States Sue IRS, Treasury To Strike Down SALT Cap Under New Tax Law

[BulldogTom]

The original intention of the Trump tax plan was to do away with all itemized deductions and most credits.   But the lobbyist got to the congress and congress told the president that they would not get rid of Charitable, Mortgage Interest and Health Deductions.   They were also not getting rid of EITC and CTC.   That is where the negotiations started from.   Trump got nearly everything he wanted on the corporate side, and Congress got most of what they wanted on the personal side. 

Make no mistake, this was a corporate tax bill that was sweetened just enough for individuals so that the base would support the incumbent party in the mid-terms.   Politics as usual.

Now the next act of this drama is going to play out.   IRS will (at some point) issue guidance on how to interpret and audit the upcoming returns.   Then the tax pros will figure out the best ways to save tax dollars under the new law and we will see the unintended consequences.   Which will give some politicians the motivation to either try and fix the tax law (depending on their point of view) or campaign for changes in the 2020 election cycle.   

As we wait to get to the 2020 election cycle, the IRS is either going to take a hard line on audits or is going to try and work with congress to mitigate the unintended consequences.   Look at how the IRS worked with Obama and congress on the implementation of ACA tax rules.   They were pretty lax in enforcement the first year or two, then ratcheted up the compliance.   They could do that again, citing taxpayer fairness and the inability of the service to handle the workload of compliance.   Or they could hammer taxpayers with letters.   We have not seen how the new treasury secretary and IRS commissioner have worked with the administration yet, so we don't really know how this will play out.

Sorry if this sound political, but it is a political process of writing these laws.   I tried to be neutral in presentment.   Sorry if it offends anyone.

Tom
Modesto, CA