I probably would have a wash, gaining double exemptions but losing the state and local write offs. But I’m not concerned about me, it’s the disastrous effect this would have on the nation. You’re talking increasing the deficit to numbers so big only Stephen Hawking understands them. They make a big fucking deal about reducing the number of brackets but who the fuck cares? You do your tax form, you get to your taxable income, go to the table and find your tax. Whether there were 3 brackets or 30 that produced that number is transparent to you.
Make no mistake, this is not tax reform. It is tax cuts. And they aren’t meant to benefit the schmucks who voted for the Cheeto Bandito, either. They’re meant to benefit the super elite. That “death tax” is really the fairest tax there is, and it affects only a fraction of 1% of estates. Don’t fall for their bullshit, it’s robbing Peter to pay Paul. We’re Peter, they’re Paul.
The thing about the keeping of the mortgage interest deduction combined with the doubling of the standard deduction means you have to have one hell of a house before that’s going to be useful. (A married couple with a would need to owe more than 600,000 on their house at today’s interest rates.) The people that Trump refers to as “forgotten Americans” do not owe that much on their homes - their homes aren’t worth that much to begin with. (cite:median home prices). Even more so when you combine it with removing the income/sales tax deduction and property tax deduction.
For married jointly that happens in the low 100s. With this tax plan, high 200s (or so).
But, the plan implies that he’s getting rid of all of the other deductions. So there are no other likely deductible items, including state income (and state sales) tax. It’s just house and charity.
But yes, if that’s a nonstarter (likely), then people in high tax states will be able to deduct that as well. People in “forgotten America” don’t live in those states. They’ve already slashed their state taxes.
I don’t know how to word this without it coming off like a political pot-shot, but the odds are it would affect nearly everybody negatively. We’re talking about one of the most complex and inter-dependent systems on Earth being “redesigned” off-handedly by someone with no understanding of, or experience with, that system, and with the reasoning ability of a five year old. Were it to somehow come into being, vast unintended consequences would arise, pretty much dwarfing the financial effects of whatever my tax bill turned out to be.
Based on this, my tax bill would be cut by roughly 5%. As someone who lives a quite comfortable life, and knowing how the deficit is going to explode in the next few years even without totally reckless tax cuts, this is absolutely absurd.
The “awful awful” part was sarcasm. A transfer of money under any other circumstances (wages, purchasing goods, etc.) is taxed. I see no reason why the transfer of money at death should be treated any differently. It’s disingenuous at best and downright fraudulent at worst to pretend that the estate tax affects anyone but the super-rich. And when you compare the tax collected to the amount of wealth passed down, you grasp the absurdity: in 2012, the estate tax collected $8.5 billion of the $1.2 trillion inherited, or 0.7%. I think the rich are doing just fine.
Politicians tell you that, but they are lying. In 2013, there were 20 small businesses and farms that owed estate tax. Twenty. And those paid roughly 4.9% of their value in tax. Cite. Even those numbers would likely be reduced with some good estate planning and the maximizing of personal exemptions. For example, the personal exemption is currently $5.49 million. By transferring the portion of your estate that exceeds that amount to your spouse, together you can transfer $11 million to your heirs. And there are additional exemptions that apply to family farms that continue to operate.
Eliminating the estate tax would knock a hole in the federal budget to the tune of $225 billion over 10 years. How is it fair to pass that to the middle class and poor, or to saddle our children with additional debt? It it better to do that and permit massive tax-free wealth transfer than to expect those who have benefited most from the US to pay their fair share on a transfer of funds?
Why not just increase the exemption amount? How about twenty million? Thirty? Fifty? Nope, the Republican politicians want it repealed, no matter how high the exemption goes. That tells you who’s holding the gun to their backs and whispering in their ears.
If I’m understanding this correctly this plan would make anything contributed to health insurance and retirement plans taxable. That would be significant, about $9K more taxable income a year for me .
That’s a big change. One of the main reasons to push employees into retirement plans is for the tax deduction, one of the main reasons employers not only offer, but often times match contributions is because of the tax deductions.
If this is getting rid of those, be prepared for personal investment into retirement accounts to drop massively.
I saw somewhere that that a journalist asked Spicer for clarification on this point and retirement changes are no longer on the table. Can’t find it now.
I haven’t done enough math to be sure, but my mental ballpark is that my taxes will go up by around $12k.
Shifting the brackets around will cost me a few $k. The elimination of the SALT deductions will cost several thousand since I live in a high state-tax area, and property tax ain’t cheap either.
I played with it a bit, and it looks like a single parent with one child, older than age 5, would see their taxes go up if their income is $15,010 (moving for $0 to $1). Below that threshold they still pay $0.
What I find interesting, is at my income, and single and with no dependents, they estimate that my tax burden would go down $1,164. But if remained single but had a school-age child, my taxes would go up $92. Oh, and that single person making $15,010? If they were childless too, they’d be paying $465 less than they do now, too. How does this work? Parents usually get taxed less, not more than childless people…considering how many people have kids, I don’t see this going over real well.