Let me do two comparisons for you tied to "the middle class" or "the working poor".
Scenario #1. Taxpayer is unmarried and has two kids under the age of 17. Taxpayer has $25,000 wage income and no tax withheld.
- Under 2017 rules this taxpayer would owe 353 federal income tax but that tax would be wiped out by the Child Tax Credit. The taxpayer would then receive Earned Income Credit of $4,208 and Additional Child Tax Credit of $1,647 for a net subsidy of $5,855.
- Under 2018 rules this taxpayer would owe 703 federal income tax but that tax would be wiped out by the Child Tax Credit. The taxpayer would then receive Earned Income Credit of $4,376 and Additional Child Tax Credit of $$2,800 for a net subsidy of $7,176. That's a 23% INCREASED subsidy (you call it a refund) from 2017
Scenario #2. Taxpayer is married with two kids under the age of 17. Taxpayer makes $75,000 with $3,500 state income tax withheld (no federal income tax). Taxpayer itemizes as follows: Income tax $3500, Property tax $5000, mortgage interest $10,000 and charity $2,500. Total itemized deductions come to $21,000.
- Under 2017 rules the taxpayer has AGI of $75,000, Itemized deductions of $21,000, personal exemptions of $16,200. That brings Taxable income down to $37,800 and tax calculates to be $4,741. Taxpayer then gets Child Tax Credit of $2,000 leaving tax due of $2,741
- Under 2018 rules the taxpayer has AGI of $75,000 but aggregate itemized deductions are less than standard deduction so they deduct the standard $24,000. There are no personal exemptions for 2018 so the taxpayer's taxable income is $51,000 ($13,200 more tnan it would have been in 2017). Tax calculates to be $5,742 ($3,001 more than under 2017 rules). Taxpayer gets $4,000 Child Tax Credit and tax due ends up being $1,742. That's a 36% REDUCTION from 2017.
Granted, these are really basic scenarios but they are also extremely common. The new tax law, generally speaking, HELPED taxpayers across the board and did not screw the average working poor or middle class taxpayer.
