Here is a peek into what can be expected in the near future.
- Individual tax rates will increase to over 50% for all working people.
- Corporate tax rates will increase and nothing bad will happen to corporations or its investors.
- Individual income taxes are being simplified and within a few years most people will be able to prepare their own taxes.
- The 10-year U.S. Treasury rate will increase 40% in the next year and no one will notice and the bank five-year CD rates will not budge.
- The Federal Reserve chairman will time his announcements so that they would cause the most disruption in the stock and bond markets.
- Congress will vote down a law that will prohibit them from engaging in insider trading.
- Students with tuition loans will owe more money than the total of all credit card debt in the United States and they would be paying triple the interest rate that the U.S. government pays for its loans.
- The United States national debt will increase by 50% during the next five years.
- Congress will have last minute brinkmanship about closing the government arguing about extending the U.S. debt limit.
- The unfunded U.S. national debt will grow to double the “national debt.”
Here is the reality as it exists today. I repeated the questions along with my responses:
1. Individual tax rates will increase to over 50% for all working people.
This may not be reality for all working individuals, but right now an individual earning $150,000 living in New York City is presently paying a top rate of over 50% in income and payroll taxes. A self-employed person will be paying a top rate of over 58%.
2. Corporate tax rates will increase and nothing bad will happen to corporations or its investors.
Well, in 2018 under the 2017 tax act, the corporate tax rate dropped 40% (from 35% to 21%) and nothing special happened except for increased stock buybacks and dividends, so perhaps with a modest increase nothing much special will also occur.
3. Individual income taxes are being simplified and within a few years most people will be able to prepare their own taxes.
There is a trend toward more people self-preparing their individual tax returns, but Congress and the IRS are working hard to reverse this trend. There is now a new Form K-2 and K-3 for owners of pass-through entities. The present K-1 forms have 21 pages of instructions and can be as much as 30 pages. Even the simple W-2 wage statement has a full page of confusing explanations with the smallest size readable font. And if you own shares in a mutual fund with tax free or foreign income fuhgeddaboudit!
4. The 10-year U.S. Treasury rate will increase 40% in the next year and no one will notice and the bank five-year CD rates will not budge.
The 10-year rate increased in the last year by 40% (from 1.72% to 2.41%) and there was no trickle down to increased interest rates for bank account savers.
5. The Federal Reserve chairman will time his announcements so that it would cause the most disruption in the stock and bond markets.
Corporations are prohibited from announcing any news during the time that the stock market is open so they would not cause a disruption in stock trading and prices. The Fed makes all its announcements at 2:00 pm timed to cause the greatest disruption in the markets. Duh?
6. Congress will vote down a law that will prohibit members from engaging in insider trading.
This was voted down. Our elected representatives who make the laws are permitted to engage in insider stock trading.
7. Students with tuition loans will owe more money than the total of all credit card debt in the United States and they would be paying triple the interest rate that the U.S. government pays for its loans.
Student loan debt is $1.76 trillion, which is almost 70% greater than credit card debt, which is at $1.04 trillion. Also, student loan interest rates are about 7% and the U.S. Treasury 10-year interest cost is about 2.4%. There is terrible inequity here for students. And I do not think it is fair.
8. The United States national debt will increase 50% during the next five years.
The national debt increased 50% in the last five years from $20 trillion to $30 trillion and indications are that it will increase at a greater rate in the next five years.
9. Congress will have last-minute brinkmanship about closing the government arguing about extending the U.S. debt limit.
This is so that the spending they voted for could be spent. Same old nonsense and stupid ego jockeying and completely wasting our tax dollars with each “fight” that miraculously gets compromised at the last minute.
10. The unfunded U.S. national debt will grow to double the “national debt.”
The total national debt is about $30 trillion and the Social Security and Medicare unfunded debt that no one talks about is over $55 trillion. Here is a link if you want to track this:
Sometimes I feel like we are on a Fool’s ride. Every response to the questions is reality. Nothing to joke about here. Anyway, Happy April Fool’s Day.
Needless to say, all opinions in this column are solely my own and not any reflection of the views of anyone else.
Edward Mendlowitz, CPA, is partner at
