To The Daily Sun,
Well it’s tax season and the Washington Post published the following letter: (https://www.msn.com/en-us/news/us/millions-of-americans-could-be-stunned-as-their-tax-refunds-shrink/ar-BBTpTS8?ocid=spartandhp). The headline was, “Millions of Americans could be stunned as their tax refunds shrink.” OMG, right?
Well, I read the article and it just confirmed what I had written over a year ago (https://www.laconiadailysun.com/opinion/letters/let-me-show-you-how-tax-reform-will-put-money/article_b06adf69-af0f-5b18-8bf7-b806f0bc3b00.html). Those in high tax states and making far more than the national average of $61,372 may pay more. I got the national average from the U.S. census (https://www.census.gov/library/stories/2018/09/highest-median-household-income-on-record.html). One of the examples used in the article was the manager of a Barnes & Noble store with a wife who works for the state of N.J. and they have two children. No specifics on salary, property value or property tax rates. Note that New Jersey does have a property tax rate similar to N.H. It ranges from around 1 percent to over 5 percent, depending on township. The average is 3.226 percent. The median home value is $324,700 according to Zillow. Compare that to $273,800 in New Hampshire.
New Jersey also has a state income tax rate on an income-based scale starting at 3.5 percent and going up to 6.375 percent if you make over $150K. At the end of the article it was stated that the couple paid more in income taxes and received a smaller tax refund. I don’t have any sympathy, since the couple probably had a family income that was twice the national average. I would have liked to see the actually numbers but it was confirmed in the article that the SALT (state and local taxes) limit offset the tax cuts everyone received. Whether they paid $1 or $1,000 dollars more in taxes was omitted as was if they had a higher gross income than the previous year. I’ll explain why those were omitted at the end of this letter.
There was a second example in the article. A single individual made $45,000 last year and was “frustrated” that he only received a $900 refund, which was less than the $1,200 refund he received the year before. You would think that he paid more in taxes but that is not necessarily the case. The article included the statement that Mr. Ramirez had less taken out in taxes each pay period. Again, the article left out the specific amount to spin the story into a negative. Let’s put a number on the reduced payroll deduction of $25 which is not much for someone making $865 per week. If he saw an extra $25 per week that would come to ($25 X 52 weeks = $1,300) over the course of a year. If he saw a $300 drop in his refund, he still payed $1,000 less in taxes. That is one of the points of this letter.
As a check, I did my own tax return and my wife and I ended up owing more in taxes this year than in 2017. Ha, you say, the tax cuts didn’t work. Well that is a bad assumption because you don’t have all of the details — like in both previous examples. What I didn’t say was that my wife and I made more in taxable income in 2018 than 2017.
In the letter I wrote over a year ago (see link above) I said, “if” the TC&JA was enacted in 2017, we would have paid about $4,500 less in 2017. Well, I adjusted my 2018 “taxable” income down to my 2017 numbers in Turbo Tax and we would have paid $3,896 less in taxes in 2018 than in 2017. The difference between the $4,500 and $3,896 is because we received more in business income and contributed less to an IRA. My point is that our 2018 taxes would have gone down if our income remained constant at the 2017 level. That would NOT have been the case if we lived in N.J.
In closing, I’m going to commend the Washington Post writer for a job well done. The article was intended to mislead people into believing that a smaller tax refund is the same as paying more in taxes. I will say that again to make the point. The intent of that article was to mislead people into believing that a smaller refund is the same as paying more in taxes. IT’S NOT! Both parties in the article didn’t vote for Trump and wouldn’t again. Their negative opinions of the TC&JA covered half of the article even though one and possibly both most likely paid less “proportionally” in taxes. I searched for misinformation (i.e. lies) in the article and couldn’t find any.
The point that 80 percent of taxpayers would see a tax reduction was in the article but glossed over. The fact that almost all of those receiving the tax cuts would be in the middle/low income bracket was not even mentioned. At least the article didn’t state that the tax breaks were going to the rich because I would have called them out on that. Finally, this Washington Post article gave me a flash back to Jonathan Gruber’s comments that “lack of transparency is a huge political advantage” and “you have to rely on the stupidity of the American people” when he was helping push through Obamacare. (https://www.youtube.com/watch?v=G790p0LcgbI). Don’t let the Democrats and the left-leaning media get away with it again.