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TGIF – December 29, 2017

December 29, 2017

Don’t fire your accountant yet.

The Tax Cuts and Jobs Act might be a lot of things, but simple it is not. Even those with a lifetime of experience in wading through the tax code are finding it difficult to assess, much less explain.

You know when it takes 13 printed pages just to summarize it, simple is in the eye of the beholder.

In reality, there was no way the resulting document could be simple, since it had to address so many targeted, niche line item tax questions.

Simple would be everybody pays 10% on their gross wages and other income, and that’s the end of it.

Unfortunately, if that was what we had gotten, no one would have to worry about entitlement programs or military spending or infrastructure, because they would all cease to exist.

We won’t know for a while whether this turns out to be a good or bad thing for individual taxpayers and the economy.

In fact, having to revisit this again in 10 years might turn out to be a blessing in disguise.

If it works out as promised, then there is nothing stopping Congress from voting to make it permanent, whether that’s in 2025 or sooner.

If it drastically curtails spending on necessary programs, Congress could also vote to end it.

The IRS will now be scrambling to get an updated 2018  Publication 15 (Employer’s Tax Guide) out to accountants, businesses and payroll management companies by the time the first paychecks are due in February. Knowing the IRS, it could take several weeks or even months longer than that, given that the 2017 tax season also starts January 1.

In the meantime, the 2017 withholding rules might apply, meaning that the first beneficial effects won’t be evident right away.

Whatever the impact, it’s a done deal for now.

SALT, Schmalt.

One of the ironies of the new bill is the uproar over the state and local tax deduction. Various people, including Chris Christie have been on TV whining that their property taxes are $21,000 or  $26,000 or whatever and now they can only deduct $10K of that amount. One lady said her L.A. County property tax was over $6,000 for a $515,000 (which is actually fairly reasonable for the area) two-bedroom townhome and her state income tax was over 9% on an income of $74,000.

OK, that’s a lot of money. But is it everyone else’s fault that some state taxes are too high?

The fact is, the TCJA had to meet certain criteria to be considered under the Byrd rules. That means it couldn’t add more than $1.5 trillion to the deficit. There would be no tax cuts at all if it hadn’t been done under reconciliation, since Democrats sure weren’t going to support taking less money from us.

At some point, non- Federal governments in general are going to have to confront the public’s dissatisfaction with giving so much of their money to local, state and the Federal government.

On the other side of the street, there will be consequences for taxpayers too. Some programs people like will probably lose funding. In other cases, new taxes will show up to offset the cuts.

Nothing’s perfect. But even if we never try to shut off the money spigot, it will eventually run dry anyway.

Witch hunt – or covert op?

The Special Counsel investigation took a new turn this week, when it moved into “examining” the RNC’s digital operations, ostensibly to see if the Russians hacked into them.

Remember, the DNC, which we already know was actively working against Bernie Sanders, reportedly  refused to allow the FBI and CIA to rummage through its digital records related to the hacking that produced the Wikileaks Clinton-DNC email release.

Actually the Special Counsel can get into just about anything it wants to, since it’s mandate allows it to investigate “(b)(i) any links and/or coordination between the Russian government and individuals associated with the campaign of Donald Trump; and (b)(ii) any matters that may arise from the investigation; [Order No. 3915-2017 – Office of the Deputy Attorney General, July 17, 2017].

Technically, that means that if you sent the Trump campaign ten dollars, then you became associated with that campaign and theoretically could be subject to investigation.

That’s unlikely, but it points to the lack of DOJ control of the investigation.

Whether you find this latest excursion into the digital records of the RNC disturbing or not depends largely on your assessment of both the motivation and the impartiality of the Special Counsel.

One thing is fairly clear. At a reported cost of more than a million dollars a month, the Special Counsel has little incentive and no mandate to wrap this up quickly.

Th-th-that’s all for 2017, folks!

Have a Happy New Year!

From → op-ed

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