Every year I like to review my last year’s Congressional Financial Wish List, both to see what actually happened since last year, as well as to see what could be improved next year. Since passage of the Tax Cuts and Jobs Act of 2017, which took effect on January 1, 2018, a lot has changed. Many changes were positive for the majority of Americans, but much remains undone.
- Wish # 1 - Income tax rates were lowered for individuals until 2026; the new rates need to be made permanent. (No progress in 2019, despite promises)
- Wish # 2 - Reduce Capital Gains tax rates, which were not modified in the 2017 Act. (No progress in 2019; little help in sight)
- Wish # 3 - Dramatically increase contribution limits for IRAs, which are currently only adjusted for inflation. (No progress in 2019; little or no change in sight)
- Wish # 4 - Repeal all Estate and Gift Taxes. (No progress in 2019; not a whimper from Congress)
- Wish # 5 - Eliminate the Clinton-era tax increase on Social Security benefits for certain income levels. (No progress in 2019; I may be the lone dissenter)
- Wish # 6 - Eliminate the Alternative Minimum Tax (AMT) on individuals. (No progress in 2019; all talk, no action)
As is evident from the forgoing analysis, it appears that I am getting a legislative lump of coal in my 2019 stocking. In 2018, Republicans promised to pass Tax Cuts 2.0 before the end of the year. As is too often the case, that promise was hollow.
What, if anything, can we realistically expect Congress to address from this list? A good start would be passing Wish #1, which simply extends current tax rates into the future for individuals. Unfortunately, even that one is looking elusive. While the term “Do-Nothing Congress” has long been applicable, this past year must be a record.
Entering into an election year, perhaps some elected officials would like to make some actual improvements in the lives of average Americans. Only time will tell. I, for one, am not holding my breath. Nevertheless, we wish everyone a very Merry Christmas and an exceptionally Happy New Year.
Van Wie Financial is fee-only. For a reason.
