Here’s the PR statement put out by the Republicans:
The Tax Cuts and Jobs Act includes specific safeguards to prevent tax avoidance and help ensure taxpayers of all income levels play by the rules under this new fairer, simpler tax system. Our legislation will ensure this much-needed tax relief goes to the local job creators it’s designed to help by distinguishing between the individual wage income of NBA All-Star Stephen Curry and the pass-through business income of Steve’s Bike Shop.
Is it true that Steve creates jobs while Curry does not? Not really. In a sense both people create jobs. Because of Steve and Steph, some cashiers have jobs at Steve’s bike shop and some concession stand people have jobs at the Golden State arena. So certain specific jobs are created by their actions.
On the other hand, neither cause the job total in America to be higher than otherwise. Those employed at the bike shop and basketball arena would have jobs somewhere else if not for Steve and Steph (due to monetary offset.)
The real argument for the lower pass through rate (if I understand it correctly) is that capital income should not be taxed at all, and a portion of business income is capital income.
Why is Curry the only person mentioned in the GOP document, and why in a less than favorable way? I’m not sure. In my view, Steph Curry is far more valuable to society than Steve (for standard diamond/water paradox reasons). But I’d guess that many GOP voters resent the high incomes earned by African-America athletes, especially those who don’t seem grateful to America. This is probably why Trump keeps picking a fight with the NFL—he knows it appeals to his base. It’s all part of our stupid culture wars.
Some have argued that high wage earners often benefit from government subsidies, such as government funding of sports arenas. That’s true, but businesses also get massive government subsidies, and only a very tiny share of Steph Curry’s income is due to these subsides; it mostly reflects his extremely high productivity (which leads to big TV ratings). I have no problem with taxing high wage earners like Steph Curry at a 50% or 60% rate, but let’s not kid ourselves and claim that businesses are somehow more virtuous that high wage earners. Productivity is productivity, whether from white businesses or African-American workers. And Steph is way more productive than Steve.
PS. It’s not good when the very first bullet point in your PR document is inaccurate:
The Tax Cuts and Jobs Act delivers tax relief at every income level – while maintaining the top 39.6% tax rate on high-income earners.
This post explains why.