Whether the Tax Cuts and Jobs Act (TCJA) disproportionately helped the rich may be 2020’s biggest political issue. Treasury Secretary Steve Mnuchin claims that it benefited most Americans. Sen. Bernie Sanders (I-Vt.) calls it a massive giveaway to the rich.

Who’s right?

Unfortunately, no one can tell from the TCJA studies done to date. Those studies, produced by government agencies and D.C. think tanks, do conventional fiscal analysis, which, truth be told, has four fatal flaws.

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First, it’s static. It considers only taxes paid in the current year. But TCJA impacts, and differentially so, every household’s future taxes.

Second, conventional TCJA analysis classifies households as rich or poor based on current-year income. This means a billionaire investor who realizes no capital gains can be classified as poor even though she’s rich.

Third, it lumps together the old and the young. But the young have higher incomes not because they’re richer but because they’re working.

Fourth, conventional analysis takes current-year, after-tax income as the measure of welfare. But consumption (spending), both current and future, is what economics, as well as the public, ultimately care about.

Why are the outstanding economists working in Washington doing highly misleading tax analysis? The answers I get are, first, members of Congress are their clients and are used to seeing the wrong numbers presented in the wrong way. Second, members of Congress aren't smart enough to process the right numbers.

This “good enough for government work” approach isn’t good enough for voters. Nor is it economists' role to teach or talk down to members of Congress, who, by the way, seem plenty smart to me.

In any case, to rectify this situation, I, together with Berkeley economist Alan Auerbach and Darryl Koehler, an engineer in my financial planning software company, have spent the last five years fixing tax analysis.

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Our just-released study, “U.S. Inequality and Fiscal Progressivity,” which includes an appraisal of TCJA, addresses all four aforementioned mistakes.

First, we consider remaining lifetime net taxes (taxes paid net of benefits received), not just taxes paid in the current year. Second, we classify households as rich or poor based on their remaining lifetime resources (net wealth plus the present value of projected future labor earnings), not their current income.

Third, we analyze inequality and fiscal progressivity within birth cohort. Fourth, we measure household welfare based on remaining lifetime spending, including bequests.

Where do we get the data? We run the Federal Reserve’s Survey of Consumer Finances through a tool — The Fiscal Analyzer (TFA) — which we developed using my company’s software.

TFA incorporates all federal and state fiscal policies, including the federal personal and corporate income taxes, state income taxes, state-specific Medicaid benefits, welfare (TANF) benefits, Social Security benefits, Medicare benefits and premiums, payroll tax, food stamps and ObamaCare’s subsidies.

Our study has important findings for inequality and fiscal progressivity. Inequality in remaining lifetime spending is dramatically lower than inequality in wealth.

For example, the richest 1 percent of 40-year-olds own 34 percent of their cohort’s wealth, but account for only 15 percent of its spending. This cohort’s poorest 20 percent own less than 1 percent of cohort wealth but do 7 percent of its spending.

This reflects two things: Labor income is far more equally distributed than is net wealth and the U.S. fiscal system is highly progressive. Indeed, the richest 1 percent of 40-year-olds pay 35 percent of their remaining lifetime resources in remaining lifetime net taxes.

Those in the third, second and first resource quintiles (20-percent groupings) face 13 percent, 4 percent, and negative 47 percent average remaining lifetime net tax rates, respectively.

The study also shows that large shares of households who are in the second, third and fourth quintiles of the remaining lifetime resource distributions are conventionally classified as richer or poorer than is actually the case due to ranking based on current income.

What about TCJA? Was it a giveaway to the rich? No and yes, depending on your fairness criterion. Let’s again consider 40-year-olds. Results for other cohorts are similar.

TCJA’s generally small percentage-point cuts in remaining lifetime net tax rates are largest for the middle class. The cut is 1.7 percentage points for the middle fifth (third quintile) compared with 1.1 for the poorest fifth (bottom quintile) and 0.8 for the richest 1 percent.

The corresponding percentage increases in lifetime spending are 1.9 percent for the third quintile, 0.8 percent for the bottom quintile, and 1.1 percent for the top 1 percent. Only 3 percent of 40-years-olds saw their lifetime net taxes rise and their lifetime spending fall.

What share of the tax cuts went to the rich and the poor? The richest 1 percent received 9.3 percent of the total tax cuts, the top 5 percent got 26.5 percent, the top quintile received 52.2 percent and the bottom quintile got 3.3 percent.

So, the rich received the lion’s share of the tax cut. But they also pay the lion’s share of taxes. The top 1 percent pay 30.2 percent, the top 5 percent pay 51.1 percent, the top quintile pays 80.1 percent and the bottom quintile pays negative 9.0 percent.

Hence, TCJA was progressive as conventionally defined. The rich received less than a proportionate share of TCJA’s total tax cut. The very poor benefited even though they pay negative net taxes.

These figures may well understate the progressivity of TCJA. Our analysis assumes that the share owners of U.S. companies (most rich Americans) bear the burden of the U.S. corporate income tax.

Others, ourselves included, think the burden of the corporate tax actually falls in full or in large part on U.S. workers (mostly middle-class and poor Americans). Why? Because it limits investment in the U.S., which limits worker productivity. Were we to assume that the corporate tax falls on labor, not capital, the TCJA would be even more progressive.

Doing the analysis correctly matters. When we use our data to do conventional tax analysis (rank households by current income, consider only current-year taxes and toss the young and old in the same pot), we find that TCJA is regressive, i.e., those with the highest incomes experience the highest percentage-point reduction in current-year tax rates.

Indeed, the correlation coefficient between our current-year tax rates and those of the Joint Committee on Taxation (JCT) based on the JCT's income intervals is 96 percent. Hence, it's not our data, but economics' clearly prescribed methodology that produces the exactly opposite result for the TCJA's progressivity as conventional and conventionally inappropriate fiscal "analysis."

For Secretary Mnuchin, these findings will be heartening. But Sen. Sanders will surely focus on the absolute size of average lifetime tax cuts. On average, the richest 1 percent received a $278,540 lifetime tax cut (lifetime spending increase) under TCJA — miles higher than the $21,704 going, on average, to those in the middle and the $4,975 going, on average, to those at the bottom.

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Did the top 1 percent of 40-year-olds who pay, on average and to be fair, over $13 million in lifetime net taxes deserve a tax break equal to the annual pay of 18 McDonald’s workers? Did anyone deserve a tax break given the massive official federal debt and gargantuan off-the-books liabilities we’re dumping in our children’s laps?

These questions of intra- and intergenerational fairness are something voters will intensely debate over the coming 16 months. Economists can’t tell them what’s fair. But we can, at long last, provide them with tax analysis they can trust.

Laurence Kotlikoff is a professor at Boston University (BU) and professor of economics at BU. He is also a fellow of the American Academy of Arts and Sciences, a research associate of the National Bureau of Economic Research, a fellow of the Econometric Society and was formerly on President Ronald Reagan's Council of Economic Advisers. Follow him on Twitter: @Kotlikoff.