Posted on 12/06/2017 2:19:53 AM PST by JayGalt
“In year 29, can we file separately?”
Yes.
“I used the tax calculator and my taxes go up substantially.”
Maybe the tax calculators suck. Do they nail your taxes exactly as they are now? Of course not.
Blue state per capita contributions to the fed far exceed those of other states — and that’s in addition to SALT.
“...a massive new write off in for rich parents sending their kids to private school.”
Is that the extension of 529 plans to private K-12 schools?
If they do it is because they make more, but their tax rates are far lower because of salt.
Actually, your claim is bogus. Top federal tax States are Kali, Texas, NY, Florida, Illinois, NJ, Ohio, Penn, Mass, Minnesota, Georgia, Virginia, North Carolina.
Top States per capita are DC, Delaware, Minnesota, NJ, Connecticut, Mass, NY, Rhode, Nebraske, Illinois, Ohio, Arkansas.
I’ll second that.
One of the most annoying things (and there are many) about references to “Javanka” is the implication that Trump is so weak and vulnerable as to be manipulated by his daughter and son-in-law.
Also, why do you combine the names Jared and Ivanka? Is it supposed to be a clever insult somehow? Is it supposed to imply that they are so joined at the hip they think and act as one?
If so, that is an insult fail. In fact, it speaks very well of a married couple to suggest they think and act as one.
The “Javanka” thing was goofy to begin with, now it’s tiresome and just creepy.
Divide state contributions to the fed (individual, not business) by households to get the averages.
CA, TX, NY, and FL a distant fourth, are the overwhelming top contributors to the fed. TX lags NY by a few percent per household despite SALT deductions. Further analysis shows a significant difference on contributions to the fed.
Per capita doesn’t necessarily reflect the entirety of the SALT debate since multiple individuals can be independently filing under the same roof.
My point: red states are not subsidizing blue states for reasons of the SALT deductions related to state and property taxes.
“I used the tax calculator and my taxes go up substantially.”Maybe the tax calculators suck. Do they nail your taxes exactly as they are now?”
Of course not. the standard deduction is being not quite doubled [for individuals, it would go from $6,350 to $12,000, and for married joint filers, it raises that deduction from $12,700 to $24,000], but then they are eliminating the individual personal exemptions [of $4,050 per person] for yourself, your spouse and your dependents; thereby, reducing the doubled standard deductions real net worth to $7,950 for singles [a real net increase of $1,600 from existing std deduction] and to $15,900 for joint filers [a real net increase of $3,900 from the current std deduction]. A couple with 2 children will have their $24,000 doubled standard deduction reduced by $16,200 for a real net reduction of $7,800. so they give with one hand but take away with the other. in addition, they are eliminating the extra deduction for those over 65 or blind.
Now, if you take the standard deduction, you cannot then itemize; therefore, giving up the normal deductions for medical expenses, long term care insurance expenses, state and local taxes, property taxes [under the senate bill], mortgage interest deduction limits, student loan interest deductions, moving expenses, alimony, dependent care assistance accounts, casualty and theft losses, unreimbursed job expenses and tax preparation fees.
On the contrary, I think that passing a bill without running calculations is premature. However, I agree that we should not rely on statements and calculators that do not show their assumptions. Everyone should "show their work" to whatever degree is possible. I tried to do that by providing the "Calculation of Taxes" tab to show the calculations above. On the contrary, the great majority of articles and statements I see do not give their calculations. I heard Kevin Brady give 16 taxpayer examples on the House floor on Monday which I've listed at this link. Most of them, he didn't bother do give the income and many of the tax savings appear to be greatly inflated. Yet it seems that nobody is checking the accuracy of any of the examples being cited. Is it any wonder then that many of them appear to be incorrect?
https://taxfoundation.org/tax-cut-amended-senate-tax-cuts-and-jobs-act/
I thrust the TaxFoundation.
Of course, we don’t know what’s in the pie until it’s baked in the Conference.
“”...Our first household (James) is a single individual earning $30,000 with no dependents. We assume that this filer takes the standard deduction and has tax-deferred retirement contributions of $2,600 (5 percent of income). Under current law, this taxpayer faces overall tax liability (including employee-side payroll taxes) of $4,331, and would see a tax cut of 9 percent, to $3,953. This household’s after-tax income would increase by 1.3 percent.
Our second household (Jason) is a single parent with two children, earning $52,000. This filer contributes $4,000 to tax-deferred retirement accounts. The taxpayer takes the standard deduction, and is eligible for child tax credits. This taxpayer sees a 36 percent reduction in tax liability, increasing after-tax income by 3.6 percent, chiefly due to the plan’s expanded child tax credit. This filer’s liability goes from $5,198 under current law to $3,306 under the proposed tax bill.
Our third household (Amber) is a single individual earning $75,000 with no dependents. We assume this filer takes the standard deduction and has tax-deferred retirement contributions of $5,500. This taxpayer’s liability is reduced by 11 percent, with after-tax income increasing by 2.4 percent. Taxes owed go from $16,104 under current law to $14,327 under the Senate proposal.
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Our fourth household (Kavya and Nick) is a single-earner married couple with two kids, earning $85,000. We assume tax-deferred retirement savings of $5,500, and that the couple takes the standard deduction. They also benefit from the expanded child tax credits, and see an overall tax savings of 20 percent, from $11,035 to $8,782. This family’s after-tax income increases by 2.7 percent.
Our fifth household (Sophie and Chad) is the first to take itemized deductions, which requires additional assumptions. We modeled a dual-income family with incomes of $95,000 and $70,000 respectively (for a total of $165,000), with two children. To derive the amount of deductible home mortgage interest, we assume a $340,000 home financed with a 30-year mortgage with 3.5 percent interest and 20 percent down. (In all cases, we assume that mortgage debt meets the definition of acquisition debt, and is not equity debt.) For deductible property tax, we assume an effective property tax rate of 1 percent. We also assume charitable contributions comprise 2.5 percent of income, and an effective state and local income tax rate of 5 percent. This couple has $20,000 in tax-deferred retirement contributions, and loses most of the value of the child tax credit under current law, but could claim it in full under the Senate bill. These taxpayers see a 8 percent reduction in tax liability, from $29,345 to $27,122. Their after-tax income increases by 1.3 percent.
Our sixth household (Soren and Linnea) also itemizes. A dual-income household with three children, this household sees incomes of $250,000 and $75,000 respectively, with an $800,000 home (same assumptions as above), charitable contributions of 2.5 percent of income, an effective state and local income tax rate of 5 percent, and a slightly higher effective property tax rate of 1.25 percent. The couple has $37,000 in retirement contributions (maxing out 401(k)s under current law in 2018), and is ineligible for child tax credits under current law, but eligible under the Senate proposal. Their tax liability would decrease by 10 percent under the plan, from $71,629 to $64,456. Their after-tax income increases by 2.2 percent.
Our seventh household (Laura and Seth) is a married, single-earner, two-child household with $2 million in income, a $2.5 million home, a maxed-out 401(k), and other assumptions identical to the previous household with the addition of about $6,000 in other miscellaneous itemized deductions. In this case, tax liability decreases by 1 percent, from $713,234 to $703,749. Their after-tax income increases by 0.5 percent.
Our eighth household (Olivia and Richard) is a married, single-earner, two-child household with $1 million in income, $200,000 of which is derived from a active stake in a qualifying pass-through business subject to the proposed 17.4 percent pass-through deduction. We assume a $1.5 million home, with other assumptions identical to the other households. In this case, tax liability declines 8 percent, from $318,315 to $292,478. Their after-tax income increases by 2.6 percent.
Finally, our ninth household (Joe and Ethan) consists of married retirees with $48,000 in retirement income. We assume that they take the standard deduction, which is increased for filers over 65. They also fall within an income range that allows a portion of their Social Security income (which we set at $16,800) to be exempt from taxation. Under the plan, their after-tax income increases by 0.6 percent, with tax liability falling from $3,497 to $3,227, an 8 percent reduction in tax liability.
All of our sample filers receive a tax cut, but the size of that reduction varies. The significantly higher standard deduction, combined with lower marginal rates and a more generous (and more broadly available) child tax credit, drives the reductions in tax liability for low- and middle-income filers. A reduction in itemized deductions limits reductions in tax liability for upper-income earners, though these filers benefit from the repeal of the alternative minimum tax.
Finally, these tax calculations are assumed to take place in 2018. Because of the temporary nature of the majority of the individual title in the Senate’s version of the Tax Cuts and Jobs Act, these results are not representative of the entire 10-year budget window. We also made no assumptions regarding individual’s health insurance status, meaning impacts of functionally eliminating the individual mandate penalty are not included.
Individual income taxes are only one component of the proposed Tax Cuts and Jobs Act, and changes to business taxation could have a significant impact on wages and economic growth. Still, sometimes it’s helpful to drill down on one component of reform, and, as these sample taxpayers demonstrate, most taxpayers across the spectrum experience lower tax bills under the Senate proposal.
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