Michael Gray, CPA's Blog

Tax and financial advice from the Silicon Valley expert.

“Big, Beautiful Bill” isn’t a slam-dunk

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The House Ways and Means Committee has released “The One Big Beautiful Bill” that includes a “wish list” of President Trump’s tax legislation proposals. On Friday, May 16, conservative Republicans joined Democrats on the House Budget Committee to block the legislation, 16 voting in favor and 21 against, from reaching the House floor for a general vote.

The bill would extend most the tax cuts enacted in the Tax Cuts and Jobs Act of 2017 that would otherwise expire after 2025. In addition, the bill includes tax breaks for some tips, overtime and Social Security for four years. The Social Security break would be a $4,000 tax deduction for seniors making less than $75,000 per year.

The bill would also restore 100% bonus depreciation and the expense election for research and experimentation expenses.

In order to partially compensate for the tax cuts, the bill includes about $715 billion in cuts to Medicaid and the Affordable Care Act. States would implement work requirements in 2029 for childless adults on Medicaid who don’t have a disability, requiring them to work for 80 hours per month. Beneficiaries who earn above the federal poverty limit would make co-payments of up to $35 for doctor visits.

The Congressional Budget Office estimates about 8.6 million people could lose their insurance coverage.

Other compensating items include repealing Biden’s student loan forgiveness plans, so more student loan borrowers would be required to repay their loans, and repealing energy incentives (including the $7,500 credit for certain new electric vehicles), enacted under the Biden Administration.

Ironically, conservative Republicans on the House Budget Committee voted against the proposal because they wanted bigger cuts for Medicaid, joining Democrats, who oppose the Medicaid cuts.

Representatives from states that impose income taxes and those from states that don’t impose income taxes are also arguing about how much the ceiling for the itemized deduction for state taxes should be. The limit would be increased from $10,000 to $30,000 under the Ways and Means Committee proposal.

Remember tax legislation is a negotiation with some constraints. House representatives will continue to negotiate the details of the “One Big Beautiful Bill”. None of the Republicans want the 2017 tax cuts to expire, so it’s likely tax legislation will be enacted this year.

Write your representatives in Congress to let them know your concerns for the tax and budget process. https://www.congress.gov/members/find-your-member

Greatest scientist of her time slain by a “Christian” mob

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The city of Alexandria in Egypt was one of greatest centers of learning in the ancient western world.

The city was founded by Alexander the Great, and the family of his named successor, Ptolemy, became the rulers of Egypt until the death of Cleopatra VII, so the culture of the city was a mixture of Greek, Egyptian and Roman.

The Library of Alexandria contained all of the known “books” of that time. Scholars came from all over the world to study there. The Library was accidentally burned by Julius Caesar during his conquest of Egypt and most of the books were moved to the Seraphium. The Alexandran Museum, a type of university, was housed in the Library and, later, the Seraphium.

The Seraphium was destroyed in 391 AD by Theophilus, the archbishop of Alexandria, under orders from the Roman emperor to destroy all pagan temples. (The Emperor Constantine adopted Christianity as the religion of the Roman Empire.) The Seraphium was destroyed because it included a temple of Serapis. Theophilus later built a church on the site.

Hypatia was the daughter of Theon of Alexandria, an eminent mathematician and astronomer, and author of a student edition of Euclid’s Elements. Theon was the last known member of the Alexandran Museum. Hypatia succeeded her father as the leading teacher of science, mathematics and philosophy of her time, and one of the first women to teach those subjects. Her lessons included how to design an astolabe, a portable astronomical calculator, that would be used until the 19th century.

Hypatia was a philosopher in the Neoplatonic school, a belief system in which everything emanates from the One.

Her lectures became immensely popular, including attracting Christian students. Some of those students became leaders in the early Christian church and incorporated her ideas into their Christian faith. Her student, Synesius, became a bishop in the Christian church and incorporated Neoplatonic principles into the doctrine of the Trinity.

Hypatia became very influential in Alexandria’s politics, and was often consulted by the city’s leaders. She was a close friend of Orestes, the governor of Alexandria. Although Orestes was a Christian, he didn’t want to cede power to the church.

Theopolis was succeeded as archbishop in 412 AD by his nephew, Cyril. Cyril continued his uncle’s attacks on other faiths. Cyril competed with Orestes for control of Alexandria. The struggle for power came to a peak following a massacre of Christians by Jewish extremists. Cyril led a crowd that expelled all Jews from Alexandria and looted their homes and temples.

Orestes refused Cyril’s attempts at reconciliation and Cyril’s monks were unsuccessful in an attempt to assassinate Orestes.

Hypatia was an easier target. She didn’t have guards protecting her. She was a pagan who publicly spoke about a non-Christian philosophy. A rumor spread that she was preventing Orestes and Cyril from settling their differences.

In March, 415 AD, Peter the Lecter and his mob captured Hypatia, dragged her into a church, stripped her naked, and hacked her to pieces. To avoid having her venerated as a martyr, they cremated her remains.

Despite those efforts, Hypatia was remembered and revered as a martyr by the Christians of Byzantium, and today she is a symbol of Enlightenment values.

The story of Hypatia is still important today. Some fundamentalist Christians and other groups reject science. The Trump administration is withdrawing funding from scientific research at the National Science Foundation and the National Institutes of Health, and attacking academic freedom. We are also seeing a resurgence in censorship and book banning.

The abandonment of freedom of thought and expression could lead to a new dark age for the United States.

No taxation without representation!

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On December 16, 1773, in Boston, Massachusetts, American colonists dumped 342 crates of tea in Boston Harbor to protest a tax on tea and the monopoly of the British East India Company on the tea trade.

The Boston Tea Party is an example of the tradition of resisting tyranny and defending human rights in America.

The English Parliament believed it had the authority to impose a tax on the residents of its American colonies. It relented and eliminated taxes previously imposed under the Stamp Act and the Townshend Acts. The Tea Act was passed on May 10, 1773, principally to bail out the British East India Tea Company, which was on the edge of bankruptcy after experiencing financial setbacks in India.

Parliament didn’t expect any resistance, because the tax was only three pennies per pound of tea (remember a penny was worth something back then), because the tea would be much cheaper than any alternative, including the tax.

American colonists resented the tax, because they had no representation in Parliament. They declared, “No taxation without representation!”

On November 29, 1773, Samuel Adams invited “every friend to his country, himself, and posterity” to attend a meeting at Boston’s Faneuil Hall to discuss how to best face this threat to American liberty. 5,000 out of a total population of 16,000 attended the meeting.

When Governor Hutchinson refused an appeal by the owner of the ship, Dartmouth, to return to England, members of a crowd proceeded to the ships to dump the tea.

The Boston Tea Party was one of a series of events that led to the American Revolution and, eventually, the United States Constitution.

Today, many Americans, including (Republican) Senator Paul Ryan, are expressing outrage that President Trump is imposing worldwide tariffs by Executive Order, without enabling legislation being enacted in Congress. (Remember tariffs aren’t paid by foreign exporters, but by United States importers, and are likely to be passed through to consumers.)

Under the United States Constitution, the “power of the purse”, including enacting tax legislation, is supposed to reside in Congress. Tax legislation is initiated in the House of Representatives to assure representatives close to their constituents will debate tax proposals. Although U.S. Presidents have imposed tariffs in the past, they have been targeted to certain imports, not broad based tariffs on virtually every country in the world.

President Trump has “paused” most of his proposed tariffs for 90 days, except a 10% tariff on all imports and a 145% tariff on imports from China. China has imposed a retaliatory tariff of 125% on imports from the United States.

Trade between the United States and China has virtually stopped.

President Trump claims to have the authority to impose broad-based tariffs because he has declared a national emergency under the International Emergency Act. (The power to impose tariffs isn’t specifically stated in the International Emergency Act.)

Also, the current situation it doesn’t seem to be a sudden, unforeseen crisis that Congress cannot act quickly or flexibly enough to address that is a true emergency. Although Congress has been debating whether to adopt a resolution declaring there is no emergency, it seems the Republican majority will support President Trump and won’t adopt the resolution.

A dozen states, including Oregon, Arizona, Colorado, Connecticut, Delaware, Illinois, Maine, Minnesota, Nevada, New Mexico, New York and Vermont, have filed a joint lawsuit in the U.S. Court of International Trade in New York to stop President Trump’s tariff policy, saying it is unlawful and has brought chaos to the American economy. We’ll eventually find out what the courts say and, if they rule against President Trump, whether he follows their ruling.

We are already seeing large protests across the United States. If President Trump’s tariff policies continue, existing inventories of imported goods will be exhausted and American consumers will find they can’t find the clothing, toys, sports equipment, furniture and other imported products they are accustomed to buying on the shelves, which could lead to bigger crowds at protests and Town Hall meetings.

More unhappy voters seem to increase the possibility of “flipping” seats in Congress in the 2026 mid-term election and the Republicans losing their control of the House of Representatives.

Will Christmas be cancelled this year?

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(What about back-to-school shopping?)

Maybe you should take care of back-to-school and holiday shopping now, while retailers have merchandise to sell.

Toymakers, children’s shops and specialty retailers have paused orders for the winter holidays in response to President Trump’s 145% tariff on imports from China.

Almost 80% of all toys and 90% of Christmas decorations sold in the United States are made in China.  97% of clothing sold in the United States is imported, with about 27% imported from China.

Shipments from China have virtually stopped.

Retailers need to place their orders several months in advance in order for merchandise to arrive in time for the holiday season.

Unless President Trump relents on his tariff proposals, there might be very few items on the shelves of retailers for back-to-school and holiday shopping.

Since most retailers earn their profits during the holiday season, the retail outlook for 2025 seems bleak.  Some retailers are consulting bankruptcy attorneys.

The United States Senate voted down a Democratic resolution to block the tariffs, 49 – 49, on April 30, 2025, so the decision is now solely President Trump’s.

(San Jose Mercury News, May 1, 2025, Section A, p. 3, “Senate votes down resolution to block Trump’s global tariffs”, Section C, P. 9, “Retailers fear tariffs will affect Christmas toy sales.”)

Michael Gray, CPA's Blog

Tax and financial advice from the Silicon Valley expert.