Congressional Sleight of Hand
The Tax Cuts and Jobs Act (TCJA) of 2017 passed by a GOP Congress gave generous, extended benefits to corporations and a bone or two for a limited time to individuals. Yes, take-home pay for workers increased. But the payroll rate cut will be taken back after 2025 and many tax benefits previously enjoyed by individuals have been eliminated or reduced at least until 2025.
This is a way of partially funding the tax cut act of 2017, since the cuts are largely based on deficit spending. There are other ways in which individual taxpayers will continue to pay the bill on behalf of corporations through the year 2025. Here are a few of the ways:
- Payments to an ex spouse pursuant to a divorce settlements signed after December 2018 are no longer deductible. Although recipients no longer report such payments;
- Individuals can no longer exclude cancelled debt from income;
- Medical expenses can only be claimed to the extent that such costs exceed ten percent of your adjusted gross income. It used to be 7.5%;
- A limit of $10,000 total for deductions of property tax as well state and local income or sales tax, which may not be an issue for lower tax areas of the country but devastating for states like California and New York;
- Interest on home equity debt is no longer deductible unless used to buy a home, or to build or improve the residence. The ceiling on such debt is $100,000 generally speaking;
- Suspension of miscellaneous itemized deductions subject to the two percent of adjusted gross income limitation. Examples include unreimbursed employee expenses, tax preparation fees, investment fees and expenses.
The Congress of 2017 was very vocal regarding increased take-home pay for wage earners but somewhat muted about reduced tax benefits for individuals. Some segment of the economy has to pay for subsidies enjoyed by oil companies. They need our assistance one supposes.