We have a Tax Framework. It's not a bill yet, but it's a proposal. It seems to be a major compromise with Democrats, and there is a lot in the bill that I disagree with; but you'll be hearing most of the same disagreements from all conservative pundits. One of the biggest questions I have, obviously, is how much my taxes should fall. Everyone who is in favor of tax cuts is asking themselves that same question. The other question is one that came up right after the election, but has fallen off to the wayside: Can we have a tax plan that is retroactive? These are two very important questions to the majority of the middle class, and they really go hand in hand in a weird way.
Across the beginning of the year, conservative pundits Ben Shapiro and Sean Hannity both made statements on the idea of tax cuts being retroactive to the 2017 tax year. Shapiro's comments fell off after a couple episodes of his daily show, but Hannity kept the idea pumping for months upon months. I stand firmly behind the idea of making a retroactive tax cut. In fact, I think at this point, it's almost essential. It's now November and the ACA, though stripped, is still intact. That, and tax reform were supposed to be done in the first 100 days of the administration. Had the tax reform been done on it's regular schedule, there would be no question as to whether it went on the '17 tax year. But the fact that we are doing this at the last minute means that there are questions. We've been paying in almost all year already, so it would be nothing for the IRS to just say "Oh, last year's rates are still effective." However, that would guarantee that all Republican Congressmen get at least subjected to a primary, if not voted out of office. We would have the definition of a "do nothing congress", and the constituents of many of our great congressmen would be right to take action.
Now, the political advantage is not the best reason to get these tax cuts going retroactive, but it's going to be a good way to light a fire under the asses of the right people: the people who's votes on the tax reform matter. There is a lot of practicality to doing tax cuts for this fiscal year. One of the big ones came into my mind when I started doing the mental math of what I would be paying in taxes in the coming years. Sadly enough, before this year, I really had no real concept of what I pay in taxes, and the amount was mind boggling. For almost my entire adult life I fell into that bottom 50%, and for the first two years that I qualified to pay federal income tax, I was so new to it that I just paid the money and said the hell with it and just paid the bill. But with all the talk about income tax cuts, a mathematical person can't help but start doing the calculations. At present rate, I would be looking at a pretty substantial 4 figure reduction in taxes, similar to a very large amount of Flyover Country Middle America. Some of the states with higher state and local taxes may not see so much, but I want to touch on that slightly at the end. First I want to say that getting these tax cuts in on the 2017 dime would be a huge jump in the National Economy as a whole. We've all been having taxes pulled off of our income for almost the entire year in anticipation of the current rate, so that will all be hanging out there in the IRS waiting to file. I'll tell you this, if the tax cuts go through and the rest of Flyover Country gets a refund like I'm anticipating, I'm not even going to spend the money on myself. While I could do a lot toward paying off my truck, or getting some money in the bank for a down payment on a house; I plan on doing something more practical. It's something that anyone who rents, or those who still live at home with their parents should be doing as well. I plan on taking that money, and putting portions of it into stock in Lowes, Home Depot, Samsung, and Apple. I chose Lowes and Home Depot because all of the people who do own homes will be taking their refunds blowing them on DIY projects, along with contracted home improvements. I chose electronics companies because the less fiscally responsible millennials who are living at home or renting will be running out to get the newest iPhone or Samsung Flagship. I predict that these stocks will soar, and that money can work for me in a better way than if I were to just spend it.
I want to close with a small comment on the repeal of the write-off for state and local taxes. I'm not opposed to the idea in any way, as I live in Wisconsin and my state is moderately taxed. In fact, with tax reform in the federal eye, my state is working on bringing it's own taxes down to be competitive as a job haven. I don't blame them at all. Tech giant Foxconn was on the edge of going somewhere else, so who knows what the next big job producer might do unless we sweeten the pot a little bit. But there is another point that I think a lot of people overlooked. Occasionally I listen to Rush Limbaugh, in spite of the fact that I usually consider him to be too extremist-right for my tastes, and on Thursday as his show was closing one of his listeners brought up a very good point during a call-in that would have never crossed my mind in a dozen years. The Republican opposition to this particular section of the tax bill is obviously coming from states with higher state taxes like New York and California. The idea behind eliminating the write off is that states with no income tax like Texas and New Hampshire are subsidizing the Federal Tax income from the higher taxed states, and lawmakers consider it to be unfair. Under the current system, you essentially pay your local taxes first, then what's leftover as Taxable Income is Federally taxed under your bracket. Ben Shapiro estimates that in his personal tax bracket, with California Taxes, he'll be giving up over 60% of his yearly income in taxes. Sean Hannity's predictions for New York State are not much better. But Rush's caller brought up a good point. The highest taxed states and municipalities tend to have been in majority Democrat controlled and represented for generations. In today's world, any information is available with a couple of screen taps. The people who are going to have their taxes go up are going to look at Republican controlled Texas, who's taxes went down, and has a surplus with no state income tax, and possibly start to re-think their representation. The left loves to talk about fairness, and there is nothing more fair than everyone paying the same in Federal income tax no matter the situation. The listener posited that the repeal of the local tax write-off may accidentally or deliberately push more voters in these states in the direction of more right-leaning state congressmen, and executives who can campaign on and deliver on state tax reductions.
If you have a comment or a different idea on how to utilize a big tax cut, or if you think the local tax write-off repeal is right or wrong, please leave a comment here or on my Twitter. That's @edsblogtw1tter. If you hit the like button, consider hitting that retweet button as well. That would be cool of you. Remember: Don't take the words of journalists and bloggers as Gospel. Find all the facts, and draw your own conclusions.
No comments:
Post a Comment