Letter to the editor, by: Rich Miller, CPA, Delran, NJ
I have been listening to the politicians that are talking about this year’s Income Tax Reform and analyzing what information we know about it so far. Basically, income taxes paid by non-wealthy individuals and families will go down if you do not itemize deductions. The bill will be released for public review tomorrow [11/3/2017 – now released], so the analysis below is based on an understanding that certain existing tax deductions will be taken away. By removing deductions for state and local taxes, mortgage interest, student loan interest, medical expenses and donations, most individuals and families will end up paying more taxes. Besides increasing the tax burden, I have listed impacts we can expect.
Loss of deductions of mortgage interest and real estate taxes this will discourage home ownership. The Income Tax System is more than a way to get revenue into our government, it is also a way to encourage desirable activities to help people and the economy. Real estate will be harder to afford for current homeowners, and harder to purchase for prospective homeowners. This will drive down home values. As values drop, homeowners will challenge their assessments, which will reduce taxes paid. This will decrease money coming into our schools which are already having difficulty. Our schools are our children, and our future. This is not good for anyone.
Loss of deductions of student loans is a direct hit against education. It will make college less affordable to more people, again stealing our ability to obtain better jobs and putting us at a disadvantage in the global economy. This is stealing our future and is not good for anyone.
Loss of medical deductions will strangle families with great medical need. Currently medical expenses are only deductible if they are greater than a certain percentage of income. Most people cannot benefit from this deduction unless they have sustained large out of pocket medical expenses. For example, a family with decent health insurance but still has out of pocket medical expenses over $20,000 per year, will suffer. The tax savings on that amount helps to slow the financial decline significantly. The loss of this deduction, as well as the proposed cuts to Medicare and Medicaid, will be particularly hard on people with disabilities and the elderly.
Loss of Charitable Deductions will reduce charitable giving to important organizations, which will negatively impact all Americans.
The Johnson Amendment, which prohibits religious leaders from advocating candidates or political positions during services, will be ended as part of this proposal. This is clearly unacceptable for a number of reasons, and has no place being snuck into a Tax Reform proposal.
The final point I would like to make is, I think there will be much fighting to save some of these deductions, and it will be successful. Although that is a big win, it is not a loss for the wealthy. The non-wealthy will still sustain huge losses with the lower tax rates for the wealthy that will make our deficit grow by $1.5 trillion dollars over 10 years.
Presenting this Income Tax Reform proposal will get everyone riled up and fighting over how it impacts us. Then certain members of Congress will appear to fight for a few deductions and win, intending to promote that fight later for re-election. But the reform they really want is lowering tax rates for the wealthy, which will go unchallenged as we are being distracted by the need to fight for our deductions. That is the bait and switch.
Editor’s note: The opinions in this letter are the author’s only.
Citizens’ Media TV encourages all viewpoints. Please submit your letters to the editor to email@example.com