Tax Attic: Thoughts on President Trump adjusting the income tax system

One of the promises that Donald Trump made when he was running for president was that, should he be elected, he would re-vamp the income tax system. In a grand scheme, this would result in cutting taxes while also not allowing the deficit to continue growing at the Presidents Bush and Obama level of trillions of dollars per year. President Trump is finding out that’s not an easy promise to keep. It’s that old theory of unintended consequences.

As it stands, our tax system supports the rest of the federal government. Cutting tax revenue while also cutting the deficit is impossible without cutting spending anywhere and everywhere it can be cut. Putting it bluntly, everyone’s ox is going to be gored. As I understand, a hiring freeze has been placed on all of the departments and bureaus of the federal government. The figure I have heard is that 17,000 jobs will not be filled. I don’t know what percentage of employees that is of the total federal government but I also don’t think it’s 25%. I mention 25% because that is the reduction in employees that the City of Rockford has endured in the last 10 years. The State of Michigan has also reduced its staff over the same time frame. I agree with President Trump in this area. The federal government will do just fine without those 17,000 employees; maybe it would be even more efficient with 170,000 less.

However, it takes more than cutting staff to solve a trillion dollar deficit. We are seeing some of the other cuts being proposed such as cutting Department of Agriculture subsidies, reducing the Environmental Protection Agency budget, cutting the Department of the Interior budget and lowering the Internal Revenue Service’s budget. A few million dollars here and a few million dollars there and, after a while, it adds up to real money.

We do have to be able to put up with a smaller federal government but cutting the budget of the IRS may not be the best idea. In fact, I believe it is similar to another old saying, cutting off your nose to spite your face. I know it’s popular to beat up on the IRS but it may not be effective. It is the agency that collects our tax money. It is in charge of enforcing the tax laws as well as dealing with all of our identity theft issues and fraudulent tax return issues. These are large and important issues. Since the IRS has “Service” in its name, it also fields millions of questions every year. Cutting this particular agency’s budget might not be the best move.

We shall see how this all plays out but I do believe we can’t keep increasing our deficit at the trillion plus dollar rate without eventually going bankrupt. Something has to change and it looks like President Trump is willing to give it a shot.

This coming Saturday is the annual Chamber of Commerce’s Rockford Expo. It’s held at the High School from 9am-3pm. There will be over 100 businesses ready to show you what services and products they offer to Rockford-area residents. Action Tax Service is one of the businesses that has had a booth at the Expo every year of its existence. It is a great event. This year, the Chamber of Commerce is also awarding three scholarships at the Expo of $1,500 each to Rockford students. One will be given to a student for attending a technical or trade school and two will be given to students attending a non-trade school. As everyone knows, the cost of attending any of type of post-high school has skyrocketed over the past decade or so. That $1,500 will come in handy. The funds for these scholarships come from monies raised at the Chamber of Commerce’s Annual Golf Outing. These scholarships are a great reason to golf. This year’s event will be held this summer at Blythefield Country Club with scholarships awarded at the 2018 Expo. Stop in to our Booth this year on the main floor, #54, and say “hi”. This is Jerry Coon signing off.

Jerry Coon is an Enrolled Agent.

He owns Action Tax Service on Northland Dr in Rockford.

Contact Jerry at www.actiontaxservice.com