Tax Attic: Income Tax Reform

I am an optimistic person. Having been a Detroit Lions and Tigers fan since I was old enough to be a fan, I have had lots of practice at being optimistic and, of course, lots of disappointments. I am not an optimistic person only at sports, though. I believe that, in the long run, things will work out for the best.

We have had a bit of a tough run in Rockford over the last couple of years starting with the loss of my dear friend and City Manager Michael Young; the on-going saga of the Tamarack Run Condominium project; continuing with the fire that consumed the one and only Hotdog Hall of Fame and substantially all of the Corner Bar; and now includes Wolverine and the water issues mainly in Plainfield Township.

What’s to be optimistic about?

First, the City Council hired Thad Beard, an experienced and capable City Manager to follow Michael Young. Thad has been on the job for two months now and has proven to me that he can roll with the punches with the best. Having been a City Manager in a different city and environment, Thad brings a different perspective to the issues. He is instituting programs that 20 or 30 or 40 years from now will be looked back upon as innovative and creative. The residents of that day will be thankful.

Second, the vacant houses on Monroe are being demolished and the T.R. Condominium project is off to a long-awaited start.

Third, even though not much has been going on outwardly with reconstruction of the Corner Bar, there has been a tremendous amount of behind the scenes work getting accomplished. The plans are now in place and we will begin to see activity with construction projected to be completed late next summer. The plans are very nice and I can hardly wait to be able to meet a client for a hotdog and a beer at the new Corner Bar.

Finally, even though the water issues in mainly Plainfield Township seem to be expanding, there is some good news. First, we can all be thankful that Wolverine is a respected corporate member of the community. Second, we can be thankful that Wolverine is still in business. Many times, in these instances, the company involved has just simply gone out of business. Third, I believe that Wolverine also has a long view of the world and will handle this situation with a long-term outlook and result in mind.

Ultimately, I am confident that the Detroit Lions will eventually win a Super Bowl; the Tigers will be World Series winners; I will bowl a 300 game and make a hole-in-one in golfing. It’s more fun being optimistic.

 

Another area that we have been hearing a lot about lately is income tax reform. That was one of President Trump’s main campaign promises and he is doing what he can to fulfill that promise. The problem he is running into is that Congress makes the laws, not the President, and all of Congress isn’t quite ready for tax reform. As we have seen, the President can make Executive Orders but there are some areas, such as income tax, that an Executive Order just wouldn’t be applicable. Congress has to act or there is no tax reform.

We tax professionals are hoping that either something is done quickly for 2017 or they all just wait to do a more complete job and make it effective for 2018. I will say that, in the past week, we have received telephone calls and emails from extremely concerned taxpayers that they will be paying more tax under President Trump’s plan. That may be true for some taxpayers but from what I have read, I believe most people will benefit.

Next week, we will go over some of the provisions that most likely will become part of a new law. However, the opening provision I want to get into this week’s column is that the standard deduction will be almost doubled for all taxpayers. Single taxpayer’s standard deduction will increase from $6,300 up to $12,000. Married taxpayer’s standard deduction will increase from $12,600 up to $24,000. These increases will cause many taxpayers who currently itemize to just take the standard deduction and be better off because of it. Of course, there are many, many more potential provisions and we will talk about them in the coming week. 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