Tags: trump | tax cut | withholding | irs

Most People Benefited From Trump Tax Cuts — Only 17 Percent Realize It

Most People Benefited From Trump Tax Cuts — Only 17 Percent Realize It
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Thursday, 25 April 2019 03:22 PM Current | Bio | Archive

Tax season can be a confusing and stressful time for many Americans, and with the advent of the 2017 tax reforms, not all filers were up to speed on the changes effective in 2018.

More than 65 percent of taxpayers will see their overall tax burden decrease by at least $100, but a NBC News/Wall Street Journal poll found that only 17 percent of Americans think they got a tax cut, and 28 percent believe they will pay more this year. In reality, only a little less than 30 percent of taxpayers will see little to no change, while only 6 percent will see an increase.

Part of the confusion surrounds the receipt of lower refunds than many Americans had expected. Although the average refund, $2,873, has dropped less than 1 percent from last year, as of March 29, 2019, there have been 2 percent fewer refunds overall. This is a result of changes in tax withholding throughout the year.

While there has been an average drop of 25 percent in tax liability across the board, most of this reprieve was effectuated by employers paying out larger paychecks and withholding less for the IRS. Although taxpayers were continually given notice of the change and given the opportunity to amend the amount withheld, the process to do so can be complicated and annoying, and some Americans likely did not want to take the proper steps, or did not pay attention to new withholding policy despite the notice. Tax experts recommend that in 2019, in order to avoid the confusion of a lower refund at the end of the tax year, taxpayers should adjust the amounts withheld from their paychecks.

Despite lower refunds, the bigger picture is that most Americans will see greater tax benefits in 2018.

Middle income households may expect an average tax cut of $1,000, according to Howard Gleckman, a senior fellow at the Tax Policy Center, a non-partisan think tank. The wealthy will see greater benefits than most Americans. Tax filers with income in the 95th-99th percentiles will get the largest break, while the bottom 20 percent of Americans will see little or no change. Another benefit for wealthy filers is a higher triggering threshold for the estate tax — estates may now pass up to $11 million to heirs without a tax burden, up from $5 million under the previous law. However, 14 percent of wealthy taxpayers, those making over $1 million, will see a tax increase, largely as a result of high state and local taxes that are no longer deductible to the same extent.

Perhaps the most notable change is a higher standard deduction, nearly doubled from prior years to $12,000 for single filers and $24,000 for married couples. The larger deduction may simplify filing for taxpayers who may have opted for several itemized deductions but now will settle for standard deduction. However, whether the process was simpler in 2018 is unclear, as many Americans who would’ve taken itemized deductions may still have had to work through and decide whether foregoing them for the flat standard deduction was worth it. Other changes include a 20 percent deduction for the owners of pass-through businesses, and a higher tax credit for children. While changes like this potentially save Americans money, the paperwork necessary to file for new deductions and credits is lengthy and tedious, so it’s unclear how many taxpayers will take full advantage.

The biggest change effectuated by the reforms was the drop in the corporate tax rate, from 35 percent to 21 percent. There was a general consensus, among both Democrats and Republicans, that the corporate tax rate was too high. The evidence that these cuts produced amazing results is undeniable when you look at the evidence of growth in wages, salaries, and overall compensation of workers over the past year, and there has been more job creation than over the past few years. Prior to the Election I went to private dinner with Congressman Gary Palmer and Minority leader Kevin McCarthy. Leader McCarthy pointed out that in 2018 we had the lowest unemployment levels we had seen in 40 years and for the first time middle class wages had risen significantly. Yet the Democrats were able to muddy the 2018 election with false accusations about the president, while lying to their constituents regarding the economy. Republicans must follow the leadership of President Trump and fight to get their message out to constituents. The media is constantly downplaying all successful conservative policies because more than 90 percent of them are liberal Democrats who no longer even pretend to be objective journalists.

If the leadership in our party doesn’t find a way to communicate the successes of our policies we could lose the 2020 election to a socialist candidate. Knowledge is power but my party often fails to realize that it is our job to communicate to the average voter how they are benefiting.

Christopher Reid is an attorney out of Birmingham who owns his own general practice law firm, which handles Business, Family, and Probate Law and high-end litigation throughout the state of Alabama. Reid has held various policy positions, including working for the Alabama Policy Institute and the Heritage Foundation in Washington D.C., where he also worked for House Republican Whip Roy Blunt. In law school, he clerked for the Alabama Attorney General Office, and, after graduation, he became Health and Judiciary Policy Analyst for Alabama’s governor. His charitable work includes serving on the board of Sav-A-Life. Chris is a frequent co-host on The Scott Beason Show in Birmingham, writes political and legal commentary for publications including The Hill, The Washington Examiner, and has been quoted in The New Yorker. He regularly provides on-air expertise and political commentary for TV news shows on Fox, NBC, and Newsmax with JD Hayworth. To read more of his reports — Click Here Now.

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ChristopherReid
Tax season can be a confusing and stressful time for many Americans, and with the advent of the 2017 tax reforms, not all filers were up to speed on the changes effective in 2018.
trump, tax cut, withholding, irs
978
2019-22-25
Thursday, 25 April 2019 03:22 PM
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