by Cecil E. Bohanon
Mercatus Center
July 07, 2014
Many argue that income tax cuts favor the wealthy at the expense of middle- and lower-income earners. Yet analysts can parse data in various ways to prove or disprove this point. This study examines how income tax burdens have changed over six decades for three hypothetical, yet typical households: (1) a low-income single mother; (2) a middle-income family; (3) a family with income near the top 1 percent. All three households benefit from tax reduction, but who fares best? In dollar terms, the upper-income household’s tax break is largest, because the couple earns more and pays more in taxes to begin with. In terms of percentage of income, the single mother gains the most. And while not the biggest winner, the middle-income household enjoys a sharp decline in their income tax liability. Clearly, an earnest inquiry into the benefits of income tax cuts will yield results irreducible to simple slogans.

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