January 3, 2017
Now is the time to seize the day. Okay - maybe we are a few days too late. If your head has been under a rock for the past two months - let me fill you in.
We have a Republican as president elect. We also have Republican majorities in the House and Senate. The top legislative agenda topics I have heard are to repeal Obamacare (Affordable Care Act) and to instill some meaningful tax reform.
The Trump Tax Plan is spelled out on his website. His plan reduces rates across the board. He also phases out deductions (aside from mortgage and charity) at the higher income levels. So - the translation is that with reduced rates, your deductions will be worth LESS tomorrow than today. Why, because the tax rates are lower. And the more obscure tax deductions, like unreimbursed business expenses or even tax preparer fees are going to be phased out for higher income earners. Now, most higher income earners in high tax jurisdictions like California and New York, already have these deductions eliminated due to Alternative Minimum Tax. But instead of having these deductions minimized through AMT, they would be phased out ouright in this proposal. Oh and Trump wants to abolish the AMT.
Who knows how much of this will become law. But we have the best shot at tax reform in 30 years so something should come out of it. How much? Who knows.
Until things get more crystalized, I'll save my opinion of whether or not I believe this will be good for the country. Overall, with a national debt approaching $20 trillion, we are in no position to be offering a tax cut. Anything done should be at worst, revenue neutral. But then, if a proposal is revenue neutral, then for every winner, there will be a loser. We shall see...stay tuned.