Today, April 15, 2020, may be the least eventful Tax Day in history.
That is of course because the federal government has postponed the federal income tax filing deadline to July 15, and has postponed other tax filing deadlines as well.
Of course, it’s not clear that this postponement is actually of much benefit. No one’s 2019 taxes are affected by the Covid-19 infection, most people actually have more time these days to complete their taxes, and tax preparers are certainly one of those businesses that can work remotely. That is, unless you’re one of those folks who still deliver all their documents to your tax preparer in a giant box!
Still, for us procrastinators, an uneventful April 15 feels like a bit of an offset to some of our current misery.
But the eventfulness is all ahead of us. The federal government is spending huge amounts of money in an attempt to stave off the destruction of a significant portion of the economy. Unfortunately, because it’s the federal government, it hasn’t happened fast enough, so there are going to be continued business failures and unprecedented unemployment filings. Businesses simply aren’t getting their PPP loans and SBA EIDL loans at the pace or at the levels that Congress led them to expect. All over the country, small businesses feel let down by their federal government.
Social Security disability applications will undoubtedly begin to increase as well, as they tend to do during recessions. In fact, one of the most cheering aspects of the recent strong economy was a sharp fall in the Social Security disability rate. That likely reverses now.
Even with a healthy, growing economy, Medicare was projected to run out of money in 2026, and Social Security to run out of money in 2035—and that’s if you believe the $2.7 trillion Social Security trust fund really exists. Already, entitlement experts are predicting that both of those dates will now be moved closer.
On the other side of the ledger, tax revenue to the federal government will undoubtedly fall because of the enormous economic shock. This combination of declining revenue, enormous increases in spending, and an accelerated crisis in entitlements all lies ahead of us.
Pondering federal debt and deficits, out-of-control spending and a looming entitlements crisis, Americans have been asking for some time “how much longer can we go on like this?” This answer has often been, “until some crisis forces us to act.”
Could the Covid-19 virus be the crisis that forces the federal government to begin setting its house in order?
Enjoy an uneventful April 15, as best you can. All the eventfulness is ahead of us.