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US Taxpayers Unhappy With Trump’s Tax Cuts

About five percent of taxpayers — 7.5 million people — will in fact see a tax increase.

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FILE- This July 24, 2018, photo shows a portion of the 1040 U.S. Individual Income Tax Return form for 2018 in New York. VOA

Some taxpayers are getting a bitter surprise this year as their usual annual tax refunds have shrunk — or turned into tax bills — even though President Donald Trump loudly promised them largest tax cut “in American history.”

And with tax season under way, thousands of unhappy taxpayers have been venting their displeasure on Twitter, using hashtags like #GOPTaxscam, and some threatened not to vote for Trump again.

“Lowest refund I have ever had and I am 50 yrs old. No wall and now this tax reform sucks too!!” a woman going by “Speziale-Matheny” wrote from the crucial political swing state of Florida. “Starting to doubt Trump. I voted for him and trusted him too.”

During the year, American wage earners see a portion of each paycheck withheld as income tax, and many then receive a refund the following year if they have overpaid the federal government. That cash boost is eagerly awaited each year, and used to help pay off debt or make large purchases.

But the 2017 tax overhaul — which Republicans promoted as a boon to the middle class — meant many workers paid less in taxes during the year reducing the amount withheld, a change which may have gone unnoticed.

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FILE – A worker adds federal tax filing information to shelves at the Eudora Welty Library in Jackson, Miss., Feb. 15, 2018. VOA

And the reform also cut some popular deductions, sometimes resulting in thinner refunds or even unexpected tax bills.

Early data from the U.S. Internal Revenue Service show that refunds so far this year are 8.4 percent lower than 2018 payouts on average, falling to $1,865 from $2,035.

However, many millions more taxpayers will be filing tax returns by the annual April 15 deadline, meaning this figure could change.

Mark Mazur, assistant Treasury secretary for tax policy under former President Barack Obama, told AFP the negative reaction was “understandable.”

“People focused on the amount of the refund but that’s not the same as their tax liability, the amount of tax they pay for the year,” he said.

Because of lower withholding during the year, some taxpayers have in effect already seen the benefit of the tax cut in their higher paychecks, said Mazur, who is vice president at the Urban Institute.

About five percent of taxpayers — 7.5 million people — will in fact see a tax increase, while about 80 percent should pay less, he said.

Tax payers, US
The reform cut some popular deductions, sometimes resulting in thinner refunds or even unexpected tax bills. Pixabay

‘Angry, disappointed and betrayed’

The IRS on Wednesday said taxpayers who suddenly found they owe taxes could pay their bill in installments and apply for a waiver of penalties normally imposed for failing to pay by the deadline.

“The IRS understands there were many changes that affected people last year, and the new penalty waiver will help taxpayers who inadvertently had too little tax withheld,” IRS Commissioner Chuck Rettig said in a statement.

A key change of the 2017 tax reform is it limited federal deductions for certain state and local taxes like real estate taxes. As a result, many homeowners in states with higher property taxes will owe more to the federal government.

Neil Frankel, a New York accountant, told AFP people were feeling “angry, disappointed and betrayed.”

“I sympathize with them. The new tax law’s withholding tables were incorrect and misleading. A complete shenanigan,” he added.

“Since my clients are mostly professionals, I don’t really hear any screaming,” he said. “However, I do hear long diatribes on hatred for the U.S. government.”

Last year, Treasury Secretary Steven Mnuchin invited taxpayers to use an online calculator to estimate their tax payments, to determine if they should modify their withholding amount.

Tax payers, US
Under Obama, however, a tax cut showed up as smaller withholdings and fatter checks during each pay cycle. Pixabay

‘Misleading’ reports

This week, the Treasury Department said media reports on the lower refunds were “misleading.”

“Refunds are consistent with 2017 levels and down slightly from 2018 based on a small, initial sample from only a few days of data,” the department said on Twitter.

But, Mazur said, perception is key: When the administration of former President George W. Bush cut taxes in 2001, it mailed out checks directly.

“Taxpayers remembered that they got that check,” he said.

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Under Obama, however, a tax cut showed up as smaller withholdings and fatter checks during each pay cycle.

“Most Americans when they were surveyed didn’t think they got a tax cut from Obama,” he said. (VOA)

Next Story

US Companies Say Price Hike Inevitable at China Tariff Hearing

Currently there's no country manufacturing metal baby gates outside of China

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FILE - A shopper is seen in the aisle of a Walmart store in Woodstock, Georgia, June 28, 2018. VOA

A broad range of U.S. companies told a hearing in Washington on Monday that they have few alternatives other than China for producing clothing, electronics, and other consumer goods as the Trump administration prepares 25% tariffs on remaining U.S.-China trade.

The comments came on the first of seven days of hearings that began on Monday, held by the U.S. Trade Representative’s Office (USTR), on President Donald Trump’s plan to hit another $300 billion worth of Chinese imports with tariffs.

Sourcing from other countries will raise costs, in many cases more than the 25% tariffs, some witnesses told a panel of U.S. trade officials from USTR, the Commerce Department and other federal agencies.

Mark Flannery, president of Regalo International LLC, a Minnesota-based maker of baby gates, child booster seats and portable play yards, said that pricing quotes for shifting production to Vietnam – using largely Chinese-made steel – were 50% higher than current China costs, while quotes from Mexico were above that.

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The comments came on the first of seven days of hearings that began on Monday, held by the U.S. Trade Representative’s Office (USTR). Pixabay

“Currently there’s no country manufacturing metal baby gates outside of China,” Flannery said.

Child safety products such as car seats were spared from Trump’s previous tariffs on $200 billion worth of Chinese goods, imposed in September 2018. But in the drive to pressure China in trade negotiations, USTR put them back on the list, along with other products spared previously, from flat-panel televisions to Bluetooth headphones.

The proposed list, which will be ready for a decision by Trump as early as July 2, includes nearly all consumer products, and could hit Christmas sales hard, particularly cell phones, computers, toys and electronic gadgets.

Marc Schneider, chief executive of fashion footwear and apparel marketer Kenneth Cole Productions, said 25 percent tariffs would wipe out the company’s profits and cost jobs. With China producing 70 percent of the shoes bought in the United States, there were no alternatives, including India and Vietnam, that could match China’s quality, price and volume, he said.

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“We’re going to lower the quality of footwear, raise prices and accomplish nothing by moving it around to other countries,” Schneider said.

In a letter addressed to the USTR ahead of Monday’s hearing, clothing retailer Ralph Lauren Corp asked for apparel and footwear to be removed from the tariff list, arguing that a rise in duties would lower sales and lead to U.S. workers losing their jobs.

Jean Kolloff, owner of cashmere importer Quinn Apparel, said her reason for opposing the tariffs was geographical – the Alashan goat that produces light-colored cashmere wool is only found in China’s Inner Mongolia region.

“We searched for similar species of goat in an attempt to copy the hair from this animal in other countries or even domestically, but to no avail,” she said.

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Sourcing from other countries will raise costs. Pixabay

Deteriorating relations

The tariff hearings are underway amid a severe deterioration of U.S.-China relations since Trump accused Beijing in early May of reneging on commitments that had brought the world’s top two economies close to a deal to end their nearly year-long trade
war.

Since then, Trump raised tariffs to 25% on $200 billion of Chinese goods. The $300 billion list of products being reviewed in the hearing would bring punitive tariffs to nearly all remaining Chinese exports to the United States.

Trump has said he wants to meet with Chinese President Xi Jinping during the June 28-29 G20 leaders summit in Japan, but neither government has confirmed a meeting.

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The list of more than 300 scheduled witnesses includes representatives from retailer Best Buy, toy maker Hasbro Inc, vacuum cleaner maker iRobot, faucet maker Moen, and other firms and trade groups in a diverse range of industries.

Not all of the witnesses on the first day of the hearing were opposed to the tariffs. Mike Branson, president of Rheem Manufacturing Co’s air conditioning division, asked Trump administration officials to close a loophole that was allowing Chinese firms to skirt air conditioner tariffs by shipping condenser and air handler units separately.

This allowed the units to be imported duty free as parts, rather than as completed units that were subject to tariffs.

Domestic manufacturers had ample capacity to make these products, Branson said. (VOA)