President Donald Trump boasted in Michigan last month that he signed into law “massive tax cuts, the biggest in the history of our country.”
As Americans rush Monday to finish up their own taxes, their judgment on Trump’s beloved tax cut bill is pretty clear: Most really don’t like it.
Multiple polls show a majority of Americans don’t think they got a tax cut at all — even though independent analyses show they did. And only around a third of the country approves of the legislation itself, the Tax Cuts and Jobs Act, passed by Congress at the end of 2017.
So as Trump moves closer to full-time reelection mode later this year, he will have to battle a stark reality: While his personal rating on the economy remains high, his signature legislative achievement is widely viewed as a political dud, one that has drawn special anger in places with high state and local taxes and pricey housing markets where deductions were limited to reduce the overall cost of the tax plan.
White House officials are clearly aware of their vulnerability on the issue and officials are dubbing this “Tax Cut Week,” sending the president out to tout the impact of the legislation starting in Minnesota on Monday.
The president still enjoys his highest marks on the performance of the economy overall. But the widespread unpopularity of the tax-cut legislation has offered Democrats running for president a giant opportunity to roast the president as showering benefits on corporate America while doing far less for average citizens he promised to help.
“I think the two major developments on tax attitudes are that Republicans have lost the edge they once had as the party best able to handle taxes,” said Karlyn Bowman, who analyzes polling data at the American Enterprise Institute. “And Democrats seem to be making headway by hammering away at the rich not paying enough.”
One reason many Americans don’t feel the tax cut: The most dramatic benefit was aimed at slashing the corporate tax rate. And many Democrats want to undo much of that cut.
Just last week, Sen. Elizabeth Warren (D-Mass.), one of over a dozen Democrats running for president, took direct aim at Trump’s tax cut bill by proposing a plan to add a 7 percent tax on corporate profits reported to investors over $100 million. Sen. Bernie Sanders (I-Vt.) wants to help fund “Medicare for All” by rolling back some of Trump’s tax cuts. Multiple other Democratic candidates have suggested junking some or all of the Trump tax cuts to fund priorities from health and child care to infrastructure and universal savings accounts.
Polling data suggest Democrats have fertile ground to rip into Trump’s tax cuts.
A recent NBC/Wall Street Journal poll found that just 17 percent of Americans believe their own taxes will go down as a result of the bill. A CBS News poll found that 40 percent said they saw no change from the tax bill. And more said it drove their taxes up (32 percent) than lowered their tax bill (25 percent.)
The bill itself has been unpopular from the start and remains so.
A Pew Research Center survey conducted last month found that 36 percent of Americans approve of the tax-cut law while 49 percent disapprove. Even the number of Republicans who strongly approve of the law dipped in the latest Pew survey.
White House officials’ response to the unpopularity of the tax cut is basically: Who cares?
They say slashing rates on corporations paved the way for stronger growth in 2018 and higher wages and will continue to do so in 2019, though many economists dispute the assertion that this year will be anywhere near as good as last. And they say Trump’s overall approval rating on the economy — 58 percent according to a recent Georgetown Institute of Politics and Public Service “Battleground Poll” — will overcome general voter antipathy to the tax-cut bill.
“There is a general principle that when the economy is strong, the incumbent tends to win,” said Kevin Hassett, chair of the White House Council of Economic Advisers. “And the sentiment indicators that matter are all looking great. People see the health of the economy clearly and their sentiment about it is super high.”
Republican strategists say Trump and the rest of the GOP would be in much better shape for 2020 if they could improve public perception of the tax cut and get people to believe in its role in fostering faster growth. Trump could still win with people disliking his tax legislation, they say, but he’s making it harder for himself.
“We had the same problem after the 2001 to 2003 tax bills,” said Tony Fratto of Hamilton Place Strategies who worked in the George W. Bush White House. “I do think the corporate tax structure is a huge improvement for U.S. firms, but that’s not always going to be apparent in the earliest years. They should bring forward firms and even individual families and have them tell their stories about how the new tax law is helping them.”
Republicans also have a case to make that antipathy to the tax-cut bill is not entirely fair. Tax preparation firm H&R Block said last week that that clients’ overall tax liability dropped nearly 25 percent in for 2018. But refunds were largely flat because the federal government changed withholding tables to direct the savings to Americans immediately.
That was no accident, according to Gary Cohn, Trump’s first National Economic Council director, who helped design the tax cuts with Republicans on Capitol Hill.
“There was a conscious decision made to get the withholding tables more accurate and therefore give consumers access to their money in real time, week to week, as they got their paychecks,” Cohn said, “not to have a deferred savings account that they wouldn’t get to touch until April.”
For the moment, even though the tax legislation remains unpopular, it appears that Trump could be running for reelection in a still-strong economy — though one that is losing some altitude. Fears of an imminent recession that spiked early this year have eased with a return to strong jobs numbers, a delay in the U.K.’s potentially messy departure from the European Union and better numbers out of China.
The Federal Reserve’s decision to stop its campaign of rate hikes — following repeated attacks by Trump to do exactly that — could also prolong the current expansion, which is set to become the longest in history this summer. The National Association for Business Economics in its most recent outlook predicted growth would slow to 2.4 percent this year but pegged the odds of recession by next year at just 35 percent.
Still, Democrats see an opportunity to re-run a playbook that helped them retake the House in 2018 by suggesting that while Trump ran as a populist focused on improving the lot of average workers, his tax policy actually tilted heavily to the wealthy and corporations.
“In 2018, the GOP’s tax giveaway to big corporations and the wealthy was an anchor that weighed down Republican candidates all over the country,” said Andrew Bates, a spokesman for Democratic super PAC American Bridge 21st Century. “Now it’s Donald Trump’s turn.”
Democrats are also hammering away at the impact the tax cut bill has had on the federal deficit. The monthly deficit hit an all-time high of $234 billion in February following a 20 percent drop in corporate tax revenue in the wake of the tax cut bill. The deficit for the first half of the year hit $691 billion, according to the Treasury Department, and is likely to reach $1.1 trillion by the end of the fiscal year on Sept. 30.
That’s given Democrats a chance to both attack the impact of Trump’s tax cuts and his promises to reduce and even eliminate the federal debt.
“The decisions around tax cuts for the wealthiest — those have real consequences,” Democratic presidential contender Pete Buttigieg said in a recent interview. “We know enough. We know too much. We’re not going to fall for the idea that these pay for themselves because they never have. That means somebody will pay for them, and it turns out that somebody is us.”
Article originally published on POLITICO Magazine
Source: https://www.politico.com/story/2019/04/15/donald-trump-tax-cuts-unpopular-1273469
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The Article Was Written/Published By: bwhite@politico.com (Ben White)
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