The bad news is that 2017 federal taxes are due today, April 17. That means hours of paperwork to document how many hundreds, thousands, or tens of thousands of dollars Uncle Sam gets to keep out of the money you earned last year.
The good news is this is the last April in which you will file and pay under the old system. Next year, thanks to the Republican Congress and President Trump, taxes will be lower for most taxpayers, and also simpler for tens of millions.
First, and most importantly, the total taxes owed and paid in April 2019 filings will be lower for an overwhelming majority of people. This will be a pleasant surprise to most members of the public, as polls indicate the Democrats’ misinformation campaign succeeded, and the bill was widely understood as a tax cut only for the wealthy. The pity is that most people may not realize what baloney that is until they’ve elected a Democratic House of Representatives and, possibly, Senate.
A full third of those surveyed said the law would result in higher middle-class taxes next April on income earned this year. Only one in six in a poll we conducted in the weeks after the bill passed knew that most middle-class people would pay less. The news media did a terrible job covering the legislation’s substance, and they helped feed rather than correct the widespread misperception.
In truth, three-fourths of taxpayers will pay a lower rate. Those savings are already showing up in paychecks through lower withholding. The median household of four people will save a little more than $2,000, according to the Tax Policy Center.
Twenty-seven million more tax filers will take the standard deduction, which the reform bill doubled. That means simplicity and less paperwork.
More pleasingly still, the reform reduces economic distortions. Fewer people itemizing deductions means fewer decisions made with an eye to minimizing taxes. That, in turn, means economics and the demands of families and individuals, rather than the favor of tax code, will drive spending and investment decisions. The result will be a stronger economy.
The tax reform wasn’t perfect. It should have simplified the code even more. The rate reductions were good, but could have been bigger if Congress had cut deeper into special tax breaks. More simplification would have juiced the economy more. As it passed, the tax reform will actually mean more paperwork for some tax filers, such as freelancer workers.
Also, we wish Trump had understood the central lesson of the tax reform, which is that lower taxes are good, and higher taxes are bad. If he had really understood that, he wouldn’t be raising taxes in the form of import tariffs.
Finally, Republicans have shied from the other half of the job here, which is to cut spending. Shrinking government, and thus expanding liberty, means not only cutting taxes, but also taking a machete to Washington’s bloated spending. Republicans this year have shown a total aversion to doing that.
Nevertheless, we ought to cheer our politicians when they do something right. Tax Day is no day for celebration, but this year there is the silver lining knowing that next year, most of us will keep more of our money.
