You’re probably one of the many American taxpayers who are wondering whether or not they benefited from the Trump tax cut. Majority of people don’t think they did. Those who think the bill reduced their taxes are only 17% of Americans even though the nonpartisan Tax Policy Center estimated that up to 80% would have their federal taxes reduced. We can only think of five reasons why people feel like they’re not getting anything from Trump’s Tax Cut.
Since many people technically have lower taxes, it’s hard to even notice any tax cuts at all. There will be 60% of Americans at the lower end of the income distribution who are estimated to have federal tax savings of less than $1,000 according to the Tax Policy Center. In addition, many people believe that the tax cuts didn’t benefit people like them but only those who have a lot of money. It turns out they are right, only those on the top 1% save $51,000.
According to Howard Gleckman, Forbes contributor, withholding through was affected by the tax changes and increased in the standard deduction and other provisions specifically the limit on the deductibility of state and local taxes (TAXES). Since many taxpayers didn’t change their withholding allowances, it’s possible that they did not withhold the correct amounts in each time period. Their tax refund is therefore expected to be smaller. The perception that taxes have increased even when they fell slightly could be the result of the smaller-than-expected refund.
The reason why Americans think only the wealthy benefited the most from Trump’s Tax Cut is because of the rate changes and the drop in corporate taxes and rise in corporate profits ended up as higher incomes for households that are wealthy.
The wealthiest Americans really are the biggest winners in the Trump tax cuts - they are the corporations and the households that get income from corporate profits. From 35% to 21%, the top corporate income tax rate dropped by almost 40%. The household rate cuts expire after 2025 but that cut is permanent. Since 62% of Americans say how it bothers them that some corporations do not pay their fair share, it shows that the imbalance between household and corporate benefits is unpopular.
Chuck Jones, a contributor of Forbes demonstrated how tax cuts were largely responsible for a 17% increase in the federal deficit last fiscal year. The deficit is estimated to be an average of 4.4% of GDP between now and 2029 according to the Congressional Budget Office (CBO) which must higher than the average 2.9% from the previous fifty years. And with the federal debt growing every year with deficits which are estimated to be 93% of GDP by 2029. This would be a larger amount than at any time since just after World War as noted by CBO.
It was found by Pew Research that the two parties increasingly disagree about whether taxes are fair. Republicans who think so is at 64% while only 32% of Democrats agree. Pew began asking this question over twenty years ago and this is the best gap ever since. Polling data are being read by Democratic presidential candidates and are insisting that the tax cuts are unfair.
It is obvious that people aren’t feeling very positive from the effects of the tax bill. And if you’re in politics, you should know that feelings matter a lot. If you recall, Bill Clinton won the Presidential election because of his theme: “It’s the economy, stupid,” The incumbent George H.W. Bush on the other hand correctly noted that the year before the 1992 election, the economic recession already technically ended. The voters, however, didn’t feel any recovery and voted to make a change which means if the economy starts to slow down or stumbles, President Donal Trump may have to expect some vulnerable voter feelings, even if most people technically took a small benefit from the tax bill.
Debi G Hill, CPA