The "New" Tax Bill or Why Nobody Reads the IRS Tax Code

              Reading the tax code is no fun. I know you haven’t done it. Neither have I and I have spent my entire career in tax law. Sure we know the concepts and how to research the details, but nobody, nowhere, no how has ever read the entire Internal Revenue Code. If you have the entire document under your belt send me a note, I will buy you a drink or three. That’s just the way it is. We know what we know and don’t know what we don’t know. Senators and congressmen who will be working on the tax reform bill that the president is attempting to get through by Christmas (or is it Thanksgiving?)won’t read much either. A typical tax bill can run hundreds if not thousands of pages with explanations. They are not going to read it. Even if they did by chance read some they won’t understand it. But they will vote on it and do their best to get it enacted into law. The Senate took a significant step toward rewriting that tax code on October 19, 2017 with the passage of the budget blueprint that would protect the $1.5 trillion tax cut from the Democratic filibuster, so says the New York Times. But as a matter of fact no one on or off Capitol Hill has seen the tax overhaul bill that Republicans are drafting behind closed doors. The Times continues: the swift pace to complete, release and quickly vote on a tax cut is aimed at leaving little time for the type of dissent that has scuttled previous tax proposals. Senators have set up a rapid series of hearings and votes with the aim of getting a bill to Pres. Trump by Christmas.( Thanksgiving?) All of this is ridiculous. What is the rush? Why are we Americans not entitled to have our legislators at least think, discuss and at a minimum read some of the volumes that will become our new tax law? It’s all about idiotic campaign promises and midterm elections, not creating a better tax system. So at the moment all we have is the scuttlebutt of what changes could be included in this new tax world. They include individual tax brackets of 12%, 25% and 35%. Peeling back some deductions like interest on home mortgages and state and local income taxes are also up for grabs. A 25% top rate for owners of pass-through entities such as S corporations and sole proprietorships. A 20% corporate rate and the repeal of the estate tax perhaps in a phase out. I have written before about the danger of tempting taxpayers to disguise their wages as income from an S corporation or sole proprietorship to take advantage of the proposed lower tax rates. Republicans say they are working on ways to eliminate any abuse. That would include implementing a 70/30 wages to profit ratio taxing 70% of income at individual rates and 30% at the new pass-through rate. Pres. Trump on the other hand has talked about punishing taxpayers who attempt to evade their proper taxes using the pass-through scheme. “They should receive coal for Christmas. Not only would that be proper punishment, but it will also help to revive the coal industry at the same time.” Okay, that part is fake news but I couldn’t resist.