The New Tax Landscape’s Unsurprising “Surprises”

Tax BriefThe New Tax Landscape’s Unsurprising “Surprises”The confusion and scramble to prepay real estate taxes is an outcome of a rushed bill.

Budget & Tax  | Quick Take
Dec 28, 2017  | 3 min read | Print Article

It gives us no pleasure to write this post, and we do not write it with any kind of gloating glee. But yes, we told you so: Thanks to the rush to pass the tax package, and the desire to achieve something fast, the new tax rules are off to a messy and confusing start, with annoyed and uncertain taxpayers in the mix, and two business days left to go before the end of the year (and the old tax rules).

We need tax reform. But the bill that was rushed through has real life consequences for real life taxpayers without truly reforming the system. It’s not some theoretical inside-the-beltway exercise for the taxpaying public. At a minimum, altering a code that governs just about every facet of our economy, and directly affects the dollars and cents in every taxpayer’s wallet, should have been given more consideration than two months and change from early draft to presidential signature. Elopements and budget weddings have probably taken longer to plan.

Yet here we are. And as of this morning, many taxpayers in key high-tax states are finding themselves the first casualties of the new, as yet unclear tax laws. They’re wondering if they should pre-pay real estate taxes for 2018 to take advantage of old tax breaks that end this week. Turns out there is confusion between local states and counties and the IRS. And some who have already paid thousands of dollars probably shouldn’t have. So they’re out substantial savings, that too a week after Christmas. But the hiccup comes as no surprise to us.

This is exactly the kind of thing we wondered about when we wrote about how Congress’ “undue haste” with tax reform back in the fall reminded us about the Silicon Valley saying “move fast and break things.” And this is what we thought might happen with the rush to tax reform, and a quick signature just before a major holiday lull, but not enough time to fully read and understand all the new rules before the end of the year. It’s some legislative equivalent of the not properly thawed Christmas goose that’s still frozen when it comes out of the oven.

In case you find yourself unmoved by the plight of homeowners with cash to spare, here’s a thought: It’s one thing to scoff at their first world problems. It’s entirely another to dismiss the lack of clarity of what is to be rendered unto Caesar. When people who can afford the tax preparers have no idea how to proceed, it doesn’t bode well for the rest of us who have to figure it out by ourselves. And that is the question of the moment: What other surprises do the new tax laws hold for us? And with what little notice are taxpayers going to be stuck holding the bill?