Analysis: How the GOP’s Tax Scam Is Now Backfiring Spectacularly
The Republican Tax Scam of 2017 — also known as the Tax Cuts and Jobs Act — was filled with tricks and gimmicks designed to hide the fact that it was
S E E D E D C O N T E N T
And now that Americans have started to file their 2018 tax returns, the extent of the GOP deception is being seen for the first time.
Writing in Vox , Matthew Yglesias explained that the backlash being seen from many Trump supporters now filing their taxes is a direct result of unconscionable accounting trickery from the IRS.
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I heard a little about this on the news this morning. A lot of middle class folks have to pay more in taxes this year than they expected.
"Thank you Mr President*, may I have another."
I know a couple people who have gotten screwed by federal taxes this year. One of them owes nearly $5,000. Did anyone actually expect Donald Trump to deliver on a promise? I’m sure he made out like a bandit, but those who actually work hard are getting hammered. That is the story of Trump’s deplorable life.
Please provide details if this is true. How much did they owe last year?
It is my wife. She normally receives at least $2,000 back, but was shocked to find out she owed $4,700 this year. We have only been married for less than a year, so this will be our first opportunity to file jointly. On a side note, I ended up owing enough in state taxes last year than I changed my withholding status to 0 exemptions across the board to ensure I don’t owe anyone. It looks like my efforts will only go to help dig her out of the debt that Donald Trump foisted on her. Increasing the standard deduction didn’t even come close to equalling the goal itmized deductions she has relied on for decades to stay ahead. This administration has seen to it to punish the hardest working Americans in order to further enrich its wealthiest citizens. One more reason to say goodbye to a second term.
Last night we were at a dinner party, and my wife was venting about this. I now realize that I misspoke - she normally receives at least a $6,000 return (not 2k), and this year she owes $4,700. We share most of all our expenses equally, but keep our finances separate, so I’m not up to date on her income tax history. As much as I’d like to say that it is financially naive to let the government hang on to that much of your money rather than withholding less and investing more, I’m very glad she did last year. Her surprise Trump tax burden might have ruined us otherwise.
The Trump/GOP tax plan is not really a scam. It is simply another implementation and innovation of Supply Side Economics. It moves the wealth up, into tighter concentration.
Please define supply side economics.
Gee that was easy, try it. Google.com
It's called Reaganomics. You should know since you use his avatar.
P.S. it has never worked for WE THE PEOPLE. It only works for the uber wealthy.
Steal from the poor to give to the rich.
Not when it's the government who does it.
Yeah, Ok, try to tell the police that the government stole your money to give it to the rich. Good luck with that.
Open your eyes and, keep watching, sooner or, later, if you keep your eyes open and, your mind open you will see it. Maybe.
You have spent countless posts on here saying that the deficit was high under Obama's first three years, discounting the five years after as if they never happened. You tried to claim that somehow Trump was responsible for the lower deficit in 2016 when he hadn't even been elected yet. You have stated that Trump has been president for three years when we have just entered his third year as president and, you wonder why I don't answer your questions? Please, as I said, learn to read, open your eyes and, keep watching, if you have an open mind, then you will see it. Until then, I'm done with you.
Wait and see what the derficit will be once the dust settles and all the returns are in.
Odds are the treasury is going to start a severe downward spiral.
My taxes are going swimmingly !
"Some" paycheck to paycheck workers should STOP doing their own taxes. Those types think they're "Smart"
, but they ain't when it comes to "Tax Laws" !
By the way:
"Millions of Americans are now paying their taxes and either getting smaller refunds than they expected or owing the government more money than they had expected."
If they are taking out less from your paycheck, meaning you are taking more money home, your refund WILL be less.
On the other hand, if you are having to pay, they are taking too little out of your paycheck in the first place.
And the biggy of all time:
If you get a "Big Refund" at the end of the year, your paying too much in the first place, and allowing the Government to play with YOUR money to make money, and yet you get no interest on your money they played with, when YOU get YOUR overpaid hard earned money back !
Perhaps there are those like us who live on retirement income, have zero debt and left the federal tax paid in 2017 to remain the same in 2018...only to find themselves sending more $ to the IRS this year.
If you rely on a retirement income, and make 25 grand or less a year in SS, you shouldn't be paying taxes at all. You just have to file showing the sort !
IMO, if you are getting back retirement (SS) income you paid into the system for all your life, you shouldn't have to pay back to government at all, but you also shouldn't get MORE back either !
It's YOUR money they are you giving back ! They did make interest off your money though, but they aren't gonna give you that.....for sure !
I'm always pissed about those that don't contribute at all, yet get 3 or 4 grand back every year from the gov., just because !
Fortunate to have had financial breaks and advances in our working lives. Did without then to have an adequate retirement income now.
My only point is, with all things being equal (except inflation), the tax cuts negatively impacted the amount we owe. The 'increased' married couple deduction is laughable given healthcare costs for many seniors.
Laugh to myself as my Mom relays how she's getting $500 back...asked her what her refund was last year, already knowing it was $1200. Proceeds to tell me she was happy to get a larger individual deduction or she wouldn't have gotten anything! After explanation, realizes she just got screwed.
Because they were taking out too much in the first place. Don't EVER let government take more of YOUR money than they should. A big "Refund" isn't a perk. That just means YOU gave them to much in the first place. Banks give you "Interest" for money used, Government doesn't !
Guess I'll bottle the smoke and send it to the IRS.
Privatize retirement !
In Simple terms.….allow "Individual Choice". If other things are worthy and protestable for "Choice", why not this ?
Totally agree! I'm a better investor then the federal govt. Mom is old school...likes the refund for the vacation she wouldn't put the same money aside for. Always treated refunds like a bonus...love her dearly, thankfully we can assist her vacation funds to meet her bucket list!
Been there, done that !
Not everyone has the time and energy for investing. The interest earned on $1,200 accumulated over the course of 12 months is barely worth the effort to ensure you are investing it wisely and moving it around as needed to keep on top. It might buy you a nice dinner somewhere - whoopdedoo. If that was the plan and one didn’t do their homework on how to change your withholding status to accommodate the new tax laws, one could easily find themselves in the negative this filing season.
You don't invest for just a quickie twelve month return !
Many have committed suicide because of investing like that !
So you tell me - if one invests that cumulative $1,200 in long term low maintenance medium risk investments, what restaurant should they choose to indulge their profits on?
I don't do "Low" or "Medium" !
I go for the "Gusto" !
That's why I have what I do !
Since you didn’t answer my question, why don’t you answer the same question framed in the terms of how you would have invest it? Would it be the Olive Garden, or something along the line of Ruth’s Chris?
A much wiser plan would be to refinance at a good opportunity from a 30 year mortgage to a 15 year, and stop eating out so much to help pay for it. That’s what we did and it will save tens of thousands in the long run.
Can't answer for "Safers" !
I can only answer for what worked for "It Is ME" !
I'm a "Ruth Chris" kinda guy ! Always have been. I know what I want, and I go get it myself.
"stop eating out so much to help pay for it."
Now there is your "Sign", on WHY folks don't have. They have this "NEED" to live beyond their means , then Bitch that they deserve MORE....on some others dime !
Now there is your "Sign", on WHY folks don't have.
There’s plenty of those signs around. Half of them say Starbucks on them. A daily Starbucks addiction wouldn’t even come close to the return on a high risk cumulative $1,200 stock investment.
Just another indulgence that takes money from the worker, and hands it over to the Billionaire. And folks bitch about Billionaires.
And folks bitch about Billionaires.
They don’t bitch about billionaires, they bitch about how their billions are taxed. For every 50,000 Americans who worked hard to climb ladders that solidify their middle class status, there’s a worthless slug that sleeps in every morning before engaging in the only “work” they accomplish - opening envelopes to see how their investments are doing. Why on earth should their earnings be taxed at a lower rate than the people who actually make the country function?!
Hal, I agree with your $1200 investing scenario and perhaps my wording needs clarification. Her whole life, she looked forward to refunds. During her working days it may have amounted to $4 or $5K/yr. Over her lifetime, if she didn't spend all the refund, her retirement income would be larger. To be fair to my Mom, 401K and IRA's weren't available in her early life. She was born in poverty whose goal was to get out if it and provide the necessities and fun she never had to her children. She achieved it well.
We lived quite frugally to save for our retirement, thankfull we never suffered through tragedies that wiped out financial stability. Many of us are but one tragedy away from losing middle class status. Healthcare is my #1 concern.
I got wiped out before the recession. NW Ohio and SE Michigan (where I used to live) were heavily dependent on the automotive industry. My engineering colleagues and I were designing subdivisions to feed the exploding growth in home buyers, and we kept asking ourselves who are these people that are buying all these expensive new homes? We had good paying jobs, plenty of job security, and modest homes with reasonable mortgages - so who were all these people who suddenly could afford homes that cost twice as much as ours? They were the poor thinking targets of predatory lenders.
Eventually NAFTA caused many of those targeted automotive factory workers to lose their jobs, thus compounding their ballooning house payment problems, ending up losing everything to foreclosure and kicking off the mortgage crisis that spread like wildfire throughout the rest of the country. No more new house buying meant no more subdivisions, hence no more job security. I lost my job, then my home, and was damn near ready to close the garage door and leave the engine running. It’s a hard thing to recover from, financially and mentally. Certain people deserved to go to prison over that shit, but that did not happen.
The lender did not hold a gun to the heads of the people buying
I didn’t say that they did. There will always be people willing to make poor economic choices without thinking them through, that is just reality. Consequently, there should also always be regulations to prevent lenders from preying on those people. When those regulations are stripped away, millions of innocent people are eventually affected. The bubble bursting causes all segments of society to suffer lost income, with the possible exception of house flippers. Patting yourself on the back over your ability to profit off of the mass suffering of your countrymen is extremely poor form.
We were asking the same question regarding the price of new housing NW of Chicago in the 90's. Amazed it'd be a mid-30's couple, two kids, BWM, a mini van moving into a 450,000 home. Lots of them...until the bottom fell out. Predetory lenders sold a pipe dream to a willing generation.
Mortgages bundled up and sold, those on the gravy train made millions. Average middle class workers paid dearly in housing and jobs. Some never recovered.
I'm sorry to learn what befell you. Glad you didn't take to the garage!
I can't give any details due to confidentiality but I have been privy to certain bank things that would make your head spin and yes banks certainly were at fault with the swaps, cdos, derivatives etc.
As far as housing prices, etc., when my late husband and I were looking to buy in 2003/2004 (mind you housing prices in WNY never went crazy) we set the price we'd go up to even though we were approved for 100,000 more than we had any intention of paying. We lived by the saying we didn't want to be house poor. I even remember reading an article before the housing bubble burst and it was in regards to interest only loans, I thought to myself anyone who would get a loan like that would have to be crazy.
Thank you for the kind words.
I do partly blame real estate agents....we went into the house buying process saying we would NOT get in a bidding war and lo and behold the first house we put a bid on the agent called us and said we are in a bidding war. Guess what, I stayed firm. Needless to say we ended up dumping said real estate agent when we went to look at another house by ourselves and he actually came there with another client and said something to the effect of I can't seem to stay away from you guys in a snarky manner.
Pretty sure I won't be taking tax advice from somebody who can't spell, uses emojis and thinks global warming is a hoax.
Nothing like trying to demean a comment that notes: "Go to a Professional".
You do your own taxes huh.
Haven't paid income taxes or property taxes in many years. Guess why?
One possibility - You rent and are among the bottom 44% of income earners thus pay no Federal income tax? You may still need to file, but you pay no Federal income tax. You'd still have payroll taxes and in some cases State income taxes of course.
One can be retired. My mother gets a homestead exemption for being over 65.
Yep - Another possibility in some States.
You're excused....don't be nasty by shouting. Quite certain your superior intellect and grammar skills can understand the point I was making to Hal.
I'd like to make one thing clear right now. I am not an avid Trump supporter, in fact I find him to be rude and boorish and not so Presidential. But I am also not prone to what some call "Trump derangement syndrome" where anything he does or proposes is an unmitigated disaster worthy of an emotional breakdown. I will look at each issue, article, or claim about him dispassionately, do the research and decide for myself where the truth lies. For example, I have found that the TCJA is not as beneficial to small business as Trump may have led us to believe and I wrote about that HERE .
So I could not help but notice that the seeded article claims to report that the TCJA was " filled with tricks an gimmicks designed to hide the fact that it was a massive giveaway to large corporations and the super-rich ". Yet isn't it interesting that only two examples were provided that do not support the conclusion drawn at the end of that statement, and are quite honestly pretty weakly supported at all.
1. The first example simply decries the actions of the IRS with respect to withholding guidelines, suggesting that it is cruel to allow folks to keep more of their money during the year and end up with a smaller refund at the conclusion in April of the following year. So I suppose it is better to let the IRS keep your money, collect interest on it and then refund it to you in April of the following year without interest? The article even admits that the law did lower taxes for some Americans (actuality for nearly ALL Americans for the next decade) but then turns around and contradicts that by saying, " But it didn’t reduce the amount of total tax they owe for the year." So which is it? The facts are that nearly everyone will benefit from the cuts and that in 2027 some individual provisions will sunset and we will be back where we started unless Congress elects to extend those provisions. I've done the calculations for my family's situation and looks like we will save $7,200 under the 2018 code vs. the 2017 code using the expanded standard deduction, and we even live in CA. There might be some who make considerably more than me in high State tax locations like CA or NY, and who typically take considerable deductions, who may actually pay more. But those upper middle class folks do not represent the VAST majority of the tax-payers, or even middle class tax-payers. Perhaps some of those will be the Trump supporters who may regret their voting decision. (-:
2. The other example in the article was a single provision of the multi-faceted foreign incoming and outgoing tax provisions the article describes as a "sweetheart deal for companies seeking to hide profits abroad". However, the GILTI provision cited in the article on its own may appear like it provides an incentive to continue operations abroad, but the article fails to mention the many other aspects of the new code and the "anti-base erosion rules" that discourage that. They forgot to mention the Base Erosion Alternative Minimum Tax (BEAT), for example. Not to mention the one-time 15.5% tax on pre-2018 profits of foreign affiliates that have been allowed to simply defer/accumulate into the trillions of dollars range under the previous Code. Does it not make sense to recover a good portion of those revenues now rather than letting them defer indefinitely in the hopes that someday they might be "repatriated" in the current system that does not ensure that? And don't forget that those multi-national corporations still need to compete with other foreign companies and that must be balanced with the other concerns about "hiding" taxable income overseas.
The Tax Policy Center Reports :
They also point out that the international provisions of the TCJA are consistent with bi-partisan plans that had previously been considered:
One might ask, why is it then that only now such strategies are found to be "unexpected" or "a sweetheart deal for corporations"?
Another couple of interesting points on the international provisions of the TCJA HERE from an accounting and tax consulting firm.