Taxes are one of the few certainties in life, and this makes them one of the most contentious political topics out there. Any small change has a ripple effect throughout the economy, and large changes can entirely reshape how much a family spends and gets back throughout the year. Add to that a president who is unprecedented in terms of controversy and you have a recipe for some heated debates. Donald Trump’s tax bill, known as the Tax Cuts and Jobs Act, is the saving grace of the middle class or the death of the American economy – depending on who you ask. Much of this has to do with messaging. While the Republicans have a set of benefits they set out to create with the tax bill, those against the bill see something entirely different. Here are some of the most important arguments against Trump’s tax bill, and why its adversaries believe it will not hold up to the promises that it will benefit the economy and the middle class.
Size of Taxpayer Impact
According to the nonpartisan Tax Policy Center’s analysis of the final legislation, 8 in 10 Americans will see lower taxes due to the passing of this bill. However, one of the largest arguments against Trump’s tax bill is that the differences the average family will see is not large enough to really matter. Despite the fact that only the incredibly wealthy will see increased taxes, Democratic pollster Geoff Garin of Hart Research reported that 80 percent of taxpayers will only see an increase of less than 2 percent in their after-tax income. Garin then went on to state, “There is no history of voters being grateful for tax cuts that small.” Democrats have proof of this from their own actions. Back in 2009, when President Obama cut payroll taxes and saved the average American almost $700 a year in taxes, only 12 % of the population even realized their taxes had been reduced, let alone were particularly thankful for it. Because of this, many speculate that many might not even know they saved a dime until they go to file their taxes, if they notice at all. While this isn’t to say that a small benefit is an inherently bad thing or is as bad as a negative impact to taxpayers would be, it’s a going argument that the bill is not the shining star the Republican party has flaunted it as.
Another issue on this same front is the tendency for those opposing the bill to state technically true statistics out of context to help spread their disapproval. Many have cited repeatedly the statistic that 83% of the tax cuts go to the wealthiest 1%. While this will be true in 2027, when the majority of the individual tax changes expire while some of the corporate changes linger, in its current state through 2025, only a quarter of the tax cuts go to the top 1%.
The most effective argument for the bill so far has been one that explains to votes that it “removes and eliminates many loopholes so special interests start paying their fair share.” Many middle class voters not only will see that they got a small tax cut, but are likely to therefore perceive that they got this cut at the expense of the wealthy getting larger cuts. This messaging that the loopholes the wealthy so often use plays to these sensitivities in today’s middle class. However, there are still many loopholes remaining, to the extent that The Fox Business Network reported on how Wall Street saved the carried-interest loophole, which primarily benefits hedge fund managers in their piece: “Blackstone, Carlyle, KKR dial up donations to key GOP lawmakers as tax bill protects carried interest loophole.”
Geoff Garin again commented on this matter, stating, “It is a sign of huge trouble when your best testing message isn’t true and doesn’t bear scrutiny. Really, how hard do you think it will be for Democrats and progressive organizations to shine a bright spotlight on how many loopholes were not eliminated, how many new loopholes were created, and how many special interests are not paying their fair share? … Seriously, I’d consider jumping off a cliff if my best-testing messages produced so little movement and left my candidates eight points behind. And believe me, there were times in 2010 and 2014 when jumping off a cliff felt like a pretty good idea.”
State and Local Tax Deductions
One of the many simplifications that Trump’s tax bill made to the tax code was to eliminate deductions that people can take on their taxes. This is cited by many as one of the reasons there is such a small benefit to people – the larger tax benefits are offset by people’s inability to claim these deductions going forward. Those who rely on these deductions, especially who have not yet seen the impact in their paycheck or income tax, tend to assume they will ultimately be worse off because of these changes. This is particularly stressful on high-tax states such as New York and California.
Eliminating the Individual Mandate of the Affordable Care Act
The individual mandate, or the requirement that all individuals must have health insurance, has always been one of the most unpopular aspects of the Affordable Care Act. The tax bill eliminated it, explaining it as public relief, as those who opted not to get coverage generally make less than $50,000 a year and were getting hit with a hefty tax penalty for not buying coverage. Those who oppose this bill (or support the ACA as it was previously) see this as negative, as many will drop coverage because the mandate is eliminated, reducing the amount the government pays in subsidies. They also project an increase in premiums overall, as those who decide to drop their coverage are likely to be younger and healthier. Therefore, the remaining pool will require more care than the previously existing pool, meaning over time the lack of premiums flowing in for those who were paying for care they were not receiving will not support those who now continue to carry coverage.
Pass-Through Business Cuts
“Pass-throughs” are any businesses whose profits are processed as personal income for their owners. While many individual tax brackets are much higher than the various business brackets, these owners often feel that they have an unfair burden. Therefore, cutting corporate tax rates requires, in the name of fairness, a cut to pass-through business taxes. Many argue that these cuts end up widening the gap between big corporations and small businesses, despite Republican arguments that it benefits small businesses. But pass-throughs include firms like hedge funds, law offices, and real estate companies. Actual small businesses already pay lower-than-corporate income tax rates, and are therefore far more likely to not be impacted by pass-through changes.
Student Tuition Waivers
One of the most controversial changes in the tax code was the change in how tuition waivers are treated. In the past, tuition waivers have not been considered taxable income. Waived tuition can be in the tens of thousands of dollars, and were it taxed as income a lot of grad students simply couldn’t afford to stay in their fields. However, under this new bill, waived tuition is treated as taxable income. Projections show this may increase the tax burden on some grad students up to 400 percent. It would also get rid of deductions for student loan interest and lifetime learning expenses.
- The Daily 202: 10 reasons Democrats think the tax bill will be a political loser for Trump’s GOP in the midterms – The Washington Post
- Fact check: Democrats are repeating a misleading talking point about tax cuts – USA Today
- Five Reasons to Hate the Republican Tax Plan – Vice
- Arguments For Trump’s Tax Bill
- What Will Obamacare Do To Small Businesses?
- Democratic View on Health Care
- Republican Views on Small Business
- Republican Views on Taxes
- Democratic Views on the Federal Budget
- Democratic Views on Small Business
- Democratic Views on College Tuition
- Democratic Views On Taxes
- Donald Trump on Taxes