Finding a new Speaker for the House is difficult enough when looking at concerns like government overspending and how it affects inflation and our other national economic difficulties. Whether or not we should fund the wars in the Middle East and Ukraine doesn’t make it any easier.
But the new wrinkle of the SALT Limitation has made the issue even more contentious.
If you’ll remember, the acronym SALT when thinking about taxes, no longer stands for that container on your breakfast table right next to the pepper. Instead it stands for State and Local Taxes referring to the fact that taxpayers who itemize Schedule A on their personal income tax returns are limited to a deduction of $10,000.
The concept in taxation was that you weren’t supposed to pay a tax on a tax. Prior to 2017, we always received a full deduction for our state income taxes, property taxes, and other non-federal taxation costs.
This limitation has been especially difficult on taxpayers in higher property tax states like New York, California, and all of the crazy people who still live either in or near Chicago.
Last week, when Jim Jordan (R. OH.) ran for speaker, a new and surprising minority of Republican Lawmakers opposed his speakership. Oddly enough it was four Congressmen from New York, demanding an end to the SALT limitation.
The Republican majority in the House is currently only five votes.
A couple of months ago, there were 11 Conservative Congressmen who were holding up funding the government trying to end the limitation. It now turns out that this issue could be the one that tips the balance of power one way or the other.
I’ll continue to write about this story as it unfolds.
Let me leave you with this.
The Inflation Reduction Act promised to increase audits on larger corporations and higher income taxpayers earning over $400K annually. As such, the IRS is putting together a new working group inside their Large Business and International Division to accomplish that very task.
The goal is to put experienced revenue officers and agents together with their main focus being the unraveling of the complex partnerships and other pass-through entities that save upper-income taxpayers significant amounts of money. But there’s only one problem.
The IRS is having significant problems staffing the group. They haven’t been able to get much past the theoretical stage.
A year ago, when they were still fully funded with the additional $80B in financing, I reported that the average compensation for new agents was less than $18 per hour. Trust me when I say that you don’t get much, if anything, in my business for that kind of money. In order to get an individual who has that level of expertise, it’s going to cost significantly more, if you can lure those individuals away from firms like mine in the first place.
The working group has begun operating on an extremely limited basis. They’re currently examining 75 of the largest multi-billion dollar partnerships. We’ll see if they ever begin auditing.
We’re all going to get through this. Let’s get through it together.
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