revenue from the 3.50% income tax to teacher and classroom support staff salaries, teacher mentoring and retention programs, career and technical education programs, and the Arizona Teachers Academy.
A "no" vote opposed this ballot initiative, thus keeping the highest income tax rate at 4.50% (in 2020) on income above $159,000 (single filing) or $318,000 (joint filing).
If you read the 4th paragraph above again, you'll notice that the people who had their taxes cut the most were those with income about $200,000. Proposition 208 was an attempt to correct that injustice.
It got 51.75% of the vote, more than 100,000 vote margin.