Albright: Doing The Tax Math

Jan 3, 2018

About this time, I start fretting about filing my yearly tax return. I try to make sure that enough is withheld from my middle-class paycheck, but sometimes I get a nasty surprise in April, and have to send the feds more money.

I’m fairly sure of what I’ll owe for 2017, but the 2018 picture looks pretty murky. Since I’m usually a glass-is-half-full kind of person, I’m going to guess that my taxes will go down a bit, because my standard deduction will go up, and my real estate taxes and mortgage interest payments can still be written off.

But as much as I can use a little extra cash in my pocket, I’m still not feeling good about it, because, looking at the bigger picture, these tax cuts will make rich people richer, and there’s no guarantee they’ll create jobs by plowing their windfalls back into their businesses.

According to recent research from Harvard and Duke Universities, the wealthiest quintile in America already own about 84 percent of the wealth. Now they’ll get to keep even more money, while the rest of us support their lavish lifestyles.

In this same study of the way truth and fiction don’t always match, when researchers asked people what they think is true about America today, they estimated that people on the top fifth of the economic ladder controlled 54 percent of the wealth - much less than they actually do. In other words, they hugely underestimated how rich the richest people really are.

And when asked to imagine the ideal distribution system, respondents said that they wanted the richest quintile to own just 32 percent of the wealth. That means, the study authors concluded, that “a large nationally representative sample of Americans seem to prefer to live in a country more like Sweden.”

Now, my husband’s name is Swanson and he would love to start the New Year feasting on herring and gravlax and other Swedish delicacies. So would I - in Stockholm. But a trip to Scandinavia doesn’t fit our budget, since we’re hoarding our money so we’ll have enough to retire on.

Even if we get a tiny break on next year’s tax bill, we’re bracing for eventual cuts to Medicare and Social Security. Because once the people who passed this bill do the math, they’ll realize that somebody is going to have to pay for it – probably us, since it certainly won’t be them.