Donald J. Trump is Tweeting about tax reform.
The White House website has a video explaining how the tax code is broken.
House Speaker Paul Ryan says Congressional Republican's tax reform plan outline will be released in a couple of weeks.
Meanwhile, pundits have been honing their prognostication skills, attempting to tease out tax possibilities and their potential effects.
But despite all this action, the bottom line is that it's still just a big tax guessing game.
Boggling tax possibilities: My head is full of speculation from all I've been reading about an eventual Trump tax plan.
Will it be large-scale tax reform a la the last such change in 1986 or just tax cuts? I'm leaning toward the latter.
Will Democrats play any real part in the process? Or will the GOP's Big Six negotiators — Senate Republican leader Mitch McConnell, House Speaker Paul Ryan, Treasury Secretary Steven Mnuchin, White House economic adviser Gary Cohn, Senate Finance Committee Chairman Orrin Hatch and House Ways and Means Committee Chairman Kevin Brady — dictate the final look of a 2017 tax bill? I'm thinking some bipartisanship, but only at the edges.
Will that tax plan show us the money? Or will promised/expected tax cuts be offset by elimination or at least reduction of some popular deductions? This is a tough one.
Despite Mnuchin's continuing vows that any tax plan will be revenue neutral, there are committed forces in Congress and various business sectors (along with their lobbyists) ready to go to the mat for many existing individual and businesses Internal Revenue Code breaks.
If they're successful and some deductions remain, the GOP then faces dissent from budget hawks within its own ranks who are concerned that Trump's touted "greatest tax reduction in the history of our country" would add, by the Tax Policy Center's estimates $3.4 trillion, to the country's deficit.
Timing is everything: Then there's the matter of when any tax changes take might take effect.
Congress could opt to have them apply beginning Jan. 1, 2018, for the coming tax year.
Or lawmakers could make them retroactive to Jan. 1 of this year, meaning folks who would see tax benefits would get them when they file this year's returns next spring. That retroactive option is a politically popular one.
From a tax planning standpoint, however, retroactive tax changes tend to be a royal pain in the ass.
What if you already made tax moves this year, either by choice or necessity of timing, based on the current tax laws? Then they are changed. It's highly unlikely you can go back and undo your moves to reconcile them with a late-in-the-year tax change.
Even if you're holding off on making tax moves, you're facing a literal time limit. What happens if Congress, as it has done so many times in the past, pushes tax action until the very last day of the year? Do you pull the trigger ahead of a law change and hope it all will work out fine?
And if Congress does make late changes, will it provide a grace period going into 2018 to make 2017 moves to comply with new retroactive laws? It's done that in the past on a limited basis, notably back in 2013 for the required minimum distribution direct donation to a qualified charity.
Or will Congress give taxpayers the option to file 2017 returns using the old laws that will have been in place for most of the year by the time any tax action is taken? Not likely, but you never know when it comes to those 535 folks in Washington, D.C.
This, my friends, is the complete opposite of tax simplification, which is often espoused as a major goal of any tax code rewrite.
Tax winners and losers: Yes, any time tax laws are changed, some people win and others lose. And much of that winning and losing is predicated on the timing of the laws.
When that happens, we all just have to pull up our big boy/girl pants and soldier on regardless of how the law affects us.
In the spirit of full disclosure, the retroactive possibility has caught my eye this time because it could cost me tax-wise. For the first time ever, medical issues this year will mean the hubby and I can claim some of our doctor and hospital costs this year on our Schedule A … if the current itemized tax rules remain.
We've never ailed enough before (ah, aging) to run up sufficient medical expenses to clear the itemized deduction hurdle, which now is 10 percent of adjusted gross income. (For readers who are alarmed by this vague info, thanks for your concern and not to worry. We're fine now.) This year, however, we would.
But a possible increased standard deduction and limits to or loss of itemized options could mean that we once again won't get any tax break for our medical costs.
That definitely would be the case if tax changes do away with the write-offs for real estate taxes and/or state and local income or sales taxes. If we're not able to claim our ridiculously high Austin/Travis County property taxes, our itemized expenses will be less than the standard amount that's been floated, meaning we would claim that instead.
I must admit that one consolation I've been taking from our larger than expected medical costs is that at least we'd be able to write them off on our 2017 return.
Time will tell: So I'll be watching what happens on Capitol Hill for personal as well as professional tax reasons.
Any action will determine whether, as I've done for decades, pay our property taxes in December so I can deduct the amount this tax year or wait to pay until nearer the levy's next February due date. If I wait, I'll have more to spend during the holidays.
Yes, I realize that the standard deduction would be easier and the bump up of that amount would be good for many filers. But it likely would still be less than our total Schedule A amounts this year if all our expenses — property tax, mortgage interest, state/local sales tax, charitable gifts and now medical costs — are allowed as they are under the current tax code.
Personally, I'm hoping for tax reform that takes effect in 2018. Of course, I don't have a personal lobbyist on retainer in D.C. so I'm at the mercy of Congress and the White House.
That's never a good feeling, and it's especially discomfiting when it comes to taxes.
You also might find these items of interest:
- Americans offer a counter-intuitive tax reform plan
- Mnuchin's tax promise looks like it was made to be broken
- BAT strikes out and other insights from the GOP's latest tax reform guidelines