Are you better off?

Bill Taylor - Contributing columnist

It seems to me that one of the questions that will be raised during this election year will be that old standby, “Are you better off now than you were four years ago?” The answer(s) to that question may touch on a variety of areas such as: How comfortable are you with your life? Are you satisfied with the direction(s) the country is going? and Do you consider changes in the past four years to have had a positive or negative effect on your personal lifestyle, or belief system?

Questions like these are difficult to quantify, that is, to measure, but there is one venue where we may analyze and evaluate the “then” of four years ago and the “now” of today. It’s our federal income taxes – a tangible and measurable indicator. Before diving into my analysis, I figure some background is appropriate.

Back when both my Sweetheart-for-Life and I were drawing paychecks instead of pensions, we, with the advice and help of a financial planner, made modest, but regular investments in stocks, bonds, and an IRA for each of us. We both retired completely some 25 years ago and since then have relied on our pensions for living expenses leaving these investments under the watchful care of our financial advisor as a hedge against future financial needs. (The one exception has been the mandatory distribution from our IRA’s which we must take.) Thus, we are effectively on a “fixed” income.

Okay, let’s move on. I recently completed our 2019 income tax and the computer program I use furnished some interesting information – a “Tax History Report” comparing a variety of categories, such as “adjusted gross income,” “taxable income” and “tax” for the past five years of our federal income tax.

Without going into specific dollar amounts, here are the results comparing our 2016 federal tax situation, before the Trump tax cuts, with that of 2019 after the cuts. Our adjusted gross income increased by 14.75% between 2016 and 2019. This increase came from COLA’s for our pensions and from interest, dividends, and capital gains from our investments. (Note: this figure does not include the mandatory distributions from our IRA’s which, although increasing each year, didn’t add to our adjusted gross income because we sent them directly to charity.) We took the “standard deduction” for both years with the amount of that deduction increasing by 16.9% from 2016 to 2019 so we got a greater deduction in 2019 than in 2016 even though our status (married filing jointly) hadn’t changed.

Now here is a real grabber. Our tax payments, that is, the amount automatically deducted by the government from our income, decreased by 11.2% from 2016 to 2019 thus leaving us more money in our pockets. Of course, since the feds are taking less out, any refund would be smaller, but I would rather have that money in hand than lend it interest-free to the government. Probably the most important finding is that, although our adjusted gross income and taxable income had increased by nearly 15%, our actual tax bill for 2019 was essentially the same ($25 more) than for 2016. Yep, that’s right.

We basically paid the same amount of federal income tax on our 2019 return as we did on our 2016 return although we had a larger income. How about them apples. Our effective tax rate, that is, the 2019 percentage of our income we paid in federal income tax, decreased by 13.% when compared to the rate we paid in 2016 and our tax bracket, that is, the percentage at which the next dollar we earned would be taxed, was also lower by the same percentage.

Okay, I realize these percentages may be a bit confusing and even boring, but they are indicators of how things have changed financially for us, an elderly middle class family, since the last presidential election. Our family income has gone up and taxes on our income have effectively gone down. In our case, we have more disposable money to meet those increasing expenses associated with being part of the geriatric generation – and those expenses are neither trivial nor covered by any other means. Yep, we old timers gotta somehow handle them ourselves. Well, there you have it, a thumbnail sketch of one way of addressing the question, “Are you better off now than you were four years ago?” I’m not suggesting this is the same scenario for everyone, but when it comes to our financial picture it sure looks like we’re better off. At least that’s how it seems to me.

Bill Taylor

Contributing columnist

Bill Taylor, a regular contributing columnist and local area resident, may be contacted at

Bill Taylor, a regular contributing columnist and local area resident, may be contacted at