The Corner

Economy & Business

If a Tax Falls and No One Sees It . . .

(Shannon Stapleton/Reuters)

It was never in any serious dispute that the Republicans’ 2017 tax cut was, well, a tax cut. The Tax Policy Center, which leans left, said that about two-thirds of taxpayers would see a decrease in their liability, and fewer than 10 percent would see their taxes go up. Yet Democrats tried to paint the bill as broadly harmful, especially because it gutted the “SALT” deduction that subsidizes high taxes in blue states.

You’d think Republicans would be vindicated, at least on the narrow question of whether tax cuts cut taxes, now that everyone has filed their 2018 returns and seen the benefits. H&R Block says its customers saw their liability fall 25 percent, and that the average savings was $1,200. Not everyone pays much in income taxes to begin with — and the new law doesn’t change the payroll taxes that even the lower-income pay — but certainly those with appreciable income-tax burdens must be grateful to the GOP right about now.

Maybe not. As the New York Times reports:

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.

The problem appears to be that, instead of sending everyone a GOP Tax Cut Check, the bill adjusted withholding formulas so people would get a little bit more in each paycheck throughout the year. This is better for household budgeting but doesn’t give people that warm fuzzy lottery-winner feeling:

The middle fifth of earners got about a $780 tax cut last year on average, according to the Tax Policy Center.

Most Americans would probably welcome a $780 windfall. But in contrast to 2001, when President George W. Bush’s Treasury Department mailed rebate checks to taxpayers, last year’s tax cuts showed up mostly in the form of lower withholding from workers’ paychecks. A few extra dollars in a biweekly paycheck proved easy to miss. Moreover, as taxpayers filed their returns, many found they were due smaller refunds than in the past, which may have further skewed perceptions of the law.

One might also compare it to Bush’s 2008 stimulus checks. One of my first ever pieces for NRO was about how I bit the bullet and, out of a sheer sense of patriotic duty, spent the whole thing on video games so it would maximally boost the economy.

Next time we drive up the deficit to cut taxes, perhaps we should make sure people notice. Anyway, Happy Tax Day.

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