THE WANDERING TAX PRO
Up-to-the-minute advice, information, resources, and, on occasion, commentary on federal and New Jersey state income taxes, and the various New Jersey property tax rebate programs, and insights and observations on tax policy and professional tax practice, by 45+-year veteran tax professional Robert D Flach.
Saturday, September 30, 2017
THE DEVIL PROVIDES FEW DETAILS
T Rump’s revealed “revolutionary” tax reform “plan” continues to be nothing
more than scribblings on a cocktail napkin.He just added a few more scribblings in his Wednesday address.
devil is in the details.But the devil
has provided only minimal details for his “plan”.
doesn’t care about “details”.He will
leave them to Congress.He only cares
about attention, praise, and the roar of the crowd.
true this is a good thing and something I wholeheartedly support, despite being
a professional tax preparer who supposedly benefits from tax complexity.The current US Tax Code is a convoluted “mucking
fess” that needs to be totally rewritten from scratch.
can earn up to $12,000 tax-free, and married couples up to $24,000.
These numbers refer to the new Standard Deduction. There is no mention of the "Head of Household" filing
status - I do not oppose doing away with this status. The plan eliminates the personal exemption, for both taxpayers and all dependents, and the additional Standard Deduction for age and blindness. I also do not oppose this. However, considering the elimination of these current deductions this plan does not "roughly double" the Standard Deduction, as it says it does.
current 7 tax rates on “ordinary income”, from 10% to 39.6%, will be reduced to
3 rates – 12%, 25% and 35%.And there could
be a “surtax” on “high income households”.
information is supplied regarding the income ranges of the 3 new rates, or what
would be considered “high income”.I
support the idea, but would want to see the specific income ranges.
Child Tax Credit for dependents under age 17, currently $1,000 per qualifying
child and phased-out based on level of income, will be “expanded”.
information is supplied regarding exactly how it would be expanded. The expansion beyond the current $1,000 is to replace the personal exemption for children. I do not oppose replacing the deduction for personal exemptions for dependents with a credit. The levels of income used in the phase-out of the credit will be increased, a good thing, although I personally oppose any AGI-based phase out of deductions or credits. The first $1,000 of the credit remains "refundable". I strongly oppose all refundable credits.
(5) A $500 credit for "non-child" dependents, such as elderly parents, will be created.
As I said above, I do not oppose replacing the personal exemption deduction with a credit.
(6) Itemized deductions that "primarily benefit the wealthiest families" will be eliminated.
The specific itemized deductions have not been identified, although we are told the "tax incentives" for home mortgage interest and charitable contributions will remain. Will the mortgage interest deduction be limited to "acquisition debt", as I believe it should?
dreaded Alternative Minimum Tax (AMT) will be repealed.
is definitely a good thing, which I totally support.In reality the AMT hurts the upper middle
class more than it hurts the “wealthy”.The current AMT was used by the Tax Reform Act of 1986 as a back door
way to offset the Act’s basic tax cuts.
federal Estate Tax will be repealed.
not oppose this as long as the step-up in basis for inherited assets remains intact.I will say that, despite what Trump
suggested, the federal Estate Tax, with its current $5+ Million exemption, does
not regularly force those who
inherit family run small businesses and farms to sell them off to pay the
tax.As USA Today points out (highlight
is mine), “according to the non-partisan
Tax Policy Center, only roughly 50 small
business and small farm estates nationwide will face any estate tax in 2017,
owing on average less than 6% of their value in tax”.
top corporate tax rate will be reduced from 35% to 20%.
have no problem with this.
The top tax rate on partnership and sub-S corporation “pass through” business income
and,Schedule C self-employment income
reported on the Form 1040 would be 25%.
would cause W-2 salary and wage income to be taxed at a higher rate than “self-employment”
income, and most definitely disproportionately benefit higher-income taxpayers.
Businesses will be able to write-off in full the cost of all equipment
Internal Revenue Code Section 179 businesses can currently write-off up to
$500,000 of equipment purchases.Isn’t this
of his tax reform “framework” arrogant serial liar Trump said, “It’s not good
for me, believe me.”First of all, I do
not believe a single word that comes out of the mouth of Donald T Rump about
anything, especially when he adds “believe me”.And second, we really can’t tell if it is good for him because he has
not released his tax returns.We don’t
know if Trump actually pays any federal income tax at all.
elimination of the federal Estate Tax would certainly substantially benefit the
Trump family.And the lower rate on “pass
through” business income would definitely benefit Trump personally, assuming he
actually pays income tax.
also said of tax reform, “I guess it is probably something I can say I’, very
good at.”Donald T Rump is not very good
at anything, except consistently screwing investors, shareholders, contractors,
vendors, employees, and customers while lining his pockets.
Overall I will admit there is much good in the "framework". But, like
the rest of America, I am eagerly waiting to see the specific details of this