Unintended Consequences

Businessman Buried in Paperwork

Thanks to the #GOPTaxScam, I will be paying more in taxes in 2018.

“Wait!” you might say. “I thought so-called (for now) President Trump’s tax bill was supposed to create big tax cuts for everyone and we would all be the rich 1% now, tra-la-la-la-la.”

Nope.

(Also, that’s not how percentages work.)

I pulled out my 2016 returns to try to estimate how much more, but it’s a little hard to figure precisely so far, not least of which because I am genuinely self-employed (as opposed to all the people who are going to fake being self-employed to take advantage of lower corporate rates). So while my corporate rate will be lower for 2018, I have an employed spouse, and we live in a deep blue high-SALT (state and local taxes) area. So that $10,000 cap (and yes, that’s per household, not per person) will hit us, hard. And then back up and hit us again.

Three points:

One, I don’t have a problem paying my taxes. As I’ve ranted about earlier, as citizens, we have three main civic duties: serve jury duty when called, VOTE, and pay taxes.

And, apparently unlike most Americans, I can do math and realize that if I want government services like traversable roads, bridges that don’t fall down, fire departments that respond to alarms, food and shelter for the less fortunate in this bitter cold, water I can drink without getting sick or dying, food that won’t make me sick either, and future employees who received excellent public educations, I have to pay taxes. (Multiple studies over time discover the same thing: Americans want our government programs, oh yes we do – we just don’t want to PAY for them.)

I ABSOLUTELY object to paying more taxes so that people who make even more money than I (and need them even less than I) can have tax cuts. Which is exactly what is going to be happening starting, well, right now.

Two, I can accommodate paying higher taxes. I can choose to spend less on eating out and entertainment and travel and clothes and booze and books. (OK, maybe not that last one – let’s not get crazy here.)

“Fine!” you might sniff. “Sounds like a bunch of snotty coastal elite bullshit anyway. You should be doing less of all that!”

Here’s the thing: I don’t eat out at Applebee’s. I eat out at small places I can walk to that are owned and staffed by people who live in my community.

My entertainment isn’t going the multiplex to see the latest superhero movie or to the big arena to pay big bucks for Springsteen or Beyonce tickets. I go hear local musicians play at tiny, shoestring-budget clubs with $5 or $10 covers or, sometimes, just a tip jar and the expectation that you’ll buy a drink from the bar. I have a subscription to the neighborhood theater company that’s “in residence” at the small performing arts center that’s about six blocks away, where they put on their shows in one of the black box theaters.

When I travel, I don’t stay at all-inclusives that stuff you with mediocre food and cheap booze all the day long, encouraging you to blow up like a beached whale by the lazy river pool and get skin cancer. I go to out of the way places and patronize the small businesses, restaurants, and jazz clubs there.

I don’t buy my t-shirts at Old Navy – I buy them from the studio where I take dance lessons (another small, local, independent business) and from a local, black-owned, made-here-in-our-city company.

I buy my booze from the neighborhood liquor store that’s been owned and run by the same family for three generations (and where some of them have been to our place to drink some of the booze they sold us). I buy my books at the indie bookstore that’s two blocks away.

When I cut my discretionary consumption, it’s going to have direct, immediate impact on my local community and local businesses (and local tax base).

But that’s not even the biggest problem. This is….

Three, charities are freaking out.

Rich people write big checks to big arts organizations and already well-endowed colleges and universities to get shit named after them.

Middle class people write small checks to social service agencies that help our communities, groups like food banks and shelters and soup kitchens and programs that tutor underprivileged kids or provide free legal help for indigent people.

This is the most pernicious part of the tax bill. The standard deduction is going up to $12,000 a person (and yes, a married couple gets $24,000). SALT deductions are being capped at $10,000. For a LOT of people, it’s no longer going to make sense to itemize (best estimate is that itemizers will drop from 35% of tax payers to 5%). Well, if you’re not itemizing, there goes the tax benefit of donating to charity.

“People give to charities because they believe in the work!” you might exclaim. “They aren’t going to stop just because they can’t deduct it anymore.”

Yeah, we’d all like to believe that, only there’s significant data that people give to causes they believe in because they can deduct what they give. That’s almost definitely going to result in a massive loss of funds donated to charitable nonprofits. Those charities will then have to cut programs, cut staff, or both. How many jobs will be lost? The best current estimate is at least 220,000. (For point of reference, so-called (for now) President Trump’s favorite industry, coal mining, employs only 76,000 people TOTAL.)

Quoting a recent Washington Post article:

“The tax code is now poised to de-incentivize the heart of civic action in America,” said Dan Cardinali, president of Independent Sector, a public-policy group for charities, foundations and corporate giving programs. “It’s deeply disturbing.”

Again quoting that same article in the Post:

The biggest change is expected to be among households earning $75,000 to $200,000 a year…

In other words, the exact people who keep the local animal shelter and Meals On Wheels program and arts workshop for kids with disabilities in business.

Am I going to reduce my charitable giving? I’m not planning on it, but to be honest, we’re going to have to wait and see. And that’s a real shame, because for more than 20 years, I’ve also given almost entirely locally, after I had the epiphany that $100 given to the World Wildlife Fund wasn’t even a drop in the bucket of the cost of their next direct mail campaign, while $100 given to the local wrap-around-care women’s shelter could change one of my neighbors’ lives (and I do mean “neighbor” – the nearest women’s shelter is two blocks away).

(Oh, and by the way: don’t assume you’ll be paying less, either. Just saying a lot of people are going to be unpleasantly surprised when April 15, 2019 rolls around.)

Image found here.

Like what you read? Follow me on Twitter @MrsWhatsit1.

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3 responses to “Unintended Consequences

  1. It’s hard times. I still feel that they will eventually unseat the non-president and non-vp, and maybe the country will get an actual president again before everything is screwed forever–it’s so bad that it impacts the most vulnerable and makes so many more of us more vulnerable. It’s great when we all work together more and help out locally. I love that our new home area (near Woodstock NY) has a real foundation of volunteering and helping the community, especially since tons of the folks are older and not wealthy–

  2. Also, a lot of accountants/tax preparers (who generally are small businesspeople who also support the local community) are going to get hurt when no one benefits from itemizing.

  3. Are there legal challenges to stop this insanity, like so many of the other insanities that have been proposed but didn’t get off the ground?

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