By the time you read this we may know for sure the fate of the tax bill in the Senate, and we already know and have reviewed the tax bill in the House. The headlines at 3:50 PM ET on November 30th read “G.O.P. Lines Up Tax Bill Votes in Senate; Analysis Says Cuts Add $1 Trillion to Deficit” I would scream and hide under the bed, except for the fact that the national debt is already at 20 trillion and change already, and also if that was the biggest problem. The unfunded Social Security obligations of $32 trillion* and massive Medicare obligations make the deficit a small problem, as according to many sources and articles too numerous to list, the range for the two together (Social Security & Medicare) is $70 Trillion to $124 trillion in the red.
No wonder the country also finds itself over-medicated.
Knowing all that, the approach that is being attempted by the Trump tax cut plan is simply to cut taxes on companies and cut taxes on mega wealthy families (elimination of estate taxes), and in my humble opinion, it can be boiled down to: Companies will stay in the U.S. and not move to other countries and they will hire more people. I would take the bet myself, as the problem we are trying to solve is arguably a $100 trillion problem, and we are betting $1 trillion. Then, we are betting that the new-age Rockefellers of the world will stay in the U.S. and not move to Cypress or Ireland if we don’t take $400 million of their billions for permission to die, by applying a death tax. I also will take that bet, people with a billion dollars are smart enough or lucky enough to have made a billion dollars, they will leave the U.S. to keep it…let them stay. Perhaps some overall good will come of that, simply on blind faith.
All the simplification part of the bill does is make it simpler for us to file and for them to collect, but it will shift dollars and who wins and losses on their own personal 1040. But, for the country it does little. Most of us will pay more, but at least we won’t have to keep receipts and records, and we can spend the time lost on that work with a family member (hey, maybe even outdoors and without your cell phone in your hand!).
If you want to actually cut your personal taxes, the only thing that’s going to do that is planning with a tax planning advisor, CPA, CFP or MBA. There are people all around you saying, “Hey, come see us and we’ll help you plan your taxes and proactively try to reduce your tax bill”. They can help. This bill is not the easy button, it’s a “Hail Mary” football throw.