People always ask all the time, ‘Why do you want to give a tax cut to the rich?' Here's the math. We have a progressive tax system, which means that if you make $1 million and I make $50,000, we both pay the exact same rate on the first, let's say, $20,000. And then, from the next $20,000 up to my $50,000, and her next $20,000 to her next $50,000, we pay the same, I think it's 12 percent of 15 percent, I can't remember where the brackets are right now. And then she goes on to pay her higher rate on the stuff that she makes and I stop.

Well, if you want to give me, the middle class, a cut, take my 15 percent rate down to say 10 percent, and that gives the middle class a cut. Guess who else benefits from that, she does. She pays that same rate on the way up the brackets.

Mnuchin is being disingenuous here. While everything he says is true, if that was the *only* source of the tax breaks, the percentage should go **down** for higher-income people.

His point is silly, but your math is worse. It's silly because the incremental bracket point is true, it's just not why the "rich" are benefiting (by the way we're not talking about the rich, we're talking about high income earners, which is not necessarily the same group).

Let's say that people pay 10% on their first $20,000 in income.

Let's not, cause it's not true. Everyone gets the standard deduction, which means the first dollars you earn are effectively tax free. Why is that relevant, when rich people get the same thing (or even better itemized deductions)? Because it impacts the

*effective tax rate* paid. I think we currently have over forty percent with an effective rate of zero or less. They can't get a tax cut.

Doubling the standard deduction is going to increase that group of people, and extend the group of people for whom their effective tax rate is below even the tax rate of the bottom of the bracket.

So your $20k earner, had a standard deduction of $9,300 leaving a taxable income of $10,700, with a simple tax liability of about $1,140 (which honestly, would almost never be the case because they'd be entitled to other credits, including refundable ones and deductions). An effective tax rate of 5.7%.

Your 50k earner, on the same assumptions (which are fairer in a 50k earner case on the credits as they'd be far less likely, but not on the deductions which would be far more likely). Would have a taxable income of $40,700 and a simple tax liability of $5,950. An effective tax rate of 11.9%

That was based on the existing 10/15/25% brackets beginning at 0, 9275, 37560, respectively. If we change those to 5/10/20, and begin them at 0, 15000, 47000, with a double personal exemption of 18,600 the results are as follows:

Your 20k earner, has $1400 taxable at 10% for $140 liability an effective rate of 0.7% (almost a 90% reduction). They pay 1/10 of what they currently would.

Your 50k earner, has taxable income of 31,400. 15,000 at 10% and 16400 at 15% for a total of $3960 and an effective rate of 7.9% (which is 34% reduction). They pay 2/3's of what they currently would.

The higher you go up the chain, the less the actual impact - by percentage - actually will be, until you get to the top of the chain where it will literally approach exactly the different between the two top brackets. If the top bracket goes from 39% to 30% then the limit on this particular change will approach approximately a 25% reduction with the top earners paying 75% of what they would have. I note however, the current rumor is that the top bracket may stay in place, which means not much tax relief to the top earners.