Tax Cuts and Jobs Act Eliminates Tax Refunds for Many

When the Tax Cuts and Jobs Act (TCJA) was presented, the Trump administration promoted it with the promise that “the average family (would) get a $4,000 raise.” After the TCJA was passed, many families actually did see a small increase in the amount in their paychecks during the year. Now that it’s tax season, however, many of those people are surprised to find that instead of the tax refunds they’re used to receiving, they owe money to the IRS. The Tax Cuts and Jobs Act, they feel, was a lie.

With the TCJA, the IRS made changes to its tax withholding tables. As a result, most taxpayers had fewer withholdings in 2018 than they did in previous years, but they were unaware of it. They are also allowed fewer itemized deductions such as business mileage, some medical expenses, and mortgage interest this year than they could in past years. In many cases, taxpayers’ withholdings decreased by more than the actual taxes they owed, hence the “raise” many people saw in their paychecks during the year.

A Government Accountability Office (GAO) report explained during the summer what would happen with people’s taxes, advising people to check their withholding status. But the average person doesn’t regularly read GAO reports.

During the year, then, with a bit more in their paychecks, Trump’s base were fans of the Tax Cuts and Jobs Act, happy to cite it as evidence that their president had their backs. One has to wonder, however, if this false “raise,” resulting as it did from reducing withholdings by a little too much, was engineered with the midterms in mind.

Many people have come to rely on their income tax refunds to pay off bills, purchase needed items, or meet other expenses. As they are realizing the real impact of the Tax Cuts and Jobs Act, however, they’re tweeting out their anger.

Dee Nelson (Dee Nelson (@deeebeeezz) tweeted: “@realDonaldTrump just did my taxes and thanks for increasing mine!! No change in income and got back $400 less than last year. That campaign promise was one of the only two reasons I voted for you. Rethinking that decision now.”

The Trump administration and the Treasury maintain that the Tax Cuts and Jobs Act will balance out the way taxes should be paid. Since in the past, about 75 percent of American taxpayers received refunds, they are quick to point out that the withholding system was flawed, and that fewer people should be getting refunds because it means that too much was withheld during the year.

Though this may be true, two other things are also true: Since so many taxpayers, including many who voted for Trump because of his promised tax cuts, feel they’ve been deceived, perhaps the Trump administration could been more clear about the possible consequences to the average American at tax time. It’s also true, though, that, over time, the Tax Cuts and Jobs Act will in fact raise taxes for many middle-class and working class tax payers.

Tips for filing tax returns under new tax code | CNBC [2019-01-25]

Will Trump’s tax reform lose popularity after Americans file this tax season? | Fox Business [2019-01-30]

Does the Tax Cuts and Jobs Act Repeal Obamacare?; How Obamacare Has Failed (or Not)

This week, Donald Trump and the GOP celebrated the passage, along party lines, of the Tax Cuts and Jobs Act. In his celebratory speech, Trump told his audience that, among other things, the Republicans’ tax bill “essentially repeals Obamacare.”

Below is Trump’s speech, including, at 4:58 in the clip, his assertion that the Tax Cuts and Jobs Act will end Obamacare (The Affordable Care Act):

President Trump & GOP Full VICTORY Speech at White House After Tax Bill Passes |  Right Side Broadcasting Network |  [2017/12/20]

Though the Republican tax bill does include a change to Obamacare, it doesn’t wipe out the entire law; it only puts an end to the individual mandate portion. The Affordable Care Act’s individual mandate requires that all Americans purchase health insurance coverage or pay a tax penalty.

Trump boasts about sneaky provision in tax bill that ‘repeals’ Obamacare
New York Daily News | [2017/12/20]

House Republicans Have Passed the Tax Cuts & Jobs Act | House Republicans | [2017/12/19]

Some say that the tax bill’s elimination of the individual mandate is a good thing (people who don’t feel they need health insurance will no longer be required to buy it). Others argue that with fewer healthy people in insurance pools, premiums will increase for those who do elect to buy health insurance.

Middle-income Americans who opt out of purchasing health insurance will either rejoice in the newfound money in their pockets once the tax bill is implemented, or they’ll be surprised at how little it impacts them at all – perhaps until they are sick and need to visit an emergency room.

Will most Americans be relieved that they will no longer have to spend money on health insurance premiums if they choose not to be covered? Or will the increased number of uninsured Americans as a result of the Republicans’ tax bill cause a chain of costly events that ultimately leads to frustration with the American health care system? Will this eventually lead to Americans’ ripeness for a complete health care system overhaul…say, to a single payer system?

How Obamacare Has Failed (Or Not)
The GOP has long insisted that the Affordable Care Act (Obamacare) is a “massive failure.” They cite such issues as the high cost of many health exchange participants’ premiums, the limited choices of insurers and plans available on the exchanges, and the increased costs of providing health care.

Obamacare has failed the American people |  The White House | [2017/6/21]

Obamacare Must Go  |  CNN Money  |  2017/2/7

Most Democrats, while admitting that the Affordable Care Act currently has its failings, maintain that it’s been a significant step toward ensuring that all Americans have access to health care. They point out the fact that since the passage of Obamacare, approximately 20 million more people now have health insurance. In addition, Democrats tout such aspects of the Affordable Care Act as limits on out-of-pocket spending for health care, and the requirement to cover those with pre-existing conditions while protecting them against higher premiums.

Perhaps one of the most misunderstood, but most meaningful aspects of the Affordable Care Act, though, is the guaranteed coverage of a list of “essential health benefits.” These include preventive care (such as annual physical exams), mental health services, prescriptions, and other services deemed necessary for maintaining good health (and thus, ideally, helping to prevent the high cost of illness).

Obamacare’s “Essential Benefits” Explained | CNN | [2017/3/24]

Whether you’re feeling alarmed or victorious about this change to Obamacare through the Tax Cuts and Jobs Act, and whether you think Obamacare is a miserable failure or a huge success, the changes to it will impact all of us.