Property taxes *are* still a valid deduction, but 1) only if you don't take the standard deduction, and 2) you're now limited to a total of $10k of deductions from SALT (state and local taxes), including property taxes.
So at the end of last year, there were a lot of people pre-paying their property taxes in high-property-tax states, to maximize their deductions over two years--stack up the itemized deductions in 2017, take the standard in 2018.
Wait a second.
You can deduct direct taxes like property tax from your tax payment?
Dragonswan's explanation is correct. Deductions, whether itemized or standard, are subtracted from your
income, and then your tax is calculated on what's left. So if I earned $60,000 and paid $3,000 in property tax and 3,000 in state income tax, my federal income tax is levied on the $54,000 that's left. (yes, this is an oversimplified example, but works for the point we're discussing)
To be more precise: Direct taxes are deducted from the income. The resulting adjusted income is then taxed. This normally results in a lower tax payment. The system is rigged but given that it is graduated upward with income it begs the questions against whom is it rigged? The poor, the middle or the rich?
It would be interesting to see which income levels are paying the highest effective tax rate. I would guess that upper middle class is getting squeezed the most. My thought being that they are paying high income taxes while the rich are more likely to gain from the concept of capital gains taxes. The lack of payroll taxes above ~120k is also huge.
That's a
very well-documented topic. The short answer is that the top 1% get 19% of the income and pay 38% of the federal income tax, the top 10% get 46% and pay 70%, and so on. There's a great chart near the top of that article that lays it all out--the cutoffs between the 1%, 10%, 25%, and 50%, the effective tax rates for each group, etc. However, it does *not* include FICA as far as I can tell.