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What if Republicans cut middle class taxes and nobody knew?

010918 Carney photo
Only 1 in 6 Americans polled last month thought they would see a tax cut from the tax reform bill signed by President Trump in December, while twice as many expected a tax increase. But such perceptions are incorrect. So, why do they persist? (AP Photo/Carolyn Kaster)

“Basically all democratic theory,” liberal blogger Ezra Klein wrote late last year, “is built around the idea people have a roughly accurate and shared view of what’s going on. What if they don’t?”

Klein’s question is apt, especially after the recent debate over tax cuts. Only 1 in 6 Americans polled last month thought they would see a tax cut from the bill, while twice as many expected a tax increase.

This is dead wrong, according to all estimates. Somewhere between 70 percent and 80 percent of taxpayers will see lower taxes thanks to this bill, and only 5 percent will pay higher taxes.

How are the people so misinformed?

The problem starts with the class of people whose job it is to inform them: The press. I was on MSNBC to discuss the bill in December when reporter Ron Insana said, “It does not help individuals who are below $100,000. In fact, it probably doesn't help individuals who are below $200,000, given the analysis we've seen thus far. It is not a middle-class tax cut.”

When I quoted Insana’s “It is not a middle-class tax cut,” to Klein’s colleague Matt Yglesias, he responded, “It’s a fine summary, you know that it’s a fine summary, you know *why* it’s a fine summary, and you know that I know you know why it’s a fine summary.”

When Yglesias and other journalists say it isn’t a middle-class tax cut, they are thinking of the fact that the individual tax cuts are set to expire in 2027. All of the bill’s individual tax hikes expire then, too (such as the limitations on deductions for mortgages and state and local taxes), except for one: a new, less aggressive measure of inflation (known as Chained CPI) will determine the thresholds of the different tax brackets from year to year. As a result of this less-generous inflation adjustment, the same income in 2027 would be taxed more under the GOP bill than it would if the bill never passed — if Congress refused to extend the tax cuts.

This is why so many writers felt fine calling it a middle-class tax hike. They shouldn’t have, though, because they misled their readers by doing so.

A full third (33 percent) of Americans think the bill raises taxes on middle-class families in 2018, according to a poll of 1,000 adults the Washington Examiner commissioned through Echelon Insights and pollster YouGov. Sixteen percent said taxes would not change for most middle-class families. Only 28 percent answered correctly, saying the bill cuts taxes on most middle-class families.

Democrats were much more likely to have been misled here: 51 percent said 2018 taxes will be higher for most middle-class families, while only 9 percent of Democrats correctly answered that the bill cuts middle-class taxes this year.

But it would be wrong to simply blame poor media coverage for this widespread error.

The partisan difference (60 percent of Republicans got the right answer) tells us something. You can’t just chalk this difference up to a Wonk Gap between the Left and Right. What happened was probably that bad media coverage created confusion and ambiguity, and Americans navigated through their ambiguity by the light of their political preconceptions.

Most people dislike middle-class tax hikes and like middle-class tax cuts. So, if you like and trust President Trump or the Republican Congress, you assume their tax bill is a middle-class tax cut. If you dislike Trump and Congress, you assume it’s a tax hike. Congress is very unpopular, as is Trump, thus people are more likely to assume this is a tax hike.

So, let's return to Ezra Klein's question: What does it say about American democracy that people will be voting this November on the false belief Republicans have hiked their taxes?

It tells us that voters are driven more by vague impressions of what their politicians are doing than the hard details of what politicians are doing. When a bill is rushed through Congress, lacking proper transparency and debate, the public is likely to ask, "What are they hiding?" In this case, much of the public assumes Republicans are hiding tax cuts for the rich and tax hikes for everyone else. A sloppy media fed that suspicion.