I can’t blame people for feeling confused about the effects of the tax reform bill Congress passed this month.
Taxes are inherently bemusing, of course, even without adding the octopus ink-like murkiness of politics.
The number “1040” is all but synonymous with the concept of a government form so complicated that nobody with an intellect short of Einstein’s could begin to comprehend it.
And even Einstein, before he reached the “adjusted gross income” line, probably would toast the document with the nearest Bunsen burner.
But media coverage of the tax bill, rather than clarify the complexities, as journalism is supposed to do, instead seems to me to suggest the existence of parallel, but opposite, worlds — and worse still, that all of us live in both worlds.
Middle-class Americans will pay more in taxes, claims one account.
Middle-class Americans will pay less in taxes, blares another.
It’s possible that both statements are true.
Probably you are thinking at this point that I’m making a bad situation worse. But there is a certain perverse logic here, and I think this unpleasant interlude will help you reach a Zen-like place of complete comprehension.
The reason the tax bill could both raise and lower taxes for the same group of people is simply that Congress, to comply with Senate budget rules related to bills that could increase the federal debt, had to make some of the provisions temporary — among them tax cuts for people with moderate incomes.
Democrats who despise the tax bill and claim it punishes the middle class while lavishing ever more lucre on the ultrawealthy have latched onto this temporary aspect of the bill with the same panicked strength of a shipwreck survivor clutching a piece of flotsam.
The Democrats’ claims about the bill actually raising taxes on the middle class are misleading — and I’m being charitable in choosing that adjective.
In fact the bill extends the middle class tax breaks through 2025. This doesn’t come close to my definition of “temporary,” and I’ll bet it’s not in the neigborhood of your definition either.
Think of this way — if you have a child in fourth grade this year, that child will graduate from high school before the tax cuts expire.
And even if the tax bill’s provisions were allowed to expire in 2025, describing the result as a tax increase is a bit disingenuous because in reality tax rates would only return to the pre-2018 levels. That is an increase, of course — but only because Congress had cut taxes eight years earlier.
In any case, recent history suggests that the tax cuts won’t end in 2025. When many of the tax reductions approved during the Bush administration were slated to expire at the end of 2012, Congress voted to make the cuts “permanent” (nothing related to taxes is truly permanent, hence the quotation marks).
The Democrats’ goal, of course, is to inflame voters so they’ll elect lots of Democrats next November and so allow Democrats to wrest control of Congress from the Republicans. In this case the truth — that most Americans will pay less in taxes starting Jan. 1 — is no ally for the Democrats.
I expect this sort of duplicity from politicians — regardless of their party affiliation.
But it bothers me that the media are in some cases complicit in the tax bill propaganda campaign.
I think it’s reasonable to believe that most Americans just want to know how the bill will affect their taxes, and thus their income, over the next year or two.
And here, finally, the answers, contrary to the dueling media accounts, are refreshingly straightforward.
According to the Joint Committee on Taxation, a bipartisan group whose members include Oregon Democratic Sen. Ron Wyden, Americans at almost every income level — including the middle class — will have a smaller federal income tax bill through 2025.
Even a cursory look at the bill’s provisions should make it obvious why this is so — including to people (me, for instance) who aren’t CPAs.
Doubling the standard deduction — to $24,000 for married couples — and doubling the child tax credit to $2,000 per qualifying child will obviously benefit most middle class families.
And yet several recent polls found that more than half of respondents believe they will be paying more in taxes rather than less.
I don’t know if this reflects flaws in polling, an abysmal failure by American journalism, or people getting their “news” from sources that are about as reliable as a meteorologist trying to pinpoint the high temperature on July 2, 2050.
I suspect all three factors are partially culpable.
There are legitimate reasons, to be sure, to oppose the tax bill.
It will increase the federal debt by more than $1 trillion. (Although considering the rate at which the debt has been rising over the past decade, it’s unlikely that the tax bill will have any meaningful effect anyway.)
Also, Republican claims about how tax cuts will invigorate the economy are far from convincing to many economists.
But that’s a theoretical issue.
The tax bill, by contrast, will have actual effects.
And for most people, including the middle class Americans whom Democrats purport to champion, one of those effects will be that they get to keep more of the money they earn.
Democrats will continue to try to convince people otherwise, of course. But I doubt they’ll be persuasive once Americans start receiving paychecks and tax refunds.
We might be confounded by 1040 forms, but we understand dollars and cents.
Jayson Jacoby is editor
of the Baker City Herald.