[RD] Getting SALTy

[metalhead]

The people saying that it benefits trump so much are cherry picking a couple very specific tax returns where he wrote off a ton of losses.

We're cherry-picking returns because they are the only ones he has let us see.

And idk why anyone cares about the estate tax. Your income and investments are already taxed as you build your estate, it's just a wealth tax that kicks in only when you die. But many support wealth taxes so I suppose that answers my own question.

You're dead. The tax isn't on you, it's on your estate. More specifically, it's taken out of the share of people who are getting large windfall income that they did not earn. The estate tax is a critical tool in fighting wealth inequality and privilege, and even though it is horribly underutilized at the moment, there is no legitimate argument against it. Dead people cannot own property, so one cannot be "taxed twice" after they die. They don't own anything, on account of being dead.

Also, you're wrong about investments being taxed. Investments aren't taxed until they are sold. Typically, that tax is calculated based on what you paid - the capital gains tax is levied on the amount you sold the asset for, minus what it cost. But when you pass property through an estate, the inheritor gets to claim the value at the time of inheritance as their cost basis, not the original amount paid. So it actually works contrary to what you say - investments that are passed through an estate are actually taxed less than they would have been had the owner sold them before he or she died.

Also no, this doesn't raise taxes on millions struggling in high tax areas. It might raise taxes a little on san francisians who live in million dollar houses in the most expensive area in the country. But do you know why they live there? Cus they have extremely high paying tech jobs.

Like I said, it hits millions who live in high tax areas, and not everyone in San Francisco has a high paying tech job, that's just silly.

In theory, though, I have no problem on hitting the top 5% or 10% with higher taxes. But if you're going to do it, you sure as heck better have a good reason for doing so. Giving that money to even wealthier people and corporation? No, not my idea of a good tax plan. AT ALL.

 

[JollyRoger]

The people saying that it benefits trump so much are cherry picking a couple very specific tax returns where he wrote off a ton of losses. And idk why anyone cares about the estate tax. Your income and investments are already taxed as you build your estate, it's just a wealth tax that kicks in only when you die. But many support wealth taxes so I suppose that answers my own question.

First of all, he has only released one partial return, so it is all we have to work with.

Second, a lot of wealth does go untaxed until death - it's called deferral of capital gains taxes. Most of Bill Gates' wealth is in the form the value of his Microsoft stock. He has not paid taxes on the increase in that value.

As for the brackets, the 12% went higher than I guessed. The child tax credit did not go up enough to offset the loss of personal exemptions for children. The marriage penalty was introduced for certain brackets (where two individuals can be better off than a married couple when filing). So much for family values - a tax "reform" punitive to marriage and children.

From en eyeball test, it looks like the real losers are those in the 100k to 500k range. There are some other unknowns that could hurt those under $100k and in many ways it is a small cut, if any as is for some and a tax increase if you have several children.

Of course, it is being paid for by cuts in medicare, farm subsidies, and student loans. Someone has to take the hit for the massive tax cuts to the wealthy and to big businesses.

 

[Cutlass]

The people saying that it benefits trump so much are cherry picking a couple very specific tax returns where he wrote off a ton of losses. And idk why anyone cares about the estate tax. Your income and investments are already taxed as you build your estate, it's just a wealth tax that kicks in only when you die. But many support wealth taxes so I suppose that answers my own question.

Also no, this doesn't raise taxes on millions struggling in high tax areas. It might raise taxes a little on san francisians who live in million dollar houses in the most expensive area in the country. But do you know why they live there? Cus they have extremely high paying tech jobs.

I mean just do a little math and it's not that much of an increase. Say you make 300k as a married couple, no kids, million dollar home with an 800k, 30yr, 4% mortgage, the first year your interest is 32k, property tax is probably around 15k, state income tax in CA is high probably like 20k there. With personal exemptions and those items you are taxing 225k. Old brackets you pay around 50k in federal taxes. Taking standard deduction with new brackets you pay 59k. But that's only the first year of the loan when interest is highest. It drops every year and your deductions drop every year as well. If you want to argue we should keep subsidizing home owners in nyc and San Francisco fine but I'd much rather give 48 other states and many times the people a refund.



I don't know how much you make but if you rent there's no way your taxes are going up unless you have like massive charitable contributions or something. If anything they should go down a bit.

The estate tax only affects a handful of people a year. But eliminating it will force a tax increase or benefits cuts for 300million people. So 300million will have lower standards of living to pay for a handful of greed and selfishness.

 

[JollyRoger]

“I’ve been telling all my constituents, look, you gotta understand this is not all gravy, it’s not all cheesecake,” Kennedy told Yahoo News. “To get to the cheesecake, you gotta go through the spinach. It’s like a big ol’ piece of cheesecake with a big ol’ hunk of spinach on top and you gotta eat the spinach first.”

How many will have to eat the spinach so Trump can have his cheesecake?

 

[Gori the Grey]

323 million?

 

[civvver]

The estate tax only affects a handful of people a year. But eliminating it will force a tax increase or benefits cuts for 300million people. So 300million will have lower standards of living to pay for a handful of greed and selfishness.

I mean I don't know where you are pulling these numbers from but whatever. I don't think it's super greedy to want to pass inheritance down to your kids. It doesn't affect me, estate exemption of 5 million is per person so if you're married it's actually 10 million. My inlaws are well off, but not that well off!

As for the brackets, the 12% went higher than I guessed. The child tax credit did not go up enough to offset the loss of personal exemptions for children. The marriage penalty was introduced for certain brackets (where two individuals can be better off than a married couple when filing). So much for family values - a tax "reform" punitive to marriage and children.

From en eyeball test, it looks like the real losers are those in the 100k to 500k range. There are some other unknowns that could hurt those under $100k and in many ways it is a small cut, if any as is for some and a tax increase if you have several children.

Of course, it is being paid for by cuts in medicare, farm subsidies, and student loans. Someone has to take the hit for the massive tax cuts to the wealthy and to big businesses.

I didn't noticed the marriage penalty as it only comes in the 25% bracket so kudos for pointing that out. That's extremely unfair. I'm not near that bracket, you'd have to make over 284 as a couple to hit that. But yes I oppose that on principle.

For the child credit thing I think it's very clear they decided to go with what would offset 15%, which is a bracket most middle class married people find themselves in. Because $600 is 15% of $4000. That means at 15% a 4000 exemption for a child nets you a 600 deduction in your taxes. So for anyone above that you're getting less, people below are coming out ahead.

I jumped the gun a little in my estimations. My mortgage interest and property taxes are a heck of a lot higher than I remembered! I ran three years, 2015, 2016 and this year based off estimates (which are very easy for me to do cus I'm salary and pay fixed rate mortgage interest). I ran them all using my agi and deductions from those years but using brackets for 2017 so it would be more consistent.

2015 trump plan is a $608 gain
2016 trump plan is only a $232 gain. This is because I refinanced my house last year and had extra deductions from one time payments
2017 trump plan is looking like a $763 gain.

That's about half of what I initially thought and was expecting. I guess it's better than nothing but it's also not very good considering how much they are talking it up. They can and should do better. Up that child credit or readd the personal exemptions or something.

 

[JollyRoger]

It also gives a tax cut to Trump's ex-wives. Alimony is no longer deductible by the payer or taxable to the recipient. Just wait until Melania finds out that her family's tax went up to give Ivana and Marla a tax break.

 

[civvver]

Imagine being divorced with like 3 kids /shudder

 

[Cutlass]

I mean I don't know where you are pulling these numbers from but whatever. I don't think it's super greedy to want to pass inheritance down to your kids. It doesn't affect me, estate exemption of 5 million is per person so if you're married it's actually 10 million. My inlaws are well off, but not that well off!

It is super greedy. But don't forget that the rich can't get a tax cut without you getting a tax increase. It's mathematically impossible.

 

[Lexicus]

It is super greedy. But don't forget that the rich can't get a tax cut without you getting a tax increase. It's mathematically impossible.

Well, it's mathematically impossible if you hold the total revenue constant. If you don't, you could give everyone a tax cut! Ultimately, it would be a strong move to toss the income tax (or have it kick in for incomes above, say, $80,000/year) and replace with a progressive wealth tax (ie, you get soaked more the more assets you have).

 

[hobbsyoyo]

Property tax is a state and local tax. It is more Red Statety than Blue Statety, thus why the Republicans have put it back in (they were going to eliminate it).

Claiming that middle class taxpayers won't get hurt because of the doubling of the standard deduction ignores the elimination of the personal exemptions (which essentially wipes out the doubling of the standard deduction for a couple with one child and is worse for a couple with two children). Plus, the lowest bracket has been raised. The real test of how much the middle class is going to have their taxes raised is when the brackets are finally released. I have a feeling the 25% bracket is going to start at a low enough amount of income to raise the taxes on a significant portion of the population.

Yeah exempting property tax is a naked ploy to get Texas Republicans on board at the expense of CA/NY/NJ.

Also PBS reported yesterday that the tax cut will eliminate the student loan write off. Yeah this tax cut is geared toward the middle class. /S

If they actually wanted to simplify things for the tax payers then the IRS would take all wage and 1099 information submitted to it for each payee, determine the taxability or credit for each tax payer, and then bill or refund the tax payer as required. That’d be the actual way to simplify taxes for the tax payer. Never mind doing taxes on a postcard, that way one wouldn’t have to do it at all.

But no one in Washington wants that because it would be a huge drain of funds. Every year, millions of people do not claim the refund to which they are fully entitled; those unclaimed credits are retained by the federal coffers. a system where a competent tax authority issued proactive refunds would be paying out gads more than it currently does.

There is a huge and powerful tax-filing lobby that has managed to kill basically every attempt to create autofiled taxes at the state and federal level. TurboTax et al make a killing by selling products that simplify overly complex tax filings.

The brackets are out, it looks like it is a modest cut across the board. The 12% bracket is huge. For married filers it's 0-90k.

http://www.businessinsider.com/trump-gop-tax-reform-plan-bill-text-details-rate-2017-10

They aren't allowing state income taxes to be deducted but are allowing property taxes up to 10k and interest on mortgages under 500k mortgage value. But the standard deduction is so much larger now it will be pretty hard to claim those.

Personal exemptions are gone but the child credit is increased from 1k to 1600 per child.

Assume a married couple with 2 kids taking standard deductions who makes 100k. Old rules they would deduct 28900 in exemptions to get to 71,100. Taxes paid would be 9732 but they would get a credit of 2k and pay 7732.

New rules, 24k deduction to get to 76000. Taxes would be 9120 but credit of 3200 to get to 5920. That's 1812 less, a pretty big break of about 23% on their taxes paid.

For families at the lower end it's much less dramatic because they pay very little in taxes to begin with. Same family at 50k income- old plan taxes 21,100 income for 2232 in taxes, minus 2k in child credits = 232 taxes paid. New plan is 26k in taxable income, 3120 in taxes paid, minus 3200 in child credits = negative 80 dollars which will get paid as a credit because it's a credit not a deduction. So the difference is over 100% but only ~300 swing in real dollars.

So it looks like they kept their word after all. I'll have to run my 2016 taxes through because I itemized but I remember I barely itemize, I think I have like 14k in itemized deductions vs a ~12k standard.

I'm really not sure who in the middle to upper middle is hurt by this unless you have a ton of itemized deductions.

The middle and upper middle classes in high state income tax states and those with large student loans will likely see a tax increase.

 

[rah]

If this POS concept passes I sure hope some of those blue states stick up their middle finger and transition to a sales tax from a state income tax.

 

[hobbsyoyo]

If this POS concept passes I sure hope some of those blue states stick up their middle finger and transition to a sales tax from a state income tax.

That would hurt the poor even more I think. The only way to make a sales tax effectively-non regressive would be to somehow exempt poor people at the point of sale. I don't know a good way to do that. Otherwise you are taking a massive chunk out of poor people's pay every time they have to buy something on the promise they will get some or all of it back when they do taxes at the end of the year.

Income tax has the same problem but I believe because poor people spend a much higher proportion of their income, a slaes tax would hit them harder on a weekly basis than an income tax.

 

[rah]

Yeah, I guess I should have thought that one ALL the way through. I was just considering the effect on the federal receipts. But it would still be a good middle finger because you know the Repugs know this will punish those in the higher state income states (mostly blue) one.

But by exempting food from the sales tax, you'd minimize the effect a bit.
I believe In illinois the sales tax on food items is lower than on other items.

 

[hobbsyoyo]

I've been reading articles that make the case that the Republicans are trying to use this tax overhaul as a mechanism to indirectly force regressive, corporate and 1% friendly tax reforms in Democratic states. I.e. it was part of a scheme to force Democratic states to end income taxes and adopt sales and property taxes in their place. I actually don't but that because the tax reforms were going to hurt a lot of middle and low income people in Republican states like Texas until they tacked on the property tax exemptions at the last minute and under extreme pressure. If they were really trying to go explicitly after Democratic states as a primary goal they would've exempted property taxes in the first place.

 

[metalhead]

That's what happens when you make policy in a purely partisan manner. Your incentive to hold your coalition means slanting policy to help people on your side, and hurt people on the other side. Politically it makes perfect sense to do it that way. As a policy matter it's morally bankrupt, but, well, Republicans

The interesting thing to me is that the people hurt most are relatively well-off white people who pay a lot of property taxes. That was a main Republican constituency, and remains a strong part of the coalition, even in blue states, and a lot of R House members come from those districts.

 

[dutchfire]

That's also discussed here: https://www.theatlantic.com/politic...icans-abandoned-the-ownership-society/544955/

Supporting home ownership has long been a central pillar of right-of-center parties, such as the UK Tories, that kept the (upper) middle class on board when most of their policies benefit the 1%. That the Republicans and the Tories (https://www.theguardian.com/commentisfree/2017/feb/06/home-ownership-tories-housing-crisis) are abandoning this is a very interesting sign of the times.

 

[BvBPL]

The GOP pursues its tax war on the middle class by purposing to eliminate the student loan interest deduction from the tax code. At the same time, the GOP wants to impose an excise tax on the endowments of educational institutions and cut tuition tax credits. It is a shocking attack on higher education and, thereby, the middle class.

 

[Broken_Erika]

That's because educated people seem to vote for democrats, therefore higher education is obviously a Communist plot by the liberal-media elite to destroy America!

 

[civvver]

It just gets messier, senate gop has release their own version of a plan.

https://www.washingtonpost.com/busi...f60b5a6c4a0_story.html?utm_term=.47d296f50c29

Basically housing deductions are left unchanged, student loan interest is back in and so are property taxes. And they want to delay the corporate tax cut.

This still makes no difference to me as my deductions won't eclipse the standard deduction under the new plan, but my taxes weren't going up, they just weren't dropping that much either. This will make those in high taxed states still be ok probably. It's really hard to tell without a specific example though.

 

[BvBPL]

We will see what happens. Rand Paul has indicated he’s not in favor of some provisions, and the possibility that they may tie the Obamacare mandate in with it might put Collins, McCain, and Murkowski in play. That and with the Alabama senate election in play (as well as Paul not being able to travel to vote) could make passing this real tricky.