The 2017 GOP Tax Plan

Tax simplification has not been attempted since 1986, 31 years ago. The idea is simple in its glamor: Make the calculation of federal income taxes so simple that anyone can file a return on a postcard. Three or four lines is all that's needed:

1. Here's what I made.
2. Here's what I owe.
3. Here's what I paid.
4. The difference.

Unfortunately, as we discovered in 1986, a tax structure that simple often results in inequities, an unfairness that penalizes some taxpayers and rewards others as individual circumstances differ.

Enter 2017, a year after the Republicans won control of the federal government that has not been seen since the days of the New Deal. They want to make good on one of their major campaign promises: a tax cut.

To accomplish that, they are proposing a simplification plan. They will eliminate the special categories of deductions, credits, and delays (401K plans, for example) in order to double the standard deduction and lower rates.

The trade-off is that what people will lose will be more than offset by the lower level of taxable income and the rate that is applied.

Much will be dropped. Here are two run-downs:
https://www.usatoday.com/story/news/politics/2017/11/04/15-things-republican-tax-bills-fine-print-could-affect-you/829075001/

http://beta.latimes.com/business/hiltzik/la-fi-hiltzik-cruelties-gop-20171103-story.html

While informative, these viewpoints are flawed because both sources opine on the cruelty of lawmakers while ignoring the proposal's basic philosophy that eliminating special categories of tax breaks will benefit all taxpayers. What people lose in tax breaks, they will gain back through lower rates.

Of course, this has yet to be seen. But I would advise people to ignore the emotional pitch and wait for the analyses that will come from foundations and think tanks showing who will gain and who will lose under the proposal before deciding whether to support or oppose the plan.

I myself will lose the 'above the line' deduction for educator expenses; yet, I will have lower taxes if the proposal becomes law. Personally, the plan will benefit me. (Don't take that to mean I am in favor of it. I am following my advice; I am waiting for analyses to understand the full implications of what will come if the plan becomes law.)

Of most interest to me is NOT what is being dropped from the tax code, but what is being preserved or added. For example, a new education savings account for private school tuition for K-12 schools. Money placed into such accounts and then spent for private schools would be tax-free. That is something that will only benefit those who can already afford private school tuition. They don't need the tax break, but hey, as a TV commercial campaign told us long ago, "Wealth has its privileges."

I wonder what else is buried in the thousands of pages of the bill. In fact, I wonder why a simplification bill needs more than ten pages.

If I could cite another slogan, "Enquiring minds want to know."