Republicans passed a sweeping tax cut for two-thirds of Americans in 2017, saying it would pay for itself and the American public would thank them.
Now, as Americans finish filing to the IRS for the first time under the new system, the law has swelled the deficit and surveys show just one-fifth of taxpayers believe their taxes have gone down. That’s made it hard for President Donald Trump to leverage the tax cuts as an issue in 2020, when he’s up for reelection and his party will be seeking to retake the House of Representatives.
“The Democrats really outmaneuvered the Republicans by convincing the American people that the main thrust of the tax reform package was to cut taxes for the wealthy,” said Dan Eberhart, a major Republican donor who runs the drilling services company Canary, LLC. Republicans “failed to fully explain the success to voters.”
Trump is going to try again on Monday when he goes to Minnesota, a potential swing state in the 2020 election, to promote what Republicans consider their signature legislative achievement. It’s part of a week of events designed to promote the tax law’s effects on the economy as he turns to his next campaign.
The Trump administration and congressional Republicans sold the tax law as fuel for economic growth and deficit reduction. Senate Majority Leader Mitch McConnell gave assurances in December 2017 that the measure would not only contain the deficit but be a “revenue-producer.” Trump’s top economic adviser, Larry Kudlow, said last week that the tax cut package had largely already paid for itself, a statement that conflicts with government data.
The U.S. budget shortfall grew by 17 percent to $779 billion in fiscal year 2018, which the Congressional Budget Office has said was partly a consequence of the tax law. Along with additional spending that’s been signed into law, the CBO projects the deficit will surpass $1 trillion by 2020.
When the law passed, McConnell said, “If we can’t sell this to the American people, we ought to go into another line of work.” He added that the GOP merely needed to tell the public “that you have more money in your pocket.”
Perceptions
But an NBC/Wall Street Journal poll this month showed that just 17 percent of Americans believe their taxes have been cut. A Reuters/Ipsos poll in March found that 21 percent thought their taxes were lowered.
That’s despite an analysis by the nonpartisan Tax Policy Center that two out of three taxpayers would see their taxes go down. The biggest benefits, though, go to the top 1 percent, who are projected to receive an average tax break of $62,000 in 2018, while the middle one-fifth of income earners got an average tax cut of $1,090 — about $20 per week.
The law appears to have met a similar political fate as President Barack Obama’s stimulus package in 2009, in which most Americans received a one-year tax break but the incremental gains in paychecks were so small that most didn’t notice.