Every year since I can remember, I have prepared a Christmas Wish List for Congress, and every year the theme seems to be the same. Last year, I wrote (modified slightly):
Once again, I am driven to perform an annual exercise in futility by itemizing my Wish List for this (the outgoing 118th) Congress. As always, there are many unresolved tax questions, unfinished “tweaks” to the Tax Code, and inconsistencies within the rules for Qualified Retirement Accounts. When contrasted with the few planned workdays left in the December Congressional schedule, it portends yet another “disaster of the undone.”
As the remaining time for Congressional action wanes, it is largely discouraging to look back at the progress (or lack of same) made by the outgoing Congress toward last year’s list, starting with:
Wish Number 1. Make the Trump Tax Cuts of 2018 permanent.
In the Tax Cuts and Jobs Act of 2017 (TCJA), which took effect on January 1, 2018, both individual and corporate tax rates were dramatically lowered. Almost every taxpayer, every consumer, and scores of employees of large corporations benefitted greatly from more cash in their wallets.
With the (re)election of Donald J. Trump, this is a near certainty. However, the usual group of elected lightweights in Congress are already explaining why this is not their #1 priority. The more things change, the more they stay the same, or so it seems.
Wish Number 2. Inflation index tax items, including the SALT (State And Local Taxes) deduction limit, currently stuck at $10,000 per taxpayer (single or joint filers constitute one taxpayer).
Prior to TCJA, taxpayers who itemize deductions could include 100% of their SALT expenses. Restrictions imposed by the 2018 Code changes restricted that amount to the current $10,000. Now, it is time to at least acknowledge the simple premise that a couple filing jointly should receive twice the benefit of the deduction, updated annually for inflation.
Wish Number 3. Have some mercy on tax preparers, tax planners, and taxpayers by giving us next year’s rules earlier this year.
This is especially important when planning items such as Roth IRA Conversions, where there is no longer a chance to correct unintended errors after December 31. Congress is so derelict in wrapping up loose ends (especially in an election year) that Tax Code changes can actually bleed over to the next year, when it’s too late.
I could go on, but it is the Holiday season.
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