An even smaller tax refund this year reminds who really benefits from Trump's tax law

I have this feeling that some low-to-middle income people are going to be in for a bigger surprise than they were last year when they file their tax returns: their tax refunds based solely on their federal income taxes—even if they have zero exemptions—are going to be even smaller than they were during the first year since Donald Trump’s tax law was implemented. I don’t like messy tax returns, and so over the past 10 years I’ve filed my tax return online using the easiest route, just using the standard personal exemption built into the tax return. I might not get as big a tax refund as I might, but I don’t have an army of accountants at my disposal like big corporations who have avoided paying any taxes at all thanks to Trump (who of course benefits immensely from his own law), and I am more likely to lose money if I pay for such services in any case. 

Since I received tax refunds based on an unchanging methodology, it is easier to “forecast” how much of a refund I can expect, one which in the past depended largely on income received. In 2017, before Trump’s tax cut for the wealthy and corporations went into effect, I saw both my highest yearly income, and highest tax refund. But a year later, like most people in my income bracket, I was stunned to see my refund drop to 67 percent of what it was before. I’ve already submitted by tax return for this past year, and it was even less—just 55 percent of what it was two years ago. This isn’t some “little” thing. I have zero exemptions because it is a way of saving money for “big” ticket items like a new laptop computer, or paying off dental or health care bills. 

What happened? The tax bracket the Trump tax law put me in reduced tax withholding from 15 percent to 12 percent. The taxes withheld decreased by about $1300 from the last pre-Trump tax law, while  my tax refund went down $800—meaning that my presumed tax “cut” was around $500. This means that I saw a take-home pay “increase” of less than $10 a week in “exchange” for a far smaller tax refund. For most people, such a tiny take-home pay increase is at best negligible if even noticeable at all—and I certainly didn’t notice any “change” that made my budgetary concerns any less stressful. Thus for most working people, Trump’s tax law is what it is: a fraud perpetrated on working class people to line the pockets of Trump and his friends—and that is exactly what has happened. 

The fact is that a 3 percent cut in taxes is essentially unnoticeable if the income base is relatively small to begin with. On the other hand, a 14 percent corporate tax cut on millions or billions of dollars is decidedly “significant”—especially for shareholders and corporate executives in whose pockets those extra dollars go straight into; as noted before, we have seen that the new tax law actually leads to a decrease in the incentive to invest in infrastructure, research and development, and labor due to the fact that these kinds of investments are no longer as useful as before for tax dodging purposes. After an initial “burst” of wage increases for the labor “class,” the tax cuts have been shown to have almost no impact on either employment or economic growth.

What makes matters worse is that while Trump and his corporate friends are reaping massive benefits from the tax law, he intends to pay for it by cutting social safety net programs—including Medicare, which he promised seniors in 2016 he would not touch, but a few weeks ago he proclaimed that if he is reelected, he intends to cut. What does all of this mean? Just more reasons for someone other than Trump in 2020.