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Opinion: The Only 2018 Political Tax Guide You’ll Ever Need

Answers to vexing questions on the new tax bill

Speaker Paul D. Ryan, R-Wis., center, is trying to figure out the winning combo to fund the government and pass other priorities. (Tom Williams/CQ Roll Call)
Speaker Paul D. Ryan, R-Wis., center, is trying to figure out the winning combo to fund the government and pass other priorities. (Tom Williams/CQ Roll Call)

The glorious thing about a tax bill is that it inspires one of the enduring examples of evergreen journalism — the inevitable torrent of “How Will It Affect You” analyses that will compete with predictable “Year in Review” stories until the ball descends on New Year’s Eve.

Since I never want to miss a cliché or an opportunity for public service, today’s column will be dedicated to answering your questions about the biggest tax bill since … well … George W. Bush. But as an added wrinkle, we will limit the queries to the 2018 elections.

Q:Paul Ryankeeps claiming, “The typical family of four making $73,000 will get a tax cut of $2,059.” Won’t voters be so grateful that they will reward Ryan with another two years scrapping for every vote as House speaker?

A: Not so fast with the gratitude.

The Tax Policy Center, a Washington think tank, has closely gauged the effects of the legislation in a paper with a wonderfully readable title, “DISTRIBUTIONAL ANALYSIS OF THE CONFERENCE AGREEMENT FOR THE TAX CUTS AND JOBS ACT.”

In 2018, according to the report, taxpayers in the middle will get an average federal tax reduction of $930. These are families and single filers making roughly between $49,000 and $86,000 a year.

Watch: Thunderous Applause As House Passes Tax Overhaul

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Q: That’s much less than Ryan’s $2,000 example. What’s the deal here?

A: By using as his example an old-fashioned 1950s family with two children at home, Ryan was trying to highlight the savings from the bill’s expanded child tax credit. But most 2017 families do not fit the mold of a TV sitcom like “Ozzie and Harriet.”

The Census Bureau noted in a new report that only 27 percent of American families have children at home, which is a historic low. In contrast, that figure was 49 percent in 1960. And in case you haven’t noticed, older families without children at home and childless singles vote.

Q: But isn’t $930 tax saving enough to win a voter’s gratitude?

A: That is the biggest political question hovering over the tax bill.

Gary Cohn, Donald Trump’s top economic adviser and alumni of Goldman Sachs, claimed back in September, “If we allow a family to keep another thousand dollars of their income … they can renovate their kitchen. They can buy a new car. They can take a family vacation. They can increase their lifestyle.”

Good luck taking your entire family to the south of France on vacation with a tax cut that works out to $36 extra in each biweekly paycheck.

If your employer also deducts health insurance from your paycheck, you may actually end up with less take-home pay. Complicating all calculations is that state income taxes have increased in Illinois and Kansas, two states with five GOP-held seats in play in 2018. In those states, taxpayers may see the bulk of their federal tax savings end up in Springfield (Illinois) and Topeka (Kansas).

By the way, taxpayers making between about $25,000 and $49,000 should expect to see an average tax savings of $380 per year. While not minimizing the struggles of those in that economic bracket, the reduction would be only about $15 in each biweekly paycheck.

Q: Isn’t the genius of a tax cut that voters will reap the benefits before the 2018 elections?

A: Trump has promised that the over-taxed IRS will issue new withholding schedules by February. But because all 150 million taxpayers subject to withholding will have to file new W-4 forms detailing their deductions, there exists the potential for a brief outburst of chaos reminiscent of the failed rollout of Obamacare.

Q: What about the 11 House Republicans from New York, New Jersey and California who voted against the House bill Tuesday because it drastically trims the deductibility of state, local and property taxes?

A: By targeting high-tax states for punitive treatment under the bill, the Republicans deliberately risked the political future of vulnerable GOP House incumbents from these states. What is difficult to gauge is whether these House Republicans inoculated themselves by opposing the only major piece of legislation of the Trump era.

Facing enraged upscale voters suddenly unable to deduct most of their property taxes, these 11 Republicans will undoubtedly argue that they bravely registered their dissent and independence. Their problem is the obvious Democratic response: “Why should we send you back to Washington to get rolled by Paul Ryan and the other leaders of your party?”

Q: Trump and other Republicans argue that the tax bill will trigger a level of economic growth never before seen in this century. Won’t that wipe away any grumbles about lost deductions?

A: With the tax bill tilted towards the wealthy and corporations, most mainstream economists believe the economic benefits will be modest. But even if they are wrong, the effects of trickle-down economics will mostly show up after the 2018 election.

Already, according to a new national Quinnipiac University Poll, 76 percent of voters pronounce their economic condition to be “excellent” or “good.” Amid these boom times, voters by a margin of 52 to 37 percent still say that they want the Democrats to take over the House of Representatives in 2018.

Q: What is the best case for Republican supporters of the tax bill?

A: That they will have won the gratitude of the most unpopular first-year president in modern history.

Roll Call columnist Walter Shapiro is a veteran of Politics Daily, USA Today, Time, Newsweek and The Washington Post. Follow him on Twitter @MrWalterShapiro.

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