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Its been 2 years since I last blogged.  Not sure if there are many human CAPS players left that will read this.  But its nice to be able to document my thoughts for reference later.  Having said that. I'm seeing more propaganda and misinformation about the new Tax Law than information and I feel called to clear a few things up.

Ok... While I'm not a Trump supporter, seeing inaccurate data in political propaganda drives me up a wall. I also want to preface that I'm neither a supporter nor a detractor for the new tax law.

But one thing I am is a CPA with a pretty in depth understanding of tax law, how it works, how it affects the economy, and the timing. I also studied the Tax Cuts and Jobs Act in great detail. So I will give you my completely unbiased thoughts about the new tax law. But first let me explain the inaccuracies.

  1. The tax cut increasing wages: I'm not sure if Trump ever said that the wage increase will be immediate. If he did then he would be incorrect. In general it will take upwards of 2 calendar years before we see the real effects of the changes in the Tax Code on the economy. Which brings me to the second point.

  2. Comparing year over year wages and tying it to a tax code that was just put into Law is just as bad as Trump taking credit for the better economy a year into office. Either these things have an immediate effect or they don't. You can't have it both ways.

  Now on to my observations of the new tax law.

  3. The vast majority of this country (including many businesses) has no freakin clue whats in this new tax law except a few soundbites off of ridiculously biased media outlets. This new tax law is MAJOR. Once this new tax law is fully understood and implemented it will be no longer business as usual.

  4. EVERYONE, I mean literally EVERYONE will be affected by this new tax law. Most of yall wont even figure out it until next tax season. Which means that you will not really see the new tax law have ANY effects on the economy until 2019 (conveniently after the midterm elections).

  5. Now for the unpopular opinion. This new tax law may actually create new jobs. There are many provisions in the new tax code designed to increase manufacturing activity in the US which will ultimately create more manufacturing jobs (or not if they can get robots to do it). Its going to create new jobs for accountants and lawyers as they figure out how to help businesses and the wealthy navigate this new tax code. Its going to increase business for Financial Advisors as they deal with the wealth management aspects of the tax code.

  6. Will this law increase wages? Yes and no. Its going to increase income for some industries that will benefit from the new tax code. Conversely, it will cause job loss for all the industries rendered obsolete by the new tax code.

 7. This law will lower taxes for alot of the middle class.

8. This law will simplify tax prep for alot of the middle class

9. This law will probably put alot of tax preparers out of business. There's word that H&R Block is already planning to close hundreds of locations.

 So now that you've been armed with the knowledge, there is no need to spread misinformation. Spreading misinformation actually causes more harm than good.

 

  

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Thanks for the insights into the new tax law.  Very few real blogs are posted on CAPS anymore.

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When I read that you were going to give an unbiased opinion, I braced myself for 100% total political bias. Thanks for surprising me with an honest unbiased explanation of the immediate effects of the new tax law on individuals and corporations.

Your economic analysis could use a little work. When an economist says it will take 2 years for the impact of the tax law to be felt, they mean that it will be slowly felt over the next two years, but not fully felt until the two years is up.

As soon as employers start adjusting how much is witheld from paychecks, the employees will start seeing bigger paychecks and have the freedom to make use of that money. And that also means that the economic impact of the tax cuts will begin to impact the economy right away, but most of the impact will take additionals years to be fully felt. My brother is one of many independent contractors who pay quarterly taxes. He has already changed how much he pays in taxes, and will not see any significant change in his tax bill next April. This is why some of the impact of the tax cuts will be felt immediately (as in several months ago).

I suspect H&R Block is looking to close 100s of locations because of the growing popularity of filing online or with software. You are right that this will simplify the taxes for millions of Americans, but most probably will not stop using H&R offices until after they file this spring.I know I will no longer be filing long form, although I still have more than a few complications because of my small real estate business.

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Melaschasm  I have so many thoughts regarding this new tax law and its effects.  Its hard to state them all concisely in one blog.   Its also tough to speak in generalities.  I do understand that many effects from the changes in the tax law will begin this year.  I also believe that depending on what area of the economy we're talking about, effects will be felt sooner rather than later. 

But if we are talking about the economic effect that will be reported on the news to the layman who knows little about the economy, most people wont see these changes have an effect thru the mass media until about 2020.  And depending on the MSMs agenda, these economic effects will be either correctly or incorrectly correlated back to the Tax Law change.  So believe me, we are speaking the same language, albeit abbreviated vs.  expanded. 

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