The other day I finished my taxes for 2018.
As a result of the Tax Cuts and Jobs Act of 2017, my federal income tax went up by roughly $500. (Yes, I computed what it would have been this year under the old rules and tax tables.)
I don’t mind the increase. Actually I think my taxes should be still higher. But I don’t like the way they did it, lowering the bracket rates and then reducing much of the incentive to make charitable contributions.
Instead they should do away with the distinction between wages and investment income, lowering the tax rate on wages and raising the tax rate on investments. Don’t ever believe politicians who say they value work while they continue to support taxing wages at a higher rate than dividends and capital gains. And don’t even get me started on inherited wealth.
Treating all income in the same way would also have simplified my tax calculations quite a bit, saving me a couple of hours of time. The new tax law simplified my filing process only slightly. The paid tax preparers and software vendors are still, I’m sure, very happy.
Incidentally, although I do think they should restore the old incentive to make charitable contributions, I’d also be fine with greatly restricting the definition of “charitable” to include only true charities—not churches or elite schools or thinly disguised political organizations.
