I hope someone will come up with a tax plan calculator soon. Funny, before the election, one of these calculators said we were going to pay 140K less with the Trump plan. Uh huh, right…
Now I’m estimating 4-7K increase. I would be okay with that if there was a significant middle class and lower middle class cut, and the deficit would go down.
Then again, I guess anything can still happen.
Doubles standard deduction but eliminates personal exemption.
" A provision in the bill, section 4303, proposes a 20 percent excise tax on profits moved from U.S. corporations to related foreign entities,"
Yay! So far, there’s more to like than not.
So they increase the standard deduction for a MFJ couple from $12600 (or $15,100 where both are over 65) to $24,000 but then take away the personal exemption of $4050 each. So a married couple both over 65 go from a total deduction of $23,200 (12,600 + $1250+1250+4050+4050) to $24,000. A whopping $800 increase in deductions for those who do not itemize. Even if they do itemize they will get much less benefit with the loss of the personal exemption.
We do itemize heavily - not for any fun reason but because we have very high medical expenses. Last year our itemized deductions were $26,000 mostly between tax deduction and medical. We were going to lose some of the medical deduction because of the 7 1/2% AGI floor increasing to 10% (DH was already 65 when they raised the floor so was grandfathered in at 7 1/2% till 2017). I did a quick calculation and if our income is about the same our taxes look like they will go UP $2,000-$3,000. I would say we are lower middle class. It’s a huge increase for us in both $ terms and %…
^^Ugh, @swimscatsmom, I didn’t realize they also took away the exemptions. That’s not good.
They better get that calculator out there to convince us otherwise. Or maybe they don’t want us looking too closely at it.
Also, the plan does add a 5th year to the AOTC (which is now capped at 4).
One nice add: elimination of the tax-free bonds for new stadium construction. Per an article in the WSJ:
Yes but it takes away the Lifetime Learning Credit. That deduction was very helpful to me when I was going to get my masters.
LLC helps lower income students who want to get a higher degree.
I don’t remember how we filed last year but I do know that our tax burden went down when we included our student loan interest.
@bluebayou I like that provision as well.
I also read that it did nothing to stop the scam that is carried interest. I thought they were going to put a stop to that? Perhaps the hedge fund managers kept their great deal going.
All that talk about getting rid of the carried interest loophole was just lies.
And what advantages are people in the bottom 33% of income getting from this? Nothing, correct?
Is the $24k inflation-adjusted? Correct me if I’m wrong, but it sounds like it is not.
If you are paying zero federal tax, I don’t see how you get a tax cut from zero, because isn’t this a revamp of the federal tax code? I don’t think they ever implied this would be a welfare bill. I guess one could call it a credit?
I do think many people paying no federal taxes do need help, however, I don’t think it was ever implied that non-payers would get distributions.
This is a bunch of smoke and mirrors. Everyone is lauding the doubling of the standard deduction but they purposely leave out they are getting rid of the exemptions.
Payroll taxes. Payroll taxes. Payroll taxes. They are taxes on people’s income. Poor people pay them. If you want to help lower income people instead of millionaires and billionaires, you could cut payroll taxes.
Probably minor at most for low-income-from-labor people overall, though some individuals with specific situations may be affected more significantly… Most pay little or no federal income tax (as opposed to payroll taxes, which do not seem to be affected by this proposal) to begin with (remember the infamous “47%” comment from 2012?), so it is not like their taxes can be cut much in aggregate. While some may disdain them for “contributing too little”, it is probably not realistic to raise the aggregate’s taxes to increase revenue significantly either.
Really, the obvious big places get income tax revenue from are:
A. High-income-from-labor people. The most attractive target for tax increases, since labor income is less easy to manipulate.
B. Income-primarily-from-non-labor people. Includes the political donor class and plutocrat-level wealthy, so do not get your expectations too high about their tax favoritism (lower rates for long term capital gains and dividends, carried interest provision, etc.) will be removed. Indeed, the proposal probably gives such people more ways to pay less income tax. Of course, even if the government tries to collect more taxes from this group, capital income is easier to manipulate for tax purposes than labor income.
C. Business. Includes big political donors and lobbyists, so it should not be surprising that they will benefit from large tax cuts in this proposal. Of course, business income is often quite manipulatable for tax purposes anyway.
More accurately, payroll taxes are taxes on people’s labor income, which makes them more regressive than they look based just on looking at the rates going down at higher income. Non-labor income as a percentage of income increases at higher income levels. The plutocrat class tends to have a much larger share of its income from non-labor sources than most high income people, who still get most of it from labor.
Was there even a hint of these taxes being changed in the tax rewrite, ever? So why would it possibly be a surprise that those were unchanged?
They weren’t changed in the last administration, either.
@busdriver1, you said there was no way to cut taxes on low income people’s income, because low income people don’t pay taxes on their income. I said, yes they do, they pay payroll taxes.
Now you’re saying, oh but the people doing the tax rewrite don’t want to cut payroll taxes. You’re right. They want to cut taxes on millionaires and billionaires. Unlike what you said, they could cut taxes on poor people. They just don’t want to.
Of course they could cut taxes on any group they wanted to, whether they called it a cut, a credit, a donation. I didn’t think it would be any surprise that didn’t happen, it was never even a possibility. They have continuously called this a tax cut for the middle class, not the poor. That’s where the voters are. And if we’re going with the illusion that this is a huge jobs bill, then obviously the poor don’t create jobs. Of course this is cutting taxes for the most wealthy, and it doesn’t surprise me a bit.
although it’s not a tax cut for the middle class, but for the rich.