Well, I finally stopped procrastinating and did my taxes. I figured at least a slightly lower personal tax bill might make the bitter pill of the Trump presidency go down a little smoother. I was wrong.
I had to pay more in taxes this year than I did last year. Now, I don’t particularly mind paying my taxes. I can afford it. I enjoy things like funding space exploration and driving on functional roads that are not littered with the bodies of the indigent. Taxes are a pretty good deal when you consider what we all get in return for paying them. I just don’t like being lied to.
And that’s what Trump and his Republican sycophants in Congress did with their supposed tax cut: they lied to us.
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Before Trump and the Republicans’ tax plan was passed late in 2017, Trump said, “It’s going to be one of the great Christmas gifts to middle-income people.” Never mind that even then its main focus was slashing the corporate rate from 35 percent to 21 percent, and that study after study from non-partisan congressional researchers and independent analysts said the tax bill would disproportionately benefit corporations and the wealthy. The tax law was also designed so that the benefits, if any, to low- and middle-income people would disappear over time.
Now that tax season is here and Americans are finally tallying up the bill for 2018, it’s pretty clear that most individual filers do not see the Republican tax plan benefiting them. According to a Reuters/Ipsos poll released on March 15, only one in five taxpayers expect their income tax bill to be lower this year as a result of the Republican tax reform law.
Just 21 percent of the adults polled by Reuters/Ipsos who had filed their taxes or plan to file agreed that “the new tax plan that Congress recently passed” would allow them to pay a lower amount this year. Far more said that they would pay a higher amount or that the law would have no impact on the amount they would pay (29 percent and 27 percent, respectively). About 24 percent were not sure how the new plan would affect them.
Because it’s 2019 and reality is no longer a shared concept, there was a partisan divide among those surveyed over whether the number on the line of your return where it says your total tax was bigger or smaller than last year. Still, even among the Republicans, only 33 percent said they would pay less in taxes this year.
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Don’t think the Republican tax plan was some big boon to the economy that you’re experiencing in unseen ways either. Before the tax reform bill was passed, Trump promised it would be “fantastic for the middle-income people and for jobs, most of all” and said that because of the bill “we could go to 4 percent, 5 percent, or even 6 percent” GDP growth. Sigh.
There was modest GDP growth and a jobs boost that could perhaps be marginally linked to the tax plan, but the effects are fading fast and were never nearly as good as promised. According to the National Association for Business Economics January Business Conditions Survey, 84 percent of business economists reported that in the year since their passage, the supposed tax cuts “have not caused their firms to change hiring or investment plans.” The U.S. GDP for 2018 will probably have grown by about 2.9 to 3 percent when the final numbers are in, but most economists are expecting GDP growth to slow to the fine-but-uninspiring mid-2 percent range in 2019 (if we can escape the recession a handful of economists are predicting). Of course, nothing good will come of the trillion-dollar deficits we’re facing for the foreseeable future, a problem completely unaddressed and meaningfully exacerbated by the Republican tax plan.
All the money that Trump promised was going into your pockets instead went to corporate share buybacks. Capital investments weakened as 2018 went on, but even during the first half of last year, companies spent more on share buybacks than they did on capital investments. A record $1.1 trillion was spend on share buybacks in 2018.
As you’re getting your taxes done this year, doing your patriotic duty to help fund this great republic of ours, compare your total tax number to last year. If you’re like most of your peers, you are not going to be impressed. That’s because the Tax Cuts and Jobs Act of 2017 was a corporate giveaway and a messaging scam. Now we’re all paying the price for it.
Jonathan Wolf is a litigation associate at a midsize, full-service Minnesota firm. He also teaches as an adjunct writing professor at Mitchell Hamline School of Law, has written for a wide variety of publications, and makes it both his business and his pleasure to be financially and scientifically literate. Any views he expresses are probably pure gold, but are nonetheless solely his own and should not be attributed to any organization with which he is affiliated. He wouldn’t want to share the credit anyway. He can be reached at [email protected].