PolitiFact: Cruz exaggerates tax cut’s impact

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PolitiFact: Cruz exaggerates tax cut’s impact

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Texas Sen. Ted Cruz, shown here at a September 2017 Texas Tribune event, later made a Half True claim about changes in federal tax law (Nick Wagner, Austin American-Statesman).

The new tax laws Republicans put in place won’t leave everyone paying less to Uncle Sam forever, projections show, mainly because nearly all of the new individual income-tax reductions expire after 2025.

But Sen. Ted Cruz, R-Texas, stirred our curiosity when he asserted that certain rich Americans would face increased taxes off the bat.

We unsuccessfully queried Cruz about his conclusion about higher taxes hitting only plump cats in New York and San Francisco.

Studies of the plan President Donald Trump signed into law suggest that many wealthy Americans will see tax cuts — while some will pay more. We didn’t confirm, though, that those likely paying more live only in San Francisco and Manhattan.

Experts told us wealthier workers in high-tax states and cities are at risk of higher tabs because the law limits the amount anyone may deduct for state and local income taxes to $10,000.

Toward the end of 2017, PolitiFact in Washington looked at studies of the adopted tax plan by the Joint Committee on Taxation, the nonpartisan group that analyzes tax bills for Congress, and the Urban Institute-Brookings Institution Tax Policy Center, an independent group that models the effects of tax legislation.

According to the committee, taxpayers stand to enjoy reductions in 2019 (the first year of its analysis) with the average tax rate decreasing in each of 11 income groupings. Yet not everyone is projected to see lower taxes every year. In 2027, the committee’s analysis says, taxpayers earning up to $75,000 a year would face average tax rates higher than those under existing law, with people in higher brackets still paying less than they would if the law hadn’t changed.

Separately, the center’s analysis indicates that from the get-go, some taxpayers within each income bracket will likely pay more in taxes—though 95 percent will see reductions or not lose ground.

Tax experts in the states singled out by Cruz each told us that most taxpayers will pay less in the plan’s first years, but there will be people paying more.

Our ruling

Cruz clearly engages in hyperbole here, though the gist of his statement holds water in that most taxpayers are projected to enjoy lower federal taxes through 2025. Also, those most likely to see their taxes go up include wealthy wage earners in high-tax states and cities.

Still, projections show that across income groups, not every taxpayer will see lower taxes, contrary to what Cruz said, and many of those who do see tax savings are likely to lose them after 2025. Also, residents of high-tax states and cities at risk of higher taxes aren’t limited to Manhattan and San Francisco.

We find this statement partially accurate but lacking in some important context. That makes it Half True.

“Every taxpayer, their taxes are going down, except rich people in Manhattan and San Francisco. Some of them, their taxes may go up.”

— Sen. Ted Cruz, R-Texas, on Tuesday, Dec. 19 , 2017 in Senate floor debate of federal tax legislation

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