Tax Break or Tax Broken


Will tax reform give us a break… or break our budgets?   One way to answer this question of the future is to examine the past.

Take the Tax Reform Act of 1986.   That law was supposed to be a detailed tax-simplification law.

Over 1,000 pages of complexity… that simplification law.

George  Orwell taught us something about that… “Doublespeak” how lawmakers name new legislation.

Doublespeak is language that deliberately obscures, disguises, distorts, or reverses the meaning of words.

War is Peace
Freedom is Slavery
Ignorance is Strength

Look at the name.  Whatever Congress calls this new act… expect the opposite.

So what does our Congress have in mind for us when it comes to taxes?

In 1986 IRA’s were severely restricted.

There have been promises that in 2017 the tax break for 401(k) plans will be kept in place under the new tax reform proposal.

There are numerous reports to the contrary.

According to the Washington Post (1) One idea quietly being discussed would be taxing the money that workers place into their 401(k) savings plans up front.

The 1986 Act hurt real estate prices.

Eliminating deductions on property tax can hurt real estate prices again.

The Wall Street Journal says: Republican Tax Plan Quickly Hits First Hurdle (2) says:  A day after announcing their ambitious tax plan, Republicans debated scaling back one of their largest and most controversial proposals to pay for lower tax rates: repeal of the individual deduction for state and local taxes.

The dispute over the state and local tax break echoes back to 1986, the last time Congress revamped the tax system.  Then, too, House Republicans from New York fought against their own party’s plan to repeal the tax break.  Aided by Democrats, who controlled the House, they prevailed, and taxpayers can now deduct their property taxes, along with either their income or sales taxes.

No one knows yet what the new tax law will be… who will gain… who will lose.

What we do know is that big business has the money and the big donors and the big lobbyists usually shape new laws.

What’s good for big can be good for small.

One way that we as  individuals can benefit from change influenced by big business is to have our own small business.  Small businesses, just like the multinationals, can benefit fro the new tax laws whatever the may be.

Gary

(1) www.washingtonpost.com:  Tax reform could include taxing your 401k contributions

(2)  www.wsj.com: Republican tax plan quickly hits first hurdle

 


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