Trump supporters greet tax law with shrugs and measured hope

  • In this Dec. 20, 2017 photo, Justin Dopierala sits in his home office of DOMO Capital Management, LLC in Germantown, Wisc. Anticipating the passage of the Republican tax plan, he said he spent 20,000 on business improvements over the last couple months, including a new website and marketing pitch book for potential clients, included in this photo. Dopierala expects to have a nearly 11,000 reduction in taxes on his 150,000 income. He said he generally votes for Republicans and voted for Trump, partly expecting he would pass a new tax plan. (AP Photo/Carrie Antlfinger) Carrie Antlfinger

Associated Press
Saturday, December 23, 2017

Ask someone like Sam Banks about the tax plan President Donald Trump signed into law Friday, and you hear something other than the effusive joy Republicans in Congress put on display this week.

The $1.5 trillion plan cuts taxes broadly while bestowing its richest benefits on companies and wealthy individuals. It is the first major legislative achievement for a president who rode to the White House with the full-throated backing of people like Banks who felt America’s economic policies needed a drastic overhaul.

Yet Banks, a 50-year-old farmer in sparsely populated southwestern Iowa, regards the tax plan with a blend of indifference and uncertainty tinged with hope.

“They had to do something, though it took them long enough,” Banks said of the president and the Congress his party fully controls. “It’s going to help the companies. It’s got to help me a little, I suppose.”

In pockets of the country where Trump scored big with voters last year, the response to the tax overhaul is mainly a muted one. You’ll get a few blank stares, some confusion and a bit of hedged optimism. What you won’t hear is excitement.

Nearly all taxpayers will receive an initial tax cut. But an analysis by the Tax Policy Center shows that the gains favor the wealthy. For households earning between $48,600 and $86,100, the average tax cut in 2018 will be $930. But the top 1 percent of earners – with incomes above $732,800 – will enjoy an average tax cut next year exceeding $50,000.

And companies will benefit from having their top marginal tax rate slashed to 21 percent from 35 percent – a permanent reduction unlike the tax cuts for individuals and families that expire after 2025.

“This is not a bill written with the core Obama-Trump voters in mind,” said Henry Olsen, a senior fellow at the Ethics and Public Policy Center in Washington. “In the short term they get a little but not a lot.”

One thinking behind the corporate tax cuts is that they will turbo-charge business activity and that ordinary Americans will, in time, receive benefits in the form of better jobs and higher wages. Most mainstream economists, though, have expressed skepticism that workers will benefit much from lower corporate taxes.

“This is something I’m very proud of,” Trump said Friday at an informal bill signing ceremony in the Oval Office. “Great for our country, great for the American people.”

What taxpayers will receive from the tax plan depends on their personal situations. Business people like Justin Dopierala appear most likely to benefit. Dopierala, 33, who runs an investment business out of Germantown, Wisc., expects the changes to reduce taxes substantially on both his corporate and personal income.

“I’m sure my wife and children would love to take more family vacations,” he said.

Banks, the Iowa farmer, isn’t expecting much of a windfall. But he sees a silver lining in the doubling of the threshold for the estate tax – something of interest to family farmers. A married couple will now be able to pass an estate worth up to $22 million to heirs tax free, up from $11 million.

In Beaumont, Texas, Chip Martel, a general contractor, says the tax changes will save his small business a substantial sum and perhaps enable him to expand his workforce of nine. He rejects the complaints of Democrats and other critics that the tax overhaul was assembled hastily, without any hearings but with heavy input from lobbyists.

“I believe we’re in the process of making America great,” Martel said, echoing Trump’s campaign slogan. “We’re changing a lot of the policies that were done with Obama, and I’m not really concerned about how it was done and finding out what’s in the bill after it was passed.”