Ignoring for a moment whether Trump’s upcoming big tax cut - discussed today in a lot of media networks - is a good idea or not - how is it likely to affect the vast majority of us Dopers (I’m assuming the vast majority of us earn less than $100k a year?)
I read somewhere that it only amounts to a few hundred dollars per year, for most low-class/middle-class folks?
If you’re paying taxes you’d end up paying less. For a while anyway, until we have to sell the country to China.
As it stands right now, I suppose I’d save a couple hundred bucks in taxes and lose immeasurably more through loss of services on a local, state and national level since there’s no plan to recoup all that missing tax revenue aside from magical levels of economic growth.
Is this going to include the previously rumored cuts like the loss of the head of household status? If so, that would raise taxes on single parents. Beyond that, I’m not sure how many people itemize and take advantage of deductions other than mortgage (most people under 100k probably need additional deductions to bundle with is)- but I heard speculation today from Congressmen and others that state taxes would no longer be deductible and stuff like that.
Hopefully, he’ll continue cutting the size of government down and reducing spending to back it up. As for me, every dollar not paid in income tax. This is why I support the Fair Tax.
My wife and I both have high paying jobs. She’s a physician, I’m a fairly senior guy at my company. Our taxes will probably go down. Yay us, I guess?
A fair tax is a progressive one. This plan is the opposite of progressive.
It’s not going to happen as described, that’s to start with. No one in the House and Senate wants exactly what has been sketched out.
If they “shrink the government enough to pay for all those cuts,” then we’ll see the disbanding of all the armed forces, and essentially the dissolution of the United States as a Republic. It will instead become a loosely associated bunch of petty fiefdoms.
Trump is proposing we return to the Reagan fantasy, which we ALREADY know was a lie. Tax cuts NEVER pay for themselves with growth. They don’t because the world doesn’t react instantly to change, and because cuts NEVER translate directly in to rising production, increased jobs, increased buying and so on.
Businesses don’t spend their extra tax-free money on what we WISH they would spend it, they do other things. Some will take the extra money and buy back stock, in order to arrange higher returns for the CEO and other top officers, without putting so much as a penny back into the economy at large. Others will use the extra cash to invest OUTSIDE the US, and build up the economies of OTHER countries. That’s what happened to the Reagan and Bush tax cuts.
But again, whatever does actually happen, it wont be what has been sketched out so far, it will be something else. The only thing I’m sure of, since the same Republicans are in charge now, as were in charge during the Bush cuts, is that yet again, the richest people will get a LOT richer, and the rest of us will be left being told that we can’t afford any social support networks, or protection from being outsourced or replaced by machines, because that money was used up trying to bribe the rich in to investing.
I don’t see it getting through a Senate filibuster as proposed. I also don’t see nuking the legislative filibuster to do it. So my short answer is, not at all.
Reducing the number of tax brackets seems counter productive. It makes the marginal tax rate large near the edges of the bracket. Sharp cliffs aren’t a good way to minimize the impact of taxes on economic decisions.
I haven’t seen a breakdown of where those new brackets fall compared to current brackets which will have an impact on individual households. That will be relevant to how much benefit an individual household gets vs the average or median household.
Getting rid of almost all deductions is troubling. Simpler is good. There’s always lot of pork in giving special interests breaks in them. Some of them are related to efficient ways to address market failures like negative externalities, though. Without that tool, regulation becomes more important to address market failures. Trump just proposed a tax plan that makes regulation more important. Ahh the irony.
I am troubled that one of the two tax breaks left in is the mortgage interest deduction. It sounds good. Home ownership is “the American Dream.” The deduction mostly serves as an indirect subsidy to the home industry. It has the added “benefit” of being regressive by helping the wealthiest more. I’d rather see it phased out finally without screwing people who made mortgage decisions based on it’s existence.
I haven’t seen the assumptions used for the dynamic effects. This not costing anything in total revenue makes me think they are extremely generous assumptions. By “extremely” I mean pulled straight out of someone’s ass to make the numbers work. I’m sure the left’s spin will be “trickle down economics” while pretending dynamic effects don’t exist. The right will try to spin the unrealistic assumptions about the dynamic effects as somehow being realistic. Somewhere between the two extremes is likely a realistic estimate of the revenue impact. Keep an eye out for a CBO estimate.
Increasing standard deductions as a form of a tax cut is a good technique IMO. It’s got the advantage of making the tax system more progressive. It’s got something for both sides of the aisle - a tax cut and helping the poor most. I doubt we hear much about that piece once the fight gets going.
Let’s try to keep this within the scope of the question in the OP. A debate on the overall issue belongs in GD. At this point I’ll keep this here but I’ll keep an eye on things in case it needs moving.
This calculator is out of date, but can give a rough idea. Supposedly this plan is similar to the plan he had on the campaign trail.
From what I know of Trump’s plan (as it affects middle class people) he wants to create 3 tax brackets and double the standard deduction. In theory that would result in a middle class tax cut of maybe 1-5% of gross annual income. I’ve heard single parents will see their taxes go up though.
However, I don’t know. I know under the current system the rate is 10% for the first ~10k in income, then 15% for 10-38k, then 25% for 38-90k. Trump wants to have 3 brackets (10, 25, 35). However I don’t know if Trump is going to expand the 10% bracket upwards or move the 25% bracket downwards.
Without seeing actual income parameters, which haven’t been published yet, how the heck am I supposed to know?
I do know that my husband is a financial advisor. He said this year he’s seen an unprecedented number of upper middle income (low to mid 6 figures) clients who’ve complained loudly about how much their tax bill is.
Personally, I don’t think ANYONE should pay over 30% of their income towards income taxes, keeping in mind that it’s not the only taxes we pay. In addition to the feds, we’re all ponying up to the states and local municipalities (income tax), our local counties in terms of property taxes, and of course, sales taxes. Then you add in the “just because we can” AMT, and most of us are paying a huge percentage of our income to support the pig we collectively know as the “government.”
I’m not sure how this will effect me. Speculation is that many in New Jersey will be adversely effected because the deduction for property tax is needed to offset our extremely high rates. How the math works out when coupled with the raise in standard deduction? I don’t know.
It also eliminates the deduction for state and local taxes, which is a pretty huge blow to me.
Although I sincerely hope the only net effect of this tax bill will be hours of entertainment as these clowns fumble again and again while they try to make it into law and fail miserably.
It sounds like I’ll come out ahead, although more details are needed.
As others have said, it’s hard to assess the impact until we see some actual legislation.
Right now, however, I’m, er, between jobs and my gross income is zero. Assuming I’m working again once this mess gets enacted, I’ll lose some money from the removal of the sales tax exemption; the effect of the changes in standard deduction and reduction from six to three brackets could go either way.
Well that too but here in NJ it’s the property tax that is the big hit. I laugh when I hear what friends pay in other states. I live in a modest townhouse and pay $5000 a year. When I lived with my ex-girlfriend in a nice house in the same town we paid $16000 a year.
Hmm, then instead of a tax cut, this might be a tax ***raise ***for lots of low-income folks.
What are the new rates? Nobody can answer your question if we don’t know what the cuts are.
Repealing the estate tax would be an absolute windfall for the 1%. Projections from the Tax Policy Center are that, for 2017, 11,000 estate tax returns will be filed. Of those, 5,200 will have to pay, and the total tax collected is projected at $19.7 billion.
So, the awful awful “death tax” only affects 5,200 decendents, out of the 2.7 million total number of deaths, or about 0.1% of households. Even dividing it absolutely evenly (which it isn’t), this is a grab that takes $19.7 billion from the treasury and puts $3.75 million back into the pockets of the well-off heirs of each and every person who would have been subject to the estate tax.
For people who hate math: this means the estate tax only affects the super-duper-rich, just the way it should. The family farm is safe.