Taxes: New Chapter on Old Story

Tina Haapala |

By Gary Silverman, CFP®


If you are wondering what’s going on with tax reform, I was going to list out the proposals here for you.


Not anymore. I’ve had to rewrite this three times now and I know it will be wrong by the time you read this. If you really care about the details, do some research. But try to read facts, not opinions. Make your own.

Instead I’d like to talk about the three basic variables of our taxes:

First, there are the taxes themselves. That’s our country’s income.

Then there is the budget. That’s our country’s expenses.

And finally there is the debt (or surplus). That’s the result of how equal the first two variables are.

When it comes to taxes, we all know a universal truth. They are unfair. We pay more than we should and “they” pay a lot less, if anything. This needs to be fixed. Of course, it depends on the vantage point of the “we” as to how to do this. Cutting our taxes is a start. And to be fair, we don’t care if they are raised on anywhere else, but we will for the next bit.

When it comes to the budget, we know that the government needs to do something about X and stop wasting money on Y. For example, we know the government institution that employs our neighbors is just fine, but the one the next county over is a waste or that the programs that keep our friends healthy and safe are vital, the others, not so much. How can we make everyone happy when each of us has a different take on what is good and what is bad?

Then there’s the debt. Debt is bad. But if for some reason you can’t keep or expand the budget in the areas we think are important without raising our taxes, well then, I guess we can put up with more of it.

In summary: We all want our taxes to be lower. We all want “our” government funded programs fully funded if not expanded. We don’t like more debt, but if we don’t actually feel the effects of it, then the first two points are the ones we’ll care about.

Here’s the reality: There are three variables. You can make one or two of them go in the direction you’d like, but that will mess up at least one other one. Lower taxes and either benefits go down or the debt goes up or both. Want to balance the budget? Then you’ll need a lot of benefits to go down while taxes stay the same or go up. Sorry, but you can’t have your cake, eat it too, and give it as a gift.

Right now, what I see coming from the Republicans (Democrats are not invited to the current game) has us lower taxes somewhere while not having too much an effect on benefits (they get shuffled around with defense spending being a big winner). The result will have the debt keep soaring.

Would any of this affect your tax bill in 2017?  No.  The provisions, if enacted, would impact the 2018 tax year.

What are the odds of passage of something…anything?  And when?

Who knows? 

Gary Silverman, CFP® is the founder of Personal Money Planning, LLC, a Wichita Falls retirement planning and investment management firm and author of Real World Investing