Trump's tax cuts, which he has touted as a nationwide unparalleled success, are not delivering on promises for low- and middle-class Americans.
The tax bill ended itemized deductions for taxes paid to state and local governments, including things like mortgage interest and federal taxes. This has resulted in high tax bills for average American citizens, who are claiming they've had to pay at least $2000 more in federal taxes.
"It's still early to determine how everyone is being affected on the new tax laws, California CPA Gerry Andrade said. "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 individual stories about lower tax returns are spreading on Twitter
"We anticipate that some of the taxpayers who have always planned on breaking even, meaning no tax due or refund, will be disappointed," Andrade continued. "They will probably owe more than they anticipated."
A government study conducted by the General Accounting Office further found that around 4 million tax filers will owe the IRS more money in 2019 than they have previously, with another few million receiving fewer refunds. On the other hand, analysts at Morgan Stanley found that tax payers could get refunded by as much as 26% this year as compared to the same time last year.
The discrepancy arises as a result of the notion of underwithholding, and not knowing how much money people are keeping back check to check. The extent of the refunds will also vary depending on region, due to factors such as how many children a family has, child tax credits, etc.
An H&R Block report stated 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." It also said that "employees who deducted unreimbursed business expenses for 2017" will also be at risk because business deductions have been reduced.
The tax law's impact on small businesses is better, though still somewhat mixed. Though there was improvement year-over-year, much of this may be attributable to external factors, such as relaxed regulations and a widespread policy of supporting the oil and mining industries.
