Tax law politicking? Nah, couldn’t be
Itry to keep current with the tax laws. Every now and again something escapes my watchful eye. The House of Representatives, however, is ever faithful in making up for my shortcomings.
A warning — my shortcomings include meaningless cultural references to (smart) physicists, (good) musicals and (horrible) Saturday morning TV shows. Prepare yourself. If you don’t like tax, then treat this column as a trivia contest.
In December 2017. Congress passed, and the President signed, the Tax Cuts and Jobs Act. This legislation contained both tax increases and decreases, although it was an overall decrease of $1.5 trillion over a 10-year budget horizon, give or take a few hundred billion dollars (CBO now expects the cost to approach $1.9 trillion).
The TCJA had some “permanent” provisions and others, mostly affecting individual taxpayers, which will expire at the end of 2025. So the latter items were “temporary.”
To be sure I checked the calendar and discovered, after counting on my fingers, that the temporary TCJA provisions still have over seven years of life in them. Along the way we will have a new Congress elected in 20182020-2022 and 2024 and a presidential election in 2020 and 2024. That’s a lot of electing.
Einstein explained to us that E=mc2. In this equation, “E” refers to elections, m is “more” and c is “changes to the tax laws.” That is, elections equal more changes (squared) to the tax laws. You may doubt me, but I hope you trust Professor Einstein.
Growing up in central New Jersey, within 5 miles of the Institute for Advanced Studies where Einstein did his work, we were taught the importance of Einstein’s work. On a humid and windy summer day, my hair sometimes even resembled the famous Einstein look.
Well the House of Representatives recently looked at their work from last December and announced that we have trouble, right here in (Potomac) River City. That’s with a capital “T” that rhymes with “P.”
What was this trouble? Well, it seems, some of the 2017 tax changes will expire in 2025 unless something is done. And done soon. To make the provisions “permanent.”
Why must something be done soon? Well, uh, because we have Trouble (that’s with a capital “T”)! Right here in River City! And if we don’t act, uh, our youth’ll be frittern away! I say our young men’ll be frittern! Good people must act.
So the House introduced H.R. 6760, called the “Protecting Family and Small Business Tax Cuts Act of 2018.” The “H.R.,” I’m pretty sure, means it was thought up by H.R. Hufnstuf, who some of you may know is your friend when things get rough.
H.R. 6760 will make the tax changes that are scheduled to expire at the end of 2025 “permanent.” If this is enacted in 2018 that’ll be a load off. The increased standard deduction, child credit, AMT changes, and tax rate changes will survive into 2026.
Also surviving will be limits on deductions for property and income taxes, no dependent or personal exemptions, limits on casualty and business losses, no moving expense deduction for nonmilitary people, and no “miscellaneous” itemized deductions.
Now let me explain why this is important. Umm, hold on a second. It’s because uh, well, if we don’t do this then umm, well people will ah, or they won’t be able to umm. Look away from the column for a second, you’re pressuring me!
Ok, now I remember. If you were thinking about paying more property tax in 2026 because your deduction would be bigger, you may want to put those plans on hold. And if you were going to move to change jobs in 2026, when you could get a tax deduction, you may want to stay where you are.
And that planning you were doing to have more kids in 2026, maybe all in the same year, to get that reinstated exemption, well, uh, who needs kids anyway.
Einstein knows H.R. 6760 will never mean anything. Not with all that electing we’ll be doing between now and 2026. So I just don’t get it — I know it can’t be a cynical play for votes. I’ll let you know if I figure it out.