Rosen: Remedial Income Tax 101 for Sen. Kamala Harris

February 26, 2019 By Mike Rosen

There’s nothing new about politicians making unrealistic promises and preposterous claims while pandering to voters to win elections.  But it seems the degree of ridiculousness in these statements is reaching new lows these days.  This is especially true among the crop of radical progressives, although Donald Trump is not without fault in this area, himself.
Here’s a whopper from progressive Senator Kamala Harris (Democrat – California) who aspires to be president of the United States in 2021.  In a recent tweet Harris complained that, “The average tax refund is down about $170 compared to last year.”  She presented this fact as proof that the 2017 tax reforms enacted by Republicans in Congress and President Trump were really, in Harris’s words, “a middle-class tax hike to line the pockets of already wealthy corporations and the 1%.” The Washington Post fact-checker gave it “Four Pinocchios,” branding it “nonsensical and misleading.”
This kind of claim, standard left-wing class-warfare rhetoric, is flatly untrue.  The new $24,000 standard deduction for a married couple and the lower marginal tax rates all through the tax brackets indisputably reduced taxes for the great majority of lower-income and middle-class taxpayers.  Under the new law, in 2018 a family of four with two young children making as much as $59,000 in adjusted gross income (AGI) who take that $24,000 standard deduction and the increased child care credit of $2,000 per kid will have an income tax bill of exactly $0.  In 2017, under the old law, only families of four with less than $48,000 of AGI could zero out their tax bill.
The tax reforms were designed to simplify the tax code and broaden the base of taxable income, while taxing it at a lower rate.  Millions of lower- and middle-income filers will be dropped entirely from the tax rolls.  The estimated ten percent of tax filers who will still itemize deductions are mostly upper income taxpayers who will lose some deductions they’ve taken in the past.
Lowering our excessively high corporate income tax rates ─ well above the levels paid by our trading partners ─ has helped spur economic growth, capital formation, higher stock values, lower prices for consumers and increased pay for workers.  And the top one percent will continue to pay the lion’s share of the nation’s total individual income tax burden, carrying almost 40 percent of it all by themselves, while the bottom fifty percent pays only a three percent share.
Getting back to Harris’s tweet, the dumbest part of it was her complaint “that tax refunds are lower than in the prior year.”  That factoid is completely irrelevant.  Since some people are confused about terminology, let’s start with the basics.  A “tax return” isn’t the same as a tax refund.  Your tax return is simply the bundle of papers you send to the IRS that includes Form 1040 and all of the required schedules and other forms to go with it showing your income, deductions and taxes you’ve already paid, such as those withheld from your pay check.  It’s not a return of money.  That’s what your tax refund is, if you have money coming back.
If you do get a tax refund, that means you overpaid your taxes, which means you gave the IRS an interest-free loan instead of taking home more money in each paycheck during the course of the year.  Of course, if you overpay less, you get less of a refund.  But your total tax bill is exactly the same in any case.  Duh.
This isn’t high finance.  You needn’t be an economist or CPA to grasp this stuff.  Surely, Harris has looked at the tax returns she’s signed over the years, even if she’s had help filling them out.  As a United States senator who has to cast votes on tax policy she’s obliged to have at least a basic understanding of income taxes.  She must have some fiscal expert on her sizable senate staff who can tutor her.
Rookie Rep. Alexandria Ocasio-Cortez, the self-professed democratic socialist from New York and overexposed darling of the liberal media, frequently shoots from the hip with foolish remarks.  But she can be excused as an inexperienced youngster lacking knowledge in many areas apparently over her head.  Harris is presumed to be smart enough to know better.  She’s 44-years-old, a law school graduate, former San Francisco District Attorney and former California Attorney General.  But maybe I’m underestimating her intelligence.  Perhaps she does know better.  In which case she’s a liar and a demagogue.