It’s still not your money
Back when tax reform was a bill before Congress I submitted a letter to the editor “Let’s Do the Numbers.” My numbers turn out to be incorrect.
Subjected to a deluge of conflicting information, I, like most Americans had (and in some areas still have) an incomplete understanding of this now enacted tax code. However, it is still doubtful that we middle income earners are going to have more money in our pockets in the end even after I corrected my numbers. Here are some of the factors that may pick our pockets.
¯ For 2018 tax returns: Your 2018 return could be less than usual because not enough was withheld. The understaffed IRS and workplace accountants are not ready for the tax changes.
¯ Bracket creep: Sounds ominous, doesn’t it. It is. Initially you will have lower taxes but eventually you’ll be shifted into a higher tax bracket and pay higher taxes even though your income did not increase.
¯ Adjusted gross income changes: The amount you can subtract from your taxable income could be reduced because some of the previous deductions have been eliminated. The House bill proposed eliminating the student loan interest and tuition and fees deduction, but they survived, this time.
¯ Health insurance: Because the health insurance mandate penalty was eliminated the number of the uninsured will rise. Your premiums will rise to make up the loss of revenue and to cover the increased hospital costs due the hospital passing on the cost of taking care of uninsured patients who cannot pay.
Medicare and Social Security budget: Loss of government tax revenue ($1.5 trillion over the next 10 years), mostly because the big payers (e.g. corporations and the wealthy) are receiving huge tax breaks, is likely to necessitate budget cuts to even such sanctified government programs as Medicare and Social Security.
¯ Property tax deduction: Those of you who pay high property taxes may be unable to deduct the full amount from your federal taxes.
¯ Individual tax cuts phased out by 2025 (or sooner): Somebody has to pay to keep the $1.4 trillion deficit from going any higher. Not big business, their tax cuts are permanent.