Skip to comments.The New Tax Bill in Simple Terms and Without the Snarky Comments
Posted on 01/07/2018 6:04:57 AM PST by Kaslin
Debating public policy is fair game. Whether or not we should build a wall on our Southern border will have diverse perspectives and warrants discussion. In the new tax bill whether Congress should have eliminated the provision for carried interest is a reasonable discussion. Demagoguing the issue and outright lying to the American people about the bill that is now law is plainly contemptible.
Demagoguing may be a means to score political points, but punishment should be meted out by the voters. Minority Leader Nancy Pelosi (D-CA) has made many negative comments, calling the bill monumental, brazen theft from the American middle class. She goes on to state the bill raises taxes on 86 million middle-class households. Yes, that is correct when (and if) some of the provisions phase out eight years from now two presidential elections and four Congresses from now when most likely Ms. Pelosi will be retired as an 85-year-old.
In the meantime, even the left of center Brookings Institutes Tax Policy Center states 80% of Americans will receive a significant tax cut.
How that will happen pops right out if you look at the tax bill. For most Americans, because Congress raised the standard deduction significantly, they will also be the ones for which the words tax simplification will have real meaning. How this will happen:
Lets say you are truly a middle-class American. You will no longer have personal exemptions, but the standard deduction you will have is now $3,200 more than the prior standard deduction and personal exemption for you and your spouse combined. Combine that with reduced tax rates and you are a tax winner.
Lets say you have taxable income of $70,000. On about $50,000, the tax rate was reduced by 3%.That means a $1,500 tax reduction. Then because your standard deduction reduced your income by $3,200, you save another $96 bringing you to a savings of $1,596.
Lets say you are the model American family and have two kids, aged 10 and 14. You would lose the personal exemptions for them costing you $1,215. But now your child tax credit goes from $1,000 to $2,000 per kid. That means an extra $785 in your pocket added to the $1,596, which means a tax savings of about $2,381. And if your tax is wiped out by the tax credits, it is fully refundable (the government writes you a check) for up to $1,400 per child.
So, lets review. You live in Kansas and both you and your spouse work. You bring in about $95,000 from your two incomes and you have two kids. You will have about $2,400 less to pay in taxes in 2018, not to mention a much simpler tax return to file saving you hours of time and a fee from H & R Block to file it.
That seems like middle class tax relief to me. Why would Senator Bernie Sanders (Socialist-VT) describe it as a disaster, one of the great robberies and a massive attack on the middle-class? It will be a rare example of a middle-class person with or without children not having a tax savings from this bill. I cannot figure one. As for it being one of the great robberies that can only be that Senator Sanders thinks all your earnings belong to the government and the tax system only allows you to keep some of that money through the goodness of our elected officials. I have not found what specifically Mr. Sanders would want to do to improve the bill for the middle-class. He just attacks the plan without explanation of how he would enhance the plan.
As for higher-earners, the ones in no- or low-tax states will do well under this bill, but most live in high-tax states. Part of the reason they earn more is to offset the high cost of living in places like San Francisco, New York and Chicago which includes the very high taxes in the states where they live that are virtually no longer deductible.
My colleagues and I have begun to work through our high-earner clients and the various scenarios they live under. Tax-wise they are screwed and tattooed. There are some provisions in the law that will possibly help them, but not many.
If you work for Disney and make a $1,000,000 salary you are going to pay more. Your mortgage interest will be potentially reduced, your excessive property and state taxes will be limited to $10,000 and your employee business expenses will no longer be deductible. Your tickets for Lakers or Dodgers games will no longer be deductible. Your $5,000 contribution to USC for those choice football game tickets (no longer deductible) will no longer be treated as a charitable contribution. Their top tax rate goes down 2.6%, but that does not nearly offset all the new taxable income.
Tell me how people like this make off like bandits?
If this tax plan works, this is what will happen:
1. Because we now have competitive corporate tax rates with the rest of the world, many positive changes will occur. Our companies will stop moving to Ireland with their 12.5% tax rate. They will bring billions back into the United States remembering we are the center of the capitalist world and have the best workers in the world. Companies in England, France or Kuwait will open or expand operations in the U.S. creating more jobs here because we will no longer have the highest corporate tax rates in the world.
2. More Americans will be working and making more money and thus paying more taxes. Remember these are tax rate reductions; not tax reductions. If the government collects more money, then taxes have gone up. After the tax rate cuts of 2002, in 2006 the federal government was collecting $700 billion more per year.
3. Because the economy is doing better more people will be working and less will be on our various welfare programs helping reduce government outlays at all levels.
4. The highly-successful people will more than offset the increased taxes they will pay because they will make lots more money and pay even more taxes.
I suggest we all take a deep breath and stop the fighting. This negativism coming from the Democrats needs to stop. The bill is passed and the only way they can win this argument is by making the points outlined above not come to fruition. That will hurt every American, including the middle class they state they have such high concern for protecting.
We should all be cheering for Americans to succeed, not telling them they are going to fail. Two years from now you can tell me I was wrong, if I am, but dont try to make me wrong. That is just unacceptable demagoguery.
, I took $16K in itemized deductions and a $4K personal allowance. Thats $20K. With a $12K standard deduction, my taxable income will increase by $8K, and my tax will increase by about $1700.
If you have 16,000 in itemized deductions, why wouldnt you take those instead of the new $12,000 standard deduction?
Or is it because they are due to not being able to deduct the SALT?
If so, this will only affect people in a small handful of states. I think you need to work on your local government, it is the problem.
i agree about being strategic to avoid paying taxes. Being retired gives you a lot of options if you are making 401k withdrawals , but those not there yet still have a few. Like IRA contributions. We will be doing that this year, probably not so necessary next year.
Please do some homework or go see a tax advisor.
He hasn’t bothered to see what is in the bill.
In other words, millions and millions of people in several states that are at the forefront of our nations economic growth, and who already pay a large portion of total Federal taxes.
“However, the fact is that a significant number of people with a not-so-high income will pay more.”
No, that is NOT a fact.
That is idiotic liberal propaganda for the feeble minded to believe.
“my taxable income will increase by $8K”
Not with an additional $10,000 SALT deduction. Your taxes would DECREASE.
See posts 14 and 15.
Retired Army 1099-Rs have been available at the MyPay website since December 18th.
Also, your retiree account statement has been available on the MyPay site since December 29th. It reflects the same pay raise as the military received, 2%.
Thanks, very informative.
There is an income band that will not see their reduced deductions offset by increased ROI.
I’m single and in CA. This is a good move for the country, but this will cost me.
“Hardly anyone below 100,000 will itemize because the standard deduction is doubling.”
Just that factor, even if we don’t get a reduction in taxes is worth it re not itemizing our deductions.
So far all of our younger/hard working adults in our family/both sides, will get refunds except for one family. He and his wife make a lot of money and purposefully use/make less monthly deductions to over pay their withholding to get a refund which they treat as a bonus. They maximize their 401k’s, IRA’s and kids college funds and have enough left over to do the higher withholding overpay due to the low interest rates/cds.
My wife and I plan to get a reverse mortgage to pay off our first and second and then take the standard deduction.
According to our CPA, that will not only increase our monthly net $’s a significant $ amount. It will enable us to get a pretty good refund with the new rates. Also, we will not need him any more and will save us about $500 in his fees each year besides eliminating the paper collection hassle.
Sounds like my widowed mother-in-law, she is in similar income bracket and figures her taxes are going up as well. How can you screw up a tax cut? Ask the GOPE, they screw up everything they touch.
Although I don’t know your exact situation, what’s stopping you from continuing to itemize the 16K? Then, there is only a 4k difference (instead of the 8k you mentioned), and with the 3% lowering of the tax brackets it seems you would still come out ahead (or at least break even).
We are in a similar situation, but once I actually sat down and crunched numbers, we basically break even or ahead by $100-200.
There is still so much bs about this tax cut.
So lets make it simple.
If you don’t pay less taxes after the plan, just vote for another Deep State Democrat congress and eventually for Clinton or whomever the socialist rat is running for president.
If you do pay less taxes, share some of it with the Salvation Army, Free Republic, your church and your family.
Then, remember the negative ones, anyone, who lied about the new tax law and never trust them again. That applies to people on the internet, the media and in your life.
If they lied about this tax plan, why did they lie? Then, again, never trust them on anything.
Next, vote for more republicans and Trump again 2020! To say thanks for your tax cuts.
I could see someone who makes the same as me but bought a much more expensive house (bigger mortgage and property tax) could end up paying more.
You correctly point out that the winners and losers in the tax bill have to do with itemized deductions. Since we don’t have a business and cannot take advantage of the lower business taxes. In my case my mortgage and state taxes are under the limits so I can still deduct them. My big deduction has always been medical expenses. That was not changed (except for a lower threshold) so I can still use all my itemized deductions. This amounts to 41 K which exceeds the 24 K my wife and I will get when I cannot itemize. So for the near term I get a lower tax because of the lower rates.
I also benefit because our son will prosper in the lower corporate economy even though he did not support Trump.
The truth is that taxes always hit some more than others. The government should get out of the business of helping us decide what to do with our money. I personally would prefer a flat sales tax instead of an income tax. But for now I will enjoy the extra money and continue support for Trump.
You are being a drama queen.
I doubt if ‘millions and millions have both the income to be paying high state income tax and own a house that has a huge property tax. $10k is still deductible.
You’ve been whining all over these threads for a month now. It’s time to pull up your big girl panties and address the REAL problem - you chose to live in a liberal state.
Federal and state income taxes should never have been mingled. Liberal states should take the full responsibility for their taxes, not depend on deductions to make them more palatable.
I’m sorry you’ll pay more in taxes. Perhaps expend the time you spend here on every thread instead put to good use educating your neighbors about how other states live within their means. Our county just cut spending for next year because their revenue dropped. Conservative states handle money matters in wats that benefit, not gouge, their citizens.
However, the fact is that a significant number of people with a not-so-high income will pay more. Singles and retirees are particularly likely to end up owing an additional $1000-3000 on incomes under $100,000.”
That’s where I am. Since I cannot now deduct my big home equity loan I will pay about $2,000 per year more. I save some tax money on the new rates, but the lack of home equity deduction counteracts that savings, adds more taxes, and I pay more.
The bright spot, though, is most of us with big home equity loans also have a stock portfolio and since Trump was elected I have made several times over this additional $2,000 extra tax I will have to pay. Boosting the earnings of the corporations will increase the market even more.
That is useless to most filers, because they won't be able to itemize. Even the Steve Mnuchin said they expect 94% of filers to not itemize because of the changes to the tax law.
Youve been whining
No, you are whining. I stated my opinion very succinctly and without emotion. You however.......
Federal and state income taxes should never have been mingled
What is this "mingled" you keep referring to?
People have to pay local, state, Federal, and other taxes, and have done so for decades, and decades, and decades in this country. The 1913 law disallowed double taxation on taxing people at the Federal level on money they are already taxed upon by states. The Federal government itself at the time declared it would be "immoral" to not do so. And here we are....today.
And yes, this law affects millions of people who will now be paying higher taxes, and the number will increase even more in the out years.
Why don't you just admit that?
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