 | What happened to that postcard we were supposed to use to file our income tax returns? A lot of us might be missing it this weekend — so much that we might want to send all those promises of simplified returns a postcard of our own. Having a nice time filling out these forms, wish you were here. President Trump promised the card again recently, telling a group in West Virginia, “this will be the |
| | last time that you’re going to go that old-fashioned, big, lots of pages, complicated tax form. Because next April you’re going to, in many cases, one page, one card.” Don’t hold your breath, and don’t sell your shares in H&R Block to invest in card stock. The old postcard promise is a meaningless one, anyway, because most of us file electronically, just as we post vacation photos on Instagram. Postcards are so 20th century. Besides, all the talk about simplified forms is a red herring. It distracts us from the real problem, which is that the amount we’re paying comes nowhere near matching the amount Washington is spending. Investment strategist John Mauldin wrote recently for marketwatch.com that Washington would need to raise income taxes by 50 percent in order to pay the difference between our future spending and the amount of money taxes are projected to bring in. Now there’s a winning political slogan for November. “Vote for me and I’ll raise your taxes by 50 percent.” Of course, there are other ways to approach the problem, such as to cut spending and curb runaway entitlements such as Social Security and Medicare. Notice I said cut spending, not taxes. Last December’s tax cuts may make your tax picture look better a year from now unless, as recent news reports indicate, you have one of those large Utah families. But those cuts are expected to push the nation’s annual budget deficit to $1 trillion by 2020, according to the Congressional Budget Office. Without those cuts, the CBO was projecting a slight decrease in the deficit this year, to $563 billion. The total national debt, the accumulation of all this excess spending, is projected to hit $30 trillion within the next 10 years, the CBO said. Mauldin reminds us these figures assume we won’t have a recession during that time. He believes $35 trillion is a more realistic number, which would make it “hard to believe Social Security can survive over the long run in anything like its present form.” One year ago, Gallup published a poll showing 61 percent of Americans felt the amount they paid in taxes was fair, the highest percentage since 2009. That may reflect good feelings about a strong economy, but it’s an unfair question because it raises another one: Compared to what? There are no competing federal governments offering to do the same for less, and apparently there is no political party left in Washington willing to confront the deficit side of the ledger and warn about its consequences. I recently acquired an editorial published by the Minneapolis Star Tribune in 1937, headlined, “Our soaring debt.” It warns that the national debt had just passed $36 billion for the first time, a figure that, with inflation, equals about $622 billion in today’s dollars. Blaming Franklin Roosevelt, it said, “As to whether or not the present debt approaches the danger line there may be honest differences of opinion, but it will be rather generally agreed that the rate at which it has increased since 1933 has been much too fast for comfort.” Eighty years and many trillions of dollars later we’re still wondering where that “danger line” is. And so we keep living as if there is none. Clearly, having the world’s strongest economy helps, as does the dollar’s position as the world’s reserve currency. Investors remain willing to purchase U.S. debt. But there must be a tipping point. A smaller, less significant country that acted this way might be insolvent by now. None of this is cheery news as Tuesday’s income tax deadline approaches and you, if you haven’t already filed, long for a postcard. Two years ago, wallethub.com published a survey that found 13 percent of Americans would rather spend a night in jail than do their taxes. I wonder what politicians would rather do when the time comes to face that inevitable danger line? |
RSS Feed
