Tax Center

Lower taxes mean lower federal revenue. Extending lower tax rates, combined with a larger standard deduction (especially for seniors), a bigger child tax credit, a 20% pass-through deduction for businesses, and a higher estate tax exemption adds up to less revenue for the government. According to the Congressional Budget Office (CBO), that adds up to $4.5 trillion less for the period of 2025–2034. The result of these reduced revenues is the projection of more than $4 trillion in additional debt, on top of the increased debt caused by annual budget deficits.

If CBO estimates are reasonably accurate, these revenue shortfalls and continuing budget deficits could cause the National Debt to balloon to $59 trillion by 2035.

The IRS is the world’s greatest tax collector and, at the end of 2019, the Congress and the Senate got together to pass a bill that makes IRAs an even worse ticking time bomb for the next generation. Under the SECURE Act of 2019, if you pass an IRA to a non-spouse loved one, they must completely empty it within 10 years. What this means is if you live a long life, they will be forced to take massive taxable distributions from their inheritances during their highest earning years. That could result in losing 40%, or more, of their inheritances to Federal Income Tax!

Unless, of course, you act. As tax planners, we help our clients combat the tax penalties of the SECURE Act of 2019 by creating strategies to restructure their assets so that they pass tax-efficient or tax-free inheritances to their heirs. The by product could be greater after-tax income for them in retirement, as well.