Wall Street Journal op-ed: The TurboTax Defense, by James Freeman:
A New York Times correction blames the popular software, but a liberal academic still isn’t satisfied.
The search continues for Americans who will not benefit from the Trump tax cuts on individual and corporate income. The New York Times has corrected a story this column described last week that originally forecast a much larger tax bill for a hypothetical New York couple. Now the paper acknowledges that the tax bill for such a couple would actually be lower and is blaming a popular software product for the error. But a liberal law professor says the Times still doesn’t have the story quite right.
That also goes for much of the media, which has devoted enormous coverage to the possibility of higher taxes on some Americans, even though the overwhelming majority are receiving tax cuts. And of course all Americans will benefit if the new tax law works as intended and encourages increased investment, faster growth and rising wages.
As for the confusion at the Times, the paper’s particular example was an imaginary couple named Samuel and Felicity Taxpayer. The Times described their imaginary family, including two children and an elderly parent living in the household. The paper elaborated: “Both Samuel and Felicity earn income, she as an employee of a design firm and he as a self-employed engineering consultant.” And the Times sketched out the family finances, writing that “their total income for 2017 was $183,911, but after deductions, their taxable income is $88,293. In 2018, it would be $116,097.”
The Times concluded that their fictional family would owe a whopping $3,896 more in taxes under the new law. But on Friday, the Times published the following:
Correction: March 2, 2018
An earlier version of this article incorrectly described the probable effect of the new tax law on a hypothetical couple’s 2018 tax bill. The TurboTax “What-If Worksheet” that generated the projection for their 2018 taxes failed to indicate that the couple would probably be entitled to claim a sizable deduction for income earned from consulting. As a result of that deduction, the amount they would likely owe on taxes would decline by $43, not rise by $3,896.
That’s quite a difference for our imaginary couple. But what if this is not the end of the story? Daniel Hemel, who teaches tax law at the University of Chicago and flagged problems with the original Times story, suggests that Times editors still don’t understand how much savings the hypothetical couple would enjoy under the Trump tax cuts.
The Times is not alone in failing to appreciate the benefits of tax reform. And if the paper is still trying to get a handle on the details of the Republican plan enacted in December, it can hardly be a shock to readers.
But TurboTax is another story. Millions of Americans rely on the software to guide them through the morass of state and federal tax regulations. Has the software been updated to reflect recent changes in the law?