Stability is a key principle of sound tax policy. It ensures that taxes are effective and minimally harmful. A stable tax code benefits individuals, families, businesses, and the government. It allows for the establishment of financial goals and the creation of plans to achieve them. However, instability in the tax code, such as that introduced by the Tax Cuts and Jobs Act (TCJA) of 2017, can drastically undermine these benefits.
The TCJA brought significant changes to the tax code. It lowered the individual income tax rate, doubled the standard deduction, reduced the corporate income tax rate, and offered full expensing for businesses. However, some of these changes, like the reduced individual income tax rate and full expensing, are temporary and set to expire just eight years after they were enacted.
This impending expiration introduces instability into the tax code. If these provisions are not made permanent, individuals and families could face thousands in tax increases. Businesses would have to reduce investments that create jobs, increase wages, and contribute to overall economic well-being. Even the government would need to adapt as its revenue streams shift.
Temporary and unstable tax policies prevent effective planning for the future. They make it harder for Americans to meet their current expenses, let alone plan to save or invest for the future. Businesses lose the ability to make long-term investments that create jobs, raise wages, and contribute to the economy. The government, too, faces challenges in predicting revenues and planning its budget.
As a tax attorney, I believe that individuals and businesses deserve policies that are stable, predictable, and consistent. The TCJA, despite its initial benefits, has introduced instability into the tax code due to its temporary provisions. This instability can have significant implications for individuals, families, businesses, and the government. It’s crucial that we understand these implications and advocate for more stable tax policies.