Across the country, thousands of individuals and families are hurriedly filing their federal tax returns to meet the April 17 deadline.
As President Donald Trump addressed a crowd in Hialeah, Florida on Monday, he reminded Americans that this is the last year they will have to file one of those “long, complicated, horrible return[s].”
But that isn’t necessarily true.
There are a number of promises Republicans made as they passed the biggest overhaul of the tax code in over 30 years which won’t be fulfilled, leaving the middle class out to dry while the corporations and the ultra-rich only get richer.
The postcard myth
Republicans grew so attached to the idea that Americans will one day be able to file taxes on a piece of paper the size of a postcard that at a November event in Washington, D.C., Speaker of the House Paul Ryan said the first thing he does when he wakes up in the morning is put his tax bill postcard prop in his pocket.
— House Republicans (@HouseGOP) January 6, 2018
President Donald Trump said repeatedly that middle-class taxpayers “will be able to file their taxes on a single, little, beautiful sheet of paper.”
But the postcard trick was just a gimmick.
As recently as Tuesday morning, Director of the National Economic Council Larry Kudlow conceded that “it would have to be a large postcard.”
Vox’s Matthew Ygelsias notes each line of the 17-line form “requires you to consult some other calculation — often with no clear instructions.”
One line requires taxpayers to deduct state and local taxes if applicable, but neglects to mention that the amount you can write down is now capped at $10,000, as opposed to being unlimited, as it was in previous years.
Another line instructs taxpayers to plainly “subtract other deductions,” which is just unrealistic. There’s no way an average taxpayer can list every single deduction on a small, postcard-sized piece of paper, at least not without using tax prep software.
Maintaining a dependence on programs like TurboTax is the real end goal of Republicans in Congress and anti-tax activists who want to keep working class Americans in the dark when it comes to the tax filing process. TurboTax and H&R Block spend thousands of dollars lobbying Congress to keep the tax code complicated, because if it weren’t complicated, why would you need to pay someone to do your taxes for you?
In an effort to address this, Sen. Elizabeth Warren (D-MA), along with ten of her colleagues in the Senate, proposed legislation that would require the Internal Revenue Service (IRS) to “develop a free, online tax preparation and filing service that taxpayers can use to prepare and file their taxes directly with the federal government, if they choose to do so.”
The country already has a one-page tax form — the 1040EZ return, which allows single and joint-filers without dependents to file their taxes if they don’t take most tax credits and don’t exceed $100,000 in taxable income.
“You can file with the EZ form, but it’s probably not in your best interest,” Mark Steber, chief tax officer at Jackson Hewitt Tax Service, told NBC News. “I do not envision a scenario where our society is so simple and so standardized that … 100 million plus Americans will pay a fair amount of tax and be equitably treated with nine lines.”
According to the nonpartisan Tax Policy Center, about 30 percent of taxpayers who previously itemized their deductions are expected to take the standard deduction, which doubled under the new tax bill. This particular portion will be slightly easier for some people, but won’t make the overall process any less cumbersome than it already is.
Middle class families aren’t really going to get a huge tax cut
If you believe Republicans in Congress and the Trump administration, the Tax Cuts and Jobs Act was designed with the middle class in mind.
This is a lie the Trump administration told the American people time and time again — over 84 times.
In reality, middle class families will get a meager tax cut.
Analysis from the nonpartisan Tax Policy Center found that 80 percent of the tax bill’s benefits will go to the top 1 percent of earners. Additionally, taxpayers in the bottom quintile (making less than $25,000 a year) would get an average tax cut of roughly $60. Taxpayers in the middle-income quintile (earning between about $49,000 and $86,000) would receive an average tax cut of about $900.
The tax bill, however, is a boon to wealthy taxpayers making more than $733,000 annually. They would receive an average cut of $51,000.
Households making over $3 million will receive an average tax cut of $190,000.
President Trump said Monday that Americans are “getting a lot more money in [their] weekly or monthly checks than [they] ever thought possible,” due to the tax bill.
This is not true for a number of reasons, but mainly because the new tax code hasn’t officially been implemented yet.
I'm not surprised people haven't been noticing the TCJA in their paychecks. Even if everyone adjusted their withholding perfectly, more than half (56%) of families would see a tax change of $20 or less (including a tax hike) per two-week period. 75% would see <$50. pic.twitter.com/TLqCYgt5lJ
— Ernie Tedeschi (@ernietedeschi) April 2, 2018
Trump and other Republicans argue that the bonuses corporations gave out in response to their tax cut have put more money into the pockets of middle class Americans. That was another gimmick, or rather, a publicity stunt for corporations.
The bonuses were a drop in the bucket compared to what the permanent tax cut for corporations actually cost.
A ThinkProgress analysis of the Americans for Tax Reform report found that the bonuses total roughly $981 million, only .09 percent of the total cost of the corporate tax cut.
Some corporations, like Walmart and Comcast, began to lay off thousands of workers after they announced bonuses for their workers. Just 2 percent of Americans have reported getting a raise or bonus as a result of the tax bill.
And even if every American worker received a tax bill bonus, a one-time bonus wouldn’t do as much for individuals families as a pay bump would. The corporate tax cut is permanent while the cuts on the individual side expire in 2023. If corporations wanted to raise their wages for their employees, they certainly have the cash to do so.
New data from Americans for Tax Fairness confirmed corporations aren’t spending their tax cut savings on higher wages for their workers. Corporations have spent a total of roughly $238,244,348,330 on stock buybacks since December 20, 2017 when the tax bill passed. Middle class Americans won’t see a penny of that, unless they own stock. The wealthiest 10 percent of American households own 84 percent of all shares, while the top 1 percent own 40 percent. Roughly one-half of American households don’t own stock at all.