However, the vast majority of people who have simple income situations (and probably the standard deduction) are not high income and do not pay much taxes to begin with (even those who disdain the 47% who do not pay any federal income tax probably realize that there is not much they can squeeze out of the 47%).
Changes in the tax code that affect what the upper income (including the self-described “upper middle class” of these forums) and plutocrat classes are much more likely to affect the overall amount of tax revenue, even if they affect smaller numbers of individual taxpayers. But these taxpayers are more likely to have income other than simple W-2 income, as well as the more unusual types of deductions and credits.
But they want to eliminate the “exemptions” line as well. Last year, we had 12K in exemptions (H, D, and I). We had more than the 24K standard deduction, but not if you remove the state/property taxes. So we would lose the exemptions AND the amount over the 24K standard deduction. It seems like doubling the standard deduction really just covers the exemptions, in which case it can’t make up for loss in the state/local taxes as well as that would double count it.
It isn’t the case that anything beyond W-2 income is complicated.
Real estate deduction may not be a red line for the White House but it may well be for certain people in Congress. And some in Congress won’t share the WH red lines. Herding cats.
We will need to wait and see what gets enacted (if anything). Though you can usually count that claimed benefits will be overstated and costs understated.
preliminary analysis of the plan: On average, someone in the bottom 95%would have their income increase around 1%; someone in the top 1% would have their income increase 8.5%.
By 2027, 30% of those with incomes between $50K and $150K, and 60% of those with incomes between $150K and $300K, would see tax increases. That’s because the plan replaces a personal exemption that is indexed for inflation with child and other tax credits that are not indexed for inflation.
I don’t love the term unearned income. A widow who rents her house is earning that money just as much as someone who owns shares in a company or a savings account. So is the rich guy who does the same thing. I do understand it is common usage.
In any case, we do have brackets for investment income. People in the bottom two brackets pay no capital gains tax, and no tax on dividends. It rises to 15% for people in the higher brackets, and then goes to 20% in the top bracket (not counting the additional 3.8% tax that was laid on the upper income group as a to help get the votes for Obamacare). There’s no indexing, so if you’ve owned stock for 30 or more years, you get taxed on your non-real income as well as your real gains.
By 2027, 30% of those with incomes between $50K and $150K, and 60% of those with incomes between $150K and $300K, would see tax increases. That’s because the plan replaces a personal exemption that is indexed for inflation with child and other tax credits that are not indexed for inflation."
For all those doing math to determine effective tax rates or actual increase or decrease in taxes, until the cutoffs for the brackets are announced, it’s anyone’s guess.
I do think it’s reasonable for folks in high tax states who will lose the deduction on income and property tax to be concerned about an increase.
While supposedly non-partisan, their parent definitely leans left, as do many of the TPC analyses. Right now everything is a guess, and even the more nonpartisan CBO is usually way off in thier projections, but be careful about reposting quotes from those that may have a pov on the outcome.
My initial thoughts when I saw the proposals is that our taxes will increase. We have very high medical costs so our itemized deductions are generally higher than $24,000 or at least in that range. If they take away the personal exemptions we will immediately have higher taxable income. It will depend on the brackets.
I don’t know if our taxes will be higher but either way taking deductions away is a good thing. Did I hear they are open to lowering the cap on mortgage deduction? That will be a good thing, too. I also heard creating another bracket for highest income is on the table. That will be great if they can manage that. I wish they cap charitable contribution deductions, too. IMO any tax reform should focus on benefitting the middle class. Most on this board will be too rich to benefit although we like to call ourselves middle class not upper class.
good old Washington Post has a helpful analysis. I am liking them better than NYT these days. According to the article, SALT deduction is greatest at higher income level as suspected. Next is the cahritable contributions.
