- The new law was mostly about making the U.S. corporate tax rate competitive with other countries through a massive cut. Nations are now apparently in a “race to the bottom” to keep corporate profits in-country by lowering their rates, and this bill only ups the ante.
- The corporate changes will likely face challenges under World Trade Organization provisions.
- Many of the individual tax benefits are temporary and set to expire in the coming years.
- High cost “blue state” efforts to blunt the impact to their taxpayers from the loss of state and local tax exemptions are unlikely to be viable in the long run. Whether states set up a charitable fund for people to pay state taxes (as California is seriously contemplating) or shift income taxes to employers (as New York is investigating), the IRS and/or Congress is likely to challenge these arrangements, creating uncertainty going forward that most taxpayers won’t want to bear.
- In the long run, the best way for states to minimize the impacts of the bill on their taxpayers is through new federal legislation.
- The bill is incredibly complex, and because Republicans never held a single hearing on it, it’s riddled with errors and oversights that will need to be corrected.
- Some taxpayers will be in for a big shock, such as those who recently got divorced and were planning to deduct alimony payments but can now no longer do so. Overall, most people have no idea at this point how the law will affect them.
Ultimately, this is a good time to be a CPA, as Californians (and most Americans) will be sifting through the changes in this law for months — if not years — to come.
Whether you live in the Bay Area or not, local public radio stations like KALW, where I host City Visions, offer vital perspectives and reporting during a time where dependable, nonprofit news can be hard to find. KALW is in the middle of its pledge drive this week and next, so I encourage you to go to KALW.org and click on ‘donate’ up top on the right to support the station.
As an example of KALW programming, this week I had the pleasure of interviewing HBO’s Silicon Valley star Matt Ross for an hour on City Visions. He’s a local actor who can share his experiences and insights with our listeners, live in the studio, all because of the platform KALW provides. It’s an hourlong discussion with the community, and it’s typical of the kind of programming on KALW.
I hope you’ll consider supporting the station. And as always, thanks for listening to KALW and shows like City Visions!
The new president sworn in last Friday caps one of the most tumultuous presidential election campaigns in our country’s history. Amid allegations of foreign interference, proliferation of “fake news,” gerrymandering, voter restriction laws, government investigations of the candidates and their advisors, and leaked emails, Americans trust in government and the media is at an all-time low.
Yet trust in these institutions and in a free and fair election is a bedrock principle of our democracy. With declining confidence in this system — and its vulnerabilities on harsh display in this last cycle — what is the future of democracy in America?
- Yascha Mounk, lecturer on Government at Harvard University, a Fellow in the Political Reform Program at New America, and a Fellow at the Transatlantic Academy of the German Marshall Fund
- Paul Pierson, the John Gross Professor of Political Science at the University of California, Berkeley.
For those outside of the Bay Area, you can stream the broadcast here. I hope you can join and bring your questions to the show!