There is no free lunch
To the editor:
I’ve been a certified public accountant for over 40 years, was raised in Saranac Lake and still have close ties to the area. Here’s why I think the Senate tax bill is unfair to the average American.
As an accountant, the numbers tell me a story and show me that there’s no free lunch. As Lee Keet remarked in his recent letter to the editor, money is being shifted from the poor, sick and middle class to the wealthy.
What’s the real game plan? First, a tax bill is created that adds $1,447 billion or about $1.5 trillion to our existing $20 trillion national debt and primarily benefits the wealthy. To offset the increased national debt, Medicare, Medicaid and other social service programs are then slashed, possibly forcing rural hospitals to downsize and merge, and nursing homes to refuse Medicaid patients. Finally, by removing a tax on the wealthy that generated Medicare funding under Obamacare, multi-millionaires gain additional benefits at the expense of everyone else.
The shell game
Based on my reading of the tax bill and supporting documents, here are additional consequences for what I believe will actually be $2,038 billion in tax cuts that result from borrowing $1,447 billion and implementing these three strategies to cover the remaining $591 billion:
¯ Removing the individual health insurance mandate to save $318 billion in government subsidies causes 13 million low/middle-income taxpayers to lose health insurance, drop preventative care and use higher-cost hospital emergency rooms for treatment, forcing everyone’s insurance costs to rise.
¯ Changing how inflation is measured generates another $134 billion.
¯ Everyone loses the approximate $4,000 deduction for each household member and enjoys fewer deductions for taxes, medical and other expenses if they itemize. While they benefit from a doubling of the standard deduction and the overall tax rate cut, the real winners are the wealthy and the government, which gain $139 billion from this shell game.
The wealthy with estates gain $83 billion because the current $5.5 million that can be left or gifted to beneficiaries is doubled.
Higher-income individuals subject to the Alternative Minimum Tax enjoy another $636 billion due to an increased deduction.
Higher-income families with children benefit the most from the $556 billion generated by doubling the Child Tax Credit, while lower to middle-income families are unfavorably impacted by a change in how the refundable portion is calculated.
Businesses with direct income or from pass-through entities save $340 billion, which has merit but could result in payroll tax costs, loopholes, creative tax planning and abuse.
Corporations net $425 billion, and their tax cut is permanent, unlike the individual tax cut. Will this help employees or owners/stockholders?
As a youngster, I took the benefits of living in Saranac Lake for granted. As an adult, I realize the devil is in the details, especially how they impact people and businesses.
The president and I both received an undergraduate degree from the Wharton School. You can imagine whose major was accounting and whose was marketing.
Harry J. Stuart, CPA