Every year I like to review my past Congressional Financial Wish Lists, both to see what actually happened since last year, as well as to see what could be improved. Since passage of the Tax Cuts and Jobs Act of 2017, which took effect on January 1, 2018, a lot has changed. The changes were positive for the majority of Americans. However, much remains to be done, and remaining Congressional time is very limited. Here is a short list of possibilities to make our financial lives even better.
- Wish # 1 – Now that income tax rates have been lowered for individuals, the new rates need to be made permanent in order to avoid reverting back to the old (higher) rates after the year 2025.
- Wish # 2 – Reduce Capital Gains tax rates, which were not modified in the 2017 Act. Reducing Capital Gains tax rates has proven to be a win-win proposal since the 1990’s, when President Clinton reduced Capital Gains Tax Rates, and generated a large revenue increase.
- Wish # 3 – Dramatically increase contribution limits for IRAs, which are currently only adjusted for inflation.
- Wish # 4 - Repeal all Estate (Death Taxes) and Gift Taxes. This happened (in a modified way) for one year in 2010, but the taxes came back in 2011. These onerous taxes need to be permanently repealed.
- Wish # 5 - Eliminate the Clinton-era tax increase on Social Security benefits for certain income levels, from 85% taxable to the previous 50% taxable limit. (Ideally, all Social Security income would be tax-free, as promised when the system was first implemented in 1935. That is likely too much to ask of a government that is so reliant on our taxes.)
- Wish # 6 – Eliminate the Alternative Minimum Tax (AMT), which was implemented in 1969 in order to force a handful of wealthy Americans to pay a minimum amount of income tax, despite following all the rules in the Tax Code. Over the years, the was AMT expanded to include thousands of Americans and corporations. This Administration managed to repeal the corporate AMT, and now is the time to eliminate the entire onerous AMT concept.
- Wish # 7 – This list has been prioritized, with Wish # 1 high above the others. Hopefully, Congress will follow through with making the new rates permanent, and with luck add a few other of my other wishes before singing Auld Lang Syne.
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