These final days of 2017 are, for me, not unlike the closing of every previous annus: I’m on the phone with my accountant, or back-and-forth e-mailing with her, seeking guidance, reminders, on what I need do before December 31, the end of the calendar year and also my fiscal year. I am a journalist, yes, but self-employed, a (quite small) businessman; thus there are things — checks to be written, documents to be filed, forms to be submitted with Postal Service certification of date mailed, etc. — and I want to cover all the bases. Which means, take advantage of every business deduction that’s lawful. Of course, the same goes for our personal finances, and perhaps yours: getting such as charitable or medical deductions postmarked.
In (perhaps) the last e-mail I sent her this year I added a post-script: “If Trump gets his, I want mine.” I have no doubt she knew what I meant. Whether I get it, whether you get what Trump gets, is quite unlikely. Unless you are in President Trump’s tax bracket, the one shared by a near-microscopic segment of the U.S. population, which number does not include me, I won’t get “mine,” not really.
As this column is written it appears all but certain that Congress will give Mr. Trump the Christmas present that he and many others of his station have ached for since his election: the most significant, sweeping revision of the tax code, personal and corporate, in three decades. It will be expensive. It will be paid by the vast majority of Americans, all but a sliver, though it may be some time before they appreciate the actual cost.
To be certain, almost everyone, Arkansans included, will get a tax cut. Just as certain, most of them will barely notice it if at all.
Only hours — hours — before voting began in Congress on the final version, completed only three days earlier, the non-partisan Tax Policy Center, scrambling to analyze the legislation’s impact, reported the impact to earned incomes:
• $25,000 or less will mean a cut of $60;
• $49,000 - $86,000 brings a reduction of $900;
• $308,000 - $733,000 takes the tax savings to $13,500;
• $733,000 and up will average a $51,000 bonus.
Bear in mind the “and up” and “average” tax cut in that last calculation. For those in Mr. Trump’s situation, those way up, the $51,000 even now is chump change. Their tax savings will mean millions — hundreds of millions over the next decade.
In the same period, by all reasonable and responsible estimates, the budget deficit and the national debt, which all “conservatives” love to lament, are predicted to soar. This tax bill, these conservatives nonetheless insist, will pay for itself through increased economic activity. No doubt the economy will be juiced, some. After all, they note, the Reagan tax cuts of 30 years ago revived consumer spending. They do not (they rarely do) note that budget deficits and the debt skyrocketed, compelling the great tax-cutter to agree to an almost immediate series of tax increases to curtail the red ink.
Understand that the individual income tax cuts are temporary, meaning that taxes for more than half of American households (probably more in Arkansas) stand to actually increase by 2027. Oh, we’ll extend them when time comes, say the bill’s advocates, as perhaps they will; after all, the Bush II reductions were extended. But continuing the middle-class and lower cuts will only add to the red ink.
Consider now that the corporate tax reductions are permanent. The congressional majority argues that the cuts will “jump-start” the economy, free business to create new jobs and bring home billions in money corporations have in overseas deposits, immune to, or subject to lesser, taxation. They do not acknowledge that the Fortune 500 companies alone are sitting on $2.5 trillion in cash and presumably could hire at will. They do not acknowledge that corporate profits are at record levels while wages have stagnated for decades, nor that the last cash recovered from abroad went mainly to shareholder dividends, not jobs. As for juicing the economy: we are in one of the longest recoveries on record, stock prices are reaching highs daily, and the Federal Reserve, concerned about overheating, is steadily raising the cost of borrowing.
The legislation does nothing to address payroll withholding taxes for Medicaid, Medicare and Social Security, which, for 62 percent of American households, exceeds what they will continue to pay in income taxes.
My accountant: It would appear that her fee will no longer be deductible.
In fact no one person knows exactly what is hidden in the new tax law; even some of its congressional supporters acknowledge that much. But know this: your congressman and both your senators gave the bill full-throated approval