I am a farmer with a Schedule-F (Form 1040) but I paid my taxes this month. It is right what they say, farm income is down. It would be nice to have that tax cut promised by Republicans but it would be even better to have more income to pay taxes on.
Grain farmers are not making any money so the tax rate is less important until they do. The tax reform proposed takes away deductions for interest paid and deductions for other taxes paid which are much needed for farm business and I think that when we see the complete plan for tax reform that it will not be as beneficial as the hype suggests it was touted to be.
What they giveth in a lower tax rate they will taketh away eliminating deductions. That deficit is still a tough thing to get around to so there is a bunch of funny business in the GOP tax reform plan to try to deal the optics of the deficit. None of those things appear to eliminate it.
I am reading Steven Ambrose’s biography of Dwight Eisenhower. He may have well have been the last Republican President. I say that despite the fact that he expanded social security coverage, increased benefits for the unemployed and raised the minimum wage from 75 cents to a dollar/hour, Ike’s most proud accomplishment was balancing the federal budget.
He hated deficit spending believing it only justified in the rarest of circumstances. Reagan did not produce balanced budgets as the first ideological conservative President differing from Ike. Clinton was the last president to balance a federal budget. Neither Bush nor Obama spent much effort on budget balancing.
Back in Ike’s day they had a tax to pay for the Korean War. If Bush would have tried that, support for the Iraq war would have totally evaporated. Trump has no excuse other than to goose an economy at full employment for political gain. I don’t oppose tax reform if that is actually what it is. Today political leaders of both parties take deficits as normal and only fight about the things that create them rather than the deficits themselves. Republicans want tax cuts and spending on the military while Democrats want to re-distribute wealth though taxes and government spending. The fight over Obamacare is a perfect example.
Ike released his tax returns. He didn’t like doing so for personal reasons and was angry at Richard Nixon who forced his hand. Nixon thought that his opponent had skeletons in his returns so challenged him in his “checkers” speech to release them. That forced Ike to release his too.
Donald said during the election that he would eventually release his tax returns but now claims that his winning the election nixes that promise. Boy, that is the “art of a bad deal”. Everyone knows that they are being played, right?
He has used an audit as an excuse not to release them but that is bunk. My lawyer says that the only reason he would not release them is that there is something in them that he doesn’t want to explain.
I asked my accountant about the audit and the release of returns and he said that most are not really audits anymore, they are just requests for more information, and are typically triggered by something like paying just $10,000 on a $1,000,000 income where the tax rate is out of line.
If Donald’s return was under full audit I think that it would have been finished by now. It was more likely just a request for information that he is drawing out for time thinking that he will stall until there is no further relevance to their release and no one will care. People do want him to release his returns but it is not such a hot button issue for most electorally allowing him to escape.
Nixon said that politicians should make their returns public so that they can see they are not a crook. Ironically that didn’t stop him in his instance.
We will likely see which one Trump wants most, not to release his tax returns or tax reform legislation enacted as he is less likely to get tax reform without releasing his taxes. If he does release a few returns they will be cherry-picked and incomplete.
Many in Congress want to know how he will benefit from tax reform before they will support such a bill. I think that is fair. That includes some Republicans.
They wanted to pass tax reform by August but did not specify August of what year. It will not be this August. Trump wants to finish health care first, they see gaining over $1 trln in tax savings from health care that they can use as offsets for tax cuts.
They are willing to withdraw health care coverage from a lot of people covered under Obamacare to get those tax offsets. One could argue that would be a huge wealth transfer or recovery depending on your ideological perspective.
David Kruse is president of CommStock Investments Inc., author and producer of The CommStock Report, an ag commentary and market analysis available daily by radio and by subscription on DTN/FarmDayta and the Internet.
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