Posted on 02/09/2019 4:00:36 AM PST by Libloather
Tried to explain this to students when I taught school Fell on deaf ears. People ARE stupid.
It’s not to force them to work. Teens rarely contribute to household. School studies lots of sports. Maybe summer job. But you get screwed if kid works when applying for FAFSA. Their income counts 100%. I know FAFSA well and my kids got lots of free money legally. It’s all about timing.
The 500 credit is about 12% on 4000 exemptions. The 12% tax rate is on taxable income up to 77,000 therefore the loss of the exemptions is neutral up to that income. On the next 22% bracket up to 165k the cost per exemption is 10% or 400. However all infome in that bracket is taxed 3% less.
The next tax bracket was reduced from 25$ to 22%. If you had more than 13000 in income in the 22% tax brack in 2018 your saving on tax would offset the loss of one the exemptions.
In other words you lost exemptions was offset by tax credits and lower tax rates.
Most people just don’t get that getting a big refund is not a good thing. In fact, I know many who intentionally withhold more than necessary just so they can get a bigger refund. I try to explain it like this: you go grocery shopping every week and spend day $150. The store makes you pay $150 for those groceries. I am going to open a store where you pay $250 a week for those same groceries. At the end of the year, I’ll send you a check for $5200. Would you rather go to my store or stay with your old one. Usually that gets the point across.
I don’t need them to “contribute to the household”; I can’t pay my auto insurance if they get their drivers licenses (not cars, just the license). My insurance company requires me to insure any licensed driver in my home, and it adds thousands to the annual bill each time one gets a license - and they have high rates until 25 years old, as I understand it (two of mine are younger/teens/more recent drivers). Understand, this is not due to adding vehicles (that would be even more) - it is about adding drivers.
They work, or they remain unlicensed for years to come; this is a “Jersey thing”.
I’ve run the numbers; besides owing more due to reduced withholdings (a clerical issue, not a “higher taxes” issue), we’ve lost ALL our exemptions - including mine and that of my wife.
The overwithholding amounts to forced savings. Some lack the personal financial discipline to save any money at all
In any case the direct beneficiaries are not the poor in the area. More jobs to the local hard-to-employ? Certainly not on an efficient basis.
Totally useless article.
But... We have to keep an eye on how much we make for the year to stay within this credit budget. This is why I say we are “semi-retired” and only work when we need to. We are just fine with being “comfortable and solvent”. Our needs and appetites are minimal and noncompetitive, “Status and class” have no meaning to us, it’s all a fool’s game. :)
The newsies are pounding the lower refund as though a bigger paycheck is meaningless and that you are no longer giving the government an interest free loan is meaningless.
It’s a useful tool for those who have no financial skills or will power or budgeting skills. If the government has it then they can’t spend it. They would be better off putting it in an account instead, but an account can still be accessed.
I was distracted by your comment on using school district taxes as a method to segregate neighborhoods.
It sounds like NJ is allowed to have rich and poor school districts.
Texas had that too until someone decided it was racist so now money is taken from rich districts and given to poor districts.
Robin Hood.
I don’t claim to know your situation, but what you say is not generally true. Just to put some actual numbers to it, consider a married couple with 4 children, a gross income of $75000 and they don’t itemize. Last year, they could have exempted 37000 in income, this year 24000. That’s 13000 extra taxable income this year. At their 12% marginal rate for that income level that would be $1560 extra in taxes. If their kids are under 17, they’d get an extra $4000 in child tax credit, far outweighing the extra $1560 in liability. Even if all dependents were 17 or over, they’d qualify for the new credit for other dependents, which did not exist last year, netting them savings of $500 per dependent or $2000 total, again outweighing the increase in liability. This analysis even ignores the reduction in marginal rate that will save most people money as welll (12% is the 2018 marginal rate for that income level).
Obviously different people have different situations, but most will see lower tax liability this year, which is the real goal of any tax reform.
You get interest on savings. This is the government having use of free money under the guise that people are too stupid to manage it themselves. Some are too stupid. Not my problem and not the problem of a free society.
Don’t forget there are still exemptions for seniors 65 plus.
Read the whole thread. There are Freepers here posting about their issues with provisions in the new tax code that apply to ALL states — not just the ones with high state/local taxes.
We have that already (called Abbott districts); normal people have to pay for their schools (and cops, public works, etc.) through property taxes, while slums’ schools (and cops, public works, etc.) are funded by redistributed state taxes - and now the state has run out of money (Robin Hood is broke - nothing left to steal from the rich). Sounds like Texas pools the school money; NJ doesn’t, just gives out income & sales tax revenues.
This is why NYC’s Amazon deal is opposed by many well-meaning, well-informed people; the taxpayers of NY STATE will continue dumping money into NYC because Amazon contributes nothing. On the flip side, the state and city both have income taxes - so they’re hoping to get their cuts from that.
Although it should be a choice, you are right on the money Bert. “Most” lack the personal financial discipline to save any money at all.
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