Tax season is here. Ready? There were few new tax laws passed in 2019, but one is significant. As of January first of 2020, Required Minimum Distributions (RMD) from retirement plans must begin the year someone turns 72. Previously, RMDs generally had to start in the year someone turned 70 1/2.
2019 was the second full tax year since the Tax Cuts and Jobs Act (TCJA) was passed in late 2017, so we now know what the actual impacts of TCJA has been.
TCJA provided permanent massive tax cuts for corporations and the very rich. It also provided small temporary tax cuts for the rest of us. It took away some deductions and personal exemptions while increasing the standard deduction. IRS Code Section 199A reduced self-employment and rental income by up to 20%.
In early 2018 I predicted the follow impacts from TCJA. Unfortunately, most of my predictions were correct:
The limits on certain deductions and the higher standard deduction has discouraged charitable giving.
TCJA reduced corporate income tax revenue and enlarged the annual budget deficit. Corporate income tax revenue was $297 Billion in 2017. In 2018 it was $204 Billion, a decrease of 31%! This had not happened since 2009 when the economy was recovering from the 2007-2009 Recession. Individual income tax revenue rose 6% in 2018. Yes, supply-side economics is still a fantasy.
Republicans have become “fiscal conservatives” again, blaming federal deficits on Social Security and Medicare while ignoring dramatic revenue reduction and increased military spending.
For those who dare read more, I’m including links to several articles. Read them if you dare.