Trump worked last year to push through the Tax Cuts and Jobs Act, the biggest tax increase in whole dollars in U.S. history and the biggest as a share of the economy since President Reagan’s tax cuts in the early 1980s.
But not having had that money taxed in the first place has resulted in another side effect that is beneficial in the big picture but perhaps was unexpected by some – smaller tax refunds.
Both the Washington Post and New York Times have published stories in recent days about the smaller refunds and the effects they are having on taxpayers. Neither takes the time to explain why refunds are smaller.
“Millions of Americans could be stunned as their tax refunds shrink,” reads the headline in the Post. “Most received a tax cut in 2018, but their refunds won’t necessarily stay the same,” reads the subhead on the story by Heather Long.
The New York Times went with “Smaller Tax Refunds Surprise Those Expecting More Relief,” by Tara Siegel Bernard.
Both sought to point the finger at the administration for its tax cuts.
“Millions of Americans filling out their 2018 taxes will probably be surprised to learn that their refunds will be less than expected or that they owe money to the Internal Revenue Service after years of receiving refunds,” Long wrote.
“People have already taken to social media, using the hashtag #GOPTaxScam, to vent their anger. Many blame President Trump and the Republicans for shrinking refunds. Some on Twitter even said they wouldn’t vote for Trump again after seeing their refunds slashed.”
The Times included a photo of an H&R Block outlet and a cutline that read: “H&R Block is training its employees to be more empathetic this tax season, when some Americans will see their refunds unexpectedly reduced.”
The story explains that employees listen to a “mock exchange between another employee and a customer whose refund would not just shrink but disappear.”
The playacting was “prescient” the Times wrote because refund totals are down 8.4 percent this year.
“The result is that taxpayers may be paying less over all but still getting a bill after filing their return,” Bernard wrote. “That has caught many people off guard.”
It turned out taxpayers might have been better served with less empathy and more information. The Times said some did try to “prepare their clients as best as they could by having them adjust the amount they have withheld from their checks” and admitted some of the shock relates to that.
Also, there was the cap on deductions for state and local taxes of $10,000, which put taxpayers in high-tax states in a bind.
“The speed from bill to law and from law to how it works in practice has made for a steep learning curve,” the Times wrote.
Both articles were filled with sob stories of people who did not adjust their withholding. John Prugh of Ewing Township, N.J., “ told the Post he was irate when he completed his 2018 tax return this month and discovered his refund would be $3,000 less than what he received last year,” Long wrote in the Post. “Prugh considers himself ‘solidly middle class,’” she wrote without explaining why that would entitle him to a refund.
Prugh manages a bookstore; his wife works for the state. They didn’t move or change their situation, so they thought – legislation notwithstanding – their tax situation would not change.
“’It totally feels like a scam,’” Prugh said of getting to keep more of his money. “’I did still get a small refund, but compared to what I was expecting from previous years, it was a shock.’”