About That Tax Plan….

So, the President’s new tax code outline is out, and it promises something for everybody.

As I see it, it promises a lot more money for corporations and for the rich, and a higher tax rate for people whose income comes from a paycheck.

Didn’t he say that? I guess I missed it.

It is a fine example of his campaign style, which is to promise things without actually using any nouns.

For instance, here are some of the things he didn’t mention. The biggest thing is, well, “income.” There is nothing in his proposal - and nothing that anyone said at any press conference - that says just what income is.

We all know that if you work, you are taxed on your income. But what happens when you sell your shopping mall to someone who wants to knock it down to build an office complex? Well, you make something, but how much? What if the buyer pays you over 10 years? What about depreciation? And what about just trading that shopping center for some other property the new builder owns. Then no money changes hands at all - presto no income! But you now own something that brings in a lot more money now, and the corporation that bought your shopping center isn’t getting any money at all until it starts renting out units.

That’s called a “like-kind” swap. It’s done all the time. And to get really sticky, let’s say the  new builder doesn’t rent out units at all, but gets stock in the company that is buying the office space. How do we value that?

Well as they say, the devil is in the details, and we didn’t hear any of those details in the President’s proposal.

Well, we did hear one. Get rid of the Death Tax.

Oh, how unfair to have to pay a tax just to die!

But wait, it’s not really a tax on dying. It’s actually a tax on the estate you leave to others. And if you give all your wealth to a charity, they won’t pay anything at all.

So, how does it actually work? Well, if you leave someone up to $10,000, they will pay a tax of absolutely nothing, Leave them $20,000, and they will pay $1,800. Top rate is 40 percent, or $345,000 if you leave someone $1 million.

But, good news for all. There is an exemption. You know, the kind of thing that helps those poor farmers who inherit their parents' farm but have to sell it to pay the death taxes? Didn’t anyone mention that?

Well, the one-time estate exemption is currently $5.45 million. There are lots of calculations you have to make to get those millions in your pocket, but - bottom line - the first $2.8 million of the death - pardon me, the estate - is absolutely, completely, totally death tax free. Wonder how many people you know will be inheriting $2.8 million? And will any of them hire an accountant?

Now let’s look at the other fact that slipped out. Cut the brackets!

The President’s wise advisors want to cut the number of current tax brackets from seven to just three. Oh, how simple. We will have to look at a smaller chart to figure out what our tax rate is. And he promises to double our standard deduction. Sounds good, so far.

Now there are seven tax brackets, from 10 percent to 39.6 percent. He would change that from 10 to 35 percent.

But what he didn’t say is when those rates would kick in. Right now there is an IRS chart showing the seven brackets, but there are 14 income levels - it’s different for single filers and married people - and there are standard deductions. There’s also a little thing called the Pease limitation, which is what makes a lot of rich people hire those tax lawyers.

Most people don’t worry about it, because it only kicks in for single people earning at least $261,500 and married folks bringing in $313,800.

So what bugs me about this all so far? Well, for one, I would lose the deductions I take for living in New York. I could no longer deduct my state tax or my county tax or my town tax. Or my school taxes or the library tax or any other tax. That big doubling of the standard deduction Trump offers will get eaten up long before it reaches my pocket.

Oh, and did I mention that no one will be deducting medical expenses any more. That’s a big deal, especially since the President still wants to get rid of our health insurance.

Now, I think it’s fair to ask how the Trump family would fair under his tax proposal. You know, how much would the kids get when he dies?

Well, for that question his people gave one clear, simple answer.

None of your business.