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Tax “Cuts” – I Will Not Be Silent!

You have been bombarded lately on every form of media, and from all sides of the political spectrum, with the topic du jour in Washington, D.C. being the so-called “Tax Cuts and Jobs Act.” Each side is misguided for different reasons, but each side is wrong. You, the affected taxpayers, are being lied to by all sides. I am your advocate, and as such I will not go quietly into the night!

Very few legislative efforts affect a larger percentage of the population than the U.S. Tax Code. Therefore, you all have a stake in the outcome. There are at least two sides, as always, in politics. Here’s where they stand, in my opinion.

The Republicans are lying, and their conclusion is wrong.

The Democrats are lying, but their conclusion is right.

Both side’s deceptions are unacceptable, including these from Republicans:

Everyone will get a tax cut. If this were true, I would get a tax cut, but I have recalculated my last year’s taxes under both plans, and my taxes would go up either way. Yours might, as well, although some people would receive a net tax cut.

We are doubling the Standard Deduction, so everyone will have a larger amount of tax-free income “up front.” This short statement contains one lie of omission and two direct lies. Omitted is the fact that, while the Standard Deduction is actually being increased, the Personal Exemption of $4,050 per person is being dropped. Direct lies include the “doubling” of the Standard Deduction and the “new zero bracket,” which today is the sum of your Standard Deduction and the total of all your Personal Exemptions. Not only is it not new, but for families of 4 or more, it results in a tax increase.

The business tax rate will drop from 35% to 20%. President Trump declared in his proposal to cut taxes that all businesses should be treated the same, from giant “C-Corps” down to the “Mom-and-Pop” small businesses. This concept was lost in the writing of the bills. Nowhere is 20% mentioned as to Sub-S corporations or self-employed people. Their rate is at least 25%, and some will be much higher.

Obviously, I am very unhappy with the Republican proposals, both the House and Senate versions. In the interest of fairness, I will also explain my objections to the Democrat protests, which draw an agreeable conclusion, but have little basis in reality:

Democrats call the proposal “tax cuts for the wealthy.” Talk about a tired storyline. This is wrong on a couple levels, but the main one is that many wealthy people will pay more.

Democrats are also saying, “Don’t borrow more money from China” and that these proposals will “blow a hole in the deficit.” So, in the year 2017, liberals got religion about the debt and the deficit? This rings hollow, given their nonchalance during a few decades of over-spending.

I would love to have an actual tax cut package put to the taxpayers. We are over-taxed, over-regulated, and uncompetitive in the world economy. It could be changed, but it would require honesty in the halls of Congress and in the media. I will NOT be holding my breath.

Some of the pundits are calling these tax proposals “primarily a corporate tax cut.” They are right. So, my proposal is to drop everything except the corporate tax rate cut, and visit personal tax cuts separately in 2018.

I have long said that gridlock in D.C. is actually desirable. My favorite times are when Congress is out of town, followed closely by times when, although in session, they are hopelessly gridlocked. Let’s hope for the best on this one. Meanwhile, plan for the worst.

Somebody, Please, DRAIN THE SWAMP!

Van Wie Financial is fee-only. For a reason.