# The 2017/2018 Trump/GOP tax plan **URL:** \ **Category:** Great Debates\ **Created:** [September 27, 2017, 5:47pm UTC](https://boards.straightdope.com/t/the-2017-2018-trump-gop-tax-plan/797442 "2017-09-27T17:47:17Z")\ **Posts on this page:** 20\ **Page:** 56
**Author:** ![elucidator](https://avatars.discourse-cdn.com/v4/letter/e/8edcca/32.png) [@elucidator](https://boards.straightdope.com/u/elucidator)\ **Post date:** [December 23, 2017, 7:40am UTC](https://boards.straightdope.com/t/the-2017-2018-trump-gop-tax-plan/797442/1101 "2017-12-23T07:40:16Z")
Yeah, that last one was a real Corker! ---
**Author:** ![septimus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/septimus/32/410_2.png) [@septimus](https://boards.straightdope.com/u/septimus)\ **Post date:** [December 23, 2017, 11:26am UTC](https://boards.straightdope.com/t/the-2017-2018-trump-gop-tax-plan/797442/1102 "2017-12-23T11:26:15Z")
> [@galen\_ubal](#): > > … Have those holes been largely closed, or can we look forward to corporations paying an effective tax rate of 10%? Let’s hope that they pay 10% or less. American corporate executives have been overworked for a pittance, and are probably fleeing in droves to more business-friendly countries. People like to point at Rutledge, CEO of Charter Communications, Inc., with his $98,500,000 compensation in 2016 but if you broaden this to the top five Charter employees, their average salary was a more meager $42,500,000. And half of the CEO’s on the Fortune-500 had to make do with less than $12,000,000 in 2016! Yes, they got an average raise of over 8% compared with 2015, but when inflation is figured in, their average raise was only about $500,000. In contrast the Bureau of Labor Statistics reports that the median U.S. worker got a whopping $303 raise in 2016 (again in constant dollars). With their crippling tax burdens removed at last, American companies will finally be able to pay enough in salaries and bonuses to attract competent executives! Make America Great Again! ---
**Author:** ![adaher](https://avatars.discourse-cdn.com/v4/letter/a/dec6dc/32.png) [@adaher](https://boards.straightdope.com/u/adaher)\ **Post date:** [December 23, 2017, 12:00pm UTC](https://boards.straightdope.com/t/the-2017-2018-trump-gop-tax-plan/797442/1103 "2017-12-23T12:00:13Z")
> [@Bone](#): > > They get overtaken by the higher child tax credit. The child tax credit is $2000. The dependent deduction was $4000. ---
**Author:** ![Alley\_Dweller](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/alley_dweller/32/430_2.png) [@Alley\_Dweller](https://boards.straightdope.com/u/Alley_Dweller)\ **Post date:** [December 23, 2017, 12:22pm UTC](https://boards.straightdope.com/t/the-2017-2018-trump-gop-tax-plan/797442/1104 "2017-12-23T12:22:22Z")
> [@adaher](#): > > The child tax credit is $2000. The dependent deduction was $4000. Just to make sure everyone understands, the child tax credit reduces the amount of tax you have to pay by $2000. The dependent deduction reduces the amount of tax you have to pay by ($4000 x your marginal tax bracket). For example, if you are in the 15% tax bracket, it reduces your tax by $600. For your other dependents who do not qualify for the child tax credit, they added a $500 non-refundable credit for each non-child dependent that they call the “family credit.” This is also a “credit,” meaning it reduces your taxes by a straight $500 (but not below $0). Note that you and your spouse are never your dependents. Under the old system, you would have had a $4000 personal deduction for each of you. That is eliminated with no replacement, unless you want to argue that the increased standard deduction is the replacement. ---
**Author:** ![Alley\_Dweller](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/alley_dweller/32/430_2.png) [@Alley\_Dweller](https://boards.straightdope.com/u/Alley_Dweller)\ **Post date:** [December 23, 2017, 12:30pm UTC](https://boards.straightdope.com/t/the-2017-2018-trump-gop-tax-plan/797442/1105 "2017-12-23T12:30:26Z")
By the way, starting in the year your child turns 17, they are no longer eligible for the child tax credit. Even if they are a full time student in high school or college, they are no longer eligible. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [December 23, 2017, 2:38pm UTC](https://boards.straightdope.com/t/the-2017-2018-trump-gop-tax-plan/797442/1106 "2017-12-23T14:38:22Z")
> [@AI\_Proofreader](#): > > Someone correct me if I’m wrong, but I’m pretty sure no loopholes have been removed for corporations, only added - as with the pass-through and real-estate exemption additions. It depends what you call a loophole. We generally tax corporate profit, i.e. revenue less expenses, which seems straightforward but there is often some question of what expenses count and when they count. Expenses that count typically include employee compensation. Pay out more and you have less profit to be taxed. That includes performance-based stock options to high-paid executives. As of earlier this week, that was being changed. [https://www.google.com/amp/s/www.wsj.com/amp/articles/potential-loser-in-tax-overhaul-executive-stock-options-1513737409](https://www.google.com/amp/s/www.wsj.com/amp/articles/potential-loser-in-tax-overhaul-executive-stock-options-1513737409) > [@](#): > > Companies stand to lose a longstanding tax break on some stock options awarded primarily to high earners. > > Publicly-traded corporations can deduct stock options they give to top leaders earning more than $1 million a year from their tax bills—a Clinton-era rule created to cap how much the leaders get paid. The provision applies to companies’ highest paid executives, those whose pay must be disclosed to shareholders. > > Now, in the plan being proposed by U.S. lawmakers, any pay higher than $1 million a year would be subject to taxation, even so-called “performance-based pay” like stock options. > > Under the rules, stock options would not be deductible, meaning large companies would be forced to pony up to lure the best executives. I don’t really think that was a “loophole” but YMMV; it was showing up when I googled “list of corporate tax loopholes” ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [December 23, 2017, 3:18pm UTC](https://boards.straightdope.com/t/the-2017-2018-trump-gop-tax-plan/797442/1107 "2017-12-23T15:18:59Z")
> [@AI\_Proofreader](#): > > Out of curiosity, now that the Alternative Minimum Tax has been repealed, and the top tax rates for individuals and corporations has been lowered, as well as a few other loopholes added, does anyone see a way someone could pay an effective rate of 0% in taxes? > > (Assuming of course no shenanigans with offshoring most profits in tax haven countries, and ignoring billions in subisidies - plenty of corps already pay 0 or have a negative tax rate with that in mind). > > It would be interesting if any situations are found that allow all profits to be kept in the U.S., with no subsidies received, but still be able to pay no taxes. [The AMT was not repealed for individuals:](http://cbs58.com/news/gop-tax-bill-how-the-new-tax-plan-will-affect-you) > [@](#): > > **What’s the deal with the alternative minimum tax?** > > For corporations, the AMT disappears. > That’s not the case for individual filers, but fewer will have to pay it, at least. > > Exemption amounts will increase from $84,000 for joint filers under the current law level to $109,400. Single filers will see that number increase from $54,300 to $70,300. > > The exemption currently phases out for joint filers at $160,900, and $120,700 for individuals. Under the tax bill, that phaseout would kick in at $1 million for married filers and $500,000 for those who are single. Above the threshold, filers lose 25 percent of their exemption, that is, $0.25 on every dollar in income. ---
**Author:** ![wonky](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/wonky/32/393_2.png) [@wonky](https://boards.straightdope.com/u/wonky)\ **Post date:** [December 23, 2017, 4:20pm UTC](https://boards.straightdope.com/t/the-2017-2018-trump-gop-tax-plan/797442/1108 "2017-12-23T16:20:44Z")
> [@galen\_ubal](#): > > There’s a question I’ve been meaning to ask. It’s known that while the marginal tax rate the US officially charged was 35%, the rate they’ve actually been paying is something like half that, due to shelters and other tax loopholes. > > Have those holes been largely closed, or can we look forward to corporations paying an effective tax rate of 10%? I think all of the the estimates I’ve seen have been the effective rate falling from 23% to 9%. This is a nice video that goes into some of the winners and not-as-winning winners: [https://www.cnbc.com/video/2017/12/21/average-effective-corporate-tax-rate-falls-to-9-percent-with-tax-reform-estimates-upenn-wharton.html](https://www.cnbc.com/video/2017/12/21/average-effective-corporate-tax-rate-falls-to-9-percent-with-tax-reform-estimates-upenn-wharton.html) At the end, the speaker says he hasn’t seen that 9% rate, but I have in other articles (though they may have been coming from the same model). ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [December 23, 2017, 4:22pm UTC](https://boards.straightdope.com/t/the-2017-2018-trump-gop-tax-plan/797442/1109 "2017-12-23T16:22:42Z")
As David Brooks noted on the _PBS News Hour_ yesterday: You can give away a lot of money for $1.5T dollars. That is to say, borrowing that much money lets you hand out goodies like nobody’s business. Which is exactly what we are doing. Borrowing money so we can give out tax breaks, most of which will go to very wealthy individuals. I’m sure that has been said in this thread before, but it bears repeating. ---
**Author:** ![jasg](https://avatars.discourse-cdn.com/v4/letter/j/f0a364/32.png) [@jasg](https://boards.straightdope.com/u/jasg)\ **Post date:** [December 23, 2017, 8:11pm UTC](https://boards.straightdope.com/t/the-2017-2018-trump-gop-tax-plan/797442/1110 "2017-12-23T20:11:57Z")
> [@Alley\_Dweller](#): > > By the way, starting in the year your child turns 17, they are no longer eligible for the child tax credit. Even if they are a full time student in high school or college, they are no longer eligible. One of the overlooked tax [benefits](http://money.cnn.com/2017/12/20/pf/private-school-529-tax-bill/index.html) is that is you are rich enough to fund a 529 account (tax free educational account for college), you can now use that money for private or religious schooling as well as college. This is a break that really benefits the top few percent - and the schools, who now may raise tuition as this NYT article [repsorts](https://www.nytimes.com/2017/12/21/your-money/529-plans-taxes-private-school.html). > [@](#): > > Imagine a wealthy family in the highest tax bracket that opens a 529 plan with $200,000 and doesn’t add another cent. The money grows at 6 percent annually, and the family takes out the maximum $10,000 each year, avoiding $2,380 in taxes annually. During the elementary and secondary school years, it saves $30,940 in taxes. > > At that point, the account would still have money left over. A lot of money: $370,717. And once the beneficiary of the 529 account enters college, the family can withdraw as much as the entire annual cost of college and related expenses (not just $10,000) each year, avoiding even more capital gains taxes over that period. > > If you have anything to do with running a private school, you’re probably licking your chops at this point. Heck, why not raise tuition by $2,380 right away! But consider your less-affluent families for a moment: Integrating a family’s 529 accounts into your financial aid formula was a whole lot easier in the old days, when families did not use them to pay tuition before college. > > If You Have $200,000 for Tuition Under the House Tax Bill ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [December 23, 2017, 9:00pm UTC](https://boards.straightdope.com/t/the-2017-2018-trump-gop-tax-plan/797442/1111 "2017-12-23T21:00:12Z")
Last I checked you can’t “open a 529 plan with $200,000” unless they’ve changed something. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [December 23, 2017, 9:05pm UTC](https://boards.straightdope.com/t/the-2017-2018-trump-gop-tax-plan/797442/1112 "2017-12-23T21:05:22Z")
> [@jasg](#): > > is you are rich enough to fund a 529 account This doesn’t even make sense. Most parents save for college. Whether those who do so take advantage of a 529 plan isn’t a matter of whether they are “rich enough.” DC’s 529 is a high-fee junkpile last I checked. No thanks. ---
**Author:** ![jasg](https://avatars.discourse-cdn.com/v4/letter/j/f0a364/32.png) [@jasg](https://boards.straightdope.com/u/jasg)\ **Post date:** [December 23, 2017, 10:31pm UTC](https://boards.straightdope.com/t/the-2017-2018-trump-gop-tax-plan/797442/1113 "2017-12-23T22:31:27Z")
> [@Ruken](#): > > Last I checked you can’t “open a 529 plan with $200,000” unless they’ve changed something. From the link above… > [@](#): > > In what we should now refer to as the old days, you might save money for 18 years and then pull the money out over four years while a child completes college. But now, wealthy families can do what’s known as “superfunding” 529 accounts with a pile of money upfront. Then, they can pull out the $10,000 maximum each year to use for elementary and secondary school, until a child starts college. (The money will not be available for home schooling expenses, however, as that fell out of the final bill this week for technical reasons.) ---
**Author:** ![jasg](https://avatars.discourse-cdn.com/v4/letter/j/f0a364/32.png) [@jasg](https://boards.straightdope.com/u/jasg)\ **Post date:** [December 23, 2017, 10:37pm UTC](https://boards.straightdope.com/t/the-2017-2018-trump-gop-tax-plan/797442/1114 "2017-12-23T22:37:02Z")
> [@Ruken](#): > > This doesn’t even make sense. Most parents save for college. Whether those who do so take advantage of a 529 plan isn’t a matter of whether they are “rich enough.” DC’s 529 is a high-fee junkpile last I checked. No thanks. From the first link above… > [@](#): > > “I have yet to find a specific part of the tax code that is more skewed to the affluent than 529s,” said Richard Reeves, a senior fellow at the Brookings Institution, a left leaning public policy organization. > > As one of his research papers notes, there are bigger tax breaks for the upper class – like the mortgage interest deduction. But the benefit to 529 account holders “is a strong contender for the prize of most absurd tax break of all.” > > Parents who used a 529 account in 2010 had about three times the median income of those who didn’t, and were much more likely to have a college degree, according to the latest report from the Government Accountability Office. I don’t know three details in DC, but low-fee Vanguard offers 529 plans. Even with high fees, avoidance of capital gains taxes could be a big winner. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [December 23, 2017, 10:54pm UTC](https://boards.straightdope.com/t/the-2017-2018-trump-gop-tax-plan/797442/1115 "2017-12-23T22:54:09Z")
> [@jasg](#): > > From the link above… “Super funding” isn’t new. So do you know if something has changed that allows you to allow you to open an account with $200k? Because I don’t see how you could before. > [@jasg](#): > > From the first link above… > > I don’t know three details in DC, but low-fee Vanguard offers 529 plans. Even with high fees, avoidance of capital gains taxes could be a big winner. This doesn’t add any sense to what you wrote. What do you mean by “rich enough”? ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [December 23, 2017, 11:15pm UTC](https://boards.straightdope.com/t/the-2017-2018-trump-gop-tax-plan/797442/1116 "2017-12-23T23:15:10Z")
[529 Plans:](https://www.kiplinger.com/article/college/T002-C001-S001-high-limits-on-529-plan-contributions.html) > [@](#): > > **Is the maximum that parents, grandparents, friends, etc., can put in a 529 plan each year $3,000?** > > Actually, the maximum contribution is much higher – so high that it isn’t really an issue. The specifics vary by state, but most states let anyone contribute as much as they want, as long as the beneficiary has less than $230,000 to $310,000 in that state’s plan. > > But a person’s contributions can be limited by the gift-tax laws. You can only give up to $12,000 to each person in 2008 without being subject to gift taxes (married couples can give $24,000 to each person). > > However, there is an exception for 529s: You can make five years’ worth of contributions in one year (totaling $60,000 in 2008) without being subject to gift taxes, as long as you don’t give that person any other money within the five years. But I don’t think the contribution side of things changed with the new law, only that you can withdraw for K-12 expenses, not just post-secondary ones. So, there is more incentive to front-load the contributions than there was before. ---
**Author:** ![Snowboarder\_Bo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/snowboarder_bo/32/229_2.png) [@Snowboarder\_Bo](https://boards.straightdope.com/u/Snowboarder_Bo)\ **Post date:** [December 23, 2017, 11:17pm UTC](https://boards.straightdope.com/t/the-2017-2018-trump-gop-tax-plan/797442/1117 "2017-12-23T23:17:07Z")
> [@Ruken](#): > > “Super funding” isn’t new. So do you know if something has changed that allows you to allow you to open an account with $200k? Because I don’t see how you could before. I googled and found [this](http://www.bayalisistheanswer.com/hitchhikers-guide-529-superfunding/): > [@](#): > > $14,000 is your annual gift-tax exclusion amount (per recipient) and gifting this amount incurs no tax. There are no IRS filing requirements and these gifts do not eat into your lifetime estate basic exclusion amount. > [@](#): > > Instead of being limited to $28,000 per year, a two parent family can go up to a whopping $140,000 ($14000 \* 5 \* 2) to fund a 529 in a single year. Basically you are being allowed to give a single recipient five years worth of tax-free gifts in a single year. If you have wealthy grandparents who want a tax-friendly way to divest portions of their estate, you can pile on even more. Than, at the end of the year, you file a Form 709 “United States Gift (and Generation-Skipping Transfer) Tax Return” on whatever you put in the 529. There’s a graph there that shows that a superfunded 529 will have 10% more cash than one that is not superfunded, too. Other sites back up the $14,000 x 2 people x 5 years = $140,000 to start tho. And since what matters is how much someone gave and not how much was recieved in a given period, grandparents or others could each contribute up to $70k at the start of the 529 fund; not hard to imagine it getting to $200k right off the bat from people in the top few %, at least. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [December 23, 2017, 11:49pm UTC](https://boards.straightdope.com/t/the-2017-2018-trump-gop-tax-plan/797442/1118 "2017-12-23T23:49:58Z")
Thank you. So a little creative laundering (or rich gparents) _does_ make this possible. ---
**Author:** ![jasg](https://avatars.discourse-cdn.com/v4/letter/j/f0a364/32.png) [@jasg](https://boards.straightdope.com/u/jasg)\ **Post date:** [December 24, 2017, 12:47am UTC](https://boards.straightdope.com/t/the-2017-2018-trump-gop-tax-plan/797442/1119 "2017-12-24T00:47:54Z")
> [@Ruken](#): > > “Super funding” isn’t new. So do you know if something has changed that allows you to allow you to open an account with $200k? Because I don’t see how you could before. > > This doesn’t add any sense to what you wrote. What do you mean by “rich enough”? Perhaps poorly put as “rich enough” - I was trying to put across the point from the article about “super funding” which clearly takes a high income and the “three times the median income” comment which is pretty rich in many people’s estimation. Here is another [link](https://www.brookings.edu/research/a-tax-break-for-dream-hoarders-what-to-do-about-529-college-savings-plans/) that covers ways to get hundreds of thousands into a 529 in a single year. A great capital gains tax dodge if you have the money to take advantage of it. Back to the tax reform, as discussed in the articles I cited, reform has given a huge boost to using 529s since they can now be used for private and religious schooling. ---
**Author:** ![Fiveyearlurker](https://avatars.discourse-cdn.com/v4/letter/f/da6949/32.png) [@Fiveyearlurker](https://boards.straightdope.com/u/Fiveyearlurker)\ **Post date:** [December 24, 2017, 1:58am UTC](https://boards.straightdope.com/t/the-2017-2018-trump-gop-tax-plan/797442/1120 "2017-12-24T01:58:45Z")
I just prepaid my property taxes. I would suggest people living in high tax states look into it. [Previous page](https://boards.straightdope.com/t/the-2017-2018-trump-gop-tax-plan/797442.md?page=55) [Next page](https://boards.straightdope.com/t/the-2017-2018-trump-gop-tax-plan/797442.md?page=57)