I think there will be a ton of workaround deals, if this tax reform gets passed. Everybody will be working to figure out a way around the new restrictions.
Interesting that there are so many posts decrying the removal of SALT deductions without a corresponding number of posts calling for states to rollback the state and local taxes to begin with.
There are probably some people who do not mind paying taxes that are used to pay for something that they see as useful. But it is unlikely that most of those people want to pay more taxes to pay for tax cuts for the plutocrat-wealthy, big business, and estates/inheritors.
Charitable contributions apparently survived as a deduction, even increased from 50% of AGI to 60% - but they may be making it harder as they will require receipts for all contributions, not just those of $250 and up.
Trying to determine if it will make more sense to make another contribution in 2017 (where we itemize) or wait until 2018.
Yep. I don’t mind paying taxes and I don’t think Ohio is overly taxed. That’s the issue, this isn’t just hitting folks in highly taxed states. I did move to a high tax state this year but I felt my taxes were reasonable in Ohio, a Big Bang for the buck especially regarding the plethora of excellent school districts with affordable housing .
I’m looking at roughly a $5,000 tax increase if this proposal is enacted in its current form—though I’m skeptical of that because it will wreak havoc at the high end of the housing market. With the kids now graduated from college, that’s not enough to put a major dent in our standard of living. But what irks me is that they’re taking it out of my hide so they can give big tax breaks to corporations and the uber-wealthy.
I’m more concerned about the hit to our net worth if the caps on mortgage interest and property tax deductibility go through. That will put downward pressure on prices for $600K+ homes as fewer people will be able to afford them. (Also, many people in a situation similar to mine will have higher tax bills, consequently less after-tax income to put toward mortgage payments). We had been planning to sell and downsize sometime in the next five years so as to bank the equity as part of our retirement plan. The slide in prices will come entirely out of our equity. On the other hand, fewer such homes will be on the market, because many current owners in that part of the market would be looking for similarly priced or higher priced properties if they decide to move, and for many that would mean trading in a fully deductible mortgage for a new mortgage with deductibility capped at $500K. So for them, it would be a hefty tax on moving. Also,in anticipation of fewer buyers, fewer upscale homes will be built. So tightened supply might partly offset the downward price pressure resulting from fewer buyers.
Understandably, the realtors, mortgage lenders, and home builders are going bats*** over this—as will many upscale homeowners once they figure out what’s up. Those are core constituencies for many of the lawmakers whose votes they’re counting on to get this proposal through. I just don’t see it passing in its current form. But then, I’ve been wrong before.
@bclintonk I wonder if the rule mandating you to stay in your house longer will put upward pressure on housing. I imagine having to stay in your house 5 of 8 instead of 2 of 5 years will affect housing prices.
“Interesting that there are so many posts decrying the removal of SALT deductions without a corresponding number of posts calling for states to rollback the state and local taxes to begin with.”
You couldn’t pay me to live in a low tax state. I appreciate not only the services and schools my taxes contribute to in my town - but also the services millions of New Yorkers less fortunate than I am get because of the state income taxes I pay.
I don’t ever want to live in a state that gives short shrift to education, aid to children, Medicaid, the mentally ill and the thousands of other programs my state taxes support.
I live in a middle tax state. There are zero states with lower taxes than me that I’d rather live in and I would happily pay more taxes for better schools, roads, and universal healthcare.
Some people seem to assume everyone hates paying taxes. That’s just not true. I’m not well off by any means but I’ll gladly pay even more for an expanded welfare state.
But as I said earlier, I am angry that under this, my taxes will shoot up AND that the revenue goes to the rich. If suddenly we had country wide universal health insurance, I’d smile as my tax bill went up. But that’s not what it is going for.
For those that appreciate paying high state taxes - don’t ask others to subsidize you.
We are already giver states. Now we will be bigger giver states. Taker states arent subsidizing us. We are subsidizing then.
Sorry, I didn’t know that some states incurred higher federal tax rates than others. My bad.
You really didn’t know this? It isn’t that the rate is higher, it is that federal expenditures in the state are higher per dollar paid.
South Carolina, for example, get $7.87 back for every buck their citizens pay in federal taxes.
So many popular tax deductions gone. It makes me wonder, are they basically getting rid of almost all deductions (except for real estate, limited property tax and charity), or are they targeting specific deductions? Are they keeping in and adding a bunch of obscure ones that only benefit a few, or are they wiping the slate pretty much virtually clean?
I know there has been a clamor for a cleaner tax code (and I’ve agreed with that before). It is painful when they get rid of highly beneficial ones like tuition and medical, however, are they actually targeting those, or dumping them all? I have not seen enough to figure that out. I’ve thought that if they could tax all income the same, lower tax rates and get rid of all deductions, it would be a better system, with no funny stuff and benefits to special interests.
However, I don’t want them to get rid of MY special interests, so… 
To return to what drives the health costs people deduct, a lot of it is long term care for seniors. My mother has Medicare, but Medicare doesn’t pay for her live-in aide. Home help for illness or disability costs a lot of money and is not covered by health insurance.
@intparent Sorry you didn’t catch my sarcasm. I need to locate an emoji for that.
The amount of federal spending per state is pretty complex, and states and state representatives can argue their positions in D.C. But I don’t see that as a logical reason to say - therefore we should be able to deduct our state taxes
I would not be surprised if there were many people who would be willing to give up their own special interest tax deductions and credits if they were removed for some reason other than to pay for tax cuts for other special interests like plutocrat-wealthy people, big business, and estates/inheritors.
Maybe some places. I doubt it in my neighborhood. Only one house on our block has sold in the 11 years we’ve been here. The sellers had been here 20 years. A block over, two houses have sold in the past 10 years; both sellers were long-term residents, and both buyers have probably been here 5 years already. My sense is the whole neighborhood is like that—very stable, little turnover, quick in-and-out moves virtually unheard of. When houses do go on the market they tend to move pretty quickly, and the buyers are here for the long haul. Now it could be that the effect you describe would affect other parts of the metro area, and that could indirectly affect prices here. But a lot of what drives home values here is very location-specific.
If you go a little further out from our immediate neighborhood, there’s been a lot of teardown activity. People want big homes in the cities (Minneapolis and Saint Paul), and the supply is limited. So they’ll buy a smaller home, tear it down, and replace it with an oversized urban McMansion on an undersized urban lot. I imagine a lot of that activity will dry up, too, with the cap on mortgage interest deductibility. That might put some downward pressure on middle-market home prices, too. Or not, if enough of those buyers decide they’ll settle for less house for the sake of the urban amenities that are drawing them here in the first place. Or if living small in the city becomes an attractive second-best to the suburban McMansion some people are dreaming of but will no longer be able to afford.
‘I don’t ever want to live in a state that gives short shrift to education, aid to children, Medicaid, the mentally ill and the thousands of other programs my state taxes support’
Colorado is a pretty low tax state. 5% income tax based on the federal filing (so most of the same credits and deductions and low income people who pay no federal taxes pay no state taxes). Property taxes are very reasonable. Schools are good (much better in school districts that pass additional bond measures like Aspen, Vail, Boulder, Cherry Creek - where rich people live), medicaid is one of the best programs in the country, great public parks and rec programs (sponsored in part by the state lottery). Where do the citizens get hit? Tuition. It is particularly high at Boulder, a little less at CSU, but there are plenty of affordable public options, community colleges, and programs to help pay.
I’d say the schools and services are better than California with high income tax and much better than Florida with high property taxes and no income tax.
Isn’t that what the filthy rich say, they are givers not takers? Why should we give even more? You should feel right at home with the filthy rich.