Just a quick look seems to say that, while the standard deduction goes up by $5700, I lose $8000 worth of personal exemptions. Why, it’s almost as if this is bad for middle class people!
Just curious, which personal exemptions are you losing?
According to the CNN article, this:
Eliminates personal exemptions: Today you’re allowed to claim a $4,050 personal exemption for yourself, your spouse and each of your dependents. The House bill eliminates that option.
For families with three or more kids, that could mute if not negate any tax relief they might enjoy as a result of other provisions in the bill.
Thank you. Newspapers weren’t linking to the full act.
Obviously, if you’ve already got three or more kids, that’s bad for you, but I’m not hugely sympathetic about the idea of subsidizing over-replacement-fertility families.
That may be, but I’m single with 1 dependent that I can claim.
nvm, answered.
I’m surprised there aren’t more giveaways to the ultra-rich: the only one I can see is eliminating the estate tax but that isn’t phased in right away. The major beneficiaries seem to be the upper-upper middle class and the moderately wealthy, who get a donut hole of a 4.5% lower bracket and elimination of the AMT. (And of course the major loser is the treasury but “deficits don’t matter” when your party is in charge I guess.)
Are there corporate giveaways as well? I couldn’t find anything on what it does to the corporate tax rate, which is where the ultrarich could benefit as well.
According to the TV, the corporate tax rate goes down significantly, which greatly helps the ultra-wealthy who can use dummy corps and similar pass-throughs to avoid higher individual rates on their income.
Doesn’t any organization categorize the “Typical” family - income, children, mortgage, etc - and then compare what they would pay in taxes with the old plan to what they would pay in taxes with the new plan?
I also notice that most news stories mention the doubling of the standard deduction but fail to mention the loss of the personal exemptions. That seems like a big deal to me. Isn’t it?
Just to throw my data in the mix, we file married, jointly, with no kids, and this is going to cost me another $1000 or so because of the removal of the personal exemptions.
Mark
Sounds like a big “screw you” to Utah.
As a Utahn, I kind of felt the same way. Senator Lee had been pushing hard for the child credit to be increased, and it was, but I wonder what he thinks of the removal of the personal exemptions. I haven’t yet figured out if I’d personally come out ahead or behind with this plan.
Do you pay state or local taxes? The deductions for them have been removed as well.
The Tax Foundation provided these example cases. Tax cuts for everyone!
Married filing jointly, two dependents. For the 2016 tax year, we took ~$26K in deductions (mortgage interest, property taxes, state income tax, and charitable contributions). Since that is just over double the current standard deduction, and we will lose some deductions, we’ll probably fall under the new standard deduction. The personal exemptions (4) reduced our taxable income by an additional ~$16K last year, which we will now pay taxes on at our marginal rate of 25%. So it will cost us ~$4K. We’re comfortable and can afford that, but it’s hardly a pittance.
The reduction in rates for pass-through income from partnerships and LLCs is an abomination.
I do not understand the GOP obsession with the estate tax. The exemption is already huge, so almost no estates pay it. The person “paying” the tax is already dead and can’t possibly feel the pain of it. The recipients of an inheritance did nothing to deserve it (I say this as someone who will probably inherit a couple of million dollars sometime in the next couple of decades). The double-taxation argument is completely bogus, given that large fortunes are often accumulated through capital gains, which are not taxed at death because of the stepped-up basis rule. (Does anyone know if the bill eliminates that to compensate at least a little for the loss in revnue?) The optics are terrible.
I assume the bill will fail in the Senate in the current form. Or at least I hope so.
Your situation sounds fairly similar to the Tax Foundation’s “Kavya and Nick” or “Sophie and Chad”, who, in their calculations end up $1k+ ahead. What is the Tax Foundation missing, or you doing differently that’s putting you $4k in the hole?
Perhaps you should itemize?
BTW, WaPo gave Senate Democrats four Pinnochios for their dishonest claims that most working-class families face a tax hike:
I’m pretty sure I’d pay more given the SALT limits.
The Kavya and Nick example is probably closest to a middle class income. But the fact they are currently taking the standard deduction means they likely have no mortgage interest or property tax and a state with no income tax. While Sophia and Chad are in the top 5% of household income. There are certainly valid numbers of people in those positions, but it cherry picks around the very common case of middle-class,Married with kids,a house in the first half of the mortgage, and a state with income tax; I’d like to see numbers on that.