Democrats claim the decline in Americans’ tax refunds is proof the GOP tax law screwed over the middle class — but the truth is more complex

nancy pelosi

Democrats are attacking the GOP’s Tax Cuts and Jobs Act after reports that tax refunds dropped during the first week of the 2019 tax season.
Democrats say the decline in refunds proves the TCJA did not benefit the middle class.
But that doesn’t tell the whole story.
Taxes for middle-income Americans fell on average in 2018, according to multiple analyses.
Financial experts also said the size of a refund is not indicative of the size of a person’s tax bill.

Prominent Democrats are blasting the GOP’s massive tax reform law over reports indicating the average Americans’ tax refund is slipping. But the fresh line of attack against the tax code overhaul isn’t telling the whole story.

The new argument comes after IRS data released on Friday showed the average tax refund in the first week of the 2019 tax filing season was down 8% from the year before, to $1,865. The total number of refunds also fell 24% from last year.

High-ranking Democrats jumped on the decline as proof the GOP tax law, called the Tax Cuts and Jobs Act (TCJA), was not a boon for the middle class like President Donald Trump and Republican leaders promised.

“The average tax refund is down about $170 compared to last year. Let’s call the President’s tax cut what it is: a middle-class tax hike to line the pockets of already wealthy corporations and the 1%,” Sen. Kamal Harris, who recently announced a run for the 2020 Democratic nomination, tweeted Monday.

House Speaker Nancy Pelosi also cited a slew of stories from news outlets that reported the slide in refund size as a way to criticize the TCJA.

“Once again, American families are feeling the reality behind the empty promises of the GOP Tax Scam,” Pelosi said in a release.

But while the decline of refunds is drawing the ire of many Americans, the line of attack by the Democrats is missing some key context.

The most glaring error is Harris’ claim that the lower refunds prove that middle class families are paying more in taxes, or received a “hike.” According to most tax experts, a sizeable majority of American households making $100,000 or less are getting a tax decrease this year.

According to the conservative-leaning Tax Foundation, 80% of all households received a tax bill cut in 2018. Those in the middle quintile of income earners saw an increase to their after-tax income of 1.6% on average for the year.

Similarly, the nonpartisan Tax Policy Center estimated the middle quintile of earners would also see a 1.6% after-tax income increase and an average tax cut of $930 per tax unit.

This isn’t to say every single household in the middle class received a tax cut.

According to the TPC, around 7.3% of tax units in the middle income quintile saw a tax increase due to the elimination of certain tax credits and deductions. But the think tanks also estimated that more than 91% of middle income taxpayers saw a cut.

So overall it’s fair to say that the middle class, …read more

Source:: Business Insider


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