Yesterday the Senate Republicans sent around a clip put together by CBS This Morning showing the results of the GOP tax bill aka Armageddon if you’ve been listening to Nancy Pelosi. The set up here is that CBS asked three families from three different states to send in last year’s taxes. The network then had a CPA redo them under the new rules contained in the newly signed tax law.
No doubt CBS was expecting one or more of the families would be getting bad news about their future taxes. After all, this bill is the end of the world as we know it, a Frankenstein’s monster which is going to return and destroy its creators (again according to Nancy Pelosi). As you’ll see, that’s not how things worked out.
The first family in this clip is a single mother in North Carolina named Macie George. She made about $40,000 last year. Under the new rules, she would have paid $1,300 less on taxes. That’s not a huge amount obviously, but it’s about 3 percent of her annual income in savings.
The Edwards are married college professors with no kids living in Rhode Island. They made $150,000 last year. The story doesn’t give any insight into what they teach or where they are coming from politically but when the accountant tells them they would save about $650 under the new rules, Mrs. Edwards admits to being surprised. She then turns on her husband, saying, “Initially you thought we were going to have a higher tax bill.” “Right,” he replies.
Finally, we get to the Lev family living in central California with their three kids. She’s a sales rep. for a drug company and together they just opened a cycling gym. Their income last year was about $300,000. They were also expecting a higher bill under the new tax code and clearly worried about the stress that will place on their new business. But the accountant concludes they’ll save $13,000. “I like the sound of that,” Layne Lev says.
The Democratic Party really has done an amazing job of demagoguing the tax bill. Polling for it is pretty poor despite the fact that 95% of Americans are going to see a tax cut. As you can see in this clip, lots of people are convinced this is going to be bad news for them when in fact, it’s not.
There is a real downside to this in that this bill is going to add to the deficit which means more debt on top of the $20 trillion we’ve already racked up as a nation. The solution to that problem is probably going to have to involve entitlement reform, something Democrats are always against regardless of what it does to the budget. But Medicare, Medicaid and Social Security are the bulk of the budget. We’re going to have to either a) raise taxes a lot to cover the gap or b) cut back on those entitlements gradually to get things under control. But for the moment the world is not going to end any more than it did when President Obama and Congress added trillions to the debt over the past 8 years.