Benjamin Franklin said death and taxes were the only certainties in this life. Little did he know that misleading political rhetoric would need to be added to that list.
It’s hard to ignore the left as they rail against the Tax Cuts and Jobs Act – the legislation that updated a decades-old, burdensome tax code with lower rates and simpler filings.
Who can forget then-Minority Leader Nancy Pelosi calling $1,000 savings for middle-income families “crumbs” and lower tax rates “Armageddon?” Or Bernie Sanders saying that the “federal treasury is being looted” by allowing Americans to keep more of their hard-earned money?
Those were the doomsday comments. Here’s what actually happened.
For the first time ever, our economy has more job openings than job seekers, while our unemployment rate of 4 percent is around the lowest level in 50 years. Unemployment rates for minorities are at their lowest levels in history.
At the same time, wages are rising at the fastest pace in a decade.
So because our booming economy proved their disparaging rhetoric as blatantly false, the left has turned to a new attack line: Your tax refund is smaller which means your taxes are higher.
Unfortunately for them, even the Washington Post admitted this political spin is just as false.
The fact is, the Tax Cuts and Jobs Act benefited everyday Americans, including those right here in Kansas. We doubled the child tax credit. We nearly doubled the standard deduction. We lowered tax rates for all Americans. Yes. All Americans.
Those are the indisputable facts that Nancy Pelosi and the left don’t like to acknowledge because not a single Democrat voted to give you those benefits.
So if all of those aspects of the new tax code are true, why are some tax refunds lower this year?
First, we are only a few weeks into the tax filing season after a partial government shutdown, so it’s hard to say with certainty what the average tax refund will actually be this year. It’s worth noting that Morgan Stanley “estimates 2019 refunds will top [2018’s refunds] by 26 percent.”
Second, your tax refund is not the same as a tax cut.
Each year, your employer withholds part of your paycheck for taxes based on the information you provide them on your W-4 and the IRS’ tax tables.
If you withhold more than what you owe to the federal government when you file your taxes – thereby giving the federal government a free loan – you get a refund (the amount you withhold minus the amount you owe equals your refund).
When the Tax Cuts and Jobs Act passed, the IRS adjusted the tax tables to reflect the lower rates, and almost every working American – around 90 percent of middle-class taxpayers – saw bigger paychecks as a result. Maybe the extra $30, $50 or $100 each month has helped a single mother with groceries, a family of four purchase a gym membership, a recent graduate start a savings account, or Kansans offset their state tax bill that went up because of higher rates.
So instead of reaping the benefits of the Tax Cuts and Jobs Act only on April 15, taxpayers are receiving the benefits of those savings all year long.
Don’t believe me?
I recently sat down with a tax accountant in Wichita who said the best way to find out how the Tax Cuts and Jobs Act affected you is not to look at your tax refund, but your tax liability – the total amount of money you owe to the federal government.
To find this amount, most filers can compare their total tax from line 63 of their 2017 Form 1040 with line 15 of their 2018 Form 1040.
That’s what the accountant has seen with a majority of his clients, most of whom would be considered middle-class, working Kansans. For example, a family of five who also has an in-home daycare benefited from lower rates and increased deductions, which lowered their total federal tax liability by $5,793. A single mother of two saw her total federal taxes decrease by $4,466 thanks to the higher standard deduction and increased child tax credit.
We designed the Tax Cuts and Jobs Act so you can spend and save more of your own money – not send it to the federal government. Don’t be fooled by the rhetoric. Check your total taxes that you owe to the federal government and find out for yourself.
Your refund may go up and down from year to year, but how much money you get to keep is the bottom line. That’s for certain.