Analysis: How the GOP’s Tax Scam Is Now Backfiring Spectacularly

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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 a massive giveaway to large corporations and the super-rich.

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.

What the IRS did was intended to make the Tax Scam more popular with American voters, but it is now backfiring spectacularly, and making Trump more unpopular than ever.

The tax law changes did lower tax rates for some Americans right now, although these will reverse in the future. However, the Tax Scam did not lower the actual tax obligations for most workers.

But instead of telling the American people the truth, the administration tried to tweak the IRS’s withholding guidelines. This reduced the amount of tax withholding throughout the year, to increase monthly take home pay. But it didn’t reduce the amount of total tax they owe for the year.

So for most of 2018 the administration did succeed in making it look like taxpayers got a bigger tax cut than they actually did. The IRS reduced the amount of taxes withheld from workers’ weekly paychecks throughout 2018. And, predictably, this had the unfortunate result of people owing taxes at the end of the year.

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.

According to Yglesias:

“If this was intended to give Republicans a boost in the midterms it obviously didn’t work, in part because the once-a-year tax filing process is a lot more salient than the biweekly process of automatic withholding.”

“In fact, they are now facing a backlash from an angry public that includes millions of people who were expecting tax refunds that they are now not going to get.”

Brad Setser, a former deputy assistant secretary in the Treasury Department, explained in the New York Times that while American workers are getting less than they had hoped for from tax reform, corporations are getting even more from the GOP Tax Scam than they were promised.

He pointed out that the tax bill’s corporate rate cuts were promoted as a tool to reduce the incentive for companies to move operations offshore. In fact, it has done the opposite.

He said that the bill Trump signed into law includes a sweetheart deal that allows companies that shift their profits abroad to pay tax at a rate (10.5%) well below the already-reduced corporate income tax (21%).

The result, Setser wrote, was this:

“Overall, the Tax Cuts and Jobs Act amounted to a technocratic sleight of hand — a scheme set to shift an even greater share of the federal tax burden onto the shoulders of American families.”

Trump probably didn’t know about this, but his advisers surely knew what the result of the Tax Scam would be. They left open huge loopholes that allowed large corporations to get away with exactly the kind of abusive tax behavior Trump had promised to stop.

On top of the deception about the effect on personal tax rates, this trickery has left millions of Trump voters feeling let down by what their president has done to them.

Trump promised to bring a flood of business investment from overseas, but it’s not happening. The overhyped Foxconn factory plan in Wisconsin is turning out to be a bust, for example.

All of Trump’s promises are turning out to be lies. He promised to end the corporate tax practices that Americans don’t like, but these practices have actually increased.

While some of his supporters still believe Trump’s lies and misinformation, eventually they will see the truth when forced to confront economic reality.

And the economic reality that millions of Americans are now facing thanks to Donald Trump is an unexpected tax bill.

It’s no surprise that Trump’s approval ratings have fallen to historic lows. There is real pain for working class Americans if they have to come up with thousands of dollars to pay their taxes.

Millions were counting on refunds that they will never receive, and it’s all because they were tricked into supporting the Tax Scam which from the very beginning was intended to hurt them while benefiting the super-rich.

To reverse the horrible impact of the GOP Tax Scam on America, it is necessary for Democrats to win both the Senate and the presidency in the 2020 elections. Hopefully enough Americans now see how they were tricked — and how they must now vote for Democrats if they want to give control of the U.S. government back to the American people instead of to the super-rich and big corporations.

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Leo Vidal

I am a lifelong Democrat with a passion for social justice and progressive issues. I have degrees in writing, economics and law from the University of Iowa.