The 2017/2018 Trump/GOP tax plan

[RickG]

@HurricaneDitka

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?

More like Sophie and Chad. I reran the numbers based on the summary at the Tax Foundation, and it looks like we may actually come out a little ahead. I was doing a back-of-the-envelope calculation based on the current brackets. Without the child tax credit, our net tax would go up by about $1K (plus we lose the tax credit for money my wife, a teacher, spends on her classroom, but that’s rarely more than a couple hundred bucks). Depending on how the tax credit phases out, we could end up with as much as a $2K net reduction. This is the last year for one of the kids, since she just graduated from college and moved away, and the other one is in college, so we only have him for a little while longer. Under current law, our tax bill was going to go up when they left, anyway, but by less than the value of the proposed tax credit when they age out of that. So once the kids are no longer dependents, we will be slightly worse off than under current law, but not as much as I thought. Mea culpa for the error.

Perhaps you should itemize?

Like I said, we already do. But with the loss of the state tax deduction, we will not exceed the proposed standard deduction.

[HurricaneDitka]

@wolfman

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.

Read the WaPo fact checker article then:

Only a small percentage (6.5 percent) of the nearly 122 million households in the bottom three quintiles will actually face a tax increase.

Meanwhile, more than 97 million (80 percent) will receive a tax cut. Doing the math the same way the JEC staff did, we come up with an average tax cut of about $450 for those 97 million households.

Does that cover enough middle-class cases for you to be satisfied?

[HurricaneDitka]

@RickG

More like Sophie and Chad. I reran the numbers based on the summary at the Tax Foundation, and it looks like we may actually come out a little ahead. I was doing a back-of-the-envelope calculation based on the current brackets. Without the child tax credit, our net tax would go up by about $1K (plus we lose the tax credit for money my wife, a teacher, spends on her classroom, but that’s rarely more than a couple hundred bucks). Depending on how the tax credit phases out, we could end up with as much as a $2K net reduction. This is the last year for one of the kids, since she just graduated from college and moved away, and the other one is in college, so we only have him for a little while longer. Under current law, our tax bill was going to go up when they left, anyway, but by less than the value of the proposed tax credit when they age out of that. So once the kids are no longer dependents, we will be slightly worse off than under current law, but not as much as I thought. Mea culpa for the error.

Like I said, we already do. But with the loss of the state tax deduction, we will not exceed the proposed standard deduction.

Thanks for taking the time to do the additional analysis.

[wolfman]

@HurricaneDitka

Read the WaPo fact checker article then:

Does that cover enough middle-class cases for you to be satisfied?

That Does sound fairly covered.It does make the suggestion of cherry picking seem wrong, So I’ll retract and mea culpa that.

[RickG]

@HurricaneDitka

Thanks for taking the time to do the additional analysis.

Sure.

To be clear, I still think the proposal stinks. I personally think that, if you’re going to do a tax cut (which seems entirely unnecessary in the current economy), it should at least be distributionally fair. By that I mean that the increase in after tax income should be similar, on a relative basis, across incomes (better still would be higher relative benefits to the poorest, but we’re not getting that from Paul Ryan). That Tax Foundation chart shows a much bigger percentage increase for higher incomes, up to 9% for the couple with pass-through income. Oddly, except for the lowest income examples, people in my situation benefit the least. I’m ok with not having a tax cut at all, or having a smaller one than people less well off than me, but I’m not that happy about richer people getting a bigger break (again, in relative terms–I understand that in absolute terms wealthier people will get more money back).

[Chronos]

There are some questions which should be asked of anyone proposing a new tax plan.

1: Will total revenue increase or decrease?

2a: If total revenue will decrease, then how will you deal with that? Spending cuts (and to what?), or increased deficits?

2b: If total revenue will stay the same or increase, then who will be paying more? It must be someone.

Of course, more detailed versions of these questions are possible and important: For instance, if a plan will decrease revenue by $100 billion, then it’s not acceptable to say that that will be paid for with cuts to the Department of Education, because the Department of Education doesn’t have $100 billion to cut.

[wolfman]

My taxes are still going to go up a lot. I’m just surprised how few people seem to be in the same position.

So I’m still very pissed that if it passes I will be paying more,while the rich get paid, and the deficit grows even bigger.

[Slash1972]

@HurricaneDitka

The Tax Foundation provided these example cases. Tax cuts for everyone!

I calculate a tax of $2090 for that first person (James). Any idea how they come up with $4132?

[HurricaneDitka]

@Slash1972

I calculate a tax of $2090 for that first person (James). Any idea how they come up with $4132?

Here’s what they wrote in their blog post:

Our first household (James) is a single individual earning $30,000 with no dependents. We assume that this filer takes the standard deduction and has tax-deferred retirement contributions of $2,600 (five percent of income). Under current law, this taxpayer faces overall tax liability (including employee-side payroll taxes) of $4,132, and would see a tax cut of 5 percent, to $3,944. This household’s after-tax income would increase by 0.7 percent.

[Try2B_Comprehensive]

So I got modded for the first time since 2009 or 10. I took a little break. Ok?

@HurricaneDitka

I have not “falsely cast blame” on liberals for “the Kansas situation”. I said “Liberals seem to think it’s been the death knell for Kansas.” There’s no ‘blaming’ there, it’s merely making an observation about how they feel about it.

My words were not bull’s-eye perfect for sure. Frankly it wasn’t really the blaming of liberals that had me so steamed.

But before I go on, I want to apologize for my intemperate remarks. Maybe I read something that gets me steamed in the media- everyone does. I really shouldn’t let it result in insulting the other posters. Sorry about that. I was wrong.
I think what was bothering me was the labeling of others as liberals. It seems to be a common reflex anymore among those on the right, a sort of rhetorical defense mechanism. Is someone disagreeing with a righty about something, threatening to disrupt The Agenda? You don’t have to know the details. Just label them a liberal in a scathing tone, and people will nod in agreement, give you support, defeat the threat.

That’s why I ask you what “liberal” means. I think this has become a simple rhetorical trick, one that is done without any insight; without meaning. If “liberal” had a concrete definition, we could debate whether or not those things connotate the pure, distilled evil that people who repeat the word as if they have contracted a terminal case of Tourette’s seem to be implying.

But it doesn’t seem to have that concrete meaning. It seems to be simply defensive name-calling deployed when a righty is losing a debate. And why should that be such a big deal? All of us are on the losing side of intellectual situations at some point- if you’re not, maybe you aren’t really engaged.

So there is still no good reason to become personally insulting. I must have got caught up in the heat of the moment.

But besides that, I don’t consider myself to be a liberal. I do think that the parts of “tax reform legislation” that give giant national-debt-inducing benefits to the wealthy are a bad idea. But I’m not a liberal. Want to engage either of those points in a reasonable, straightforward way, with comity and good humor?

I consider myself to be a pragmatist. I think the government should solve problems. The Constitution lays out some missions for government- ensuring domestic tranquility is one of them. If half the population thinks the other half are evil liberals, things look like a dangerous powder keg. What is the government going to do to decrease this divided-ness?

Well, I don’t think tax cuts for the wealthy are it. Not by a longshot. Can you grok that perspective, whether or not you agree?

And, if you believe my self-labeling as a “pragmatist” does not escape me from my status as a “liberal”, maybe you should tell us what “liberal” means so we can decide if that is really an apt moniker for me or not.

[HurricaneDitka]

@Try2B_Comprehensive

So I got modded for the first time since 2009 or 10. I took a little break. Ok?
My words were not bull’s-eye perfect for sure. Frankly it wasn’t really the blaming of liberals that had me so steamed.

But before I go on, I want to apologize for my intemperate remarks. Maybe I read something that gets me steamed in the media- everyone does. I really shouldn’t let it result in insulting the other posters. Sorry about that. I was wrong.

I think what was bothering me was the labeling of others as liberals. It seems to be a common reflex anymore among those on the right, a sort of rhetorical defense mechanism. Is someone disagreeing with a righty about something, threatening to disrupt The Agenda? You don’t have to know the details. Just label them a liberal in a scathing tone, and people will nod in agreement, give you support, defeat the threat.

That’s why I ask you what “liberal” means. I think this has become a simple rhetorical trick, one that is done without any insight; without meaning. If “liberal” had a concrete definition, we could debate whether or not those things connotate the pure, distilled evil that people who repeat the word as if they have contracted a terminal case of Tourette’s seem to be implying.

But it doesn’t seem to have that concrete meaning. It seems to be simply defensive name-calling deployed when a righty is losing a debate. And why should that be such a big deal? All of us are on the losing side of intellectual situations at some point- if you’re not, maybe you aren’t really engaged.

So there is still no good reason to become personally insulting. I must have got caught up in the heat of the moment.

But besides that, I don’t consider myself to be a liberal. I do think that the parts of “tax reform legislation” that give giant national-debt-inducing benefits to the wealthy are a bad idea. But I’m not a liberal. Want to engage either of those points in a reasonable, straightforward way, with comity and good humor?

I consider myself to be a pragmatist. I think the government should solve problems. The Constitution lays out some missions for government- ensuring domestic tranquility is one of them. If half the population thinks the other half are evil liberals, things look like a dangerous powder keg. What is the government going to do to decrease this divided-ness?

Well, I don’t think tax cuts for the wealthy are it. Not by a longshot. Can you grok that perspective, whether or not you agree?

And, if you believe my self-labeling as a “pragmatist” does not escape me from my status as a “liberal”, maybe you should tell us what “liberal” means so we can decide if that is really an apt moniker for me or not.

Thanks for the thoughtful response. As for the early testiness, apology accepted, and I apologize for the part I played in it. I’d like to also attempt to clarify how I’m using the word “liberal”. It’s not intended as an insult or pejorative. I use it as basically synonymous with leftist or Democrat. Yes, I understand that those aren’t actually perfectly synonymous. There are conservative Democrats, and leftists or liberals that don’t consider themselves Democrats, but there’s a lot of overlap in those groups, even though things get a bit fuzzy around the edge. By the same token, I’ll use conservative, right-winger, and Republican as basically interchangeable, even though I realize there are some edge cases where that’s not strictly true. None of those terms are meant to be mean-spirited or name-calling, but an easy and relatively clear way to express which group I’m talking about. So, in HD’s parlance:

liberal ~ leftist ~ Democrat

&

conservative ~ right-winger ~ Republican

“Want to engage either of those points in a reasonable, straightforward way, with comity and good humor?”
Yes, I’d love to. I hope I answered the first point above.

As for the tax cuts, you asked “Well, I don’t think tax cuts for the wealthy are it. Not by a longshot. Can you grok that perspective, whether or not you agree?”

Yes, I can grok that perspective. I thought that RickG did an admirable job of making essentially that same case just a few posts ago. While I may not feel 100% in agreement with all of what he posted, AFAICT, it’s a factually-sound and reasonable position and I can respect his holding it, even though I may not prioritize those concerns the same way that he does. We can politely have differing opinions, and even explore those differences.

I hope in the previous few posts we’ve at least reached a shared understanding that it’s really a tax cut for almost everyone, not just the rich, even though the some rich people will benefit significantly more from it than some poor people.

[John_Mace]

@Bone

I’m pretty sure I’d pay more given the SALT limits.

I think I’m fucked under this plan. I own two houses and pay a shitload of property tax (much more than $10k), most of which will no longer be deductible. At least my mortgage payments are low, so I won’t be hit there. But property tax in NorCal is through the roof. Add to that what I keep hearing about people like me (self-employed) wrt increases in Health Insurance, and I’m doubly fucked.

With luck, this bill will fail and the current system will stay in place. Jiggering with the tax code every few years like this is nuts. People need predictability so they can arrange their financial affairs without fear of having the table turned on them. It’s one thing to tweak the brackets, but another to reshuffle the whole philosophy. If you’re going to do that, phase it in slowly over a long period of time to allow people to adjust.

[Bone]

I am doubtful it would pass in its current form. I exceed the SALT limits by quite a lot so that’s not great. I also take quite a few personal exemptions with the family, so this being eliminated is not great either. The increased standard deduction doesn’t help at all since my itemized would still be way over that amount too.

Yay CA. New Hampshire looking pretty good right now - go porcupines!

But really, I doubt it will go through. Of course I thought Clinton would win in a landslide so I’m pretty awesome at predicting things.

[John_Mace]

I’m hoping the CA House Republicans will vote against it. CA is a Democratic state, but because we’re so big we still have 14 Republicans in the House. Of course, most are from the Central Valley, where home prices are much lower, so maybe it won’t be as big an issue from them.

[AI_Proofreader]

Looking forward to seeing the new list with more companies in the Fortune 500 that have a Negative effective tax rate after subsidies are factored in. Should swell considerably under this plan:

The Secret to Getting a -45% Tax Rate - Business Insider

[HurricaneDitka]

@AI_Proofreader

Looking forward to seeing the new list with more companies in the Fortune 500 that have a Negative effective tax rate after subsidies are factored in. Should swell considerably under this plan:

The Secret to Getting a -45% Tax Rate - Business Insider

I’m not sure I fully understand their scorekeeping, but it sounds like they’re counting any deduction a company takes as a “tax subsidy”. That seems an awful lot like telling Bone and John Mace that their SALT deductions are ‘subsidies’ for their property in California. I suspect (but may yet be proven wrong) that they’d call bullshit on that characterization, and I’d tend to agree with them.

Or did someone in the government really write GE a $4.7 billion check?

[AI_Proofreader]

@HurricaneDitka

I’m not sure I fully understand their scorekeeping, but it sounds like they’re counting any deduction a company takes as a “tax subsidy”. That seems an awful lot like telling Bone and John Mace that their SALT deductions are ‘subsidies’ for their property in California. I suspect (but may yet be proven wrong) that they’d call bullshit on that characterization, and I’d tend to agree with them.

Or did someone in the government really write GE a $4.7 billion check?

Don’t think you’re reading that right. If I’m not mistaken, the -4737.0 number is amount *paid in taxes by GE ($1.579 billion / year). The 8397.9 number is the amount, in millions, *received by GE from the government in subsidies over the same period, 2008-2010 ($2.793 billion / year).

So we’re “only” net paying them about $1.2 billion per year.

This NYT link shows a similar trend, with $15.4 billion in subsidies paid to GE over 8 years ($1.925 billion / year average):

Profitable Companies, No Taxes: Here’s How They Did It (Published 2017)

[Ruken]

I’d like to dig into this topic of potentially negative taxes, but maybe we should start a new thread so the title catches more eyes and gets us more participants?
I’ll be driving around bumblefuck MN most of today but maybe I can write up a new OP when I get to the airport tonight.

[Damuri_Ajashi]

@sleestak

post snipped (Note, beaten to the punch by manson1972)

First, define ‘fair’.

That is, as far as I can tell, where the conversation goes off the rails as there are many definitions of ‘fair’.

My personal definition, likely to be very different than yours, is that fair means each person pays an equal amount. Since that isn’t really possible due to folks who have no income and people who have very low incomes the next best version of fair is everyone pays a fixed percentage across the board, regardless of income type. I also suspect that doesn’t meet your definition of ‘fair’.

So, before we go any further we have to define what ‘fair’ means.

I suspect that isn’t possible.

Slee

I think we can define it. I don’t know if we can actually achieve perfect fairness.

[Damuri_Ajashi]

@RTFirefly

As noted elsewhere, the doubling of the standard deduction is a bit of a sham, since the personal exemption (and the additional deduction for persons over 65) goes away. Per Josh Barro of Business Insider:

The numbers for married couples are 2x the numbers for single taxpayers, across the board, so no percentage changes.

The break-even point for singles seems to be $20,000 in income. (Twice that for childless married couples.) Less than that, your taxes are reduced by somewhere between $0 and $160. More than that, and they increase.

Also probably worse off if you have kids, because the per-kid exemption goes as well.

Well to be fair, if you make more than some amount, the per kid deduction goes away anyway so that is only going to affect people making less than that amount.