Trump Taxes and Rumors - What to Expect

Mike: [00:00:00] Welcome to The Hidden Money Podcast. Today is January 22nd, 2025. Two days after the inauguration of our 47th president, our 45th president returning back, Donald J. Trump. We want to talk about tax. We are excited about tax. This is going to be a big year for tax changes, and hopefully really good, beneficial tax changes for our economy.

We want to talk to you about what to expect. What are the rumors? As of this point, there's zero legislation that has been released. No bills have been released, even draft bills, into Congress, yet, that I've seen.

So, we'll get kicked off, but welcome back, Kevin, you have a brand-new son. How old is your son?

Kevin: He is about a month old. So, it has been a whirlwind for me personally in a good way. but I'm ready to get back to it. And there's no more joy [00:01:00] than having a kid. I mean, there's a lot of joy in life, but having a child is just one of the top ones. He's just adorable and sweet, and brings the other kids together that we have, and it's just been a really sweet time for us.

And now, with all this whirlwind of Trump taking office, he is hitting it hard and fast, and I feel like I'm just trying to catch up to him. He has all these executive orders he's kicking out. And you know, with you and I, our major focus for our clients and our business is going to be the tax law. That's going to make a huge change.

So, like you said, there's nothing concrete. Everything right now is everything that he said either during his campaigning, things that we've read. We'll go through some rumors of what's been out there, and go through some things that are false that I've heard too. So, but we're doing the best we can with the information we're given.

As soon as we hear official bills hit the floor, you can be here and hear it here first that we're going to be on it. Like. Within hours, hopefully [00:02:00] as soon as we have some information, we're giving some podcasts, we're giving some information out to y'all.

So, make sure you're following us. You can be the first to get that information.

Mike: Additionally, you'll be able to read our blogs either at www.revotaxpayer.com or hiddenmoney.com, and we will keep these updated. This is a very, very exciting time for tax, people.

Kevin: Yeah.

Mike: Maybe not the rest of the country. No one else I know nerds out as much as we do on tax, but this is good stuff, man. This is exciting.

Kevin: It is. And no matter what, the most certain thing we have right now is that something is changing. It is going to change. It has to change.

If he's wanting to curb inflation, if he's wanting to incentivize people to domestically manufacture, or domestically hire us citizens to do work, there's going to be incentives tied to that. But with incentives always come a cut somewhere else to where you're going to pay some tax somewhere.

Usually, the wealthy pick up the bill, [00:03:00] not always, but that's Mike and I's job- we want to educate you because if you are wealthy, you don't have to just sit by and take it. There's always ways around new tax law changes. That's why you have to have a proactive CPA in your corner that is looking at this stuff and your situation.

Mike: Agreed. Regardless, whether it's a Republican tax bill or Democrat tax bill, anytime changes come down in our internal revenue code, the way it's designed, they always end up coming with some incentives. So, it's super important.

Those incentives exist to try to convince the American public and entrepreneurs to utilize their capital in ways that whoever's in power believes will help out our economy. It's your patriotic duty to help out our economy, and it's your patriotic duty to utilize the tax code the way it's written and pay less taxes, in my not so humble opinion.

So, let's get started with some of these tax laws and [00:04:00] rumors. So again, no tax bills have made their way to.. at least, been published from the house or the Senate, but we know a lot of things.

I want to start off with a tax bill that was passed by the house representatives last January, with huge bipartisan support, and you and I and everyone who was following it expected very quick passage.

That tax bill was going to bring back bonus depreciation retroactively to 100%. It was going to re-institute the ability for companies and corporations to deduct the R&D tax credit. And it was going to expand the child tax credit.

Ultimately it didn't pass. Why? Mainly the Republicans in the US Senate, namely Mike Crapo from Idaho. He said it was, and was recorded saying, “We got to kill this thing. There's too much fraud. That's going to happen with the child tax credit.” And this was back in July of 2024.

He said, “We are going to win.” meaning, the Republicans are going to [00:05:00] win all three, or both houses and the white house, in November. “And we'll come back with a better deal.” He said they're going to bring back bonus depreciation 100%. They're going to allow the deduction of R&D expenses for us corporations. And they were going to improve the child tax credit, but reduce the likelihood for fraud.

So, we expect that to happen. Mike Crapo was just the minority ranking member in the Senate last year when he said that. He is now the finance chairman, a chairman of the finance committee in the Senate. So, he has got a lot of power and a lot of pool. If he's going to stick to his word, I don't know the guy, but I do know the guy wants to get re-elected.

And if he made a promise that we understood, and so many people know that he's going to bring this back, I think there's a fair chance he's going to bring it back, and he has the power to make it happen quickly. [00:06:00] What do you think, Kevin?

Kevin: I think so too. And I think Trump, with all these executive orders coming through, I think they have to move quickly, and that's what he's been showing. Momentum is huge. He's just got to go, and I think that we're going to see tax law change quick.

I'm hopeful on the 100% bonus depreciation re-upping right now, as it is, under current law, under the Tax Cuts Job Act, you got 40%. You got 40% this year, and then you're going to have 20% next year and then 0%, the following. So, we need 100% bonus depreciation. It's going to really up the investment, domestic investment of real estate, domestic investment of equipment, vehicles, whatever it is.

Tax law drives a lot of economics in this country. Just speaking to our clients, I mean, they're always thinking, “What can I do to reduce tax? What can I do to reduce tax?” And we don't want to just take dollars and throw them at [00:07:00] expenses that go down a drain. You want to invest those dollars.

And if we can invest those dollars into assets that are eligible for 100% depreciation, then we're growing our net worth and lowering our taxes at an extra- just a huge amount, right? So, that is what I'm hopeful for. I think 100% bonus is the one I'm most excited about.

I think that changes not only just real estate, it changes every industry out there. It changes accounting firms. We buy desks, we buy computers, we buy capital assets that we need, to take 100% bonus on. Most all businesses can take a benefit of that.

Trump has said in his campaigning, the no tax on tips- that's really unique. It would have helped me when I was 16 and a waiter at a Mexican restaurant.

I would have loved that, but that doesn't help everybody, but it helps a good chunk of the country, and it helps the people that really need it. And I, I like that one too, but it also, big [00:08:00] picture-wise, you can kind of see where maybe the economics, no tax on tips, can come in. So, what do you think of that one?

Mike: I mean, honestly, I think it was a political gimmick and we saw it, because as soon as Kamala Harris came in the race, she latched on and said, “Oh, we're going to do that too.” It was like, I don't know if she ever gave Trump credit, but she took his idea and ran with it as well. So, it was obviously to win votes. Is it a good idea? I don't know. Would it help the people who are barely making it, and they work for tips?

The restaurant workers delivery drivers. Yeah, it would help them. It would help them. But what's it going to do the economy overall? I read an interesting article. I think it was in the Wall Street Journal, a few weeks ago about that, that said, “Wait,” because it was also, he's also mentioned not taxing overtime.

So, anyone who makes overtime, it's possible once they start hitting overtime, they're making non-taxable income. That would be huge. But in that article, they said, “Wait a second. So, if you tell people [00:09:00] you'll work a normal 40 hour a week job with no tips, no overtime, and you're going to pay normal tax,” or you tell them that, “Hey, you could go change your job, work for tips, pick up some gig jobs, maybe three jobs that all works on tips.

Make about the same amount of money, but it's going to be tax free.” It's going to distort the economy. Is that good or bad? I had no idea. I can't see that many moves ahead. Same thing with overtime. A lot of professionals don't get paid overtime.

We're exempt from overtime. But if all of our pay, our salary is 100% taxed, or we could go get an hourly job and work the same amount of time, but now half of our pay is at overtime rates and non-taxable. Heck, I might leave our firm, Kevin. Go get some free, taxable hourly income.

Kevin: I’m telling you, man, as you're talking about this, you can live it in the gray area of this. It's kind of like, why wouldn't I pay all of the staff at our firm? Why wouldn't we pay them on an hourly basis and then just [00:10:00] allow them to earn overtime as their bonus. So it's tax free. Why wouldn't I? What's always in our society already.

So it's tipping, it's over tipping. Like every time I swipe my card, they turn the screen to me and want a tip. And it's just not even in the service industry where you would tip, but it's almost like you're going to see if there's no tax on tips, they might. We might see a lot more of that, but also people might just change their revenue streams to be more tip oriented as a CPA.

I would charge, “Hey, here's 50 tax returns, but you're mandatory. You have to tip me. And here are the amounts you can tip me.” Why would, I mean, what's the definition of a tip? What's the definition of all of this? There's so much room for abuse in the way that people can overthink this just to evade tax.

So I'm interested to see what they define tips as if they change it with, you know, because if they put no tax on these things, everyone's going to be incentivized to classify their income as that.

Mike: We will help [00:11:00] every one of our business owner clients figure out how to re-coordinate their payroll to be almost all tips, right? I mean, that would be our job.

Kevin: I would tip myself. I would tip you, Mike. Why? I mean, why would two business partners tip each other like, “Mike, you had a great week. Here's a tip.”

Mike: Tax free income, baby. I love it. Yeah, so, I don't know. Again, I think a lot of these things that we heard in the campaign trail, when the rubber meets the road, I think things are going to change. It always does, anyways.

‍Another point is the Republicans have a very small majority in the house and in the Senate. If they're going to get these kinds of things passed through the Senate. To avoid the filibuster, the only way they can do that to avoid the Democrats filibustering their tax bill is to use what's called the reconciliation process.

And to do that, they have to, I don't know if they've adjusted the value now, but back in 2017, it had to have a [00:12:00] net cost over 10 years of a trillion dollars or less to be eligible for reconciliation under the Senate rules. So, whatever these laws are going to come out, they're going to have to have some offsets, right? Especially the way the CBO scores it. Can I go on a soapbox for a second about that, Kevin?

Kevin: Go, go for it.

Mike: So, we saw this in the 2017 Tax Cut and Jobs Act. There was 100% partisan, and just like it's been in Congress for most of the time over the last eight years, but it had to be passed; only Republicans, there was no Democrat support or very, very little.

So, they moved it through a reconciliation, and in reconciliation, they had to have guarantee that it wasn't going to cost more than a trillion dollars according to this congressional budget office, the CBO. The CBO, one of their jobs, especially with legislation like this, is to score, they call it score, but basically value how much this is going to bring in or cost over a period of time.

And [00:13:00] the CBO is not allowed to use factors. I don't know why. I mean, I think it's their own internal rule. They don't use factors like, “Hey, if we lower taxes, it's going to grow the economy, which is going to increase taxes, so it's actually going to cost less.” They don't do that.

And we saw this in 2017, they said those Tax Cuts and Jobs Act, that was going to cost a trillion dollars over the first 10 years. It was going to reduce the amount of revenue that we were bringing in as a nation by a trillion dollars. That didn't happen. Every single time, you look back, you can go farther back, if you want really good data, look at JFK’s tax cuts.

John F. Kennedy's tax cuts. Everyone said it was going to hurt. It was going to hurt the budget. It was going to reduce revenue. And he cut taxes hugely, like, more than Donald Trump did. And guess what? Within two years, the government's receipts and revenue increased greatly. [00:14:00] Every year after that, it kept increasing. It set records.

CBO ignores that kind of stuff. Same thing happened in 2017. They said this costs a trillion dollars and we're in less revenue. Well, you look- in 2019, we had record revenue, more revenue than the Treasury Department had ever collected. Same thing in ’21, ’22 and ’23; they did as well. They're still having great collections because of the lower tax rates.

That happens. You give business owners and entrepreneurs more of their money to keep. They grow the economy more by investing into their businesses. That's what entrepreneurs do. But again, we're going to have to push this stuff through reconciliation. And unless, somehow, the powers that be in DC can change the CBO’s rules, they're going to assume every tax cut is a net cost. It's a zero-sum game.

The economy's not going to grow. That drives me nuts. And here's one reason. They're going to have to come up with more revenue enhancers, and this is where we found ourselves today. And I think what's [00:15:00] hurting our economy greatly is, in order to keep it down under a trillion in 2017, they had sunset clauses and phase-outs of a lot of the tax cuts, and because that has happened, bonus depreciation started going down two years ago.

The QBI deduction, or pass-through deduction, that small businesses have utilized greatly, and ramped up their ability to spend and grow their companies, that expires this year. There's a lot of these things that are expiring when uncertainty, when you're a business owner, huge business, small business, Sole Proprietor, when you're a business owner and you don't know that you can rely on tax cuts that you're utilizing to help fund your business, guess what?

You start saving money. You stop spending money, and that doesn't help our economy. But they had to do that in order to meet the reconciliation process. So, we'll see. I wish there was another way to get bills passed in our partisan Washington without having to do reconciliation. And [00:16:00] I wish we could use real numbers and valuations of how much is this really going to cost, because once again, every time in history we've lowered tax, tax receipts from the federal government have gone up.

And if only in 2017, the government stopped spending more money each year, kept their budget static, or just increased the same amount as inflation, even under Biden's inflation, guess what? We'd have almost a balanced budget right now because we're collecting trillions of dollars more than we were a decade ago as a federal government with lower taxes. If we don't keep these tax cuts that are expiring soon, our tax receipts are going to go down because companies will stop spending as much money because they won't have the money. The government will take it.

And if they're not spending the money, the economy slows down. If the economy slows down, you can crank up tax rates as high as you want- you're going to have lower tax receipts. We saw this. JFK knew this. There was 90% income tax in some points when JFK took over. And [00:17:00] we were only collecting as a country between 18% and 20% of our GDP in taxes.

He lowered taxes, cut them in half, slashed them even more than that in some cases. And guess what? As a collection, as a percentage of GDP, we collected about the same amount of taxes, but total dollars grew that we collected. Why? Because the economy grew.

It's Tax Cuts 101, Tax Policy 101! I don't know why most people in Congress don't get that. I don't know why our national media doesn't get that. I don't know why people who are so opposed to tax cuts, don't get that or refuse to look at those facts.

Let's talk about this SALT cap. That was part of the Tax Cuts and Jobs Act of 2017. Can you give us a summary? Because I tend to get overly verbose on what the SALT cap is. Could you, like, give us just a layman summary of what the SALT cap is?

Kevin: Yeah. SALT cap is going to be [00:18:00] dealing with itemized deductions. So, every taxpayer either takes a standard deduction or itemized. Itemized deduction is going to include property tax, state income tax, your primary mortgage interest, and your charity, mainly, and medical, but medicals is kind of rare. Now, you add up all those itemized deductions and you compare it against the standard deduction for that year, and you take the higher of the two.

The standard deduction is always increasing with inflation. So, the standard deduction could be $26,000, for instance. Well, you're going to calculate your itemized deductions, and hopefully, it's above $26,000 and you would take them.

So, back before the Tax Cuts Jobs Act, residents of California, New York, they would pay very large amounts of state tax, maybe, like, $30,000 a year in state income tax. Now, being in the best state ever of Texas, we don't have state tax. So, it [00:19:00] doesn't apply to most of our clients or us, but for those people living in those high income earning, income rated states, you do pay significant state tax.

And the federal government was almost subsidizing those tax payments because you got to deduct your state taxes as an itemized deduction. So, if you paid $30,000 of California state income tax, you were already above the standard deduction. Then you had your property tax. If you owned a property, and then you had your mortgage interest, charity, and everything else, your itemized deductions were very large.

What the SALT cap does is it takes our sales tax, our local tax, our state tax- it takes all those taxes, and your property tax- it lumps them all together, and you can only deduct $10,000. So, if you lived in California and you paid $30,000 of state income tax, you had to pay it, but the federal government's not going to allow you to deduct all of that on your income [00:20:00] tax on your itemized deductions.

So, you cap at $10,000, that is what that SALT cap limit is. And there's ways around it, which we won't get into here, if you own a business and everything like that. But that is, very high level is they just, kind of, put a ceiling on how much taxes you could deduct on your federal tax

Mike: Yeah. The reason that ended up becoming part of the Tax Cuts Jobs Act of 2017 was they had to keep a trillion dollars, or less, cost to get through reconciliation. So, they called that a revenue enhancer, meaning you're going to raise more taxes that way, and that got pushed through, and I want to talk about that a little bit more later, but that is why it was included, and it angered a lot of people, a lot of Republicans in high tax states, and a lot of Democrats in all of these high tax states.

Because what you saw pretty soon after that, when people started realizing how much it was [00:21:00] costing them to live in that state, whose state governments aren't great at managing their finances, or who don't think twice about taxing their residents five times more than the average states out there, those people started figuring that out and said, “Wait a second. Now, I actually have to pay for this out of my pocket. The federal government is not subsidizing this anymore.” So, what do they do? They move from California to Texas, from New York to Florida, the big businesses and the wealthy individuals, Democrats and Republicans alike moved. Jeff Bezos moved from Washington to Florida. They're doing those things greatly, in part, to the billions of dollars that they're saving in taxes, because of that SALT cap tax limit.

There are either four or five New York Republican congressmen or congresspersons. I don't know if they're all men or women, but they have said they will not vote for the, “Yay!”, for any tax reform unless it increases the SALT cap tremendously. They said it's got to be.. [00:22:00] $40,000 is not enough is what they said. It's going to have to be much, much higher. I am so annoyed with those guys. So, I get it, but again, let's talk of what's really happening.

So, we live in Texas who has a balanced budget. There's a lot of states that actually have a balanced budget. There's Florida, there's Tennessee, there's a lot of low tax states and they balance their budgets. They have surpluses. We don't pay that much in state tax. So, if we have an unlimited SALT tax deduction, State and Local Tax deduction, what's really happening is our states, and us who are the voters in these states, who have insisted that our state governments are reasonable with their budgets, don't waste money on ridiculous nonsense.

What they're, what we're doing is our state, Texas, is subsidizing California for their wasteful spending. Or worse, Illinois and Chicago, and they just blow through budgets left and right. [00:23:00] And the voters in those States, if they're able to deduct all of their state taxes, there's no incentive for them to hold their state politicians accountable because they don't see it come out of their net pay-check. And that's why the governments, in my opinion, in New York, in Illinois, in California, have been able to be so ridiculous in how they waste money.

I mean, look at some of the things that waste their money on. It is absolutely ridiculous, and they're bankrupt because of it. And they're probably going to come to the United States for us to bail them out, and again, we're going to be subsidizing them. I don't think we should have, allow unlimited SALT deduction. I think a reasonable amount, I think, that was fair, I think, that made the country more equitable.

One of the great things about the United States is by having all these states, we have different laboratories to figure out how our society can work best. We have all different ways of running, governing, collecting taxes, spending, and taking care of the [00:24:00] populace. And none of us, not one of our States knows it all and are perfect, but we can see which ways work and which ways don't work, but the only way that works for the future of our country and for the good of our country is if the states are accountable for the stuff that they're doing.

If they are ridiculously spending and wasting money left and right, and then going bankrupt, they need to learn their lesson and stop doing that. It's not fair for the states that are making the right choices to have to bail them out.

So sorry, New York Republicans. You guys, that's not fair. It's not right. It's not good for our country. Get over it. I know you're in New York. I know you're elected to represent New York work in your state to balance your budget and lower your taxes. Don't make me in Texas subsidize your state, please.

Kevin: No, that's good stuff, man. [00:25:00] That's good. And I've even read to just to kind of take this in a little different direction that, and this is, maybe, just thinking- I mean, there's no actual reading that I can really justify this, but I'm just thinking, and as from an economy standpoint, with the tariffs that are coming in, is it plausible that maybe, if we can get more revenue from tariffs coming in, that Trump really could push true tax breaks down to the American people because we have revenue coming in from foreign sources that we don't have to heavily rely on our income tax here?

Mike: I mean, it's possible, in theory. Before we had the amendment that allowed us to assess income tax, I think in 1913, that's where 98% of the income for the federal government came from, was from tariffs. The majority of economists I [00:26:00] read think tariffs are a bad idea. I'm not sure I agree with them, but they think it's a bad idea.

And here's their argument. They say, “If you raise tariffs, all that that's going to do is increase the prices that consumers pay here in the US for those products, which means it's inflation, and it just increases inflation.” Well, if you raise tariffs and increase inflation, but you lower income taxes, you'll have more disposable income. It might balance out, and maybe even be a net positive. I was watching, so I didn't watch a lot of his speeches. You had me working too much, Kevin. I couldn't do it.

Kevin: I know.

Mike: But I did watch later that night, when he was in the Oval Office signing those 100 plus executive decisions, and he answered a lot of questions while he was writing. It was refreshing to see a president actually talking to the media unfiltered, even though some of his unfiltered comments really grind on me, but they asked him about tariffs and he gave some very nuanced [00:27:00] answers.

Trump doesn't usually do nuance, but the gist I got from it is he's not settled on doing these flat tariffs. nation or worldwide., He's using this as a negotiation tactic to get fair trade. He's saying, “Hey, look, if you're not going to be fair trade with us…” or I think what he's saying, and he mentioned it in a few things like that about Tik Tok and the terrorist to China, if they're not letting our IT companies or our places like Twitter and Facebook operate in China, why should we let Tik Tok operate here?,

If they're ripping us off with trade deficit, why shouldn't we use tariffs? Heck, we'll raise them to 100% on China, and he was doing it in a nuanced way where I'm not absolutely certain, not at all convinced that his plan is really to do system-wide tariffs.

I think he's using it as a negotiation tactic, but then again, we don't know. He made me laugh when he said that.

Kevin: Yeah,

Mike: I haven’t gotten to the point yet where I can read Donald Trump. I don't know that [00:28:00] anyone in this world will ever get to that point.

Kevin: No, and I think that's what makes him good. Yeah, that's what makes him good at what he does. It's like, he comes up with these outlandish terms and ideas. It's like, “Hey, Tik Tok, give us 50% of your business or else I'm going to just ban you from the country.” And I'm like, “That's very New York mafia kind of mentality.”

I mean, that's how he does it. And I can't tell if he's bluffing or not, but everything is supposed to be for the good of our country. So, I'm not on Tik Tok, don't know the ins and outs of it. I just know if they want to steal a bunch of teenagers’ information, I don't see what the big deal is.

And that's also how Trump views it.

Another one that I really liked of one of his proposals is going to be the social security, which if you think about it, no tax on social security income, which is already, kind of, in-play a little bit with limits.

If you fully rely on social security, you're not going to get taxed on it. But if we could fully [00:29:00] make social security not taxed, which just makes sense because you pay tax to get your social security, and it grows at such a weak rate. I'm so against social security. One, you're relying on the government to give you money in the future, which at our current rate, we're just losing money. We're going to be bankrupt.

And so, I just don't trust it, and I haven't trusted since I started working 20 years ago, but I have to pay in legally. I would rather take my few hundred bucks every pay-check, and if I invested that for 30, 40 years, I would have serious money that I could invest in and work with myself, and I would pay tax on it. But no, they make you pay into this system where your money doesn't grow at any good rate.

Mike: Because they don’t invest it.

Kevin: And then, when you receive it, you pay tax. Then you pay tax on something you already paid tax on. You pay tax to pay in, and then you pay tax again on the income. It makes zero sense. So, I like that social security change. And I think a lot of elderly people would like to see that too, because not many people are under that cap [00:30:00] where all your social security is tax free.

Mike: Yeah, I like it. But I also, I mean, the fact is social security is going bankrupt unless it's changed greatly, and how do you fix it? Also, the fact is, there are millions and millions and millions of Americans that are relying on it, and we made a compact with them for the last 50 years. More than that- since FDR, they, we made a compact- if you pay in, government's going to take care of you, at least keep you from starving and having zero shelter. That's what social security offers.,

And so, I think we have to honor that commitment that we've made to people that are relying on it, but then, at the same time, like you and I, I don't think it's fair that they're taxing, effectively, 15.3% of all of our wages, Kevin, every pay-check, they're taking it from us, and we know we're never going to see that- our full benefits from social security.

It's going bankrupt at some point. The estimates are anywhere in the next few years, the next 10 years, it's [00:31:00] going to go bankrupt. They're going to have to change it. So, they're talking about, “Well, we should raise the retirement age.” That's not fair to the people that have been working the last 40 years, or 30 years, and are expecting it, and depending on it, and living for five or six years not working before they're dead. That is not fair.

Then they're saying, “Well, we can just cut the benefits.” Well, that's also not fair because for those, I know a lot of people that live off of it. That is their main source, and that's not their only source of income in retirement, social security. They ain't living it high on the hog, man. They're barely making it. They are barely making it.

So, we can't cut benefits on them. But then again, we have a lot of clients, a lot of friends, Lord willing, you and I are going to continue to invest decently and have a decent amount of our own retirement money left. My opinion, as much as it sucks, it's not fair to people like us. If we can afford, if we are able to make enough savings on our own to retire, then the only somewhat kind of [00:32:00] equitable way I can think to deal with this is you do means-testing for social security in the future.

And yeah, if you've got some money put away, but not enough to fully live off of, so then, maybe you get half your social security benefits and half of that. I don't know. I don't like any of the choices, but I know we just can't get rid of it. I did like a man, George W. Bush, got hammered for this, but he came out with that idea of allowing people to take a third of their social security taxes and put them in private investment accounts. That kind of thing could really help.

What we don't want to do is be 50 years from now, and have the same problem with social security. We need to reform it. I like something like that, where if you actually put the money that they take out social security, and invest it just in T-Bills, it would grow tenfold and could afford much higher benefits. The problem is it's the government takes social security and spends it. It's supposed to go into this social security fund and be saved. But what's happened for the last decades and decades where the government was actually [00:33:00] taking more social security taxes than they were paying out when they had that extra surplus, they didn't save it.

The government wasted it. That should not be allowed. Get rid of that nonsense. If they had done that in the first place, social security would still be solvent, would stay solvent from here on out, but they didn't do it.

Kevin: We haven't even gotten to the external revenue service, repealing green energy tax credits,, corporate, domestic, tax rates. I mean, there's going to be so much changing. I think the external revenue service is such a unique topic.

I'd like it if we're going to enforce these tariffs, take those 88,000 Internal Revenue Service service-agents, and move to the external revenue service, get them off our backs, let us do our job, free up our tax code, make our tax code a little simpler, but make the incentives there, and then, we can really be cooking.

[00:34:00] So, that's my hope. I don't know what they're going to do with the tax code. Mike doesn't either. So, this is hopefully a good intro to what is we're looking at and what we could be thinking. But what comes to actual pass, no one knows. I mean, all of this is conjecture-based on what he said during his campaigning, what he said in interviews.

Luckily, Trump does a lot of interviews, but he says a lot of off-the-wall stuff when he does his weave. He can't be stopped. You could definitely tell when he's on a teleprompter, like, his inauguration speech was really good. I actually really enjoyed his inauguration speech because he had teleprompters.

He was on pace. I could follow it. He had subjects, and he finished the subject before moving on to another one. But when he's off teleprompter, he could throw out any idea out there, and we got to take it all with a grain of salt. I mean, everything should be taken with a grain of salt, coming from the government.

I think that's going to be their biggest thing is getting, gaining trust in the government. And that's their, that's an uphill battle from what we've been seeing, right and left [00:35:00] or equal, in this, that the American people just have to have faith in what our government is spending money on, what they're telling us, what they're doing.

They have to rebuild that trust, and transparency is going to be huge. I mean, there's always going to be a degree of transparency that, I guess, a degree of not being transparent when the government's releasing records are allowing us, the public, to see what we can see, which is understandable.

That's national security stuff. But I mean, we got to have some more faith in our leaders there, and I think we're on the right track. I'm a Republican myself, conservative, uber-conservative Republican, but Trump, I can only take in small doses. You know, I'm not married to Trump. I’m not at all married to Republicans.

I'm like, I'm good for what's good for my family, good for the country, as I think most people are, we just may have different views on what is good for our country, and good for our families. And that's the beauty of this country is we have the freedom to [00:36:00] disagree, and the freedom to have different opinions.

Mike: Well, we're supposed to have that freedom, and we need to keep fighting for that freedom when it starts to be infringed upon by the government. And I think we saw a lot of that in this past election.

Kevin: Yeah.

Mike: Let's at least highlight some of the specifics without going into too much detail of what's likely to happen. I do expect the super majority of the Tax Cuts and Jobs Act to be reinstated, not sunset. You know, one of the things that the TGIA was to bring corporate tax rate down to 31% instead of 35%. That was made permanent. That's not going away, but that pass-through deduction, that's going away.

That's a big one. We expect that to come back. We expect to keep the same standard deductions, and get back the smaller ones, the same child tax credits. Likely, I don't know what they're going to do with the SALT- that might change. If we allow the Tax Cuts [00:37:00] Jobs Act to completely expire without replacement with something, AMT tax is going to come back with a vengeance.

It's been gone for the most part. I think, applicable to less than 1% of taxpayers now. Maybe 1% or 2% of our client base, I think, Kevin, where it used to be much higher, and that's good. And it's been a great boom. It's just the AMT tax was originally created for wealthy people to, at least, pay some tax, and the most wealthy people, the truly wealthy people, they do pay AMT now, but it wasn't supposed to get people making $120,000 a year. And it was, and it will again in 2026, if we don't reenact the provisions of the Trump tax act regarding AMT.

Estate tax changes. Wow. It could go back down to 4.5 or 5 Million for a lifetime exclusion. I hope that comes back. That would be very painful for, especially, the farming and ranching world. Suddenly, your family ranch that's been in your family for six [00:38:00] generations, if it drops down to $4 Million and they die, and then, we have some kind of estate tax, like the old one, or even the new one that Biden and Harris were trying to enact, those people are going to have to sell their farms just to pay the tax bill. They won't be able to keep them. So hopefully that'll be reinstituted.

Also, something they're considering doing is reinstituting the DPAD, Domestic Production Activities Deduction, even bringing it a little bit higher, that would incentivize businesses here in the US to do more of their production here in the US, instead of outsourcing to China or Mexico or Indonesia or somewhere. I think that makes sense. Again, exempting overtime, tips from income taxes, we'll see about that. One cool thing I like- I think this is fair- especially, as it's become so ridiculously, in the last four years, expensive to buy a car, a used car, or a new car. It's hard. It's like buying a house now for a lot of people versus buying a vehicle- allowing people to deduct their auto loan interest.

I think that's a good one. Are they [00:39:00] going to eliminate the green energy subsidies from the IRA or Inflation Reduction Act? That was a joke. The Inflation Reduction Act increased inflation tremendously,

Kevin: Yeah,

Mike: It increased it. It made it worse, but I hope they don't get rid of all of them. Some of them make good sense.

What they need to do is make it merit-based. Get back to meritocracy. If the technology, the alternate energy technology works, help it become a little more profitable, but don't just start throwing hundreds of millions of dollars as like giveaways to these companies that have failed before. And they're going to fail again.

And the only reason they exist is government keeps sending them money and they can't make anything. I do hope they get rid of the whole thing where the government got, was it $14 Billion or $60 Billion? Some huge amount of billion to improve broadband access, they wouldn't let Elon even bid on it.

It had to be union jobs. So, over the three years that they've had this money, [00:40:00] not one new person has been provided broadband. Get rid of slush like that. But some of the good things, like I do think it's good for our national grid for us to get a tax credit. Granted, I got one for getting the solar panels out.

I think that's making our grid, and our society at large, more independent from things like power outages. I think some of those are good. Hopefully, I don't get rid of all of them. We'll see. I know he threatened to get rid of all of them. The terrorists is going to be a big question. What's going to happen? Are we going to start having trade wars or not? We'll see. We'll have to follow those. A couple other things I want to get to.

So, if you remember, it started under Biden. I'm sorry. It started under Obama, disappeared under Trump, and then came back under Biden. This idea of all the nations, mainly the first-world nations, getting together globally and agreeing to have some kind of shared tax system. The whole point of it was, “Hey, if we raise our taxes in Britain, [00:41:00] it's not fair that companies are just leaving and going to Ireland to save taxes, or moving to America to save taxes.” From our perspective, not my perspective, but from Biden and Obama's perspective, the same thing, if we raise America's taxes, we don't want our companies just to move somewhere else and lower tax.

So, we're trying to come up with some kind of, what was it called? I'll find it in a second, but some international agreement. We called it the ‘global tax affair’. They created a group called Economic Cooperation and Development OECD of all these nations, to come together and basically share tax information, and come up with an agreement so no one got lower tax bills by moving out of the country.

For the same reason I went on a riff about the SALT tax in our different state laboratories here don't have a global tax, it stifles innovation and it stifles the ability to find good ways to actually tax an economy without hurting an economy. But Trump is in the process of pulling out of that if we haven't already. So, that's good in [00:42:00] my not-humble opinion. What else have we not talked about?

Kevin: I would say the biggest thing, not the biggest thing- one thing I would say we, I would like to touch on, is misinformation floating out there. You're going to hear a lot of people talking about legislation and tax law changes, and nobody knows as of today, January 22nd, two days after he's been president, no one knows what's going to happen, until it actually hits the floor.

And we see bills, like, for instance, I had a buddy of mine who actually listens to my podcast, our podcast here. He actually listens to it, and said, “Hey, is this true? Can y'all cover this on the podcast? That is if a father is paying child support, the payer of child support gets to pick and claim that child on their taxes going forward.” which would be a kind of a big deal for him and me, because I do pay child support myself, and my friend pays child support for three kids.

So, that would be a tremendous [00:43:00] tax benefit, and it, kind of, economically makes sense. I'm paying tax on the income, but it's going to an ex-spouse who's spending it for my kids. Well, financially, I am covering a good chunk of their income, their food, their clothing, their medical, whatever it is. It does kind of make sense that the person paying child support should pick that child up as income, or as a dependent on their tax return, getting that $2,000 credit for each of their kids. It doesn't work that way under current law, but he saw a video online where a guy was saying this is happening.

And nowhere have I read that that's happening, and I've never heard Trump say that, so just be careful of misinformation. You might hear some crazy outlandish stuff, like 100% tariff on China or whatever. Just be careful, and Mike and I are, we're not going to spread misinformation. To the best of our knowledge, we're giving you this information as it's current.

And as soon [00:44:00] as we know what the bills are going to be voted on, we will bring that to you, and then let you know when they actually pass into law and, you know, the revenues, Internal Revenue Service actually puts procedures out and all that. So, it's a long road to get all this stuff changed, but I do think it's going to go quickly, and I do feel like he could retroactive it or activate it.

So that's another thing we could talk about maybe on a different podcast is, “Hey, do I file my 2024 taxes? Or do I wait and see what Trump's going to do?” Because what if Trump changes a lot of tax law in the summer, or retroactivates bonus depreciation to tax year 2024, but you filed your tax return already?

These are things you need to have conversations with your CPA about your situation. But we're going to have that conversation just like we did last year with this house bill that got killed. We were having the same conversation last year. I feel unless Trump moves and gets this thing done by April 15th and we actually know what law is going to be, that might be similar conversations this year saying, “Hey, there's these bills floating out. What am I, what do you want to [00:45:00] do? Do you want to file an amend? Do you just want to wait?”

So, it does the citizens who are filing their taxes so much good if they're going to retroactivate any tax law to get this done quickly, so that we're not all just, as professionals, just not knowing which way is up.

Mike: Yeah, let me summarize what you just said, because I agree completely and I get asked this a lot now. If you want to file your tax returns this year and the new tax laws have not passed from this new White House and Congress, should you file your tax return? Maybe, maybe not. Talk with your tax professionals about it.

If there's a good chance you're going to get a big refund, by waiting, maybe wait. If you're already going to get a refund, it would just be bigger. And then the legislation seems stalled in Congress, and you're ready to file in March, maybe file, but you'll probably have to amend if they do pass it.

So, just talk with your tax professional and understand what your options are, because generally, your tax preparers are going to charge you money to [00:46:00] amend your tax return, so it might make sense to wait, but sometimes, it makes no sense to wait. So, that's important to talk with your tax advisor.

Kevin: And so, thank you all for listening to today's podcast. Please stay tuned, join our mailing list, like us on all the socials so that you're up to date. Because as soon as some bills start hitting the floor, we're going to be the first out there to let you know what's going on.

Mike: www.hiddenmoney.com or www.revotaxpayer.com, where we are revolutionizing the way people see taxes.