AP FACT CHECK: No, tax-filing migraines are not going away
WASHINGTON — On Tax Day, the White House inflated the public’s expectations that Tuesday’s filing deadline marked the last time that figuring out taxes will drive Americans crazy.
Vice-President Mike Pence hailed a new era of simplicity for tax filers starting next year in a tweet that also repeated the myth that the tax cuts are the largest ever. He was following up on President Donald Trump’s overblown promise Monday: “This is the last time you’re going to fill out that long, complicated, horrible return.”
On another front, Trump accused China and Russia of “playing the currency devaluation game” to gain an unfair trade advantage, contradicting findings by his Treasury Department.
A look at the statements:
PENCE tweets Tuesday: “Thanks to the historic TRUMP TAX CUTS, today marks the last time the American people will file taxes under a complicated & outdated tax system. Our Tax Cuts- the largest in American history- will save YOU money, increase opportunity & create more JOBS for American workers.” And: “Next year will be simple.”
TRUMP remarks Monday: “This is the last time you’re going to fill out that long, complicated, horrible return. … Tomorrow, last day. Very importantly, next year, it’s going to be a simple — for the most part, one page. It may get a little bit bigger. But it will be simple and easy to do.” — event in Hialeah, Florida.
THE FACTS: Long, complicated returns are not going away. The Trump tax overhaul does not introduce a system permitting everyone to file a one-page or so form. The process will become easier for some people, not for others.
There’s already a one-page form, the 1040EZ, which has been around for years. It can be used by people who have less than $100,000 in taxable income and no dependents and who meet other criteria. Trump previously had promised a card-size tax form but now appears to be backing off that claim by describing next year’s form as “for the most part one page” that “may get a little bit bigger.”
In fact, there’s no sign that the IRS is planning new filing forms, card-size or otherwise, for the 2018 tax year.
Although many taxpayers will have an easier time filing because of the doubling of the standard deduction, they’ll still have to do legwork to figure out their taxable income and whether they qualify for the deduction or would be better off itemizing. They will also need to figure in the hit they could take from the capping of deductions for mortgage interest and state and local taxes. Tax-filing migraines are not vanishing.
As for the tax cuts being the biggest in history, no.
They considerably trail Ronald Reagan’s 1981 tax cuts, Barack Obama’s 2013 extension of George W. Bush’s tax cuts, and more.
The estimated cost of Trump’s package is $1.5 trillion over 10 years. In October, before the details were complete, the nonpartisan Committee for a Responsible Federal Budget assumed a higher value to the package — $2.2 trillion. Even that more significant plan ranked as only the eighth largest in history as a percentage of the GDP and the fourth largest by another measure — inflation-adjusted dollars.
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TRUMP tweet Monday: “Russia and China are playing the Currency Devaluation game as the U.S. keeps raising interest rates. Not acceptable.”
THE FACTS: Trump’s claim misstates the current economic situation and contradicts his own Treasury Department, which on Friday released a report showing no country was labeled a currency manipulator.
Trump during the 2016 presidential campaign had vowed to label China a currency manipulator immediately after taking office. But in three straight currency reports issued since Trump took office, the administration has not branded China or any other country as a currency manipulator. A country that devalues its currency can gain an edge because its exports are cheaper to buy, while its imports become more expensive and less competitive than goods made in that country.
China took that route in the past, but its currency, the yuan, has actually been rising in value and now stands at the highest levels against the U.S. dollar in about three years.
By contrast, Russia’s ruble has been falling against the dollar and did plunge sharply last week. But that reflected new economic sanctions the United States imposed on Russia — not rising U.S. interest rates or efforts by the Russian government to drive down the ruble’s value.
As for rising interest rates, it’s true the Federal Reserve has been moving to increase them gradually. That can boost the dollar’s value against foreign currencies. The Fed is acting to ensure the economy does not overheat when unemployment is at a 17-year low and the economic expansion is now the second longest in U.S. history.
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Taxe cut analysis: https://tinyurl.com/y8ktlfn3
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Associated Press writer Martin Crutsinger contributed to this report.
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Taxe cut analysis: https://tinyurl.com/y8ktlfn3
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EDITOR’S NOTE — A look at the veracity of claims by public figures