FOX Business host Larry Kudlow discussed the state of the American economy under the Trump administration, highlighting a new study by Scott Winship of the American Enterprise Institute. The study shows that the core middle class and lower incomes have been shrinking due to a boom in the upper middle class. Dual income households have nearly tripled since 1979, rising from 10 percent to 31 percent, with incomes reaching $326,000 a year. The core middle class, defined as just over $100,000, has only slightly decreased from 35 percent to 31 percent, while lower middle class and poorer incomes have fallen somewhat [1].
Kudlow attributes this near 50-year period of middle class prosperity to relatively low tax rates, which he describes as the supply side era bookended by President Reagan and President Trump. Family incomes have been rising across the spectrum, especially among women, and studies indicate that individual mobility from the bottom fifth to the top fifth of earners has increased by roughly 50 percent. Kudlow argues that contrary to criticisms from Democrats, supply-side economics has not hollowed out the middle class, citing data that supports increased prosperity [1].
He further notes that Trump tax cuts 2.0 are designed to help the middle class through tax-free tips, overtime, and Social Security, as well as Trump accounts that allow newborns to accumulate wealth regardless of background. Trump tax cuts 1.0 during his first term disproportionately benefited middle-class blue-collar wage earners due to lower business taxes. Trump 2.0 includes 100 percent immediate cost expensing and reciprocal fair trade, which Kudlow claims is fueling a factory building boom and boosting working-class prosperity [1].
Kudlow also points out that the top 1 percent of income earners pay more than 40 percent of the tax burden, and in states like New York, California, and Washington, the most successful earners pay half or more of the tax burden when state and local taxes are included. He asserts that Americans feel overtaxed and that much of the tax revenue is spent fraudulently in these states. Kudlow concludes that the GOP can win the midterms if they effectively communicate these economic benefits [1].
CONCLUSION
The article presents evidence that low tax policies under the Trump administration have contributed to increased prosperity and mobility for the American middle class, particularly through rising incomes and expanded opportunities. While the top earners shoulder a significant tax burden, the middle class has benefited from targeted tax cuts and economic growth. The market takeaway is cautiously optimistic, with potential implications for political outcomes and continued economic expansion.