Posted on 12/02/2017 2:44:33 PM PST by Jim Robinson
Edited on 12/02/2017 2:54:27 PM PST by Jim Robinson. [history]
Updated.
I calculated federal income taxes for two hypothetical working class couples filing jointly under the new senate proposal compared to current law, taking the standard deduction in each case (see the pdf at source).
The first working class family has a combined income of $100,000 and if my calculations are NOW correct would owe $10,948 in federal income taxes under current law with an effective tax rate of 10.9%.
Under the senate proposal, this family's federal income tax would be cut to $8,739 with an effective tax rate of 8.7%. This is a substantial tax cut.
The second working class family has a combined income of $60,000 and would owe $4,948 in federal income taxes under current law with an effective tax rate of 8.2%.
Under the senate proposal, this family's federal income tax would be cut to $3,939 with an effective tax rate of 6.6%. This is a very substantial tax cut.
The tax cuts are even more dramatic if these families have children and can take the $1650 tax credit per child (compared to the $1000 per under current law).
If each of these working class families above have two children they get a tax credit of $1650 X 2
So the family earning $100,000 gets $3300 credit leaving a tax bill of $5,439 or 5.54% eff rate.
The family earning $60,000 gets $3300 credit leaving a tax bill of $639 or 1.4% eff rate.
Very substantial cuts!
Working class families with two children, earning $55,000 or less owe no federal income tax at all.
This will allow the vast majority of "working class" families to receive a substantial tax cut by simply taking the standard deductions.
This thread was to counter the democrat lie that this tax cut is only for the rich and that the poor working class people are the hardest hit.
All I can do now is point to the tax bill authors’ own estimates:
“The Senate Republican legislation proposed to eliminate all state and local tax deductions — a move that would produce about $1.5 trillion in additional federal revenue over the next decade to help offset the large corporate tax cut and smaller reductions to individual rates.”
http://www.latimes.com/business/la-fi-state-local-taxes-20171130-story.html
That $1.5 trillion in additional revenue will be paid by people who are no longer able to deduct state income taxes. In other words, they’re paying money to the federal government that it wouldn’t otherwise be receiving.
Thank you!
From what I’ve seen, no change. Devil is in the details though.
Looks good.
Thanks Jim
A cop & a nurse are not middle class. That is upper middle.
A cashier & her husband living in his parent’s basement are middle class.
How do you figure that?
Retired in Jersey - pay reduced state income taxes because we don’t have to declare Social Security and portions of pension and IRA payments as state income - no more mortgage, so haven’t itemized for the feds for a couple of years - already take federal standard deduction which is augmented for couples over 65 and will be going up more under new plan - that and the lowered federal rates, whatever they turn out to be, make it appear we’ll save a couple of thousand, about ten percent, on federal taxes under the new scheme - I like it.....
Well, the Los Angeles Times like all democrats and establishment RINOs claim you have to “pay” for tax cuts and their preferred method for accomplishing that lie is to raise taxes elsewhere to be “revenue neutral.” They’d never dream of cutting spending or cutting government. But I think Trump will be bringing them up to date in the next couple rounds.
The increase in the SD is just a couple grand more than the personal exemption that they are taking away.
Thanks
Exactly.
Thanks Jim, very well done!
I will use this tax example to counter my lefty brother’s pessimism, who like whiny lefty liberals will try to sabotage President Trump’s winning over the next 8 years. They will not get their deranged foothold.
They will be forced to suffer in the warm sunshine of Winning!
what concerns me most about both the house and senate versions is the elimination of the personal exemptions ($4,050 x each family member). And to the degree that I have seen it mentioned, it’s been in the context of a single person or married couple.
for my family of 5 however, this increases my taxable income by $20,250.
True, but they’ve also cut the rates in the brackets and protect more income with the lower rates by widening some of the brackets. If you can reduce the direct tax rate by 3% on two or three hundred thousand dollars, you’re saving far more than the net savings on the personal exemption.
If some of those are children, you may be able to directly reduce your taxes owed by a $1650 tax credit per child, which may net better than reducing your taxable income. You will also be paying your tax on that taxable income with a reduced rate, btw.
“Since individuals pay taxes not “averages” ..”
?? “average” is a simple math term. It means the majority of tax filers will be their taxes reduced.
Giving you more money in your pocket takes away your money from them, period
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