Because You Asked: What Do You Think of the Biden Tax Law Changes?

That title may be a bit misleading because it is meant as an umbrella-type question that is more accurately phrased along the lines of:

What do you think of proposed law governing Y? 

And the very first response to any question with those variables is: It has to become a law first, and no president can write laws.  Presidents do have a lot of power in our democratic form of government and can set policies and issue executive orders, which Wikipedia defines as: “An executive order is a means of issuing federal directives in the United States, used by the President of the United States, that manages operations of the federal government.” 

While Presidents can and do issue these executive orders counteracting their predecessor’s executive orders- but these are not lawLaws can be set in several ways, but in reference to the federal government, they are Bills passed by both houses of Congress, and then either signed or vetoed by the President.  Congress can then override (counteract) the veto with enough votes, so they can either become Laws by signature, or by a veto override.  

We were kind of joking last week when someone mentioned the old Schoolhouse Rock videos.  Remember those?  Here is the link to the one called, I’m Just a Bill: https://www.youtube.com/watch?v=FFroMQlKiag  This was a good refresher!

But back to the original question regarding tax law; Investopedia broke down the steps needed for tax legislation: https://www.investopedia.com/terms/f/formaltaxlegislation.asp

Understanding Formal Tax Legislation

Proposed tax laws start the formal tax legislation process as bills before they become law. Tax bills must be introduced in the House of Representatives because the House is supposed to represent individual citizens, rather than whole states, as with the Senate. The formal tax legislation process follows these specific steps:

    1. The tax bill originates in the House of Representatives and is referred to the Ways and Means Committee. Once committee members reach an agreement regarding the legislation, the proposed tax law is written.
    2. The tax bill goes to the full House for debate, amendment, and approval.
    3. The tax bill is then passed to the Senate where it is reviewed. The Senate Finance Committee may rewrite the proposal before it is presented to the full Senate.
    4. Following Senate approval, the tax bill is sent to a joint committee of House and Senate members who work to create a compromise version.
    5. The compromise version is sent to the House and Senate for approval.
    6. Once Congress passes the bill, it is sent to the president who will either sign it into law or veto the bill. If the President signs the bill, the responsible agencies, such as the Treasury Department and Internal Revenue Service (IRS), must take action to carry out the bill. If s/he decides to veto the bill, s/he returns it to the House along with a statement of why s/he opposes various portions of the bill.
    7. In the event the president vetoes the tax bill, Congress can make the changes that the President wants or override the veto with a two-thirds vote of each house; if successful, the tax bill becomes law without the signature of the President.

Presidents can, and frequently do, recommend changes to current tax laws, but only Congress can make the changes.

Why is it important to remember this process?  Because headlines and talking points are used as scare tactics, usually to sell something or solicit donations from unsuspecting consumers and constituents.  Do we need to be informed of the content of these discussions?  Absolutely.  We want to make sure our representatives are paying attention and are fully aware of our concerns, so they can represent us effectively.

Just don’t get sucked into headlines such as this one: “Why Biden’s New Plan Could CRUSH Your IRA/401K”.  This particular one-page ad goes on to tell you about their version of snake oil that they call “protecting your wealth”.  This always reminds me of the scriptural admonishment to “Be wise as serpents and harmless as doves” (Matthew 10:16).  I guess we could add: be vigilant, be aware, be cautious, and do not be afraid to question what you hear and see.

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