Lee Wochner: Writer. Director. Writing instructor. Thinker about things.


Tax change

After filing my taxes next year, I’m wondering if change is all I’ve have left.

I say that because I met with my CPA today, and it seems that whatever tax maneuvers I was able to do before no longer apply. The good news (for me):  Because I own a business, I should qualify for a deduction on pass-through income. This is the thing that was added in the compromise legislation — so now I guess I owe Senator Bob Corker, who held out for this, a thank-you (even though I’d prefer to see him in prison for self-dealing). The bad news (for me):  My state and local taxes, and my mortgage interest, are no longer deductible. (And surely it’s coincidental that these provisions mostly affect such states as California, New York, New Jersey, and Connecticut, for example, which reliably vote Democratic. But I digress.) Minimum, my federal taxes are estimated to go up $1200 just because of losing that interest deduction.

So much for the tax “cut.”

Other elements of this are head-scratchers:

  • For some reason, the pass-through income deduction applies to product-oriented businesses, but not services. So if you’re an accountant, lawyer, doctor, or Indian Chief, no deduction for you. But if you’re manufacturing mousetraps, sure, you get the deduction. What exactly could be the rationale behind this? Except punishing service providers? And if so — why?
  • In 2018, entertainment deductions are no longer allowed. I’m shocked this made it through. Really? All those K Street lobbyists won’t be able to deduct their pricey lunches and dinners and travel and concerts and so forth? How did they miss this? Had they known, they never would have let it happen.
  • Also, medical and dental expenses aren’t deductible the way they were. Two years ago, I could have bought a good used car for what I spent on the interior of my mouth — and that’s not even with counting the agony that came with it. I got two kinds of relief:  When the pain finally subsided, and when I got a deduction for it. So:  Let’s strip out the Affordable Care Act as best we can, piece by piece — and let’s also limit or remove people’s deductions for medical expenses. One or the other change might make sense, but doing both just seems punitive.

I’m not opposed to change, but, in general, I like change for the better. This was supposed to be a simpler tax code that jump-started the economy. Just about nobody believed that, including the people who said it. For one thing, the economy is doing fine. For another, if you suck $1500-$5000 extra out of my finances, and then you multiply by the number of people like me in those blue states where we actually financially support the federal government (unlike, say, Alabama, Mississippi,Oklahoma and all the other red states that cost the feds more money than they send), what you’re actually doing is depressing our spending ability — which shrinks the economy.

I do wonder just how much informed thought went into this by our selected officials and the corporate overlords who own them. To wit:  Have they asked, if we all die sooner without health care, who’s going to support the 1%?

3 Responses to “Tax change”

  1. Dan Says:

    When you give more $$ to the Rich, you’re “providing inventive for the job creators.” Give it to the poor and working class, and it’s “welfare.”

  2. Jim Markley Says:

    The poor don’t run companies or hire people to work for them. Sorry about the tax hike, that sucks. We’ll probably take a hit as well. Trump would probably quote Obama, “We won; you lost – get over it!” The economy IS doing better – has been for about a year now. I don’t give Trump all the credit, nor do I give Obama all the blame. But the stock market keeps going up, and there’s a helluva lot of people getting raises and bonuses!

  3. Lee Wochner Says:

    Fair enough. To give credit where it’s due, the “Clinton recovery” was jump-started by George H.W. Bush, who paid for it by losing his presidency. The stock market isn’t going to result in economic gains for most people, but some of the changes in the tax law will — most of it directed toward the top-most tier. The part I was in favor of was reducing the incentive to offshore profits — which Obama also tried to do — and which has now resulted in Apple, for one, bring $36 billion in taxes back onshore. We were indeed uncompetitive in that area.

    In general, I’m not ideological. (Whatever you may think.) I want things to work, and for the most part I’d like them to work for the middle class across the board. If you really want the economy to improve, you get more money into the hands of the middle class, and they spend it. Also, it reduces stress — and, therefore, perhaps shootings and other societal stress. Instead, we’ve got an economic culture where, at the low end, everyone is slashing their prices because even these historically ultra-low prices (such as with fast food and some tech) are unaffordable for too many. Similarly, we’ve made a business of indebting our young adult population. These are very bad trends for all of us.

    Regarding my personal taxes — we’re fine. I just think the trend is bad overall for almost all of us across the nation.

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