| Hello John, I recently saw some polling that was, frankly, hard to believe. As regular readers know, the middle-class tax cut President Trump signed in July prevented the largest tax increase in history. But according to a recent poll, many Americans aren’t aware they narrowly avoided a tax hike. As the kids would say, “Wut?” Let’s take a closer look at why this law amounted to a significant tax cut for middle-class families — and how it spared them from a massive tax hike.
Let’s go back to 2017, when Congress passed — and President Trump signed — the Tax Cuts and Jobs Act, one of the largest tax cuts in U.S. history. The law caused growth for families like yours to skyrocket:
- Family income increased by nearly $6,000
- Wages rose fastest for low-income and blue-collar workers
- The bottom 50% of American households saw a 40% increase in net worth
The TCJA delivered impressive results — particularly for the middle class — that resonated with the public. By the end of 2019, Americans’ confidence in the economy was at its highest in nearly two decades. But here’s the rub: To ensure passage of the TCJA, Republicans had to use the reconciliation process. The advantage of reconciliation is that it only requires a simple majority vote in the Senate. The downside is that reconciliation also requires abiding by specific budget rules. Because of those budget rules, most of the tax provisions in the TCJA were time-limited and were set to expire at the end of this year. If that happened, all the tax cuts in the TCJA would have — poof! — disappeared. The result? We would have seen the largest tax hike in U.S. history. The House Ways and Means Committee estimated the average American family’s taxes would have gone up $1,700 annually. Here are the important tax provisions that would have expired if not for the recently enacted plan known as the Working Families Tax Cuts: - Individual income tax rates: The TCJA lowered income tax rates across all income levels, giving households more disposable income to save, invest, or spend and helping mom-and-pop businesses grow.
- Standard deduction: To reduce taxes and simplify the tax code, the TCJA increased the standard deduction and eliminated personal exemptions. This change was especially beneficial to low- and middle-income individuals.
- Small business rates: Mom-and-pop businesses are usually organized so that the owners report their business income on their personal tax returns and pay taxes based on individual tax brackets.
- Alternative minimum tax: The TCJA increased the AMT exemption amounts and raised the income levels at which the exemptions phase out, resulting in fewer taxpayers liable for the AMT.
- Death taxes: The TCJA doubled the estate tax exemption. If this provision had expired, the exemption for married couples would have decreased to about $14.3 million, compared to $28.6 million now.
How can people look at that and conclude that this new law didn’t prevent a tax hike? But that is why we keep fighting to get the truth out there! Between now and next November, you’re going to hear a lot from the left about “tax cuts for the rich” and “paying their fair share” and a lot of other nonsense about this bill. Just remember that this bill maintains the successful tax policies of the TCJA while adding new ones that specifically benefit the middle class. People are free to disagree with some of these provisions, but no one can say with a straight face that this law ignores the middle class. Lawmakers — whether they supported or opposed the bill — need to hear from you. Send a message and let them know you’re paying attention. | 
