Why the Trump tax cuts are flopping

Bill Mead of Houston is glad the tax cuts signed by President Trump last year lowered the corporate tax rate, aligning it more with rates in other nations. But the naval architect, 71, still feels the cuts were far too generous to the wealthy. “I don’t know why they need it,” he says. “They’re just going to use it to overpay for something they could have anyway. They all need to sit down at the club and think about this. They could make the country better by paying a little more.”

Overall, Mead—a Republican—disapproves of the new tax law.

So do a lot of other Americans. In the latest Gallup poll, 48% of respondents said they disapprove of the tax cuts, while just 39% approve–which seems surprising, given that the cuts have boosted take-home pay for roughly two-thirds of workers. Republicans in Washington are so dismayed by the tax law’s unpopularity that they’re considering another round of tax cuts, although passage seems unlikely.

Reuters
Reuters

Yahoo Finance conducted its own flash poll on April 18 to figure out why, exactly, Americans don’t like the tax cuts. We found three basic reasons: People think the tax cuts favor the wealthy over the middle and working class. They’re suspicious that tax cuts for businesses are permanent but tax cuts for individuals are temporary. And they think it’s irresponsible to finance the tax cuts with debt that future workers will have to shoulder.

“It bothers me, because I have children and grandchildren and I wonder how this is going to affect them,” a database architect who lives in the Pacific Northwest told Yahoo Finance. His income is in the top 3%, he says, and his after-tax pay rose by about 5% this year due to the tax cuts. His daughter earns far less than he does, however, and she has seen little gain. “I got a huge benefit,” he says, “but my daughter, who makes about one-eighth what I make, saw a negligible increase in pay. We should have had a tax cut targeted at the class that’s really hurting.” The data architect is an Independent.

Our audience at Yahoo Finance is more enthused about the Trump tax cuts than the broader population, probably because they tend to be investors benefiting from provisions that favor shareholders and business owners. Of more than 2,000 respondents in our survey, 57% approve of the tax cuts. Our audience also favors President Trump by about 5 percentage points more than the broader population. (Full survey results are at the end of this story.)

Who benefits most from the tax cuts?

Yet even among a group favorably disposed toward tax cuts, two glaring objections to the GOP tax law appear in our survey results. First, a plurality—42%–think the tax cuts favor the wealthy most of all. Only 29.6% say they favor the working and middle class.