There is a lot of deduction eliminations that appear to be intended for the poor and middle class. I’m wondering how this is going to affect everyone and the country.
A politician tweeted out an image of the reform removing income tax for married people under around 24k a year. 12k for single people. If I earned 25k last year in income should I just get married and get payed less so I can keep all my money? Or was that chart wrong?
According to The Holy HairHelmet, it’s not set in stone at this point.
Remember when the GOP said if you like your current tax rate, you’ll like the new one better?
Is lowing income tax rate going to outweigh the loss of deductions & reduced caps? I know it’ll depend on person to person but in general will people be getting more or less back? In the poor to middle class.
The poor and middle class tend not to itemize deductions, so many people will probably have lower taxes or be unaffected. It looks like the really affected will be people who have very unusual situations like huge medical expenses or MFS and forced to itemize or moving expenses.
This huge tax cut for the rich will be financed by cutting SocSec, Medicare, CHIP, Obamacare subsidies, etc. To say “the poor and middle class will probably have lower taxes or be unaffected” is to miss the whole scope of this boondoggle.
I was referring to the income tax portion, sorry. I haven’t looked at the rest too much and don’t know how it will go except considering the source… yeah probably.
While details are being worked out, it seems that *prosperous *middle class taxpayers – incomes on the order of $100,000 – will very likely be paying higher federal income taxes. Especially if they don’t have children, and live in high-tax states. Ending deductions for mortgage interest and state income taxes will cost them. And the increases in the standard exemption and personal deduction are not likely to make up the difference.
A common Republican claim over the years was that when Democrats said they wanted to raise taxes on the rich (say, $500,000+ income), they were actually planning to include the prosperous (but non-rich) middle class in their tax hikes. This plan would render that claim laughable.
I’m pretty solidly middle class and I itemize. Property taxes plus mortgage interest plus state and local taxes is quite a snootfull. Now they want to take the state and local taxes away but give me a larger standard deduction. Screw that.
It isn’t the middle class hanging out in the halls of Congress in their $1000 suits and alligator shoes, it’s the lobbyists for the elite. They’re the ones who will be taken care of, and as long as one millionaire pays a nickel in taxes, they’ll stay there and whine about being overtaxed.
The poor don’t pay income tax, so pretty much by definition tax cuts don’t help them, except indirectly.
Eliminating the state tax deductions is going to be hard on states with high taxes.
I guess I will wait and see what actually comes out, and take what the Dems say about it with a shaker or two of salt.
Regards,
Shodan
FWIW, a story I read claimed that the plan would keep the deduction for property taxes, while eliminating the deduction for state income taxes. So people in states with high property taxes, but low income taxes (do they exist?) wouldn’t be hit as hard as if both types of tax were high.
Hard to say. According to this, it’s kind of all over the place. New Jersey is first, and Illinois is second, but Texas is third in what they define as ‘effective tax rates’. But again, we don’t know what the final bill, if any, will look like.
FWIW I would support any tax bill that is a) deficit neutral, and b) simpler. And it is going to be hard to tell if the final bill is either, because both sides are going to spin, obfuscate, and outright lie about it.
[ul][li]Tax cuts good![/li][li]Giveaway to the rich![/ul]No to both.[/li]
Regards,
Shodan
And then we can read bad summaries and come here and call each other poopheads until the mods have to spank us and put us in separate corners.
you misspelled “Republicans”. Democrats have no motivation to lie when the truth is so damaging to Republicans.
No motivation, so it’s even stupider when they do it anyway. Which has already happened.
But we know for a fact that the Republican plan will not be deficit neutral. The parameters passed by the House and Senate for drafting the plan specifically provides for $1.5 trillion in increased debt over the next ten years.
And that is setting aside the “cooking of the numbers” from fraudulent analyses that tax cuts will raise economic growth to 4% or more, under the fiction that tax cuts will pay for themselves.
Cite?
It isn’t totally a direct connection, but he isn’t exactly wrong either:
There are refundable tax credits in the code that you can claim even if your tax is zero. But the bigger point is that this tax reform isn’t even principally about income tax. They are tackling all kinds of other federal taxes. So there’s no reason not to task about the distributional impact on the poor.
Indeed, in early planning, there was talk about helping the poor by making the child tax credit refundable. But not only did that get nixed, but they actually took away the tax credit from U.S. citizen kids whose parents don’t have social security numbers. Given that the attacks on higher education finance in the bill will also make it harder for the poor to go to college, I think it’s fair to say the effect on the poor ain’t good.
Worth noting that these are generally the states that contribute the most in federal taxes despite the deduction. I guess conservatives think that is a coincidence, but liberals have a pretty good story to tell about how paying for things like infrastructure and education with local taxes raises productivity and ultimately gives more money to the federal government to pay to red states who need it.
Thanks for this. I wasn’t calling him wrong, I just had seen him make the same claim twice and didn’t understand where it was coming from. Interesting side note from your cite, regarding this post by you:
Do you think 2.6% growth is a reasonable / achievable estimate?
I am not a fan of the current government in general, but I’d like to point out that the mortgage interest deduction is not eliminated, but capped at 500K. I guess this hits* people harder where property values are high, but this should not affect the poor nor most of the middle class, I think. Also, assuming that residents of high tax states are getting value for those taxes, it’s not unreasonable to eliminate that deduction. Does this apply only to state income tax, or is sales tax included (I’m looking at you, Florida!)?
The inability to deduct high medical expenses will be a kick in the teeth for sick families. It’s a good thing they will be well looked after by the ACA.
When I saw nothing about canceling the tax provisions that allow real estate developers to pay zero (if they’re “smart”) taxes for years and nothing about the tax provisions favoring hedge fund managers, you could have knocked me over with a feather.