Legislation

Sen Charles “Chuck” Grassley on the Conclusion of Tax Filing Season

WASHINGTON DC (May 1, 2019) — Prepared Floor Remarks by U.S. Senator Chuck Grassley of Iowa Chairman, Senate Finance Committee on the Conclusion of Tax Filing Season:

Mr. President,

A few weeks ago, the tax-filing season came to an end.

This filing season was an important milestone as it was the first under the Tax Cuts and Jobs Act (TCJA).

Congressional Democrats sought to turn the filing season into an indictment of the tax-reform through a campaign of misinformation and half-truths.

They were obsessed with finding anything they could hang their hat on to declare the filing season a failure.

Case in point, they attempted to use early and incomplete tax-refund data to mislead taxpayers into believing that since average tax-refunds were down, their taxes must be up.

Of course, such a claim was always hogwash.

The size of a tax-refund tells you nothing about a taxpayer’s overall tax-liability.

It merely tells you by how much a taxpayer has overpaid the federal government throughout the year.  

The Washington Post fact-checker called out Democrat tax-refund falsehoods as being “nonsensical and misleading.” 

Their talking-points earned them a whopping four Pinocchio’s.  

Yet, they wouldn’t let facts or reason get in their way.

They continued to mislead and scare the public for several more weeks.

Then more complete tax-refund data came in showing that average tax-refunds were actually in-line with previous years.

Much to Democrats’ chagrin, their favorite talking-point was once and for all exposed as nonsense.       

The fact is this filing season was a resounding success for the Tax Cuts and Jobs Act.

The filing season ran remarkably smoothly.

This became more clear the further into the filing season we went and a more complete picture emerged.    

All the IRS’ computer systems functioned as planned.

Refunds were processed in a timely manner.

The total number of refunds sent to taxpayers are up and the average refund amount differed by only $55 compared to last year.

Most importantly, millions of middle-income taxpayers saw less of their hard-earned money go to Washington.  

Unfortunately, Democrats remain as determined as ever to take down tax-reform through a campaign of misinformation.

For years, they’ve misled the American people and promoted a narrative full of distortions and misrepresentations about what the law does and doesn’t do.

Even when the bill was little more than a one-page outline, Democrats began their campaign to peg tax-reform as a giveaway to the wealthy and a tax-hike for the middle-class.

As we drafted, discussed new ideas, and crafted the final bill, it evolved considerably from the initial framework.

Yet the Democrats talking-points never changed.

Analysis after analysis, ranging from the non-partisan Joint Committee on Taxation (JCT) to the liberal Tax Policy Center, showed tax-reform would cut taxes on average for every income group.

These analyses showed that, to the extent there were tax increases, they were largely concentrated among the wealthy.

That’s right, the taxpayers Democrats claim were the big winners in tax-reform are actually the ones most likely to see a tax-hike.

Moreover, according to JCT’s analysis, the largest-percentage tax-cuts are concentrated among low to middle-income taxpayers.

JCT’s analysis also shows that tax-reform made the tax-code more progressive.

Millionaires now shoulder an even larger share of the total tax-burden than under prior law.

But Democrats are determined to not let these facts get in their way.

Since the beginning, they have argued up was down — that tax-cuts were tax-increases — and even suggested the bill’s passage was a sign of “Armageddon.”

Unfortunately, their constant drumbeat, coupled with little pushback from the mainstream media, has worked to mislead too many taxpayers.

However, there are signs some in the media are starting to see the Democratic talking-points for the nonsense they really are.

A few weeks ago, the New York Times, of all papers, published an article highlighting how Democratic talking-points — and far too many Americans’ perceptions of the law — don’t match reality.

I have here a chart used in the article.

It compares the liberal Tax Policy Center’s analysis of taxpayers receiving tax-cuts under the individual-income provisions of the law with a recent survey of taxpayers who think they received a tax-cut.

As you can see, there is a large gap between how many taxpayers actually received a tax-cut and those who think they did.

Based on the Tax Policy Center analysis, nearly 70 percent of Americans earning between $30,000 and $50,000 saw a tax-cut, but only about 36 percent think they got a tax-cut.

Similarly, more than 80 percent of Americans earning between $50,000 and $70,000 received a tax-cut, but only about half that amount — 40 percent — think they got a tax-cut.

And the gap between perception and reality continues as you go up the income-scale.

Only about half as many people who actually got a tax-cut, think they did.

As noted in the New York Times, “[t]o a large degree, the gap between perception and reality on the tax-cuts appears to flow from a sustained — and misleading — effort by liberal opponents of the law to brand it as a broad middle-class tax increase.”

I applaud the New York Times for finally calling Democrats out for their effort to mislead the American public.

But, even in this article, the New York Times was selective in its reporting.

The paper chose to highlight only the Tax Policy Center’s analysis of the “individual income-tax” provisions rather than its analysis of ALL major tax provisions enacted in the Tax Cuts and Jobs Act (TCJA).

Even the liberal Tax Policy Center recognizes the person who has the legal burden of paying a tax isn’t necessarily the one who bears the economic incidence of that tax.

For instance, it’s widely recognized that a portion of the corporate tax ultimately falls on employees in the form of reduced wages.

Thus, when all major provisions of tax-reform are considered, the percentage of taxpayers receiving a tax-cut is not 70 percent as reported, but 80 percent.

Moreover, when you look at taxpayers with incomes between $50,000 and $70,000, the percentage receiving a tax-cut climbs to 90 percent.

I ask unanimous consent to insert into the record the complete Tax Policy Center analysis of Americans receiving a tax-cut under tax-reform.

I hope that the New York Times article is a wake-up call to congressional Democrats to abandon their misleading rhetoric.

Unfortunately, it’s more likely they will continue their campaign of misinformation.

But, as more and more hard data comes in on the benefits of tax-reform, it will become harder and harder for the American public to take them seriously.   

With tax-filing season behind us, we are finally starting to get some of this hard data.

H&R Block has released data for this filing season based on their experience helping taxpayers during this filing season, which demonstrates how taxpayers fared in each state.

As you can see from this chart, taxpayers in red and blue states alike all benefitted from tax-reform.

On average for all states, taxpayers saw a 24-percent reduction in their tax-bill.

This data directly contradicts misleading arguments by some Washington Democrats that tax-reform was an attack on high-tax blue-states due to the cap on the state and local tax (SALT) deduction.

Some of the largest tax-reductions actually are found in high-tax blue-states according to this H&R Block data.

On average, taxpayers in New Jersey saw the largest reduction in their tax-bill at 29 percent, Massachusetts was the second largest reduction at 27.6 percent, and California was the third largest at 27.1 percent.

The fact is, on average, taxpayers in every state benefitted from tax-reform.

And in some cases, high-tax blue-states fared even better than red states.

I am proud of the work we did on tax-reform.

No bill is perfect, and we still have work to do to address a number of technical issues.

But we kept our promise to enact meaningful reforms that cut taxes for the middle-class.

Even more important is what tax-reform means for long-term economic-growth.

It doesn’t take a tax-expert to see income, wages, jobs, and unemployment numbers have all improved since the enactment of the TCJA, reflecting significant benefits obtained by American workers.

And that’s on top of the direct tax-relief that hard-working individuals and families are already receiving, which I described at the start.

Annualized growth in real after-tax personal-income averaged 2.5 percent during the Obama administration; it has averaged 3.3 percent following tax-reform.

Annualized growth in real average hourly-earnings averaged a mere 0.6 percent under President Obama compared to 1.7 percent following the enactment of tax-reform.

Monthly job-gains averaged 110,000 under President Obama; they’ve averaged 215,000 after the TCJA.

There have been nearly 5.4 million jobs created since January 2017, with more than half of that job-creation having occurred since the enactment of tax-reform.

Under President Obama, the unemployment rate averaged a whopping 7.4 percent.

It’s averaged 3.9 percent after the enactment of tax-reform.

Following tax-reform, and for the first time since 2001, the number of job-openings in the national economy exceeded the number of unemployed Americans.

A phenomenon that has continued for the past year. That means an American who wants a job can find one.

To say it simply, tax-reform is working for all Americans.

For Democrats to suggest otherwise is nothing more than their continued effort to mislead the American public.

I invite them to take a page from the New York Times, acknowledge the facts, and work with us to continue improving the economic environment for hard-working individuals and families across the country.

I yield the floor.


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