Posted on 04/26/2017 12:46:54 PM PDT by Enlightened1
No NY, NJ, CA or IL republicans can vote for it, because it ends deductibility of state taxes.
That is political suicide in those states.
Ending deductibility of medical expenses is a problem also. This will hit me hard and I am urging my reps to preserve this or vote NO.
think so....along with eliminating property tax deduction
But basic family deduction is doubled.
Thanks for the info. I haven't yet read the details of the plan.
I agree with your take on the political costs to some Republican legislators. Non-deductibility of state income taxes is literally a poison pill for them, and they're not about to swallow it.
I've got to ask, though, whose bright idea was it to strike that deduction in the first place? That's a deal breaker for voters on both sides of the aisle. Bad idea, which ought to be removed from the bill.
Intimately so, which is why I think it's the best way to raise revenue to fund the government.
“... What IF the mortgage deduction was done away with...do you have a mortgage? How would you react?...
How do you feel about large medical bills NOT being deductible?”
Large medical bills are only deductible if they exceed 10% of a person’s income.
The mortgage deduction isn’t a huge player for many people. Unless they have a huge mortgage, or give large amounts to charity - both of which apply to upper income people - they won’t see much benefit.
Suppose a person with $50K in income has $6000 in out-of-pocket medical bills, pays 9,600 in mortgage interest and gives $2000 to their church. Their itemized deductions would total $1000 + $9,600 + $2,000, so 12,600 total.
The standard deduction is already $12,600.
Suppose the same person has $10,000 in medical bills. That would up his itemized deductions up to $16,600, which would increase his deduction by $4,000. Assuming no kids, he’d be in the 15% tax bracket, so he’d save $600 on his taxes. While better than nothing, $600 in savings isn’t going to do much to cover his $10,000 in medical bills, let alone make owning a home practical.
Of course, people in high tax states are more likely to be able to itemize, but the benefit of itemizing depends on how much your itemized deductions exceed $12,600, and what your marginal tax rate is. Compared to the child tax credit, additional child tax credit, EITC and the education credits, it is trivial.
Roughly 20% of people making 50K or less itemize, and as you can see, many of them do not get a huge tax benefit from itemizing.
“Suppose the same person has $10,000 in medical bills. That would up his itemized deductions up to $16,600, which would increase his deduction by $4,000.”
And if the stuff leaked so far in Trump’s plan is accurate, that same person would still owe no more, since the standard deduction would be somewhere around $24,000 - $25,000.
Here is another example:
Suppose a person with $50K in income has $10,000 in out-of-pocket medical bills, pays 12,600 in mortgage interest, $7,000 in state taxes and gives $2000 to their church. Their itemized deductions would total $5000 + $12,600 + $2,000 + $7,000, so $26,600.
Under Trump’s plan, he could still itemize, but his additional deduction compared to the standard would only be $2-3,000. That would reduce his Fed tax by around $300-450, pretty small potatoes to someone who is already paying out $7,000 in state taxes and over $1,000/month in mortgage interest.
BTW - the number of people with over $10,000 in out-of-pocket medical bills is pretty small.
Just like paying taxes on your SS benefits if you earn over a certain amount. Already paid the tax once then when you collect benefits tax you again.
Lots of people depend on being able to us the mortgage deductible and people who, sadly, get terrible illnesses ( such as cancer ) need to be able to deduct that too and neither of those groups of people are wealthy.
And just at what dollar point, would you consider someone to be "wealthy"? And you need to remember what is "wealthy" in one state, is almost POOR, in many others!
That they do, as well as tax people who arfe on Medicare, at certain income levels, too.
And a whole lot of people get “REFUNDS”, which they don’t deserve, since they don’t pay income taxes. Talk about things that STINK!
Yes, it all gets passed down to the final customer.
Adding yet another sales tax, to state and city taxes, would make things more expensive. And paying no income taxes wouldn't offset it, since the Fed sales tax would have to be high enough to offset not having an income tax.
And since you keep ignoring things I mentioned in my original post, what about black markets, bartering, and just outright FRAUD, which would happen. Without an IRS ( or are you saying that the IRS would be over seeing the Fed sales tax? ) how would that all work?
And then throw in the people every company would have to hire, to do all of the paperwork. What happens when someone/s makes mistakes? Is the company owner blamed, the people who work for the company, just those who are in charge of tax compliance, all of those people ?
Would the sales tax have to be charged by babysitters? That WAS in the original plan...way back when.
Friend, I appreciate your passionate reply, but I’m past arguing about the merits of the Fair Tax. I studied all the angles 15 years ago, and concluded that the upsides to the plan far outweighed the downsides.
Neither one of us will change the other's opinion; however, it looks like it just depends, for some, on whose ox is being gored...until that ox catches up with them.
OTOH...this is NEVER going to happen; at least in my lifetime and probably not in yours either, so this is a silly discussion. What isn't "silly", is that this new proposed tax plan has a few good things ( especially getting rid of the DEATH TAX ), some not good things, and will NOT come to fruition, if it does, in any way even vaguely similar to what has just been presented.
“You obviously don’t know many people.”
I tried my hand at doing taxes for other people. Did about 400 total over a couple of years, so I probably have seen more tax returns from average families than you have.
I’ve explained WHY the mortgage deductible actually doesn’t do much for very many people. And that is with the CURRENT $12,600 standard deduction. If Trump raises the standard deduction to $24,000, then almost no one in the middle class will be harmed by losing the mortgage interest deduction.
What is middle class? It depends on definitions, but Business Insider says it ranges from $72,000 - $145,000 in Maryland down to $38,000-76,000 in Mississippi. I’m in Arizona, and I chose a figure about the median for AZ - $50,000.
http://www.businessinsider.com/middle-class-in-every-us-state-2015-4
https://www.census.gov/content/dam/Census/library/publications/2014/acs/acsbr13-02.pdf
But if increasing the standard deduction to $24,000 and cutting out the mortgage interest deduction is going to harm you, then you live somewhere very expensive. I don’t know what percentage of families pay both more than 10% of their adjusted gross income in out of pocket medical bills AND pay $1500+/month in mortgage INTEREST - but it isn’t many.
If you live in Maryland...well, MOVE!
BTW - I am not a fan of the EITC. It is welfare, and should be handled as such.
I DO live in an expensive state and so do many, many others, who WILL suffer from not being able to deduct them.
That's an awfully LOW threshold, in Maryland, for what is "wealthy" and even more so, for Mississippi; but then, I did know that Mississippi was a poor state.
Is it really THAT lows in Arizona? GOSH....
“I DO live in an expensive state and so do many, many others, who WILL suffer from not being able to deduct them.”
Do your itemized deductions exceed $24,000? When I did other people’s taxes, it was in Arizona...but I’d guess less than 1% had itemized deductions over $24K, and they were folks with over $200K in income. That was only a couple of years ago, but it included people who were willing to pay to have their taxes done.
If Trump doubles the standard deduction, very few people will pay more in taxes due to losing the home mortgage interest deduction. Most will see a cut. At least based on what I saw in AZ a couple of years ago.
And now, a la what's on DRUDGE, the damned DEMs want to add the insane VAT to this proposition. Ergo...EVERYONE will be SCREWED, if the GOPers cave and Trump okays that.
You don’t have a mortgage, but you will be screwed if the standard deduction goes up to $24,000? How much do you pay in state taxes?
It’s none of your business how much I pay, in state taxes, and asking me, on a public thread, to post that, is rude.
Can you further explain this to me? I’m still not understanding it.
How much would a married couple tentatively get to deduct for their standard deduction? Is there a personal deduction for each person?
Right now I am figuring we will owe thousands more, because (based on my most probably flawed calculations), we are over the cutoff for the one category by .085%, jumping us up to the next percentage tax bracket.
We have no mortgage or child care or interest.
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