Once again, I am driven to perform my annual exercise in futility by itemizing my Wish List from the current (118th) Congress, which meets from October 1, 2023, through the end of 2024. As always, there are many unresolved tax questions, expired (but important) tax provisions, and inconsistencies within the rules for Qualified Retirement Accounts. When contrasted with the few planned workdays left in the December Congressional schedule, unfinished business portends yet another “disaster of the undone.”
Wish Number 1. If I could be granted one, but only one, wish, it would be to make the Trump Tax Rate Cuts of 2018 permanent. It is also simple to accomplish, except, of course, that it quite literally takes an Act of Congress. 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. A majority of taxpayers, along with scores of employees of corporations, benefitted greatly from more cash in their pockets. Some high earners in high-tax states actually paid more. Many received one-time bonuses funded by lower corporate taxes. Tax cuts always provide additional government revenue through economic growth. Always – no exceptions.
Wish Number 2. Index all tax items, including the SALT (State and Local Taxes) annual deduction limit and the Net Capital Loss deduction annual limit, which have been stuck at $10,000 and $3,000 respectively. Both need to be increased immediately and then adjusted annually for further inflation.
Wish Number 3. Have some mercy on tax preparers, tax planners, and taxpayers by giving us the rules early in the tax year. Far too often, “tweaks” are renewed as elected officials are checking their flight schedules to get home for the Holidays, leaving our clients unable to accurately forecast important numbers. This is especially helpful when planning items such as Roth IRA Conversions, where there is no longer time to correct unintended errors.
Wish Number 4. Restore the ability of taxpayers to perform Recharacterization of Roth Conversions, in whole or in part, after the year of the Conversion. We had this tool until TCJA was passed. I believe that was a mistake, and I’d like to see it restored. Congress could restore it with a simple majority vote. Don’t hold your breath.
Based on our divided government, very little can be expected to pass into tax-friendly law in 2023. We can only hope that the lower rates will survive and get extended, and anything beyond would be a real plus.
A guy can dream, right?
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