The Tax Cuts and Jobs Act (TCJA) was the largest reform to the American tax code since 1986, and there was no clear consensus among economists and tax experts as to how it would actually impact the bulk of taxpayers.
A number of studies determined that its truncation of tax brackets, increasing of standard deductions, and rolling back of the ability to deduct state and local taxes would allow high earners to keep substantially more money, but would actually cost the lowest earners money.
But until at least one tax season had passed, the actual effects of the sweeping changes would still be unknown. As economics professor Joel Slemrod put it in a paper about the TCJA’s impact, the law was “a wonderfully generous gift [to economists] because it provides scores of natural experiments that could help provide credible estimates of the causal effects of tax policy.”
If the reactions of taxpayers on Twitter are any indication, these “natural experiments” are going to be failures for the Trump administration and possibly cost the president votes in the next election.
A number of extremely viral posts have claimed that while making the same amount of money, people now owe much more in taxes—going from large refunds to owing amounts that, in some cases, they don’t have.
Last year I got a tax refund. This year, with unchanged salary, I owe $1300.— David Hoffman – Boomer (@atDavidHoffman) February 3, 2019
I’m middle class.
Yet the very wealthy got huge cuts. #ThanksRepublicans
#ThanksRepublicans I’m paying $3000 more this year than last. Same income. Glad I was able to help the 1%. F#*k you, Donald Trump and Republican Party.— Jim Bjork (@JimBjorkPPOA) February 4, 2019
Wait, what happened? My tax refund is half of last year.— Care for Earth. There is no escape plan. (@GeorgeEarthling) February 3, 2019
I thought we were all going to get an additional $4k. LIES! Has anyone seen any improvement?
It’s important to note that these individual stories can’t be confirmed. Many didn’t respond to requests from the Daily Dot. And plenty come from accounts with anti-Trump hashtags. But it’s not just #resist Twitter that claims to be seeing its tax hit go up despite the TCJA’s massive cuts.
Many people who claim to have voted for Trump in 2016 have been rewarded for their support with a whopping tax bill, or at least less of a refund.
Wait til you file your taxes. Middle class just lost half their return. Lowest refund I have ever had and I am 50yrs old. No wall and now this tax reform sucks too!! Starting to doubt Trump. I voted for him and trusted him too.— Speziale-Matheny (@Speciale3886) January 27, 2019
I voted for this crack pot President, what a mistake I made, getting screwed on my taxes, loosing roughly $3,500, my mortgage interest is not deductible, wtf? #TaxScam #goptaxscam #taxrefund #presidentsucks #TaxReturns— Nick (@nickyd6865) February 5, 2019
@realDonaldTrump I just got back from my tax accountant. All I can say is you phucked us bad. On the same income as 2017 I went from getting a ~$6,000 refund for both state and federal to owing ~$2,000 total. I will not vote for you again. Your tax changes SUCK!— Jeff Dearborn (@JeffDearborn) February 1, 2019
As statisticians and skeptics are fond of pointing out, the plural of “anecdote” is not “data,” particularly when the anecdotes come from anonymous Twitter accounts, some of which display the posting tendencies of bots.
Beyond that, it’s hard to tell whether these experiences will be repeated across the board, as tax filing season has only just started, and people who usually get refunds are more likely to file early.
But it’s clear that nobody knows what the impact of the TCJA on the majority of Americans’ tax refunds—or even who will be getting back what. That extends to the tax professionals whose careers are built around knowing stuff like this.
Thanks to the @GOP #TaxReform we went from getting $1200 in refund to OWING $2400.— PlasticMan (@Almondrobopanda) February 2, 2019
Give corporations and millionaires a tax break so Americans have to pay for it, huh?
Burn the GOP down. Salt the earth where they stood.
“It’s still early to determine how everyone is being affected on the new tax laws, California CPA Gerry Andrade told the Daily Dot via email. “For the few returns that have been completed, the refunds have been less than the previous year, due to the adjustment of the tax withholding tables. Federal Income Tax Withholdings were reduced to increase employee take home pay. However, the elimination of the exemption deductions, employee business expenses and the limits on the property tax and state income tax deductions, have impacted tax refunds compared to previous years.”
While Andrade couldn’t predict exactly how everyone’s individual taxes will shake out, he did confirm that the outage seen on Twitter represents something very real “We anticipate that some of the taxpayers who have always planned on breaking even, meaning no tax due or refund, will be disappointed,” Andrade wrote. “They will probably owe more than they anticipated.”
One government study, done by the General Accounting Office, found that as many as four million more filers will owe the IRS money this year, and another four million will receive smaller or no refunds, compared to the system that had been in place earlier.
The culprit, economists agree, will be under-withholding—not adjusting one’s W-4 to take into account the new tax brackets and changes in deductions. Essentially, they’ve been getting less taken out of their paychecks week-to-week, and will have to make up the difference now.
For 2017, 102 million tax filers got at least some money back, having withheld too much from check to check, and getting it back with a refund. But with the TCJA, this number could drop dramatically—and if one goes by Twitter, it already has.
Welp. I missed the memo and have a large surprise tax bill thanks to the Tax Jobs and Cuts Act. #taxrefund #nonexistent @forbes @WSJ @SenAlexander https://t.co/yfcqHvDhRy— Jacy Warrell (@JacyWarrell) February 3, 2019
But despite the avalanche of angry tweets from tax filers, it’s not clear at all that most middle-class taxpayers will owe money or see lower refunds. A number of sources claim just the opposite, that refunds will be higher and more frequent this year.
One Morgan Stanley economist told the New York Times that refunds for the average taxpayer will be “much higher than they expected,” with the firm estimating that taxpayers will be getting back as much as 26 percent more money this spring compared to last spring. In fact, that Morgan Stanley study found that taxpayers not only aren’t under-withholding, the changes in the tax code have led to more over-withholding, essentially loaning money to the government interest-free.
Other economists believe that the impact of the new tax laws will vary from family to family, with wide variations. Because child tax credits are higher, families with more dependents will likely see more money coming back. It will also vary region to region, as states with higher income taxes will see fliers be able to deduct less due to a cap on state and local tax deductions.
An H&R Block report generally estimates that “those who itemized deductions in 2017 and have no dependents […] are one of the groups most at risk of owing instead of getting a refund,” as well as homeowners in states with high tax rates, and “employees who deducted unreimbursed business expenses for 2017” as business deductions have been curtailed.
So if you’re a small business owner or self-employed, with no dependents, and live in a state with a high tax rate; you’re probably going to get hit hard by the changes. Is this the category that Twitter tax complainers belong to?
The only thing that’s clear is that nobody knows for sure. With tax filing just having gotten underway, it’s likely that social media will see more accounts from both people who owe more, and from those who are getting more back. Every individual’s experience will vary.