The extra take home pay is so inconsequential to most people that, of the minority who says they’ve noticed the extra funds, a little less than 40 percent say it’s improved their finances “a great deal” or “a fair amount,” with the remainder saying it the money either helps a small amount or not at all.
Am I surprised? Of course not! This was entirely predictable — despite Republican claims to the contrary last year.
The tax bill, as we all know, was a major gift to corporations and the wealthiest of the wealthy, who received the lion’s share of the $1.5 trillion cuts. The cuts the typical American received, on the other hand, are relatively minor.
The nonpartisan Tax Policy Center estimated that the typical middle-income household would see an after-tax gain of $930 in 2018 as a result of the new law. Assuming a one-paycheck household, that adds up to a little less than $18 a week. That’s enough for an extra lunch at Chipotle (average check: $12) but won’t even cover a steak dinner at Outback Steakhouse.
There is, unsurprisingly, a partisan divide in how the tax cut’s benefits are being perceived. While 52 percent of Republicans in the CNBC poll say they’ve noticed more money in their paychecks, only 20 percent of Democrats and 19 percent of independents claimed the same thing. Similarly, while 51 percent of those who approve of Trump say they noticed the change in their paychecks and attributed it to the tax cut, only 21 percent who don’t approve of his performance say the same.
Steve Liesman, senior economics reporter for CNBC, pointed out to me that it’s also possible that the relatively small amount of money from the tax cut got swallowed up by other changes in people’s paychecks at the beginning of the year. For example, if someone needs to contribute more toward an increased health insurance premium, that could take up a decent chunk of the relatively small weekly or bi-weekly amount the tax cut amounted to for most people.
However, there is no way around the fact that a majority of people are not noticing a change in the amount of money in their paychecks or aren’t sure about it. And the chances are good if they haven’t registered it by now, they won’t notice it at all — no one less than Treasury Secretary Steven Mnuchin said they would see it in their paychecks by Feb. 15 at the latest.
Finally, there is evidence from previous tax changes that people do not register it when their paychecks go up by relatively small amounts. Take what happened after President Barack Obama signed the Making Work Pay tax credit into law in 2009.
That $116 billion tax cut resulted in American households receiving an extra $1,200 in take home pay in 2009 and 2010. But that tax cut was parceled out, paycheck by paycheck, in line with the thinking of economists who argued recipients would be more likely to spend a small amount of money, making it a more effective economic stimulus. The result? According to the New York Times, less than 10 percent of Americans knew they received a tax cut. More people thought their taxes had increased.
When Republicans were promoting this monster of a tax cut last year, they repeatedly claimed it would help middle-class Americans. Mnuchin argued the middle class would benefit, while the rich would receive “very little cuts or, in certain cases, increases.” This was laughably untrue. Some of the arguments verged into parody: Ivanka Trump claimed the plan would “create simplification” for Americans, a remarkable statement considering it was passed with so little deliberation that it’s now becoming clear a huge number of “errors and ambiguities” are causing problems for large and small businesses alike.
Republicans also argued voters would reward them come this November for the extra money in their paychecks. This data shows that’s an increasingly unlikely possibility. Perhaps Republicans can take comfort from the long view: The individual tax cuts are set to expire at the end of 2025, even as the corporate cuts, which overwhelmingly benefit the wealthy, continue. Maybe ordinary voters won’t notice that their tax cut disappeared even as those enjoyed by the rich live on in perpetuity.