House Democrats used a Feb. 13 Ways and Means subcommittee hearing to point out flaws in the 2017 tax law, including the smaller refunds many taxpayers are receiving this year.
The hearing was part of House Democrats’ efforts to reexamine provisions in the sweeping tax law championed by congressional Republicans and President Donald Trump. Republicans countered Democrats’ assertion that the tax changes don’t do enough for the middle class, pointing to low unemployment numbers and GDP growth as signs that the law is working well.
“With higher paychecks and more money in their pockets from tax reform, middle-class families are more optimistic about their finances than ever,” said Reps. Kevin Brady (R-TX) and Adrian Smith (R-NE) in a joint letter sent this week to House Ways and Means Committee Chairman Richard Neal (D-MA).
Rep. Mike Thompson, who chairs the Ways and Means Subcommittee on Select Revenue Measures, said positive economic trends “don’t capture the whole story,” and that middle-class families “aren’t necessarily feeling that GDP growth in the same way as their more affluent fellow Americans.”
Thompson pointed to numerous reports indicating that taxpayers are seeing smaller refunds or tax bills this year as a result of the Tax Cuts and Jobs Act (TCJA). The IRS has acknowledged the average refund is down about 8 percent this year but said it’s early in the filing season.
“News reports on reduction in IRS filings and refunds are misleading,” the Treasury Department tweeted this week. “Refunds are consistent with 2017 levels and down slightly from 2018 based on a small initial sample from only a few days of data.”
Democratic lawmakers are intent on making some changes to the tax law to help the middle class, including expanding the earned income tax credit and the child tax credit. Some Democrats also want to repeal the tax law’s $10,000 cap on deductions for state and local taxes, which they say is hitting households hard in high-tax states like New York, California, Connecticut and New Jersey.
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