OT: Final Tax Plan Thoughts

[scotchtiger]

Now that we have seen most of the combined plan, what are everyone's thoughts? In my original thread about the House version, most seemed to support the plan, but had concerns about repealing the Estate Tax, repealing AMT, adding to the national debt and potentially paying more due to the SALT exclusion.

Congressional Republicans have addressed the first two items by simply doubling the Estate Tax exemption. AMT also remains, but the law has been wisely changed so that it doesn't adversely impact those who were never its targets (i.e. folks making under $1M annually).

A HUGE improvement over the House plan is the revised tier structure borrowed mostly from the Senate bill. This prevents upper-middle and upper income folks from actually paying more after reform than before it. Now, only those in high-tax states should experience that effect.

Some basic benefits - reduced rates, higher standard deduction, more simple filing for vast majority of Americans, expanded child tax credit, reduced pass-thru taxes and a much lower corporate rate to drive economic expansion.

Added bonus - you can now use 529 plans to fund K-12 education. Little scotchtiger's grandparents all received a Future Scholar contribution form in advance of Christmas .

Here's a calculator to estimate your personal impact. I come out quite a bit ahead even before factoring in benefits to pass through income, which will just help us even more. I would have likely lost under the House bill.

http://taxplancalculator.com/

Overall, I'm much happier with the final product than with the House bill. I would have preferred that they not touch the mortgage exemption, preserve more of the SALT deduction and reduce rates even more aggressively, but this is a step in the right direction. Now we need to work across aisles to reduce spending significantly.

 

[FLaw47]

At the end of the day, I'm not in favor of increasing the deficit and especially not when it doesn't provide more benefits. I'm in favor of the social programs that we have so reducing spending on them is not desirable to me. I think this plan is better than what the House first proposed but that doesn't make it good. I don't particularly care that I'll save a little money if it means that we're increasing the deficit to create a handout for the wealthy.

 

[allorangec]

Now that we have seen most of the combined plan, what are everyone's thoughts? In my original thread about the House version, most seemed to support the plan, but had concerns about repealing the Estate Tax, repealing AMT, adding to the national debt and potentially paying more due to the SALT exclusion.

Congressional Republicans have addressed the first two items by simply doubling the Estate Tax exemption. AMT also remains, but the law has been wisely changed so that it doesn't adversely impact those who were never its targets (i.e. folks making under $1M annually).

A HUGE improvement over the House plan is the revised tier structure borrowed mostly from the Senate bill. This prevents upper-middle and upper income folks from actually paying more after reform than before it. Now, only those in high-tax states should experience that effect.

Some basic benefits - reduced rates, higher standard deduction, more simple filing for vast majority of Americans, expanded child tax credit, reduced pass-thru taxes and a much lower corporate rate to drive economic expansion.

Added bonus - you can now use 529 plans to fund K-12 education. Little scotchtiger's grandparents all received a Future Scholar contribution form in advance of Christmas .

Here's a calculator to estimate your personal impact. I come out quite a bit ahead even before factoring in benefits to pass through income, which will just help us even more. I would have likely lost under the House bill.

http://taxplancalculator.com/

Overall, I'm much happier with the final product than with the House bill. I would have preferred that they not touch the mortgage exemption, preserve more of the SALT deduction and reduce rates even more aggressively, but this is a step in the right direction. Now we need to work across aisles to reduce spending significantly.

The calculator says 2,718 for me. But, the bigger difference for me is the repeal of the individual mandate.

 

[dbjork6317]

Now that we have seen most of the combined plan, what are everyone's thoughts? In my original thread about the House version, most seemed to support the plan, but had concerns about repealing the Estate Tax, repealing AMT, adding to the national debt and potentially paying more due to the SALT exclusion.

Congressional Republicans have addressed the first two items by simply doubling the Estate Tax exemption. AMT also remains, but the law has been wisely changed so that it doesn't adversely impact those who were never its targets (i.e. folks making under $1M annually).

A HUGE improvement over the House plan is the revised tier structure borrowed mostly from the Senate bill. This prevents upper-middle and upper income folks from actually paying more after reform than before it. Now, only those in high-tax states should experience that effect.

Some basic benefits - reduced rates, higher standard deduction, more simple filing for vast majority of Americans, expanded child tax credit, reduced pass-thru taxes and a much lower corporate rate to drive economic expansion.

Added bonus - you can now use 529 plans to fund K-12 education. Little scotchtiger's grandparents all received a Future Scholar contribution form in advance of Christmas .

Here's a calculator to estimate your personal impact. I come out quite a bit ahead even before factoring in benefits to pass through income, which will just help us even more. I would have likely lost under the House bill.

http://taxplancalculator.com/

Overall, I'm much happier with the final product than with the House bill. I would have preferred that they not touch the mortgage exemption, preserve more of the SALT deduction and reduce rates even more aggressively, but this is a step in the right direction. Now we need to work across aisles to reduce spending significantly.

According to the calculator, I stand to see my tax burden reduced by about 18%. My taxes are pretty simple, its pretty much just the standard deduction change that’s benefitting me.

Also glad to see the tuition credit remain, as it means my employer won’t end their tuition program which is currently paying for my MBA.

On the changes to pass through income, are there any ways little ole regular folk can take advantage of that? Or do you have to be a business owner? I’m guessing I’d have a hard time convincing my employer to give my paychecks to an LLC.

 

[scotchtiger]

I don't particularly care that I'll save a little money if it means that we're increasing the deficit to create a handout for the wealthy.

I just plugged in a family of 4 making $75K and a few minor assumptions.

Result = $2,058K in savings.

That's real money in a middle class family's pocket. Not a handout for the wealthy.

 

[scotchtiger]

On the changes to pass through income, are there any ways little ole regular folk can take advantage of that? Or do you have to be a business owner? I’m guessing I’d have a hard time convincing my employer to give my paychecks to an LLC.

You would have more options if you are a 1099 employee.

 

[FLaw47]

I just plugged in a family of 4 making $75K and a few minor assumptions.

Result = $2,058K in savings.

That's real money in a middle class family's pocket. Not a handout for the wealthy.

Sorry, I should have been more precise with my wording. You're correct, there are some concrete non-trivial gains for middle class families in this plan. That much is true. I believe that the staggering majority of the gains are for the very wealthy and corporations, though. No credible estimates have this plan coming anywhere close to paying for itself (feel free to correct me) and I do not feel that the cost is worth the reward in this circumstance. Especially when this may be used as an excuse to cut Medicare, Medicaid, and Social Security (which will absolutely negatively impact middle and lower class families).

 

[FLaw47]

According to the calculator, I stand to see my tax burden reduced by about 18%. My taxes are pretty simple, its pretty much just the standard deduction change that’s benefitting me.

Also glad to see the tuition credit remain, as it means my employer won’t end their tuition program which is currently paying for my MBA.

On the changes to pass through income, are there any ways little ole regular folk can take advantage of that? Or do you have to be a business owner? I’m guessing I’d have a hard time convincing my employer to give my paychecks to an LLC.

I don't believe that the tuition wavers would have affected your MBA. My understanding (and I could be wrong) is that you already have to pay income taxes on your MBA tuition. The change would have required Grad Students (whose tuition is an extremely significant portion of their total compensation) to pay income taxes on the tuition benefit. I've never had a company sponsored graduate degree though; I'm just basing this off of my conversations with co-workers who are getting their MBA's through our employer.

 

[SaltyMeatBallsOO]

I like the new plan. It's not simpler like I hoped. If you itemize, it actually got more complicated.

We will save on taxes quite a bit since we are both considered high income earners. I wish they would have killed the AMT completely though.

 

[CLT-Tiger]

Here's another calculator you can play around with. https://www.calcxml.com/calculators/trump-tax-reform-calculator

 

[ChucktownK]

The bracketing change seems to be helping, if that calculator is correct.

I'd be much happier with spending cuts than this tax change however.

 

[gambrelw]

Now that we have seen most of the combined plan, what are everyone's thoughts? In my original thread about the House version, most seemed to support the plan, but had concerns about repealing the Estate Tax, repealing AMT, adding to the national debt and potentially paying more due to the SALT exclusion.

Congressional Republicans have addressed the first two items by simply doubling the Estate Tax exemption. AMT also remains, but the law has been wisely changed so that it doesn't adversely impact those who were never its targets (i.e. folks making under $1M annually).

A HUGE improvement over the House plan is the revised tier structure borrowed mostly from the Senate bill. This prevents upper-middle and upper income folks from actually paying more after reform than before it. Now, only those in high-tax states should experience that effect.

Some basic benefits - reduced rates, higher standard deduction, more simple filing for vast majority of Americans, expanded child tax credit, reduced pass-thru taxes and a much lower corporate rate to drive economic expansion.

Added bonus - you can now use 529 plans to fund K-12 education. Little scotchtiger's grandparents all received a Future Scholar contribution form in advance of Christmas .

Here's a calculator to estimate your personal impact. I come out quite a bit ahead even before factoring in benefits to pass through income, which will just help us even more. I would have likely lost under the House bill.

http://taxplancalculator.com/

Overall, I'm much happier with the final product than with the House bill. I would have preferred that they not touch the mortgage exemption, preserve more of the SALT deduction and reduce rates even more aggressively, but this is a step in the right direction. Now we need to work across aisles to reduce spending significantly.

Elimination of the personal exemption and rolling it into the standard deduction still hurts those that have to itemize since they can no longer use the personal exemption on top of the interest/state tax deduction...essentially losing the $8K+ for families that have to itemize. The increase in standard deduction is for the most part a false claim.

Other than that, I am okay with the bill.

 

[fatpiggy]

"Added bonus - you can now use 529 plans to fund K-12 education. Little scotchtiger's grandparents all received a Future Scholar contribution form in advance of Christmas ."


Is that true? So basically you can send your kids to private school with pre-tax dollars?

@scotchtiger

 

[nealchick]

At the end of the day, I'm not in favor of increasing the deficit and especially not when it doesn't provide more benefits. I'm in favor of the social programs that we have so reducing spending on them is not desirable to me. I think this plan is better than what the House first proposed but that doesn't make it good. I don't particularly care that I'll save a little money if it means that we're increasing the deficit to create a handout for the wealthy.

Where does this idea come from. This reform does not "give" anything to the wealthy. Taxes are not owned by the government, them taking less is not a handout, nor does it give something to someone paying less. That is mathematically impossible.

Full disclaimer, I despise the implementation and the waste created by many social programs. FLaw47 and another poster above assume that these programs will be cut in order to "pay for" a tax cut. That is not the plan.

Some others have mentioned that lowering tax burdens will increase the budget, that will depend on growth. One means to really digging in to the deficit is by growing American companies and sparking investments by non-american companies in the US.

Many with a void of economic knowledge assume that we can only raise money for spending by increasing taxes. That is not the case. Any level of government that can be streamlined or eliminated will reduce tax burden. That is a huge part of the work this administration has already been doing, and that most of the country is ignoring or unaware of. We all know the reason for that primarily being the MSM which gives us phony collusion stories, stories about ice cream and diet coke etc, so that many are blind to good works in progress.

N---

 

[FLaw47]

Where does this idea come from. This reform does not "give" anything to the wealthy. Taxes are not owned by the government, them taking less is not a handout, nor does it give something to someone paying less. That is mathematically impossible.

Full disclaimer, I despise the implementation and the waste created by many social programs. FLaw47 and another poster above assume that these programs will be cut in order to "pay for" a tax cut. That is not the plan.

Some others have mentioned that lowering tax burdens will increase the budget, that will depend on growth. One means to really digging in to the deficit is by growing American companies and sparking investments by non-american companies in the US.

Many with a void of economic knowledge assume that we can only raise money for spending by increasing taxes. That is not the case. Any level of government that can be streamlined or eliminated will reduce tax burden. That is a huge part of the work this administration has already been doing, and that most of the country is ignoring or unaware of. We all know the reason for that primarily being the MSM which gives us phony collusion stories, stories about ice cream and diet coke etc, so that many are blind to good works in progress.

N---

I'm not going to engage you in semantics on who benefits from tax cuts.

As for the rest.
Ryan says Republicans to target welfare, Medicare, Medicaid spending in 2018

Also, Tax Cuts never pay for themselves:
https://www.washingtonpost.com/news...ry-lesson-do-big-tax-cuts-pay-for-themselves/

http://www.crfb.org/blogs/do-tax-cuts-pay-themselves

http://www.politifact.com/punditfac...-tax-plan-prompts-question-can-tax-cuts-real/

 

[enctigger]

Yes spending is the issue. Government overspending.

 

[nealchick]

I'm not going to engage you in semantics on who benefits from tax cuts.

As for the rest.
Ryan says Republicans to target welfare, Medicare, Medicaid spending in 2018

Also, Tax Cuts never pay for themselves:
https://www.washingtonpost.com/news...ry-lesson-do-big-tax-cuts-pay-for-themselves/

http://www.crfb.org/blogs/do-tax-cuts-pay-themselves

http://www.politifact.com/punditfac...-tax-plan-prompts-question-can-tax-cuts-real/

Greetings counselor, in the WPost article linked: cutting waste in programs such as welfare, Medicare/aid are terrific goals. That does not mean that you cut benefits to the needy. Minimizing costs associated with administration should be the goal of any effective manager. That is the ideal that Trump is operating on.

On tax cuts paying for themselves, I agree they don't pay for themselves, because there is nothing to pay for. This is an invalid concept to begin with. No one pays anything for a tax cut.

N---

 

[NorthStateTiger]

I will do very well according to this calculator. Right there is enough to take my dad fishing in Alaska for his 70th birthday.

But I dont think people in my financial situation really needed much tax relief.

Would have liked to see more go towards the poor and lower middle class. Think that would build a healthier and more stable country and economy.

 

[tigrbybirth]

I just plugged in a family of 4 making $75K and a few minor assumptions.

Result = $2,058K in savings.

That's real money in a middle class family's pocket. Not a handout for the wealthy.

IIRC, the detriment to lower middle class families is lies more in predicted changes as a result of the bill. Removing the individual mandate will raise insurance rates. Also, the significant reduction in tax revenues in total will have to flow through to other programs, therefore they will experience higher cost in things like day care.

 

[FLaw47]

Greetings counselor, in the WPost article linked: cutting waste in programs such as welfare, Medicare/aid are terrific goals. That does not mean that you cut benefits to the needy. Minimizing costs associated with administration should be the goal of any effective manager. That is the ideal that Trump is operating on.

On tax cuts paying for themselves, I agree they don't pay for themselves, because there is nothing to pay for. This is an invalid concept to begin with. No one pays anything for a tax cut.

N---

Alright, well I enjoyed our conversations. There isn't any point in us talking again because you're coming at this from a perspective that's pretty incompatible with how government functions today.

 

[mskoonce]

The problem with taxes and deficits is that everybody wants lower taxes, but nobody wants to reduce their entitlements or services accordingly. My father-in-law is a raging conservative that thinks taxes are way too high and everyone in this country is getting a hand out from the government. But he is constantly reaming out someone out because his road hasnt been repaved, he is on 30 different medications for everything you can imagine, he eats like crap and now has diabetes, and he wants to have both his knees replaced despite the fact he does nothing but sit on the couch and watch Fox news. Oh, and say anything about reducing Social Security or Medicaire benefits and he will lose his mind. He isnt the problem, but everyone else is.

 

[tigrbybirth]

Greetings counselor, in the WPost article linked: cutting waste in programs such as welfare, Medicare/aid are terrific goals. That does not mean that you cut benefits to the needy. Minimizing costs associated with administration should be the goal of any effective manager. That is the ideal that Trump is operating on.

On tax cuts paying for themselves, I agree they don't pay for themselves, because there is nothing to pay for. This is an invalid concept to begin with. No one pays anything for a tax cut.

N---

The term paying for themselves is more related to how it impacts the budget, i.e., the tax changes will pay for themselves if they generate growth in the economy such that total receipts do not fall. They will also pay for themselves if some taxes go down, while others go up. Tax cuts pay for themselves if the bill is deficit neutral. In this case, the revenue reduction will be reduced by ~20% if growth assumptions hold. There were some unrealistic assumptions about growth that would make this deficit neutral, but the problem there is that our economy is at a level where increased growth is likely to be inflationary as wages and the cost of other inputs rise.

 

[scotchtiger]

"Added bonus - you can now use 529 plans to fund K-12 education. Little scotchtiger's grandparents all received a Future Scholar contribution form in advance of Christmas ."


Is that true? So basically you can send your kids to private school with pre-tax dollars?

@scotchtiger

It's pre-state-tax dollars. And the growth will be free from federal taxation.

Still a nice bonus to those investing in their children's education.

 

[steele-tiger]

I will probably save a decent amount, but this calculator is too simplistic to even get a fair estimate while also grossly overestimating the savings for low and middle income by giving the full $2,000 credit regardless when is phases in based on income level and low-income parents might get as little as $75. They also changed the way inflation is calculated that makes tax benefits that help low-income less generous year over year.

I personally prefer to not increase the deficit to give corporations and extremely wealthy a huge tax cut while throwing 75% of the population crumbs.

I don't think it will spur much growth. It will likely get used to buy back stock, which is why the stock market is up. Companies have records amounts of cash on hand, so it isn't like more cash is going to spur job growth. Plus there is nobody to hire in many industries anyway. Yet 70% of the tax plan savings is going to corporations.

Rather try to spur the middle class, so they can afford to shop at places other than Dollar General.

 

[scotchtiger]

The problem with taxes and deficits is that everybody wants lower taxes, but nobody wants to reduce their entitlements or services accordingly. My father-in-law is a raging conservative that thinks taxes are way too high and everyone in this country is getting a hand out from the government. But he is constantly reaming out someone out because his road hasnt been repaved, he is on 30 different medications for everything you can imagine, he eats like crap and now has diabetes, and he wants to have both his knees replaced despite the fact he does nothing but sit on the couch and watch Fox news. Oh, and say anything about reducing Social Security or Medicaire benefits and he will lose his mind. He isnt the problem, but everyone else is.

I wouldn't say everyone, but it seems your FIL falls into that category. Personally, I'm in good health, in good shape, take no medications, eat fairly well and so far my joints seem to be a-okay.

I'd also happily participate in a reasonable phasing away from Social Security.

Furthermore - I max my HSA each year so that I will have some medical financial independence in my later years, reducing my reliance on Medicare.

So, I'm really not the problem.

PS - I'd support a higher gas tax if it meant better roads. Again paying my own way.

If only everyone focused on personal responsibility...

 

[tigrbybirth]

The problem with taxes and deficits is that everybody wants lower taxes, but nobody wants to reduce their entitlements or services accordingly. My father-in-law is a raging conservative that thinks taxes are way too high and everyone in this country is getting a hand out from the government. But he is constantly reaming out someone out because his road hasn't been repaved, he is on 30 different medications for everything you can imagine, he eats like crap and now has diabetes, and he wants to have both his knees replaced despite the fact he does nothing but sit on the couch and watch Fox news. Oh, and say anything about reducing Social Security or Medicaire benefits and he will lose his mind. He isn't the problem, but everyone else is.

Ding, ding, ding, we have a winner!!!!!

There are a number of mini-solutions, which will have an impact, but there's no magic bullet. First, a number of social programs like social security and medicare/medicaid have developed expectations among future recipients. People plan to have those programs supplement their retirement. That expectation is developed to a large degree because it was sold that way, but to a greater degree because it's been in place long enough and has become something of a sacred cow.

One of the things that we need to do in the short term is to open up our borders to skilled labor and to invest significantly in training our work force. We need workers who are agile, i.e., have the ability to be retrained and move as our economy evolves. That would be huge, but it's much tougher than you think. People get set in their ways and don't want to move. Training and geographic mobility typically take 1-3 generations.

 

[hutchyoung]

why do the individual cuts sunset and not corporate, would be my question? I get that businesses make long term investments and need assurance of what they should expect their liability to be, but don't individuals also? Also,leery of looming cuts to medicare and or medicaid. Not a financial expert, so not able to get too deep into this discussion, but I do find those aspects disconcerting. Particularly cuts to medicare, as my parents depend on that a good bit. Like I have suggested to my wife, any benefit we gain will probably be negligible over time...My bosses should make more money, I assume I will get a little bit larger increase annually, but at the end of the day, we will do what we do regardless....I don't see the amount that I likely will save being consequential enough to laud the plan and I feel uneasy about where the inevitable cuts will come from.

 

[IcelandTiger]

At the end of the day, I'm not in favor of increasing the deficit and especially not when it doesn't provide more benefits. I'm in favor of the social programs that we have so reducing spending on them is not desirable to me. I think this plan is better than what the House first proposed but that doesn't make it good. I don't particularly care that I'll save a little money if it means that we're increasing the deficit to create a handout for the wealthy.

"Handout". For the wealthy...... LMAO and also SMH

 

[scotchtiger]

As for the rest.
Ryan says Republicans to target welfare, Medicare, Medicaid spending in 2018

This seems like common sense. Those categories represent a third of all federal spending, so it seems a great place to start looking for waste and abuse, ways to keep people from needing these programs in the first place, incentives to become self-sufficient, etc.

 

[The Orange Wave]

At the end of the day, I'm not in favor of increasing the deficit and especially not when it doesn't provide more benefits. I'm in favor of the social programs that we have so reducing spending on them is not desirable to me. I think this plan is better than what the House first proposed but that doesn't make it good. I don't particularly care that I'll save a little money if it means that we're increasing the deficit to create a handout for the wealthy.

How do you see this as a handout for the wealthy? My income varies depending on bonuses each year and when I just plugged in various incomes the higher my income went the more the new plan increased taxes?

 

[hutchyoung]

I wouldn't say everyone, but it seems your FIL falls into that category. Personally, I'm in good health, in good shape, take no medications, eat fairly well and so far my joints seem to be a-okay.

I'd also happily participate in a reasonable phasing away from Social Security.

Furthermore - I max my HSA each year so that I will have some medical financial independence in my later years, reducing my reliance on Medicare.

So, I'm really not the problem.

PS - I'd support a higher gas tax if it meant better roads. Again paying my own way.

If only everyone focused on personal responsibility...

can you explain how we phase out Social Security? Start with our children, I assume. That drives me so nuts that the amount I have payed in, I am just as likely to not see as I am to see....I understand it is reaching a point where there will be too many drawing, but damnit, I put that money there and I want it back. Same with medicare tax...What would become of that? What would be the way to refund those monies if they were "phased away from"??

 

[FLaw47]

"Handout". For the wealthy...... LMAO and also SMH

Great contribution, thanks for stopping by.

 

[IcelandTiger]

Great contribution, thanks for stopping by.

Anytime

My contribution was more intelligent than yours

 

[allorangec]

I personally think the corporate tax rate is too high. And it needed to come down to be more competitive with other countries. Will it bring the large corps back to the US, no. But it might prevent growing companies from leaving.

 

[hutchyoung]

"Added bonus - you can now use 529 plans to fund K-12 education. Little scotchtiger's grandparents all received a Future Scholar contribution form in advance of Christmas ."


Is that true? So basically you can send your kids to private school with pre-tax dollars?

@scotchtiger

529 is post tax, right??

 

[allorangec]

I have no issues with a higher gas tax. But it won't solve the problem as more people go electric or hybrid. We have to go to a Vehicles Mile Traveled tax to pay for roads. Right now, electric vehicles are using public roads without paying anything towards it.

 

[BionicTiger]

"Added bonus - you can now use 529 plans to fund K-12 education. Little scotchtiger's grandparents all received a Future Scholar contribution form in advance of Christmas ."


Is that true? So basically you can send your kids to private school with pre-tax dollars?

@scotchtiger

The amount you can use on K-12 is capped at $10K per annum, and 529s are not pre-tax. The growth isn’t taxable. But, the monies going in are going to be post fed tax.

 

[FLaw47]

This seems like common sense. Those categories represent a third of all federal spending, so it seems a great place to start looking for waste and abuse, ways to keep people from needing these programs in the first place, incentives to become self-sufficient, etc.

I was replying to someone who said there was no plan to cut spending there. If you think that those areas could use cuts then cutting them probably does make sense. I'd prefer for us to have a single payer system so the cuts don't sound as good to me. I'd much rather cut our military spending than Medicare.

 

[Flying Elvis]

In Czarist Russia, taxes were enacted on vodka, matches and salt, with exemptions for the clergy and others as deemed necessary. As you would imagine, the vodka tax was a killer for the Romanov dynasty. I kind of feel the same way about the AMT. Why should anyone earning less than 50% of their income from passive investment pay a so called "fairness" tax like that?

I am heartened by attempts to streamline the tax code, but the collection methods, just like Czarist Russia, eventually become obsolete. That's where we are today. How about a VAT or simple sales tax? Much easier to enforce.

 

[MillerHighLife21]

Inflation is a bigger problem than anything else when it comes to "entitlement" benefits because the value of those benefits constantly goes down...forcing increased spending on them to keep up.