Do Tax Cuts Work? | 5-Minute Videos | PragerU

Do Tax Cuts Work? | 5-Minute Videos | PragerU
Quizzed ESL Activities

Summary


Do Tax Cuts Work?

The debate on tax cuts revolves around their impact on workers, families, businesses, and the economy. The right believes tax cuts are beneficial as long as the government can fund its core functions, while the left argues that targeted tax cuts for low- and middle-income earners are beneficial, but tax cuts for the wealthy are not.

The 2017 Tax Cuts and Jobs Act

  • Reduced income tax rates for virtually everyone by 2-4 percentage points.
  • Lowered corporate tax rate from 35%, one of the highest in the world.
  • Increased the child tax credit, further lowering household tax liability.

Did the Tax Cuts Work?

  • Average tax cut for working and middle-income taxpayers ranged from $1,500 to $3,000.
  • The bottom half of earners saw the largest reduction in taxes paid, over 16%.
  • Virtually everyone’s taxes went down, regardless of race, gender, education level.

Critics’ Claims

  • Critics argue that tax cuts only help the rich, but this is due to math: high earners pay more taxes, so their savings are larger.
  • High earners pay most of the taxes, with the top 10% paying 76% of federal income taxes and the top 1% paying 46% of taxes.

Corporations and Tax Cuts

  • Corporations don’t pay taxes, consumers do, through prices of goods and services.
  • After the tax cuts, household income increased by $5,000, and wages grew 4.9%.
  • Companies like Chipotle, CVS, Lowe’s, and Wells Fargo invested tax savings in employee benefits and bonuses.

Government Revenue

  • Since 2018, federal revenue has increased year after year, except for 2020.
  • In 2022, the government collected over $5.2 trillion in revenue.

Conclusion

Tax cuts lead to higher income, higher wages, and higher government revenue. So, why would anyone want higher taxes?


Key Vocabulary

Term Definition Example Usage
Tax Cuts Reductions in the amount of taxes owed by individuals or businesses. The 2017 Tax Cuts and Jobs Act reduced income tax rates for virtually everyone.
Corporate Tax Rate The tax rate applied to a company’s profits. The 2017 Tax Cuts and Jobs Act lowered the corporate tax rate from 35%.
Child Tax Credit A tax credit provided to families with dependent children. The 2017 Tax Cuts and Jobs Act increased the child tax credit, further lowering household tax liability.
Federal Income Taxes Taxes levied by the federal government on an individual’s income. The top 10% pay 76% of federal income taxes, and the top 1% pay 46% of taxes.
Government Revenue The income received by the government from taxes and other sources. In 2022, the government collected over $5.2 trillion in revenue.

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Do Tax Cuts Work? | 5-Minute Videos | PragerU

Vocabulary Quiz

1. Which word means ‘to make something smaller or less in amount or degree’?

A) Increase
B) Reduce
C) Invest
D) Collect

2. Which word means ‘a group of people who are together because of shared characteristics’?

A) Earners
B) Household
C) Demographic
D) Race

3. Which word means ‘to give money or other benefits to someone in order to help them’?

A) Invest
B) Pay
C) Benefit
D) Fund

4. Which word means ‘to make something or someone stronger or more powerful’?

A) Grow
B) Increase
C) Strengthen
D) Weaken

5. Which word means ‘to take money or other things that belong to someone else’?

A) Pay
C) Invest
D) Take

Answer Key:

1. B
2. C
3. C
4. A
5. D

Grammar Focus

Grammar Focus: The use of the passive voice

The passive voice is used to emphasize the action rather than the doer of the action. It is formed using a form of the verb “to be” (e.g. is, was, were) and the past participle of the main verb. In the given text, the passive voice is used to describe the effects of tax cuts, making the information more objective and formal. For example: “Virtually everyone’s taxes went down”, “Household income increased”, “The government collected over $5.2 trillion in revenue”.

Grammar Quiz:
  1. By 2022, ____________________ over $5.2 trillion in revenue.
    1. was collected
    2. had collected
    3. has been collecting
    4. collects
  2. Tax cuts ____________________ to higher income and higher wages.
    1. lead
    2. leads
    3. are led
    4. have led
  3. The child tax credit ____________________.
    1. was increased
    2. increased
    3. has been increasing
    4. is increasing
  4. By the top 10% of federal income taxes ____________________.
    1. are paid, 76%
    2. pays, 76%
    3. is paid, 76%
    4. were paid, 76%
  5. After the tax cuts, employee benefits and bonuses ____________________ by companies like Chipotle.
    1. were invested
    2. invest
    3. have invested
    4. are investing

    Answer Key:

    1. was collected
    2. lead
    3. was increased
    4. are paid
    5. were invested