Author Topic: Republican Tax Plan 2017  (Read 174578 times)

sol

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Re: Republican Tax Plan 2017
« Reply #1450 on: December 18, 2017, 02:26:50 PM »
Am I correctly understanding that the new rules on residential real estate allow a deduction of up to 25% of wages (which are normally zero) PLUS 2.5% of the unadjusted cost basis?

For a 300k rental house that's a new $7500 deduction every year, that didn't exist before.

I mean I'll gladly take it, I'm just incredulous that was the intention of the bill's drafters.

NorthernBlitz

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Re: Republican Tax Plan 2017
« Reply #1451 on: December 18, 2017, 02:29:15 PM »
If you make a charitable contribution to a state, you get a dollar for dollar credit on your state income taxes.  How many states will move to such a system....Charitable deductions are fully deductible on federal taxes.

Unless the charitable donation offsets your property taxes, I don't see the advantage in it.

For you or in general?   It will certainly help those who pay high state income taxes.  I know for myself I’ll pay 30k in state taxes and 15k in property taxes next year.  It’s the difference between being able to deduct 40k vs 10k.


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If you are paying $30k in state taxes you are making a lot of money. Do you get any break from them bumping up the AMT threshold? Fed tax in your bracket. In other words clearly you get fucked on SALT, but does it balance out?

I don't know who the current plan would affect me.  The one calculator I plugged my info into indicated I would save 3% initially and then lose at as the rates revert back but the deductions don't.  I don't know how the AMT changes will affect me.  I have a feeling it'll basically be the same.

Again its temporary like all other individual deductions but:

"Proposed: Increase the exemption to $70,300 for singles and $109,400 for joint filers. Increase the phase-out threshold to $500,000 for singles and $1 million for joint filers. The higher limits would expire on Jan. 1, 2026"

Probably not enough info to go on, but you may see a healthy cut if you were paying AMT anyway.

If that means no AMT unless income for joint filers is > $1M then that's good for me.  I do pay some AMT now, and we don't make more than $1M, so....

I know this has been discussed but it irks me that there is still ways to be very wealthy and not pay tax similar to what a high wage earner would pay.  They could fix this so easily be taxing all income the same (maybe giving an adjustment based on inflation for investment income).  They could probably lower rates further if they did this.  Then they would have a truly progressive tax system that wasn't overbearing.  That's what real reform would look like.

I think that this would have a very large impact anyone interested in trying to figure out how much money was enough.

Right now, FIRE works so well because long term capital gains get a sweetheart tax rate.

If they were taxed as normal income, I think all of our FI numbers would increase dramatically.

I think that the whole concept of FIRE is about how to be at least relatively "wealthy and not pay tax similar to what a high wage earner would pay". I guess it just depends on where you draw the line between "relatively wealthy" and "very wealthy".

I think most Americans would consider someone with $1M to $1.5M in savings very wealthy. From the "what's your FI number" post, I think many of us are shooting for numbers in that range. I definitely wouldn't want to pay "normal" tax rates on that income.

ZiziPB

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Re: Republican Tax Plan 2017
« Reply #1452 on: December 18, 2017, 03:06:38 PM »
Am I correctly understanding that the new rules on residential real estate allow a deduction of up to 25% of wages (which are normally zero) PLUS 2.5% of the unadjusted cost basis?

For a 300k rental house that's a new $7500 deduction every year, that didn't exist before.

I mean I'll gladly take it, I'm just incredulous that was the intention of the bill's drafters.

Oh yeah, that's the "Corker fix" https://www.washingtonpost.com/business/economy/last-minute-real-estate-perk-in-tax-reform-prompts-blowback-for-corker/2017/12/18/6be3a9ba-e406-11e7-ab50-621fe0588340_story.html?utm_term=.091b462e6d46

akl432

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Re: Republican Tax Plan 2017
« Reply #1453 on: December 18, 2017, 03:19:40 PM »
I've always thought it a bit cheeky decrying the tax breaks for billionaires while ignoring the huge loophole we Mustachians exploit in the USA, enabling us humble millionaires to pull up to $90k/yr in income without paying a dime in income tax. I think a LOT of hard working middle class people paying large amounts of state and federal income tax would find that disgraceful...

Could someone please clarify this -- how does one accomplish this?
« Last Edit: December 18, 2017, 03:31:00 PM by akl432 »

dragoncar

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Re: Republican Tax Plan 2017
« Reply #1454 on: December 18, 2017, 03:24:00 PM »
i dont understand why you keep targetting property taxes here.

I didn't mean to target property taxes.  Property, income, it's all the same for this purpose.

I'm just not seeing how a state can legally forgive taxes due based on a charitable donation, which by definition cannot be for your own benefit. 

I'm not philosophically opposed to the idea, I just don't see how it could possibly be legal.

Same way my zoo membership is tax-deductible? (translation: I have no idea, but it is)

No it wouldn’t work.  Otherwise I’m starting a car donation charity.  Just donate $20k and I’ll give you a free car!  You get a fat tax deduction and I’ll take a nice salary to administer the charity
« Last Edit: December 18, 2017, 03:26:25 PM by dragoncar »

RangerOne

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Re: Republican Tax Plan 2017
« Reply #1455 on: December 18, 2017, 03:25:20 PM »
If you make a charitable contribution to a state, you get a dollar for dollar credit on your state income taxes.  How many states will move to such a system....Charitable deductions are fully deductible on federal taxes.

Unless the charitable donation offsets your property taxes, I don't see the advantage in it.

For you or in general?   It will certainly help those who pay high state income taxes.  I know for myself I’ll pay 30k in state taxes and 15k in property taxes next year.  It’s the difference between being able to deduct 40k vs 10k.


Sent from my iPhone using Tapatalk

If you are paying $30k in state taxes you are making a lot of money. Do you get any break from them bumping up the AMT threshold? Fed tax in your bracket. In other words clearly you get fucked on SALT, but does it balance out?

I don't know who the current plan would affect me.  The one calculator I plugged my info into indicated I would save 3% initially and then lose at as the rates revert back but the deductions don't.  I don't know how the AMT changes will affect me.  I have a feeling it'll basically be the same.

Again its temporary like all other individual deductions but:

"Proposed: Increase the exemption to $70,300 for singles and $109,400 for joint filers. Increase the phase-out threshold to $500,000 for singles and $1 million for joint filers. The higher limits would expire on Jan. 1, 2026"

Probably not enough info to go on, but you may see a healthy cut if you were paying AMT anyway.

For comparison, the current AMT exemption amounts are:
Married taxpayers filing jointly‎: ‎$84,500   Single taxpayers‎: ‎$54,300

So I don't think that this is a significant increase.

Its not, but the phase out I imagine bites most people in the mid $200k earning range, since you immediately start to lose that exemption amount. Though it seems like the phase out was pretty generous only fully dispersing at ~$477k.

But I have to imagine that having no phase out at those incomes could be a big deal. It could easily be $40k extra un-taxed dollars at a 37%-39% rate which is a nice bit of money back. But thats just speculation without people running numbers.

starguru

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Re: Republican Tax Plan 2017
« Reply #1456 on: December 18, 2017, 05:08:39 PM »

I think that this would have a very large impact anyone interested in trying to figure out how much money was enough.

Right now, FIRE works so well because long term capital gains get a sweetheart tax rate.

If they were taxed as normal income, I think all of our FI numbers would increase dramatically.

I think that the whole concept of FIRE is about how to be at least relatively "wealthy and not pay tax similar to what a high wage earner would pay". I guess it just depends on where you draw the line between "relatively wealthy" and "very wealthy".

I think most Americans would consider someone with $1M to $1.5M in savings very wealthy. From the "what's your FI number" post, I think many of us are shooting for numbers in that range. I definitely wouldn't want to pay "normal" tax rates on that income.

Those with savings of $1M to $1.5M would be withdrawing 40-60k a year in a reasonable scenario.  If treated as normal income, they would get the 24k personal deduction and any other deductions that still exist.  I don't think they would pay much (or any) taxes on that.

snapperdude

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Re: Republican Tax Plan 2017
« Reply #1457 on: December 18, 2017, 05:24:12 PM »
Am I correctly understanding that the new rules on residential real estate allow a deduction of up to 25% of wages (which are normally zero) PLUS 2.5% of the unadjusted cost basis?

For a 300k rental house that's a new $7500 deduction every year, that didn't exist before.

I mean I'll gladly take it, I'm just incredulous that was the intention of the bill's drafters.

Oh yeah, that's the "Corker fix" https://www.washingtonpost.com/business/economy/last-minute-real-estate-perk-in-tax-reform-prompts-blowback-for-corker/2017/12/18/6be3a9ba-e406-11e7-ab50-621fe0588340_story.html?utm_term=.091b462e6d46


I believe that is now being called the #corkerkickback

seattlecyclone

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Re: Republican Tax Plan 2017
« Reply #1458 on: December 18, 2017, 05:27:32 PM »
Am I correctly understanding that the new rules on residential real estate allow a deduction of up to 25% of wages (which are normally zero) PLUS 2.5% of the unadjusted cost basis?

For a 300k rental house that's a new $7500 deduction every year, that didn't exist before.

I mean I'll gladly take it, I'm just incredulous that was the intention of the bill's drafters.

Oh yeah, that's the "Corker fix" https://www.washingtonpost.com/business/economy/last-minute-real-estate-perk-in-tax-reform-prompts-blowback-for-corker/2017/12/18/6be3a9ba-e406-11e7-ab50-621fe0588340_story.html?utm_term=.091b462e6d46


I believe that is now being called the #corkerkickback

What a shame. #corkerporker has such a nice ring to it.

oldmannickels

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Re: Republican Tax Plan 2017
« Reply #1459 on: December 18, 2017, 05:40:38 PM »
Am I correctly understanding that the new rules on residential real estate allow a deduction of up to 25% of wages (which are normally zero) PLUS 2.5% of the unadjusted cost basis?

For a 300k rental house that's a new $7500 deduction every year, that didn't exist before.

I mean I'll gladly take it, I'm just incredulous that was the intention of the bill's drafters.

My read is the calc is 20% of your qualified business income subject to a limit of$7,500 in your example.

pianomom

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Re: Republican Tax Plan 2017
« Reply #1460 on: December 18, 2017, 05:56:55 PM »
Does anyone know if there were any changes to deducting health savings accounts? And if you can still deduct them above the line?

dragoncar

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Re: Republican Tax Plan 2017
« Reply #1461 on: December 18, 2017, 09:48:34 PM »
The county where I live has just opened up their website for pre-payment of next year's property taxes (in anticipation of the tax bill passing, and at the request of many taxpayers here.)

I am pre-paying the property taxes and I am going to pull forward my January mortgage payment into the last week of December.  Just maximizing my 2017 itemized deductions before I (presumably) will be taking the standard deduction next year.
What are the mechanics of paying your January’s mortgage in December?  I though a late-December payment would just be counted as principle pay down and not pay off any accrued interest (is the deductible part)
Send a check marked "January 2018 payment" (or send with the January coupon).

My experience is that any payment of the monthly size posted the back half of the month is treated as the next month's payment without any instruction on my part.

It seems like the bill is going to (try to) disallow any benefit from doing this.

Thanks, I looked into it and it seems like I can just click "pay" online since next month's balance shows up right now.  I was a bit paranoid that my autopay would double-withdraw but I've got an email from customer service saying it will skip the payment if it's paid early.  So I can't really lose, except a few cents in interest.  Might as well try.

Stache-O-Lantern

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Re: Republican Tax Plan 2017
« Reply #1462 on: December 18, 2017, 11:19:49 PM »
I've always thought it a bit cheeky decrying the tax breaks for billionaires while ignoring the huge loophole we Mustachians exploit in the USA, enabling us humble millionaires to pull up to $90k/yr in income without paying a dime in income tax. I think a LOT of hard working middle class people paying large amounts of state and federal income tax would find that disgraceful...

Could someone please clarify this -- how does one accomplish this?

I believe this is a reference to qualified dividends and long term capital gains being taxed at 0% if you are in or below the 15% federal tax bracket.  If all your income is qualified dividends and long term capital gains, then with standard deductions, you can have about $90k income and not pay any federal income tax.

See an article on this topic here:

http://gocurrycracker.com/never-pay-taxes-again/

Mr Mark

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Re: Republican Tax Plan 2017
« Reply #1463 on: December 18, 2017, 11:30:53 PM »
I've always thought it a bit cheeky decrying the tax breaks for billionaires while ignoring the huge loophole we Mustachians exploit in the USA, enabling us humble millionaires to pull up to $90k/yr in income without paying a dime in income tax. I think a LOT of hard working middle class people paying large amounts of state and federal income tax would find that disgraceful...

Could someone please clarify this -- how does one accomplish this?

I believe this is a reference to qualified dividends and long term capital gains being taxed at 0% if you are in or below the 15% federal tax bracket.  If all your income is qualified dividends and long term capital gains, then with standard deductions, you can have about $90k income and not pay any federal income tax.

See an article on this topic here:

http://gocurrycracker.com/never-pay-taxes-again/

Yep. I love America.

Exflyboy

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Re: Republican Tax Plan 2017
« Reply #1464 on: December 19, 2017, 12:50:07 AM »
Sadly it doesn't work if you are a resident of Oregon as they tax pretty much all of your income at about 9%.

It doesn't work if you want a subsidy for your healthcare costs either.

But then if you ARE an Oregon resident AND you want a subsidy its amazing how low you can get that "income" if you have to..:)

DarkandStormy

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Re: Republican Tax Plan 2017
« Reply #1465 on: December 19, 2017, 08:32:46 AM »
https://www.vox.com/policy-and-politics/2017/12/18/16791174/republican-tax-bill-congress-conference-tax-policy-center

They took two independently shitty bills and made them even shittier when reconciling them.

By 2027, the top 1% will see 83% of the tax cut.  Amazing.

It is historically perhaps the least popular piece of legislation  https://fivethirtyeight.com/features/will-passing-the-tax-bill-help-the-gop-in-2018-probably-not/

OurTown

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Re: Republican Tax Plan 2017
« Reply #1466 on: December 19, 2017, 08:37:26 AM »
I'll be FIREd before 2027, I hope.  I will take the little nominal individual rate cuts while still working, then get out of the workforce before they sunset.  "What about everybody else?" asks my wife.  I guess they are on their own.

brooklynguy

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Re: Republican Tax Plan 2017
« Reply #1467 on: December 19, 2017, 08:37:48 AM »
Am I correctly understanding that the new rules on residential real estate allow a deduction of up to 25% of wages (which are normally zero) PLUS 2.5% of the unadjusted cost basis?

For a 300k rental house that's a new $7500 deduction every year, that didn't exist before.

I mean I'll gladly take it, I'm just incredulous that was the intention of the bill's drafters.

I'm still working through the proposed legislation, but, based on my review of the conference report explanatory notes (I haven't yet reviewed the actual proposed statutory text on this point), I believe the formula you're citing (25% of wages + 2.5% of unadjusted basis) is merely (one component of) a cap on the otherwise applicable deduction, which is 20% of all qualified business income.

The general rule appears to be that you can deduct 20% of your qualified business income.  But, if your overall taxable income exceeds a specified threshold, that deduction is subject to the following limitation:  the deduction cannot exceed the greater of (a) 50% of the total wages paid to the business' employees and (b) the sum of 25% of the total wages paid to the business' employees plus 2.5% of the unadjusted basis of all qualified property.

So, in your example, the deduction would not automatically be equal to $7500--instead, the deduction would be equal to 20% of the net rental income (assuming the rental income qualifies as "qualified business income"), capped at $7500 if the taxpayer's taxable income exceeds the specified threshold.

This post, like all of my posts in the forum, does not constitute tax or legal advice.   
« Last Edit: December 19, 2017, 08:39:39 AM by brooklynguy »

DarkandStormy

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Re: Republican Tax Plan 2017
« Reply #1468 on: December 19, 2017, 10:03:58 AM »

sol

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Re: Republican Tax Plan 2017
« Reply #1469 on: December 19, 2017, 10:13:18 AM »
I believe the formula you're citing (25% of wages + 2.5% of unadjusted basis) is merely (one component of) a cap on the otherwise applicable deduction, which is 20% of all qualified business income.

The next question, then, is what counts as qualified business income.  At first glance it looks like only your schedule E line 24 rental income counts, which penalizes several types of RE investors, including me. 

I "make" far more in equity paydown and capital value growth than I do in monthly cash excess.  My rents are only a few hundred dollars month higher than my mortgage payments, but my tenants pay thousands of dollars in loan equity for me each month.  Since line 24 income is AFTER you deduct all expenses including depreciation and property taxes and insurance and mortgage interest, this new 20% deduction for rentals would have saved me... $173 last year.

I'll still take it, don't get me wrong.  But it's slightly disappointing.  Where's my big beautiful tax cut?  I'm rich, dammit, this bill was supposed to help me!

Maybe it's time for me to refinance my properties to get my payments down and my cash flow up, at the expense of total return.  This new tax bill does at least change the calculus of that decision.

sol

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Re: Republican Tax Plan 2017
« Reply #1470 on: December 19, 2017, 10:18:33 AM »
Don't be fooled by this chart, D&S.  2025 is the year republicans want you to look at because it is the last year with individual tax cuts.  They all expire after that.  Look at 2026 or 2027 if you want to see what republicans are really shooting for.  They are counting on future gridlock to prevent any chance that their plan will be stopped.



oldmannickels

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Re: Republican Tax Plan 2017
« Reply #1471 on: December 19, 2017, 10:26:04 AM »
I believe the formula you're citing (25% of wages + 2.5% of unadjusted basis) is merely (one component of) a cap on the otherwise applicable deduction, which is 20% of all qualified business income.

The next question, then, is what counts as qualified business income.  At first glance it looks like only your schedule E line 24 rental income counts, which penalizes several types of RE investors, including me. 

I "make" far more in equity paydown and capital value growth than I do in monthly cash excess.  My rents are only a few hundred dollars month higher than my mortgage payments, but my tenants pay thousands of dollars in loan equity for me each month.  Since line 24 income is AFTER you deduct all expenses including depreciation and property taxes and insurance and mortgage interest, this new 20% deduction for rentals would have saved me... $173 last year.

I'll still take it, don't get me wrong.  But it's slightly disappointing.  Where's my big beautiful tax cut?  I'm rich, dammit, this bill was supposed to help me!

Maybe it's time for me to refinance my properties to get my payments down and my cash flow up, at the expense of total return.  This new tax bill does at least change the calculus of that decision.

Right, you need to look really closely at accelerating depreciation with the new deduction. Not electing to accelerate depreciation increases your profit and therefore a bigger deduction over a longer period of time, than if you just expensed everything right away. YMMV

brooklynguy

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Re: Republican Tax Plan 2017
« Reply #1472 on: December 19, 2017, 10:29:14 AM »
which penalizes several types of RE investors, including me. 

The reason landlords like you (and me) are able to report such little rental income is that we're already benefitting from a host of tax advantages for real estate investors, including, as you mentioned, the ability to deduct paper depreciation expense.  Now you're asking for the ability to double-dip by taking the new qualified business income deduction on those same already-deductible dollars?

Quote
Where's my big beautiful tax cut?  I'm rich, dammit, this bill was supposed to help me!

You can join the ranks of the merely-rich-but-not-ultra-rich complaining about their unfair shake, to the sound of the world's tiniest violin.

sol

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Re: Republican Tax Plan 2017
« Reply #1473 on: December 19, 2017, 11:15:46 AM »
You can join the ranks of the merely-rich-but-not-ultra-rich complaining about their unfair shake, to the sound of the world's tiniest violin.

I'm not complaining about my taxes, I'm complaining about the lies.

I support raising taxes.  I think our country should spend more on infrastructure, and on subsidized health insurance, because these things increase economic output and would thus raise tax revenue in the future.  They will help balance the budget in the long term.

The GOP tax bill does not.  It raises taxes on most Americans in order to lower taxes on the super wealthy, who do not spend their excess millions and who do not generate future tax revenue.  Their plan increases the debt for no discernable reason other than increasing wealth inequality.

If the GOP is going to publicly claim that their tax increase is going to save me money, then please show me the money.  Right now, all I'm seeing is trillions in new debt, higher taxes paid by most Americans, and juicy perks for the obscenely rich.  Oh, plus fewer people getting that great healthcare they were promised.  Color me disappointed.

DarkandStormy

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Re: Republican Tax Plan 2017
« Reply #1474 on: December 19, 2017, 11:19:02 AM »
Don't be fooled by this chart, D&S.  2025 is the year republicans want you to look at because it is the last year with individual tax cuts.  They all expire after that.  Look at 2026 or 2027 if you want to see what republicans are really shooting for.  They are counting on future gridlock to prevent any chance that their plan will be stopped.

It looks crappy even before you get to 2026 & 2027.

brooklynguy

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Re: Republican Tax Plan 2017
« Reply #1475 on: December 19, 2017, 11:20:47 AM »
I'm not complaining about my taxes, I'm complaining about the lies.

I know, just some friendly ribbing.  I'm as disgusted with this legislation as you are (and simultaneously trying to figure out how to maximally exploit it, such as it is, to my own personal advantage).

sol

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Re: Republican Tax Plan 2017
« Reply #1476 on: December 19, 2017, 11:27:33 AM »
Don't be fooled by this chart, D&S.  2025 is the year republicans want you to look at because it is the last year with individual tax cuts.  They all expire after that.  Look at 2026 or 2027 if you want to see what republicans are really shooting for.  They are counting on future gridlock to prevent any chance that their plan will be stopped.

It looks crappy even before you get to 2026 & 2027.

Then you're going to be really disappointed in the bill's rates once they're fully phased in.  That 2025 chart still has the doubled standard deduction and expanded child tax credit in it.  Those are disappearing in 2026, but your personal and dependent deductions are not coming back.

That's the whole point of the tax bill (I mean on the individual side, since the real money is all on the corporate side).  It lowers rates but increases the amount of income you pay taxes on by taking away your deductions and exemptions.  It temporarily increases the child tax credit and standard deduction in order to soften the blow, but they ultimately need to repeal that softening for normal families in order to fund lowering the tax rate in the top bracket.

Saving4Fire

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Re: Republican Tax Plan 2017
« Reply #1477 on: December 19, 2017, 11:43:52 AM »
Don't be fooled by this chart, D&S.  2025 is the year republicans want you to look at because it is the last year with individual tax cuts.  They all expire after that.  Look at 2026 or 2027 if you want to see what republicans are really shooting for.  They are counting on future gridlock to prevent any chance that their plan will be stopped.

It looks crappy even before you get to 2026 & 2027.

Then you're going to be really disappointed in the bill's rates once they're fully phased in.  That 2025 chart still has the doubled standard deduction and expanded child tax credit in it.  Those are disappearing in 2026, but your personal and dependent deductions are not coming back.

That's the whole point of the tax bill (I mean on the individual side, since the real money is all on the corporate side).  It lowers rates but increases the amount of income you pay taxes on by taking away your deductions and exemptions.  It temporarily increases the child tax credit and standard deduction in order to soften the blow, but they ultimately need to repeal that softening for normal families in order to fund lowering the tax rate in the top bracket.

I'll also add they changed inflation index, which will serve as a long term tax increase.   This bill is beyond depressing.

BigRed

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Re: Republican Tax Plan 2017
« Reply #1478 on: December 19, 2017, 11:51:15 AM »
And, of course, the child tax credit is not indexed to inflation at all, in either the temporary $2000 dollar value or the old (and eventually new again) $1000 dollar value, so those whither away over time as well.  Same for the $10,000 SALT deduction limit, which is forever.

Yes, incredibly depressing.

ZiziPB

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Re: Republican Tax Plan 2017
« Reply #1479 on: December 19, 2017, 12:06:58 PM »
And, of course, the child tax credit is not indexed to inflation at all, in either the temporary $2000 dollar value or the old (and eventually new again) $1000 dollar value, so those whither away over time as well.  Same for the $10,000 SALT deduction limit, which is forever.

Yes, incredibly depressing.

And, I've heard a lot of economists and other commentators say that the increased deficit is likely to lead to higher inflation...

sol

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Re: Republican Tax Plan 2017
« Reply #1480 on: December 19, 2017, 12:07:21 PM »
And, of course, the child tax credit is not indexed to inflation at all, in either the temporary $2000 dollar value or the old (and eventually new again) $1000 dollar value, so those whither away over time as well.  Same for the $10,000 SALT deduction limit, which is forever.

Yes, incredibly depressing.

On the bright side, there is a temporary tax cut for many high earners with kids, for the next few years.  By the time they expire my tax deductions will be headed off to college and my reported income will drop dramatically after I retire so income taxes will matter less.

They left capital gains and dividend income and roth ira rollovers alone, so an industrious mustachian who is nearing retirement still has a viable path through retirement, by transitioning to living off of investments instead of wages. 

I just wish they hadn't repealed the individual mandate, because that is expected to raise premiums for everyone left buying insurance.  Now the question becomes how to game that system as rates skyrocket.  Maybe the indexed silver plan will spike and bronze plans will stay affordable, or maybe it will suddenly make sense to go uninsured and then sign up only when you incur major expenses (aka supporting the death spiral).  My guess, though, is that managing your income (and/or relocating) to qualify for state expanded Medicaid is about to get a whole lot more attractive.

Unfortunately, the days of paying no taxes on $100k of wage income, like in that gocurrycracker post, appear to be waning.  By 2026, this bill will make that impossible.  Or at least require vastly different strategies than we use today.

teen persuasion

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Re: Republican Tax Plan 2017
« Reply #1481 on: December 19, 2017, 12:08:30 PM »
Don't be fooled by this chart, D&S.  2025 is the year republicans want you to look at because it is the last year with individual tax cuts.  They all expire after that.  Look at 2026 or 2027 if you want to see what republicans are really shooting for.  They are counting on future gridlock to prevent any chance that their plan will be stopped.

It looks crappy even before you get to 2026 & 2027.

Then you're going to be really disappointed in the bill's rates once they're fully phased in.  That 2025 chart still has the doubled standard deduction and expanded child tax credit in it.  Those are disappearing in 2026, but your personal and dependent deductions are not coming back.

That's the whole point of the tax bill (I mean on the individual side, since the real money is all on the corporate side).  It lowers rates but increases the amount of income you pay taxes on by taking away your deductions and exemptions.  It temporarily increases the child tax credit and standard deduction in order to soften the blow, but they ultimately need to repeal that softening for normal families in order to fund lowering the tax rate in the top bracket.

I'm assuming you mean exemptions in the section I bolded above.  Actually, personal exemptions are only SUSPENDED until 2026, then they return.  They ditched the House repeal of the exemptions.

Bruinguy

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Re: Republican Tax Plan 2017
« Reply #1482 on: December 19, 2017, 12:13:49 PM »
Wow, that is super misleading.  Thanks for pointing that out.

Don't be fooled by this chart, D&S.  2025 is the year republicans want you to look at because it is the last year with individual tax cuts.  They all expire after that.  Look at 2026 or 2027 if you want to see what republicans are really shooting for.  They are counting on future gridlock to prevent any chance that their plan will be stopped.



Exflyboy

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Re: Republican Tax Plan 2017
« Reply #1483 on: December 19, 2017, 12:28:10 PM »
And, of course, the child tax credit is not indexed to inflation at all, in either the temporary $2000 dollar value or the old (and eventually new again) $1000 dollar value, so those whither away over time as well.  Same for the $10,000 SALT deduction limit, which is forever.

Yes, incredibly depressing.

On the bright side, there is a temporary tax cut for many high earners with kids, for the next few years.  By the time they expire my tax deductions will be headed off to college and my reported income will drop dramatically after I retire so income taxes will matter less.

They left capital gains and dividend income and roth ira rollovers alone, so an industrious mustachian who is nearing retirement still has a viable path through retirement, by transitioning to living off of investments instead of wages. 

I just wish they hadn't repealed the individual mandate, because that is expected to raise premiums for everyone left buying insurance.  Now the question becomes how to game that system as rates skyrocket.  Maybe the indexed silver plan will spike and bronze plans will stay affordable, or maybe it will suddenly make sense to go uninsured and then sign up only when you incur major expenses (aka supporting the death spiral).  My guess, though, is that managing your income (and/or relocating) to qualify for state expanded Medicaid is about to get a whole lot more attractive.

Unfortunately, the days of paying no taxes on $100k of wage income, like in that gocurrycracker post, appear to be waning.  By 2026, this bill will make that impossible.  Or at least require vastly different strategies than we use today.

At the moment at least we have found the high deductible bronze plan for a "mere" $1100/m (without subsidy) works for us by buying the expensive asthma inhalers from Canada. This is the first time we have done this but our doc was quite happy to send the prescription to Canada Drugs and the $234/month inhaler (yes you read that right $234/m just to breath) cost us $33. The inhaler came from a licensed pharmacy the UK so I no problem with its authenticity.

I'm sure our beloved HC cartel will shut down personal importation one day (because the FDA has our best interests at heart don't ya know?), but it seems to work for now.

DarkandStormy

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Re: Republican Tax Plan 2017
« Reply #1484 on: December 19, 2017, 12:28:48 PM »
https://www.vox.com/platform/amp/policy-and-politics/2017/12/19/16786006/looting-of-america?utm_campaign=mattyglesias&utm_content=chorus&utm_medium=social&utm_source=twitter&__twitter_impression=true

Quote
Politicians are making decisions to enrich their donors — and at times themselves personally — with a reckless disregard for any kind of objective policy analysis or consideration of public opinion.

Quote
A businessman president who promised — repeatedly — that he would not personally benefit from his own tax proposals is poised to sign into law a bill that’s full of provisions that benefit him and his family. Congressional Republicans who spent years insisting that “dynamic scoring” would capture the deficit-reducing power of tax cuts are now plowing ahead with a bill so fast that they don’t have time to get one done, because it turns out they can’t be bothered to meet their own targets.

Quote
Across the board, it’s about letting whoever’s powerful now squeeze as much out as they can without worrying too much about the consequences — like enormous, deficit-financed tax cuts passed with no regard for budgetary or economic effects.

Quote
Somewhere in its murky origins, “tax reform,” as conceived by is Republican authors, was supposed to be a policy-driven bill aimed at creating a simpler and fairer tax code that would generate broadly superior economic outcomes for most people — a normal governing objective even if it was always the case that substantial disagreement would exist over the merits of marginal corporate tax rate cuts as a growth-boosting policy.

But along the way, virtually all of the high-minded aspirations were dropped and all of the normal aspects of congressional process broken — to the point where the bill’s leading architects won’t even mention the policy changes that are at the heart of the bill. In the end, instead of taking on the special interests as promised, it gives away the store to almost every lobby shop in town — with last-minute additions that personally enrich the Trump family and a decent chunk of the members of Congress voting for it.

Quote
“Not economic growth judged by us,” Rep. Kevin Brady (R-TX), the Chair of the House’s tax-writing committee, told Vox in March, “but by the independent Joint Committee on Taxation.”

And of course it wasn’t going to be a bonanza for the rich. Trump went so far as to promise that the rich wouldn’t benefit “at all” from his plan, and he certainly swore repeatedly that he would not personally benefit.

Quote
The House bill slashed the top tax rate a little and the Senate bill slashed it a little more, so the conference committee compromised on a bigger rate cut than either had proposed.

Meanwhile, after all the months of work, Republicans ultimately settled on not actually eliminating any significant deductions or loopholes after all.

Quote
Why? Well it certainly seems to have had something to do with the orgy of lobbying that, according to the New York Times, led more than half of the city’s 11,000 registered lobbyists to report having worked on the tax bill. The swamp is running wild.

Quote
But Trump and Ryan have completely dissolved the norm against dishonesty to the point where there are no longer any whistleblowers in the Republican caucus or the world of conservative media. You just say whatever you want, and dole out favors to your friends — moving at such a rapid pace that the country’s ability to process what’s happening gets overwhelmed.

It is hard to overstate just how bad this bill is...from the lies of the GOP, to letting the "swamp" write the damn thing, to the temporary nature of the tax cuts for middle and low income families, to the ballooning deficit price tag attached - brought to us by the formally "fiscally conservative" GOP.
« Last Edit: December 19, 2017, 12:39:59 PM by DarkandStormy »

Debts_of_Despair

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Re: Republican Tax Plan 2017
« Reply #1485 on: December 19, 2017, 12:31:34 PM »
Passed by the House!

RangerOne

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Re: Republican Tax Plan 2017
« Reply #1486 on: December 19, 2017, 12:37:20 PM »
That's the whole point of the tax bill (I mean on the individual side, since the real money is all on the corporate side).  It lowers rates but increases the amount of income you pay taxes on by taking away your deductions and exemptions.  It temporarily increases the child tax credit and standard deduction in order to soften the blow, but they ultimately need to repeal that softening for normal families in order to fund lowering the tax rate in the top bracket.

I don't agree that the point of this bill is to increase taxes directly on the majority of income earners.

I say directly because one clear desire the republicans have is to cut major social programs while not giving us break on payroll tax which in an of itself is a tax hike. Also the new breaks are not tied to inflation like today's personal exemptions which makes them more risky bets long term. Granted over the 8 year period I don't expect inflation to impact the value much but again long term its not great.

The temporary move is a clear dodge of their own senate deficit hawk rules to try to bullshit the true cost of this legislation to get under the 1.5 Trillion dollar estimated loss. Cynically the Republicans could be doing this knowing there will be a huge income loss and growth wont fill the void, but its a short term win. A glass half full view may be some Repubs still believe that the estimates are wrong and growth will fill the void. Thus allowing an easy continuation of the breaks.

The reality is though that this creates a guaranteed budget battle for whoever is in control at that point . They will be forced to renew the breaks or be blamed for a large middle class tax hike. I find it unlikely the future congress wont find away to extend these, given the inventiable blow back. The downside is I am sure some shitty provisions will be pork barreled in with it.

Still though, your fears are valid that compared to today's long standing tax code, this leaves a none zero chance that 8 years down the road a baked in tax hike will hit the majority of American households.

Oh and side note. I am not sure wtf happened to, "We are going to simplify taxes" but this legislation just made taxes even more convoluted and challenging. Fear not Intuit and CPAs your jobs are safe. Granted I am not a fan of simple tax codes anyway.

Fomerly known as something

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Re: Republican Tax Plan 2017
« Reply #1487 on: December 19, 2017, 01:24:23 PM »
And, of course, the child tax credit is not indexed to inflation at all, in either the temporary $2000 dollar value or the old (and eventually new again) $1000 dollar value, so those whither away over time as well.  Same for the $10,000 SALT deduction limit, which is forever.

Yes, incredibly depressing.

On the bright side, there is a temporary tax cut for many high earners with kids, for the next few years.  By the time they expire my tax deductions will be headed off to college and my reported income will drop dramatically after I retire so income taxes will matter less.

They left capital gains and dividend income and roth ira rollovers alone, so an industrious mustachian who is nearing retirement still has a viable path through retirement, by transitioning to living off of investments instead of wages. 

I just wish they hadn't repealed the individual mandate, because that is expected to raise premiums for everyone left buying insurance.  Now the question becomes how to game that system as rates skyrocket.  Maybe the indexed silver plan will spike and bronze plans will stay affordable, or maybe it will suddenly make sense to go uninsured and then sign up only when you incur major expenses (aka supporting the death spiral).  My guess, though, is that managing your income (and/or relocating) to qualify for state expanded Medicaid is about to get a whole lot more attractive.

Unfortunately, the days of paying no taxes on $100k of wage income, like in that gocurrycracker post, appear to be waning.  By 2026, this bill will make that impossible.  Or at least require vastly different strategies than we use today.

At the moment at least we have found the high deductible bronze plan for a "mere" $1100/m (without subsidy) works for us by buying the expensive asthma inhalers from Canada. This is the first time we have done this but our doc was quite happy to send the prescription to Canada Drugs and the $234/month inhaler (yes you read that right $234/m just to breath) cost us $33. The inhaler came from a licensed pharmacy the UK so I no problem with its authenticity.

I'm sure our beloved HC cartel will shut down personal importation one day (because the FDA has our best interests at heart don't ya know?), but it seems to work for now.

Just claim it is for your cat.  OA the is much cheaper for my car from Canada as well

Jrr85

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Re: Republican Tax Plan 2017
« Reply #1488 on: December 19, 2017, 02:43:31 PM »
And, of course, the child tax credit is not indexed to inflation at all, in either the temporary $2000 dollar value or the old (and eventually new again) $1000 dollar value, so those whither away over time as well.  Same for the $10,000 SALT deduction limit, which is forever.

Yes, incredibly depressing.

To be fair, that is one of the redeeming qualities of the bill.  Between the limit to $10k and not increasing it with inflation, and putting the standard deduction at $24k for couples and indexing it to chained CPI, that sets the stage for SALT to be completely eliminated as a deduction going forward (which it should be). 

Then the corporate rate being 21% is a huge improvement. 

Just need some of the more ridiculous changes to be eliminated over time (the 20% deduction for pass through income probably being the biggest). 

DarkandStormy

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Re: Republican Tax Plan 2017
« Reply #1489 on: December 19, 2017, 02:50:21 PM »
LOL.  The GOP has to re-vote on it tomorrow.

brooklynguy

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Re: Republican Tax Plan 2017
« Reply #1490 on: December 19, 2017, 03:33:03 PM »
LOL.  The GOP has to re-vote on it tomorrow.

What's even funnier is that, reportedly, one of the three provisions that is failing to survive the Byrd bath is totally nonsubstantive:  the provision that does nothing more than give the legislation its name, the "Tax Cuts and Jobs Act."

accolay

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Re: Republican Tax Plan 2017
« Reply #1491 on: December 19, 2017, 04:33:32 PM »
Then the corporate rate being 21% is a huge improvement. 

Improvement from what? As in, it's an improvement just because it's a lower number? Any arguments for lowering the corporate tax rate does not make any logical sense. This bill is a turd.

Michael in ABQ

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Re: Republican Tax Plan 2017
« Reply #1492 on: December 19, 2017, 04:56:12 PM »
Then the corporate rate being 21% is a huge improvement. 

Improvement from what? As in, it's an improvement just because it's a lower number? Any arguments for lowering the corporate tax rate does not make any logical sense. This bill is a turd.

Lower corporate tax rates mean either lower prices for goods and services offered by those corporation or increases in the value of the company which are passed on to shareholders. Since most of us here invest in the stock market and buy goods and services from corporations this will be a net gain on those accounts.



It would be nice if the government just spent less money when they had less tax revenue. But of course hell will freeze over before a politician will stop spending other peoples money.

accolay

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Re: Republican Tax Plan 2017
« Reply #1493 on: December 19, 2017, 05:01:12 PM »
Lower corporate tax rates mean either lower prices for goods and services offered by those corporation
Nope.

or increases in the value of the company which are passed on to shareholders.
Yep.

It's interesting that I don't hear many stating that these corporations will pass the savings onto their employees. You know, like Walmart and Amazon could pay a living wage. I think it's because we all know that it's not going to happen. The rich will keep the savings. That's how this works.

Edit: to add that the bill remains a turd
« Last Edit: December 19, 2017, 05:06:13 PM by accolay »

RangerOne

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Re: Republican Tax Plan 2017
« Reply #1494 on: December 19, 2017, 05:07:41 PM »
Then the corporate rate being 21% is a huge improvement. 

Improvement from what? As in, it's an improvement just because it's a lower number? Any arguments for lowering the corporate tax rate does not make any logical sense. This bill is a turd.

Lower corporate tax rates mean either lower prices for goods and services offered by those corporation or increases in the value of the company which are passed on to shareholders. Since most of us here invest in the stock market and buy goods and services from corporations this will be a net gain on those accounts.



It would be nice if the government just spent less money when they had less tax revenue. But of course hell will freeze over before a politician will stop spending other peoples money.

Setting aside the argument that lower corp tax will spur growth.

They are skipping part of what needs to happen to keep this above board. They are still cutting revenue. So they should be telling us up front what spending is on the chopping block or recapturing the revenue with more individual taxes.

I am not convinced the corporate tax cut will do anything more than temporarily extend an already ridiculous bull market. Maybe it will be good timing and counter balance the impact of the quantitative unwind.

RangerOne

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Re: Republican Tax Plan 2017
« Reply #1495 on: December 19, 2017, 05:09:50 PM »
Lower corporate tax rates mean either lower prices for goods and services offered by those corporation
Nope.

or increases in the value of the company which are passed on to shareholders.
Yep.

It's interesting that I don't hear many stating that these corporations will pass the savings onto their employees. You know, like Walmart and Amazon could pay a living wage. I think it's because we all know that it's not going to happen. The rich will keep the savings. That's how this works.

Edit: to add that the bill remains a turd

Those jobs are on the verge of going away forever so at this point they will either pay next to nothing, or they will can half the staff, replace them with automated checkout and pay the remainder a little bit more than nothing until they can fully automate a store. That should definitely happen in our lifetimes.

JLee

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Re: Republican Tax Plan 2017
« Reply #1496 on: December 19, 2017, 05:36:37 PM »
Lower corporate tax rates mean either lower prices for goods and services offered by those corporation
Nope.

or increases in the value of the company which are passed on to shareholders.
Yep.

It's interesting that I don't hear many stating that these corporations will pass the savings onto their employees. You know, like Walmart and Amazon could pay a living wage. I think it's because we all know that it's not going to happen. The rich will keep the savings. That's how this works.

Edit: to add that the bill remains a turd

Those jobs are on the verge of going away forever so at this point they will either pay next to nothing, or they will can half the staff, replace them with automated checkout and pay the remainder a little bit more than nothing until they can fully automate a store. That should definitely happen in our lifetimes.

Amazon could replace cashiers with automated checkout machines?

wat?

maizeman

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Re: Republican Tax Plan 2017
« Reply #1497 on: December 19, 2017, 05:59:36 PM »
Amazon is replacing more and more of their warehouse employees with robots.

JLee

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Re: Republican Tax Plan 2017
« Reply #1498 on: December 19, 2017, 06:18:48 PM »
Amazon is replacing more and more of their warehouse employees with robots.

Fair point.  That does add speed and efficiency, providing benefits to customers as well.

I am not a big fan of the trend towards self checkout lanes. They're abysmally slow compared to a competent cashier and I do not like them.

maizeman

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Re: Republican Tax Plan 2017
« Reply #1499 on: December 19, 2017, 06:52:17 PM »
Yeah people seem to have quite polarized views on them.

I tend to like self checkouts because often the store can put in four of them to replace a single human manned checkout lane, so the wait is usually shorter and you don't have to make small talk. But I agree with you the actual checkout process takes longer. McDonalds is also replacing more and more of their order takers with automated checkout kiosks, I'll be interested to hear what people think that does for usability and wait times to order. Overall I'd argue automation is good for customers. If nothing else, it should reduce prices or prevent them from increasing as rapidly as they otherwise would have.

But this is getting a bit off topic. There are good arguments that all things being equal tax cuts will result in increased profits/share prices (good for investors). There are plausible arguments that in certain specific circumstances* tax cuts may get passed on in the form of lower prices (good for consumers). But generally if you make a business more profitable, it's not going to spend any more money on employee salaries because salaries are set by supply and demand for people with the skillsets the company needs (so tax cuts don't do anything for employees).