So much for that tax cut we’ve all been hoping for—it looks like the swamp in Washington is alive and well. If this is a tax-cut for the rich, imagine what a tax increase would look like. Don’t get me started.
And for all those saying this is a tax cut for the rich, well, the last time I checked you need “money” to get a tax cut—too many Americans have no skin in the game.
Americans who I work with—the successful Americans like you—are either still working and saving for retirement, or are already retired and could use a break.
Couples in their 50s saving for retirement? Ha! Finally, the kids are through college, you’re making a good combined income, and are basically in the fourth-quarter of your earnings-life. You need to finish strong. This tax deal is hardly a game-changer. You’re still looking at a 35% bracket, and let’s not forget about that 3.8% Obamacare tax.
Retirees have the government to thank for zero percent from the bank. Now we learn dividends and capital gains taxes will not change—staying at 20%—and let’s not forget about that 3.8% Obamacare tax. Oh, and if you’re over 70-and-a-half, you’re still required to take a distribution every year from your IRA.
How about your home life? State and local taxes? Sorry, you can’t deduct more than $10,000. Mortgage interest on that second home? Nope. Why? Because Washington will never understand how the successful class lives.
As a member of the successful class, you know how to save money for a future where having more of it buys you a little freedom. That takes time, hard-work, smart investments, and sacrifice. It takes planning.
But suddenly, buying a second home, for example, an investment that takes planning is now more expensive because the rules are being changed mid-game. We’ll follow the rules, but don’t keep changing them.
And don’t even get me started on the corporate tax cut. It’s going to pass right over most small business owners in America. Many will take it in the neck paying 39.6%, and, let’s not forget, the 3.8% Obamacare tax.
So, if you’re a successful, middle-aged American couple, recovering from sending your kids to private school because the public one was not an option, and you are finally making some good money while paying a second mortgage on that condo down south for when you have enough to retire—this is not a tax cut to like.
And if you are retired, living off your dividends and/or capital gains, there’s not much to get excited about for you either.
It’s business as usual for the big players in Washington and corporate America.
The swamp is alive and well.
E.J. Smith - Your Survival Guy
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