Tax Day 2018: Impacts Of Trump Tax Plan
MICHEL MARTIN, HOST:
The deadline to file federal taxes is now. And according to the IRS, a large number of Americans - about 1 in 7, or more than 20 million people - waits until the last week to file. So it's likely that some of us are thinking about the taxes that we need to file or maybe even doing the paperwork as we speak. But even if you're not, this is the time of year when taxes are on our mind, so we thought we'd take a minute to think more broadly about taxes. We called David Wessel for this. He's a senior fellow in economic studies at Brookings, which he came to after spending three decades at The Wall Street Journal. David, thanks so much for speaking with us.
DAVID WESSEL: Good to be with you, Michel.
MARTIN: I think many people will remember that Congress passed and the president signed this large tax bill last year. So does it have any effect on people's taxes this year? Just remind us, if you would, about, you know, what happened and what the effect is going to be.
WESSEL: Well, it was a big tax cut, as you say, huge by any measure. It cut taxes for a lot of businesses and for some individuals. But this will affect how much money they pay next year. The biggest effect it's having this year is that people are seeing a smaller amount of money taken out of their check each week in withholding because that's the money that's going towards next year's taxes.
MARTIN: So there's some big questions about taxes that have yet to be answered. I mean, this bill that was passed was essentially a tax cut. I'm really - I guess I'm wondering what kinds of conversations that people like yourself are having. You know what I mean? Are there still questions or issues about taxes that we still should be talking about?
WESSEL: Oh, absolutely. I mean, first of all, this is not sustainable. They cut taxes, in my view, too much. At some point, they're going to have to raise them. So that's the first thing we talk about. The second thing is that they made something simpler, like they did away with the personal exemption you get for each member of your household and increased the standard deduction. But anybody who has a small business, sometimes called pass-throughs, it's incredibly complicated. And then there are some big problems in our society that we look to the tax code to address. And we didn't do anything here to help slow the growth of healthcare spending. And this tax bill will do less to narrow the gap between winners and losers in our economy than the tax code did before the big tax bill.
MARTIN: So, David, before we let you go, what's the next conversation we are likely to have about taxes?
WESSEL: Well, one possibility is the Democrats do really well in November 2018 and they start to try and raise taxes on businesses and the rich. That's a possibility. Another possibility is even though nobody seems to be worrying about the federal deficit and the federal debt today, at some point, something's going to happen to force that action in Congress on that. And at that point, I think they'll be weighing - how much do we want to raise taxes, and how much do we want to cut spending on retirement and health programs and so forth? And at some point, we're going to think about things like a carbon tax or other taxes that are designed to both raise money and reduce the dangers of global warming. And I think we'll get to that at some point, but I'm not very good at knowing when that will come.
MARTIN: That's David Wessel. He's a senior fellow in economics at the Brookings Institution. That's a think tank in Washington, D.C. He joined us from his office there. David Wessel, Thank you.
WESSEL: You're welcome.
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