Watch out for this:
“8. Curbs who’s hit by AMT: Earlier bills called for the elimination of the Alternative Minimum Tax. The final version keeps it, but reduces the number of filers who would be hit by it by raising the income exemption levels to $70,300 for singles, up from $54,300 today; and to $109,400, up from $84,500, for married couples.”
Wow, that looks like a really generous adjustment. /sarcasm
Another interesting thought about definitions of middle class. We often see this on CC, where the definition of “CC middle class” is wildly different from reality. We are on CC, so let’s look at the middle 50%
Using household income:
$28,000 – $99,000
Perhaps I now understand why congress thinks this is a middle class tax cut:
I will admit the immediate quote above is a bit weakly sourced:
Source: https://www.thebalance.com/definition-of-middle-class-income-4126870
Since these two cases are not even remotely comparable, statements like this are just inflammatory.
And - gets it from whom? No one is giving them anything. They are keeping more of their own money.
I get frustrated with the mindset that the gov’t is “giving” money to people when taxes get cut. The gov’t doesn’t own the money I make.
One final source for the frustration of those of us who think this bill is bad policy:
Sorry to repeat, but I will leave it with Lewis Black’s words.
“I hate this bill because it hurts those who need help, and helps those that don’t help.”
@saillakeerie I would prefer they never had let this get to where it is. The whole “deal” made with companies with off shore companies (multinationals) is that the money would ONLY be taxed if they brought it back. We should have simply taxed it when earned. Now it has built up to such a degree that lawmakers see this as something that they can spin to the American public and say if the money was brought back all these good things would happen.
We have a complicated taxation system with lots of preferences and incentives. This bill, rather than simplification, represents a dramatic shift in preferences away from workers in favor of owners of capital. That’s good for me but, in my opinion, bad policy.
It actually is a big deal - that $25000 increase will reduce the AMT you could potentially owe by $6500.
But the bigger deal is that the exemption thresholds have been increased dramatically, from 120K/160K to 500K/1000K. This will keep most people out of the 35% incremental rate when the exemption phases out.
As a result, many many fewer people will have to pay AMT.
If you tax foreign income of US nationals when its earned, you will encourage companies to go offshore. If you have a US company that is looking to open up a subsidiary in China and you tax the US parent on income of the Chinese sub (even if that income is not repatriated to the US), there would be a huge incentive to either incorporate the US entity in a non-US jurisdiction (which is what the article that Dave has posted argues the current bill will do) or you would form a holding company in a low/no tax jurisdiction with the US entity and Chinese entity as brother-sister companies. US tax would only be owed on the US companies income. Chinese sub would not be subject to US tax (nor would the holding company). So at best, the US only gets tax revenue from the US entity’s income; at worst it doesn’t get any tax because the US entity leaves the US.
NRE, given that the AMT income threshold has not been adjusted for inflation until 2013, that is a small handful of crumbs thrown to those who are hit with it.
I know how complicated this is but we did have a worldwide taxation scheme. So I do feel we should have taxed the Chinese income that you bring up.
Companies will do whatever they need/want to do to lower their taxes. If they leave they leave. They already do it. It just goes against capitalism to tell companies to stay here.
When did we have a worldwide tax for corporate taxes?
Typically you don’t want to give incentives to companies to leave. There are already economic ones that are difficult to avoid. Taxation doesn’t have to create that incentive. And if they leave, you will not receive any US income taxes on the Chinese profits anyway (so you haven’t done anything to help there). And you may lose the US entity’s taxable income. Doesn’t make sense to me.
Who is telling companies to stay here? No one that I see. Its more a matter of not encouraging them to leave. Some may leave anyway. But many won’t.
When they adjusted it for inflation, they went back to the beginning, they didn’t start with 2013 as the base year.
The changes will take us out of AMT territory, where we have been for the last several years, and save us thousands of dollars a year. So I am happy about this.
We currently have a worldwide tax system and this new bill changes it to a territorial system (USA only). A huge, major change that may have lots of unintended consequences.
Corporations AND individuals are taxed on worldwide income. Depending on the corporate structure (using CFC’s) companies are allowed to defer tax on foreign earnings until they repatriate them home. It was actually intended to allow companies to rapidly expand overseas by allowing them to retain the money gross of tax. It was an expansionist theory. We wanted companies to have all the foreign profits to fuel more foreign expansion.
I think we are getting a bit too wonky now. Hahaha.
“When they adjusted it for inflation, they went back to the beginning, they didn’t start with 2013 as the base year.”
A small consolation to those who had to pay AMT prior to 2013. 
Have not had to deal with it since 1999, the only year I paid it, but it was a shocker that we were considered “rich” at that time. Hope the wider brackets will take more folks out of AMT territory.
@yourmomma, a small rebuttal to you and perhaps others who have no use for economists:
And, for those helping others write college admission essays, a very fine closing:
NRE - I’m really tired of generalizations about this bill and how it will save most people money. In my case, we will pay more. Our tax bracket will stay the same and we cannot claim our college age dependent child. We will be borderline for being able to itemize, and the loss of exemptions will hurt us.
Someone posted this excellent link several pages ago. Look at the second chart. Anyone not in the green territory will not be saving. Many people in the green territory may be in a lower bracket, but could still pay more through the loss of SALT or something else. The changes in the brackets will hit individual filers more heavily since they are trying to make up for the marriage penalty, at least at lower incomes. Families are hit harder by the loss of SALT and personal exemptions.
I get frustrated with this argument all the time, as it usually means the speaker doesn’t understand that the gov’t needs funds to operate, to pay for its promises, and the government is entitled to a percentage of your income. People forget that the Whiskey Rebellion settled this a couple hundred years ago.
I get frustrated when my own taxes go up while the rich and wealthy will see their taxes go down.
Many in the middle class will end up paying more after the phase out of the temporary changes to the individual tax laws expire after 2025. I get frustrated as the rich and wealthy corporations changes are not set to expire.
I get frustrated as health care premiums will go up, and 4 million people will lose health care coverage. I get frustrated as this is what the rich wanted - to screw the poor - and they got it. The uneducated and the poor won’t know what hit them.
Since we typically only see big tax law changes every 30 years or so, I am not confident that this will get fixed before 2025.
I don’t like to pay taxes, nobody does, but I realize they are necessary to provide for the services and safety net we have promised. I am not happy with all of the Federal Spending, nor Federal Rules/Regulations, but I understand it is complicated for a few hundred million reasons.
I don’t like the way this was pushed through the Congress, but I didn’t like how Obamacare was pushed through either when the other party was in power. I don’t like how bitter and partisan both sides have gotten. So I feel as though I do have the right to complain at both sides.
I understand the necessity for the Individual Mandate, and the impact it will have. Like the car insurance analogy, I don’t understand why states that do have a requirement to purchase meaningful auto insurance in order to register a vehicle, don’t require auto insurers to report to the DMV whenever someone terminates a policy without having proof of new coverage, and the DMV should cancel the registrations, instead of allowing someone to drive uninsured. Demand better from your lawmakers.
From the third paragraph of your link:
It sucks that you will pay more, but that doesn’t make the generalization wrong.
I have no idea if we will pay more, less, or the same yet. I suspect we might save a little, but our taxes are complicated enough that I can’t say for sure without a lot of work I haven’t done yet. I seriously doubt it will be a life-changing amount for us no matter which direction it goes.
@3puppies, I agree with most of what you say.
Lest we fall prey to false equivalences, many months passed between the introduction of ACA and the vote for it. If you mean the support was one-sided, your quote is fair.