Quote of the Day:
If you’re an American taxpayer, you probably got a tax cut last year. And there’s a good chance you don’t believe it.
–New York Times (!)
Patrice did an excellent job yesterday of showing that most Americans got a tax cut this year thanks to the 2017 Republican-passed tax reform. Patrice's blog was important because, despite having received a cut, many Americans have been encouraged to believe otherwise, thanks to a relentless campaign by President Trump's opponents.
I missed an article in the New York Times (!) that made the same points Patrice made. The article is by Ben Casselman, who writes about business and economics for the Times, and Jim Tankersley, who covers economics and politics for Times.
Ever since President Trump signed the Republican-sponsored tax bill in December 2017, independent analyses have consistently found that a large majority of Americans would owe less because of the law. Preliminary data based on tax filings has shown the same.
Yet as the first tax filing season under the new law wraps up on Monday, taxpayers are skeptical. A survey conducted in early April for The New York Times by the online research platform SurveyMonkey found that just 40 percent of Americans believed they had received a tax cut under the law. Just 20 percent were certain they had done so.
That’s consistent with previous polls finding that most Americans felt they hadn’t gotten a tax cut, and that a large minority thought their taxes had risen — though not even one in 10 households actually got a tax increase.
To a large degree, the gap between perception and reality on the tax cuts appears to flow from a sustained — and misleading — effort by liberal opponents of the law to brand it as a broad middle-class tax increase.
That effort began in the fall of 2017, when Republicans prepared to introduce legislation that models by the independent Tax Policy Center predicted could raise taxes on nearly a third of middle-class taxpayers. It continued through Mr. Trump’s signing of the law, even though the group’s models showed that the revised bill would raise taxes on relatively few in the middle class in the 2018 tax year.
After the law went into effect, Democrats played down those estimates and instead highlighted projections that most Americans’ taxes are set to increase in 2026, after the individual tax cuts in the law are scheduled to expire.
. . .
In convincing people that they would not benefit, “the Democrats did a very good job,” said Howard Gleckman, a senior fellow at the Tax Policy Center. “They were able to put that into the public perception, and the reality has been unable to break that perception.”
Casselman and Tankersley find another reality:
Experts are divided on whether the tax law was a good idea. But there is little disagreement on this core point: Most people got a tax cut.
H&R Block, the giant tax preparers,for example, reported that about two thirds of their customers got a tax cut.
Some families did get relatively modest cuts–the middle fifth of earners got a cut of around $780. I don't know about you, but unlike Nancy Pelosi I don't regard this amount of money as a crumb.
Since, however, many of these cuts came in the form of higher paychecks over the year rather than more dramatic rebates, it was easier to overlook this, especially in light of the anti-Trump tax cuts campaign.
Many high earners got bigger cuts. Casselman and Tankersley observe:
Surveys consistently show that what bothers Americans most about the tax system is not that they pay too much but that they think corporations and the wealthy pay too little, said Vanessa Williamson, a political scientist at the Brookings Institution who studies public attitudes toward taxation. The tax law only sharpened those concerns.
Speaking for myself, I am concerned mostly with my own tax bill and realize that the very rich do pay a disproportionate percentage of taxes and that punitive taxes on corporations may satisfy the our envy, but they also cut down on the number of jobs available in the country.
Many critics of the tax law were vocally outraged that the deductions for state and local taxes–the so-called SALT deduction–was capped at $10,000. Let's face it–this hits mostly the rich in high tax (blue) states.( I thought Democrats wanted the rich to pay more? Seems that, when this actually happens, they are up in arms.)
And, according to the New York Times story, there are compensations for the change:
But just because people were bitten by the SALT cap doesn’t mean they were net losers under the law. The law doubled the child tax credit, for example, and made it available to more taxpayers. It also cut marginal tax rates and changed the treatment of some business income.
“A lot of people who are very angry about the SALT were not thinking about it in the context of the stuff that actually benefited them,” Mr. Gleckman said.
I urge you to read the entire article.
By the way, I noticed one change in the tax code that would have been a godsend to me in the days when I was a struggling freelance writer. The first twenty percent of such earnings are excluded. How I would have benefited from that when I most needed it!
Let's hope today's struggling freelancers are at least cognizant enough to be glad for this change, which benefited anybody but "the rich."