It’s no secret Uncle Sam has been living above his means. He hasn’t balanced his budget since 2001. He put trillions on his American Express card to pay for Covid relief. And now, as he struggles to extend the Tax Cuts and Jobs Act of 2017 later this year, he’s fighting to flesh out a budget resolution that authorizes $86 trillion in spending through 2034. If he was your real uncle, you might be googling “Debtors Anonymous” meetings in your neighborhood.
taxrelief
Pizza Pizza
In 2016, the curtain rose on Ben Affleck’s movie, The Accountant. Spoiler alert: he’s not just an accountant. Sure, the character Christian Wolff spends his workdays laundering money for the mob. But what accountant doesn’t do that? (Well, besides us.) No, the real surprise is that he’s a stone-cold killer, taking out 28 characters in the course of a meandering, two-hour plot. If you watch closely enough, you’ll even see one guy get killed twice.
Cool Cats
Someday, accountants will be cool. I don’t just mean in the “Oh, you’re majoring in accounting, that’s cool” sense. I mean Steve-McQueen-cruising-through-Rome-on-a-Vespa cool. Someday, little kids who dream of growing up to be accountants will collect bubblegum cards with Big Four partners’ pictures on one side and detailed career stats on the back. (Tax dollars saved, by year! Endorses checks: right-handed!) When they get to high school, they’ll be as popular as the quarterback of the football team and the Homecoming Queen. (56.8% of CPAs are women.) Someday, cool college kids will skip fraternities to party with the Accounting Club.
2025 Tax Forecast
2025 promises to be a big year for taxes. Right now, the individual provisions of the Tax Cuts and Jobs Act of 2017 set our current standard deductions and tax brackets. Those rules expire, like Cinderella’s carriage at midnight on December 31. At that point, if Washington hasn’t extended them, taxes go up for as much as 80% of Americans. That’s an unacceptable result for Democrats and Republicans alike. And it promises a bruising effort ahead as Congress weighs continuing the cuts against a $36 trillion national debt.
Taxing “Climate Criminals”
Last week, we discussed how the 2017 tax cuts are scheduled to expire at the end of 2025—and how the election results make it likelier that Washington will extend them. Here’s the problem: it won’t be cheap. The Congressional Budget Office estimates extending the current rules will blow a $4 billion hole in the budget over the next 10 years, along with an unknown amount of higher interest payments on the new debt. That’s making life difficult for a new administration that also wants to eliminate tax on tips, overtime pay, and Social Security benefits, along with other giveaways.
Gaze Into Our Crystal Ball
As President Donald Trump’s first year in office drew to a close, Washington gave us the Tax Cuts and Jobs Act of 2017. That legislation reformed the system in conventional Republican fashion by broadening the base (subjecting more income to tax) and lowering rates. On the corporate side, they did this mainly by closing avenues to avoid tax on international income. On the individual side, they did it by raising standard deductions and eliminating or limiting personal deductions such as mortgage interest and state and local taxes.