Tax Cuts and Gas Price Increases…..

Trump and company are selling bigger tax refund checks….

They aren’t talking about higher costs for healthcare, food, and gas and oil….

Americans STILL are NOT happy with their economy….

 

It was always going to be an uphill battle for Republicans to turn last year’s tax cuts into a memorable economic and political victory that could help their party retain control of Congress in the midterm elections.

Many people won’t see a significant change in how much tax they owe. The overall economic effect was expected to be minor. And even for people who were set to benefit from the new tax cuts, a larger refund this spring might not be enough to shape how they vote in the fall.

Now, a surge in oil prices, brought on by the war against Iran that President Trump chose to launch, is threatening to raise costs across the economy and cut into the already modest stimulus the tax cuts were poised to deliver in the coming weeks.

“Rather than even a month ago thinking this could provide a boost to base line growth for the rest of the year, now I’m thinking it could limit the downside,” said Michael Pugliese, a senior economist at Wells Fargo. “This energy shock is coming just as the refund money really gets flowing.”

Republicans carefully designed their tax law to try and create an economic lift this spring. Much of the legislation was dedicated to extending an expensive series of tax cuts passed in Mr. Trump’s first term, a maintenance of the status quo that seemed unlikely to interest voters. So the party layered on an additional set of tax cuts that reflected Mr. Trump’s campaign promises, like “no tax on tips,” with the hope that the populist changes would generate more economic activity and public support for the G.O.P.

To help the new tax cuts pop, Republicans made them retroactive to the beginning of 2025. After the law passed, the Internal Revenue Service didn’t change how taxes were withheld from paychecks. As a result, the new tax cuts will only become apparent to many Americans when they file their taxes this spring.

The idea was that supersized tax refunds worth thousands of dollars would grab attention and drive spending in a way that marginally lower taxes saved throughout the year would not, even if many Americans wouldn’t be able to claim the new tax breaks. Those refunds would arrive before the law’s cuts to Medicaid, the health care program for low-income Americans, and food stamps, kicked in….

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