Setting the record straight on tax reform

As tax reform legislation moves closer to a final vote, one would expect taxpayers to be looking forward to being allowed to keep more of their own money. Instead, polls are showing that Americans are actually more opposed to a bill that will cut their taxes than previous tax hikes.

Though many observers are pointing to this lack of broad support as an indication that the bill does not truly benefit the middle class, the evidence seems to point to voters simply being misinformed about what impact the bill will have on their wallets. 

{mosads}Repeatedly, polls have shown that many more Americans believe they will receive a tax hike than a tax cut. A Quinnipiac University poll found that 41 percent of respondents thought their taxes would go up rather than down (as opposed to 20 percent that thought they would see a tax cut.) 

Another poll conducted by Marist University arrived at a similar conclusion, with 52 percent saying the bill would hurt them financially, compared to 30 percent who thought the bill would help them.

Fortunately, the optimists generally are correct. The Joint Committee on Taxation’s (JCT) analysis of the Senate’s bill finds that about 62 percent of Americans will see a tax cut of at least $100, while only 8 percent of taxpayers will see a tax hike of at least $100.

The other 30 percent will see no significant change in their taxes. Though the bill has been amended in the conference committee process and JCT has yet to release a new estimate, the fact that the child credit was expanded further in conference means that even more taxpayers are likely to see a significant tax cut.

It is easy to see where this mistaken presumption comes from. Headline writers have repeatedly seized on scorekeeping gimmicks to draw unfavorable conclusions about the tax plan. For example, a Washington Post story from Nov. 16 claimed that families earning less than $75,000 would see their taxes go up by 2027.

This claim relies on a JCT analysis of the repeal of the individual mandate that suggests that Americans who are no longer forced to purchase (subsidized) insurance are losing those subsidies. Never mind that they are still able to purchase subsidized insurance if they so choose — JCT still scores this as a net loss.

Leading conservative groups agree→ the Tax Cuts & Jobs Act “will encourage economic growth, simplify the tax code, and provide American families and individuals with much-needed tax relief.” https://t.co/YWNdYMcdYc

— Paul Ryan (@SpeakerRyan) December 18, 2017

Other claims made by opponents of tax reform have had no grounding in reality at all. Earlier on in the tax reform process, several Democratic senators claimed that the average family making up to $86,100 would see a tax hike of $794.

Fortunately for the American people (and unfortunately for those senators), the original source for this claim clarifies that this statistic applied to a mere 6.5 percent of households in this income bracket. On the other hand, more than 80 percent of households in this income group would receive a tax cut. The Washington Post Fact Checker gave the claim Four Pinocchios. 

The Quinnipiac poll also revealed that a different line of attack against the GOP tax bill has proven to be very effective. Voters agree by a 61-34 margin that the tax plan will help the rich at the expense of the middle class.

However, this is largely a function of the progressive nature of the tax code, as the latest data shows that the top 10 percent of income earners pay over 70 percent of all income taxes. Were the tax planners to have simply extended a flat tax cut (say 10 percent) to all taxpayers, it actually would have benefited the rich more than the Senate tax plan.

Even so, opponents of tax reform continue to point to provisions in the bill to claim that the bill is not about the middle class after all. One in particular, a supposed tax break for private jets, has repeatedly been hammered by Democrats.

However, the “tax break” is actually just a clarification of the law, and was inserted into the bill by Sen. Sherrod Brown (D-Ohio). Rather than providing a “private jet tax break,” it prevents private jet owners from being assessed the “ticket tax” that commercial fliers pay. Instead, private jet owners pay other taxes, such as fuel surcharges. 

There are reasonable debates to be had on the merits of the bill. However, they should always be grounded in fact. Taxpayers shouldn’t be tricked out of a tax cut by misleading information. 

Andrew Wilford is an associate policy analyst at the National Taxpayers Union (NTU) Foundation, the research arm of the NTU, a conservative taxpayers advocacy organization. Follow him on Twitter @PolicyWilford.