Author Topic: Republicans Consider Sharp Cut in 401(k) Contribution Limits  (Read 76626 times)

dandarc

  • Magnum Stache
  • ******
  • Posts: 4737
  • Age: 39
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #300 on: November 02, 2017, 11:14:47 AM »
Has anyone seen anything on capital gains taxation?  Should we assume that they are taxed at 0 up to the top of the new 12% bracket?
Still 0-15-20, but they've separated from the tax-brackets entirely.  The "15% rate threshold" is $77,200 for MFJ.

https://waysandmeansforms.house.gov/uploadedfiles/bill_text.pdf

DarkandStormy

  • Handlebar Stache
  • *****
  • Posts: 1452
  • Age: 32
  • Location: Midwest, USA
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #301 on: November 02, 2017, 11:20:13 AM »
Can't believe they're proposing a standard deduction of $24,000 (married) and keeping the 401(k) pretax deduction where it is.

I think this is a real win for frugal upper middle class people like me.

Did...did you purposefully ignore the elimination of personal exemptions?  If you have kids and are taking those exemptions currently...poof.  Gone.  Suddenly, your standard deduction + exemptions NOW > deduction in new plan.

This plan absolutely screws low-income workers.  Instead of their first $9,525 of taxable income being taxed at 10%, it's taxed at 12%.  Anybody with $16,000 or less in taxable income ends up paying MORE under this proposal.

boarder42

  • Walrus Stache
  • *******
  • Posts: 8838
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #302 on: November 02, 2017, 11:25:09 AM »
Has anyone seen anything on capital gains taxation?  Should we assume that they are taxed at 0 up to the top of the new 12% bracket?
Still 0-15-20, but they've separated from the tax-brackets entirely.  The "15% rate threshold" is $77,200 for MFJ.

https://waysandmeansforms.house.gov/uploadedfiles/bill_text.pdf

Dang I missed that.  That sux. Was really hoping it would ride the 90k

ZiziPB

  • Magnum Stache
  • ******
  • Posts: 3339
  • Location: The Other Side
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #303 on: November 02, 2017, 11:32:08 AM »
Has anyone seen anything on capital gains taxation?  Should we assume that they are taxed at 0 up to the top of the new 12% bracket?
Still 0-15-20, but they've separated from the tax-brackets entirely.  The "15% rate threshold" is $77,200 for MFJ.

https://waysandmeansforms.house.gov/uploadedfiles/bill_text.pdf
Interesting, so a FIREd individual could have up to $38,600 long term capital gains taxed at zero AND do a Roth conversion up to $45K at 12%?  These would not be cumulative like before?

sherr

  • Handlebar Stache
  • *****
  • Posts: 1543
  • Age: 36
  • Location: North Carolina, USA
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #304 on: November 02, 2017, 11:32:48 AM »
My summary:
Income:
Standard deductible: 12.2k (single) / 24.4k (married filing jointly)
12% bracket limit: 45k / 90k
25% bracket limit: 200k / 260k
35% bracket limit: 500k / 1MM
39.6% bracket limit: more

Capital Gains:
0% bracket limit: 38.6k / 77.2k
15% bracket limit: 425k / 479k
20% bracket limit: more

CheapScholar

  • Pencil Stache
  • ****
  • Posts: 557
  • Location: The Midwest
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #305 on: November 02, 2017, 11:33:01 AM »
Can't believe they're proposing a standard deduction of $24,000 (married) and keeping the 401(k) pretax deduction where it is.

I think this is a real win for frugal upper middle class people like me.

Did...did you purposefully ignore the elimination of personal exemptions?  If you have kids and are taking those exemptions currently...poof.  Gone.  Suddenly, your standard deduction + exemptions NOW > deduction in new plan.

This plan absolutely screws low-income workers.  Instead of their first $9,525 of taxable income being taxed at 10%, it's taxed at 12%.  Anybody with $16,000 or less in taxable income ends up paying MORE under this proposal.

Only have one kid - don't care.  I'm a JD and took tax law - I'm confident this current version of the bill is a win for my family.  Will it have any significant change in my life?  No, but I'm sure feeling better about my wife and I keeping our 403(b) deductions!  People making less than 16K taxable need to seriously rethink their life decisions and go out and earn if you ask me.  Proud day to be a Republican. 
« Last Edit: November 02, 2017, 11:34:49 AM by CheapScholar »

boarder42

  • Walrus Stache
  • *******
  • Posts: 8838
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #306 on: November 02, 2017, 11:35:21 AM »
The child and parent tax credit increase esp for one child more than offsets the loss of the personal exemption

Ok JD in tax law. I can't decipher how charitable contributions count next year. Are the above the line so I can still deduct. And count on top of the standard deduction.

Psychstache

  • Handlebar Stache
  • *****
  • Posts: 1269
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #307 on: November 02, 2017, 11:40:42 AM »
Can't believe they're proposing a standard deduction of $24,000 (married) and keeping the 401(k) pretax deduction where it is.

I think this is a real win for frugal upper middle class people like me.

Did...did you purposefully ignore the elimination of personal exemptions?  If you have kids and are taking those exemptions currently...poof.  Gone.  Suddenly, your standard deduction + exemptions NOW > deduction in new plan.

This plan absolutely screws low-income workers.  Instead of their first $9,525 of taxable income being taxed at 10%, it's taxed at 12%.  Anybody with $16,000 or less in taxable income ends up paying MORE under this proposal.

Only have one kid - don't care.  I'm a JD and took tax law - I'm confident this current version of the bill is a win for my family.  Will it have any significant change in my life?  No, but I'm sure feeling better about my wife and I keeping our 403(b) deductions!  People making less than 16K taxable need to seriously rethink their life decisions and go out and earn if you ask me.  Proud day to be a Republican.

2017 Standard Deduction + Personal Exemptions with 1 kid:

12,700 SD
4,050 x3 Personal Exemptions

Total: 24,850 deduction

How is losing $450 in baseline deductions a 'win'?


ZiziPB

  • Magnum Stache
  • ******
  • Posts: 3339
  • Location: The Other Side
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #308 on: November 02, 2017, 11:43:14 AM »
Can't believe they're proposing a standard deduction of $24,000 (married) and keeping the 401(k) pretax deduction where it is.

I think this is a real win for frugal upper middle class people like me.

Did...did you purposefully ignore the elimination of personal exemptions?  If you have kids and are taking those exemptions currently...poof.  Gone.  Suddenly, your standard deduction + exemptions NOW > deduction in new plan.

This plan absolutely screws low-income workers.  Instead of their first $9,525 of taxable income being taxed at 10%, it's taxed at 12%.  Anybody with $16,000 or less in taxable income ends up paying MORE under this proposal.

Only have one kid - don't care.  I'm a JD and took tax law - I'm confident this current version of the bill is a win for my family.  Will it have any significant change in my life?  No, but I'm sure feeling better about my wife and I keeping our 403(b) deductions!  People making less than 16K taxable need to seriously rethink their life decisions and go out and earn if you ask me.  Proud day to be a Republican.

2017 Standard Deduction + Personal Exemptions with 1 kid:

12,700 SD
4,050 x3 Personal Exemptions

Total: 24,850 deduction

How is losing $450 in baseline deductions a 'win'?


But you get $1600 child tax credit plus $300 tax credit per parent.  Before, you could only get $1000 credit.

DarkandStormy

  • Handlebar Stache
  • *****
  • Posts: 1452
  • Age: 32
  • Location: Midwest, USA
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #309 on: November 02, 2017, 11:43:51 AM »
Can't believe they're proposing a standard deduction of $24,000 (married) and keeping the 401(k) pretax deduction where it is.

I think this is a real win for frugal upper middle class people like me.

Did...did you purposefully ignore the elimination of personal exemptions?  If you have kids and are taking those exemptions currently...poof.  Gone.  Suddenly, your standard deduction + exemptions NOW > deduction in new plan.

This plan absolutely screws low-income workers.  Instead of their first $9,525 of taxable income being taxed at 10%, it's taxed at 12%.  Anybody with $16,000 or less in taxable income ends up paying MORE under this proposal.

Only have one kid - don't care.  I'm a JD and took tax law - I'm confident this current version of the bill is a win for my family.  Will it have any significant change in my life?  No, but I'm sure feeling better about my wife and I keeping our 403(b) deductions!  People making less than 16K taxable need to seriously rethink their life decisions and go out and earn if you ask me.  Proud day to be a Republican.

Ah yes, spoken like a true member of #cult45.  Who cares if it screws low-income workers and families?  As long as you and yours are set up, **** the rest of the country, right?

Hint: a full-time minimum wage job worker makes $15,080 in gross wages.  So, back of the envelope here, anyone with ~$27,000 in gross wages or less loses here.  That's ~$13/hour.  Proud day to be a Republican...where they just increased taxes on every person making $13/hour or less.  Good for you man, good for you.
« Last Edit: November 02, 2017, 11:45:35 AM by DarkandStormy »

CheapScholar

  • Pencil Stache
  • ****
  • Posts: 557
  • Location: The Midwest
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #310 on: November 02, 2017, 11:45:26 AM »
The child and parent tax credit increase esp for one child more than offsets the loss of the personal exemption

Ok JD in tax law. I can't decipher how charitable contributions count next year. Are the above the line so I can still deduct. And count on top of the standard deduction.

I do not believe so.  Per an article from Chronicle of Philanthropy, it is not above the line.  Plenty of articles out there talking about this large standard deduction severely reducing number of taxpayers who will itemize and whether they marginally win or lose.  I've never itemized in my life, fortunately. 

sol

  • Walrus Stache
  • *******
  • Posts: 8464
  • Age: 44
  • Location: Pacific Northwest
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #311 on: November 02, 2017, 11:46:10 AM »
Quote from: boa
this all looks to be great for mustachians so far.

I think this looks disastrous for us, because we have mortgages on our rental houses as well as our personal residence.    Anybody who owns multiple rentals is likely to get hit by both the cap on mortgage interest and the one on property tax deduction.

And since I live in a state with high property taxes (now with a capped deduction) but with no income tax (still fully deductible), I lose out on both ends.  They kept the SALT break I can't use, and reduced the one I need.

The third strike is the loss of deductibility of rental losses.  We had to rehab a trashed rental this year, so it stayed vacant while we put thousands into it this summer, and we'll lose money on the property this year.  If this tax plan passes, situations like this one suddenly get way more expensive.

As a landlord, why would I ever improve a property if I pay extra taxes for doing so? Or buy one, if my interest and taxes aren't deductible?  This whole plan seems to absolutely brutalize residential landlords.  So far, I hate it.

boarder42

  • Walrus Stache
  • *******
  • Posts: 8838
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #312 on: November 02, 2017, 11:48:23 AM »
The child and parent tax credit increase esp for one child more than offsets the loss of the personal exemption

Ok JD in tax law. I can't decipher how charitable contributions count next year. Are the above the line so I can still deduct. And count on top of the standard deduction.

I do not believe so.  Per an article from Chronicle of Philanthropy, it is not above the line.  Plenty of articles out there talking about this large standard deduction severely reducing number of taxpayers who will itemize and whether they marginally win or lose.  I've never itemized in my life, fortunately.

If they don't separate it this will greatly hurt charities.

CheapScholar

  • Pencil Stache
  • ****
  • Posts: 557
  • Location: The Midwest
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #313 on: November 02, 2017, 11:48:38 AM »
Can't believe they're proposing a standard deduction of $24,000 (married) and keeping the 401(k) pretax deduction where it is.

I think this is a real win for frugal upper middle class people like me.

Did...did you purposefully ignore the elimination of personal exemptions?  If you have kids and are taking those exemptions currently...poof.  Gone.  Suddenly, your standard deduction + exemptions NOW > deduction in new plan.

This plan absolutely screws low-income workers.  Instead of their first $9,525 of taxable income being taxed at 10%, it's taxed at 12%.  Anybody with $16,000 or less in taxable income ends up paying MORE under this proposal.

Only have one kid - don't care.  I'm a JD and took tax law - I'm confident this current version of the bill is a win for my family.  Will it have any significant change in my life?  No, but I'm sure feeling better about my wife and I keeping our 403(b) deductions!  People making less than 16K taxable need to seriously rethink their life decisions and go out and earn if you ask me.  Proud day to be a Republican.

2017 Standard Deduction + Personal Exemptions with 1 kid:

12,700 SD
4,050 x3 Personal Exemptions

Total: 24,850 deduction

How is losing $450 in baseline deductions a 'win'?

It's a win when you consider 403(b) stays and you plug in my family earnings into the new brackets.  Not to mention this bill will encourage economic growth, which I don't expect most people on this forum to believe but I am certainly bullish on America with this plan. 

boarder42

  • Walrus Stache
  • *******
  • Posts: 8838
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #314 on: November 02, 2017, 11:50:17 AM »
Quote from: boa
this all looks to be great for mustachians so far.

I think this looks disastrous for us, because we have mortgages on our rental houses as well as our personal residence.    Anybody who owns multiple rentals is likely to get hit by both the cap on mortgage interest and the one on property tax deduction.

And since I live in a state with high property taxes (now with a capped deduction) but with no income tax (still fully deductible), I lose out on both ends.  They kept the SALT break I can't use, and reduced the one I need.

The third strike is the loss of deductibility of rental losses.  We had to rehab a trashed rental this year, so it stayed vacant while we put thousands into it this summer, and we'll lose money on the property this year.  If this tax plan passes, situations like this one suddenly get way more expensive.

As a landlord, why would I ever improve a property if I pay extra taxes for doing so? Or buy one, if my interest and taxes aren't deductible?  This whole plan seems to absolutely brutalize residential landlords.  So far, I hate it.

I'd say this affects a very small portion of mustachians. I did a poll a while ago and over 90% were 4% swr with vtsax or some index fund equivalent. Very few were real estate.

CheapScholar

  • Pencil Stache
  • ****
  • Posts: 557
  • Location: The Midwest
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #315 on: November 02, 2017, 11:52:16 AM »
The child and parent tax credit increase esp for one child more than offsets the loss of the personal exemption

Ok JD in tax law. I can't decipher how charitable contributions count next year. Are the above the line so I can still deduct. And count on top of the standard deduction.

I do not believe so.  Per an article from Chronicle of Philanthropy, it is not above the line.  Plenty of articles out there talking about this large standard deduction severely reducing number of taxpayers who will itemize and whether they marginally win or lose.  I've never itemized in my life, fortunately.

If they don't separate it this will greatly hurt charities.

You are correct, and honestly that is unfortunate.  I've posted on this board before that we need to increase tax incentives for all income levels to give to charity.  This bill also places a 1.4% tax on endowment earnings at wealthy universities, which I'm philosophical opposed to.

ZiziPB

  • Magnum Stache
  • ******
  • Posts: 3339
  • Location: The Other Side
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #316 on: November 02, 2017, 11:54:14 AM »
My summary:
Income:
Standard deductible: 12.2k (single) / 24.4k (married filing jointly)
12% bracket limit: 45k / 90k
25% bracket limit: 200k / 260k
35% bracket limit: 500k / 1MM
39.6% bracket limit: more

Capital Gains:
0% bracket limit: 38.6k / 77.2k
15% bracket limit: 425k / 479k
20% bracket limit: more
I'll ask again because I think it's important.  The new language makes it seem like these are not cumulative like before?  In other words, a FIREd individual could have up to $38,600 long term capital gains taxed at zero AND do a Roth conversion up to $45K at 12%?  If so, that is a huge.

sol

  • Walrus Stache
  • *******
  • Posts: 8464
  • Age: 44
  • Location: Pacific Northwest
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #317 on: November 02, 2017, 11:55:18 AM »
Quote from: boa
this all looks to be great for mustachians so far.

I think this looks disastrous for us, because we have mortgages on our rental houses as well as our personal residence.    Anybody who owns multiple rentals is likely to get hit by both the cap on mortgage interest and the one on property tax deduction.

And since I live in a state with high property taxes (now with a capped deduction) but with no income tax (still fully deductible), I lose out on both ends.  They kept the SALT break I can't use, and reduced the one I need.

The third strike is the loss of deductibility of rental losses.  We had to rehab a trashed rental this year, so it stayed vacant while we put thousands into it this summer, and we'll lose money on the property this year.  If this tax plan passes, situations like this one suddenly get way more expensive.

As a landlord, why would I ever improve a property if I pay extra taxes for doing so? Or buy one, if my interest and taxes aren't deductible?  This whole plan seems to absolutely brutalize residential landlords.  So far, I hate it.

I'd say this affects a very small portion of mustachians. I did a poll a while ago and over 90% were 4% swr with vtsax or some index fund equivalent. Very few were real estate.

Is this a thread about how the proposed plan affects other people, or about how it affects us?

I'm also primarily an index investor, but we do own two accidental rentals from moving without selling our old home.  I'm not anywhere near "primarily" real estate, but this plan would still cost me thousands per year in new taxes.

DarkandStormy

  • Handlebar Stache
  • *****
  • Posts: 1452
  • Age: 32
  • Location: Midwest, USA
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #318 on: November 02, 2017, 12:00:04 PM »
Adds $1.51 trillion to the deficit.  "Fiscal" conservatives LMAO

sherr

  • Handlebar Stache
  • *****
  • Posts: 1543
  • Age: 36
  • Location: North Carolina, USA
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #319 on: November 02, 2017, 12:00:43 PM »
My summary:
Income:
Standard deductible: 12.2k (single) / 24.4k (married filing jointly)
12% bracket limit: 45k / 90k
25% bracket limit: 200k / 260k
35% bracket limit: 500k / 1MM
39.6% bracket limit: more

Capital Gains:
0% bracket limit: 38.6k / 77.2k
15% bracket limit: 425k / 479k
20% bracket limit: more
I'll ask again because I think it's important.  The new language makes it seem like these are not cumulative like before?  In other words, a FIREd individual could have up to $38,600 long term capital gains taxed at zero AND do a Roth conversion up to $45K at 12%?  If so, that is a huge.

They add together, now and before. So, ignoring the standard deduction:

You do a Roth conversion on $45k @ 12%, and then Capital Gains are taxed at 15%.
Or, you do a Roth conversion on $20k @ 12%, and then you can do $18.6k of Capital Gains at 0%.
« Last Edit: November 02, 2017, 12:12:30 PM by sherr »

ZiziPB

  • Magnum Stache
  • ******
  • Posts: 3339
  • Location: The Other Side
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #320 on: November 02, 2017, 12:04:18 PM »
If I were still working and making the money I'm making now next year and beyond, the change that would affect me most would be getting rid of AMT.  I've paid it for years and years.  It would be nice not having to worry about it.  Alas, I am now trying to figure out how these changes will affect me as an early retiree with significantly lower income...

bacchi

  • Walrus Stache
  • *******
  • Posts: 5938
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #321 on: November 02, 2017, 12:04:53 PM »
Quote from: boa
this all looks to be great for mustachians so far.

I think this looks disastrous for us, because we have mortgages on our rental houses as well as our personal residence.    Anybody who owns multiple rentals is likely to get hit by both the cap on mortgage interest and the one on property tax deduction.

And since I live in a state with high property taxes (now with a capped deduction) but with no income tax (still fully deductible), I lose out on both ends.  They kept the SALT break I can't use, and reduced the one I need.

The third strike is the loss of deductibility of rental losses.  We had to rehab a trashed rental this year, so it stayed vacant while we put thousands into it this summer, and we'll lose money on the property this year.  If this tax plan passes, situations like this one suddenly get way more expensive.

As a landlord, why would I ever improve a property if I pay extra taxes for doing so? Or buy one, if my interest and taxes aren't deductible?  This whole plan seems to absolutely brutalize residential landlords.  So far, I hate it.

I'd say this affects a very small portion of mustachians. I did a poll a while ago and over 90% were 4% swr with vtsax or some index fund equivalent. Very few were real estate.

Is this a thread about how the proposed plan affects other people, or about how it affects us?

I'm also primarily an index investor, but we do own two accidental rentals from moving without selling our old home.  I'm not anywhere near "primarily" real estate, but this plan would still cost me thousands per year in new taxes.

It's not at all clear that the rental mortgage deduction is capped. Rental expenses are not a Schedule A item, which is what this proposed law takes aim at.

Undecided

  • Handlebar Stache
  • *****
  • Posts: 1092
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #322 on: November 02, 2017, 12:13:38 PM »
Can't believe they're proposing a standard deduction of $24,000 (married) and keeping the 401(k) pretax deduction where it is.

I think this is a real win for frugal upper middle class people like me.

To be fair, they are eliminating exemptions. So really its only a difference of 2700 off your taxable income. Not huge in my opinion.

Frugal upper-middle class people in some states will lose their biggest itemized deduction (state and local income taxes) and many will start to take the (much smaller) standard deduction, but then again many of them were already having that part of their deduction disregarded in the AMT, and perhaps already had their exemptions phased out anyway. Some will see some income shifted down to 35%, but other income shifted up to 35%. Sort of hard to generalize. And maybe it won’t even pass.

SuperSecretName

  • Bristles
  • ***
  • Posts: 353
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #323 on: November 02, 2017, 12:15:32 PM »
seems like the loss of the 0% income tax bracket is a loss for those that FIRE and will do roth conversion.

bacchi

  • Walrus Stache
  • *******
  • Posts: 5938
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #324 on: November 02, 2017, 12:20:18 PM »
seems like the loss of the 0% income tax bracket is a loss for those that FIRE and will do roth conversion.

Doesn't the increased standard deduction help hide capital gains income? Or am I misunderstanding that part of the plan?

SuperSecretName

  • Bristles
  • ***
  • Posts: 353
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #325 on: November 02, 2017, 12:21:00 PM »
seems like the loss of the 0% income tax bracket is a loss for those that FIRE and will do roth conversion.

Doesn't the increased standard deduction help hide capital gains income? Or am I misunderstanding that part of the plan?
roth conversions count as income, not LTCG

sherr

  • Handlebar Stache
  • *****
  • Posts: 1543
  • Age: 36
  • Location: North Carolina, USA
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #326 on: November 02, 2017, 12:23:29 PM »
seems like the loss of the 0% income tax bracket is a loss for those that FIRE and will do roth conversion.

There never was a 0% tax bracket technically, there just sort-of-was for income <= the deductions. The standard deduction is increasing, so the "0%" bracket is actually getting larger.

Undecided

  • Handlebar Stache
  • *****
  • Posts: 1092
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #327 on: November 02, 2017, 12:24:22 PM »

And since I live in a state with high property taxes (now with a capped deduction) but with no income tax (still fully deductible), I lose out on both ends.  They kept the SALT break I can't use, and reduced the one I need.
.

I don’t think that’s right (although I’ve only been reading the bill in snippets)—while it caps the state and local property tax deduction, it seems to entirely eliminate the state and local income tax deduction. So my guess is that a similarly situated Oregonian paying 8%+ state income taxes would lose much more in itemized deduction than a Washingtonian loses via the property tax cap.
« Last Edit: November 02, 2017, 12:26:22 PM by Undecided »

CheapScholar

  • Pencil Stache
  • ****
  • Posts: 557
  • Location: The Midwest
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #328 on: November 02, 2017, 12:25:14 PM »
seems like the loss of the 0% income tax bracket is a loss for those that FIRE and will do roth conversion.

There never was a 0% tax bracket technically, there just sort-of-was for income <= the deductions. The standard deduction is increasing, so the "0%" bracket is actually getting larger.

But yet Republicans hate the poor.  Rable rable rable. 

SuperSecretName

  • Bristles
  • ***
  • Posts: 353
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #329 on: November 02, 2017, 12:27:20 PM »
seems like the loss of the 0% income tax bracket is a loss for those that FIRE and will do roth conversion.

There never was a 0% tax bracket technically, there just sort-of-was for income <= the deductions. The standard deduction is increasing, so the "0%" bracket is actually getting larger.
great point.  I knew I was missing something.

so for single, roth convert 12k, and cap gain 26.6k for all 0%.

This seems to be a slight improvement to the current tax system.
« Last Edit: November 02, 2017, 12:30:33 PM by SuperSecretName »

sunnyca

  • Bristles
  • ***
  • Posts: 411
  • Age: 40
  • Location: Orange County, CA
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #330 on: November 02, 2017, 12:36:22 PM »
PTF

sherr

  • Handlebar Stache
  • *****
  • Posts: 1543
  • Age: 36
  • Location: North Carolina, USA
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #331 on: November 02, 2017, 12:36:31 PM »
seems like the loss of the 0% income tax bracket is a loss for those that FIRE and will do roth conversion.

There never was a 0% tax bracket technically, there just sort-of-was for income <= the deductions. The standard deduction is increasing, so the "0%" bracket is actually getting larger.

But yet Republicans hate the poor.  Rable rable rable.

You're not going to get any sympathy from me. I agree that this seems to be mostly-fine for the poor and middle class. I agree that this seems to be a return to "rational Republicanism", which I'm very glad to see after the "well we propagandised that Obamacare was terrible, so destroy it!" nonsense from earlier.

However it's also true that this is a huge give away for the very-rich. Repealing the AMT, repealing the estate tax (after 6 years), not repealing the deductions that the very-rich actually benefit off of (remember the "I will repeal the Carried Interest loophole" Trump?). This helps them much more than it helps us, and it is intended to.

And it will balloon the deficit (how could a tax-cut-for-everyone not?). And we all know that the next step in their grand plan is "Wow look how big the deficit is, we have to cut the entitlement spending from these crazy Democrats that are ruining the country!" We know because it has happened before. And they're repeating exactly the same process and just assuming that all their voters are too dumb to notice or too self-interested to care.

ZiziPB

  • Magnum Stache
  • ******
  • Posts: 3339
  • Location: The Other Side
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #332 on: November 02, 2017, 12:37:20 PM »
seems like the loss of the 0% income tax bracket is a loss for those that FIRE and will do roth conversion.

There never was a 0% tax bracket technically, there just sort-of-was for income <= the deductions. The standard deduction is increasing, so the "0%" bracket is actually getting larger.
great point.  I knew I was missing something.

so for single, roth convert 12k, and cap gain 26.6k for all 0%.

This seems to be a slight improvement to the current tax system.
I don't think so.  You could have more capital gains untaxed under the old system.
The old "up to 15%" meant $37,950 plus standard deduction and personal exemption, so effectively about $48,000 total before your capital gains would be taxable.  Now, all you get is $38,600. 

Unless that's $38,600 plus $12K standard deduction???
« Last Edit: November 02, 2017, 12:39:50 PM by ZiziPB »

sherr

  • Handlebar Stache
  • *****
  • Posts: 1543
  • Age: 36
  • Location: North Carolina, USA
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #333 on: November 02, 2017, 12:43:54 PM »
seems like the loss of the 0% income tax bracket is a loss for those that FIRE and will do roth conversion.

There never was a 0% tax bracket technically, there just sort-of-was for income <= the deductions. The standard deduction is increasing, so the "0%" bracket is actually getting larger.
great point.  I knew I was missing something.

so for single, roth convert 12k, and cap gain 26.6k for all 0%.

This seems to be a slight improvement to the current tax system.
I don't think so.  You could have more capital gains untaxed under the old system.
The old "up to 15%" meant $37,950 plus standard deduction and personal exemption, so effectively about $48,000 total before your capital gains would be taxable.  Now, all you get is $38,600. 

Unless that's $38,600 plus $12K standard deduction???

Plus. So it's pretty similar, $48k before, $50.6k now.

Undecided

  • Handlebar Stache
  • *****
  • Posts: 1092
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #334 on: November 02, 2017, 12:52:06 PM »
seems like the loss of the 0% income tax bracket is a loss for those that FIRE and will do roth conversion.

There never was a 0% tax bracket technically, there just sort-of-was for income <= the deductions. The standard deduction is increasing, so the "0%" bracket is actually getting larger.

But yet Republicans hate the poor.  Rable rable rable.

You're not going to get any sympathy from me. I agree that this seems to be mostly-fine for the poor and middle class. I agree that this seems to be a return to "rational Republicanism", which I'm very glad to see after the "well we propagandised that Obamacare was terrible, so destroy it!" nonsense from earlier.

However it's also true that this is a huge give away for the very-rich. Repealing the AMT, repealing the estate tax (after 6 years), not repealing the deductions that the very-rich actually benefit off of (remember the "I will repeal the Carried Interest loophole" Trump?). This helps them much more than it helps us, and it is intended to.

And it will balloon the deficit (how could a tax-cut-for-everyone not?). And we all know that the next step in their grand plan is "Wow look how big the deficit is, we have to cut the entitlement spending from these crazy Democrats that are ruining the country!" We know because it has happened before. And they're repeating exactly the same process and just assuming that all their voters are too dumb to notice or too self-interested to care.

I doubt that the repeal of the AMT has much meaning to the very rich, if that means people with massive assets and the associated qualified dividend- and capital gains-driven incomes. It has some meaning to people with large wage incomes (although few that crack “the 1%”), but playing with the rates and brackets, and eliminating the state income tax deduction (considering how many of them are in high-tax CA, NY, NJ, MA and IL) means many of them are the ones paying for others’ cuts.

Inaya

  • Handlebar Stache
  • *****
  • Posts: 1643
  • Age: 36
  • Location: Land of Entrapment
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #335 on: November 02, 2017, 01:09:54 PM »
seems like the loss of the 0% income tax bracket is a loss for those that FIRE and will do roth conversion.

There never was a 0% tax bracket technically, there just sort-of-was for income <= the deductions. The standard deduction is increasing, so the "0%" bracket is actually getting larger.

But yet Republicans hate the poor.  Rable rable rable.

You're not going to get any sympathy from me. I agree that this seems to be mostly-fine for the poor and middle class. I agree that this seems to be a return to "rational Republicanism", which I'm very glad to see after the "well we propagandised that Obamacare was terrible, so destroy it!" nonsense from earlier.

However it's also true that this is a huge give away for the very-rich. Repealing the AMT, repealing the estate tax (after 6 years), not repealing the deductions that the very-rich actually benefit off of (remember the "I will repeal the Carried Interest loophole" Trump?). This helps them much more than it helps us, and it is intended to.

And it will balloon the deficit (how could a tax-cut-for-everyone not?). And we all know that the next step in their grand plan is "Wow look how big the deficit is, we have to cut the entitlement spending from these crazy Democrats that are ruining the country!" We know because it has happened before. And they're repeating exactly the same process and just assuming that all their voters are too dumb to notice or too self-interested to care.

I doubt that the repeal of the AMT has much meaning to the very rich, if that means people with massive assets and the associated qualified dividend- and capital gains-driven incomes. It has some meaning to people with large wage incomes (although few that crack “the 1%”), but playing with the rates and brackets, and eliminating the state income tax deduction (considering how many of them are in high-tax CA, NY, NJ, MA and IL) means many of them are the ones paying for others’ cuts.
So this is basically Blue states paying for Red states yet again? Or am I misunderstanding?

boarder42

  • Walrus Stache
  • *******
  • Posts: 8838
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #336 on: November 02, 2017, 01:14:32 PM »
where was state income tax done away with.  i saw property tax deductions capped at 10k but i saw nothing about eliminating state and local income deductions unless it was just  a delete this paragraph line item.

sherr

  • Handlebar Stache
  • *****
  • Posts: 1543
  • Age: 36
  • Location: North Carolina, USA
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #337 on: November 02, 2017, 01:24:03 PM »
So this is basically Blue states paying for Red states yet again? Or am I misunderstanding?

You are not misunderstanding. That was a "feature" of the Cassidy-Graham Obamacare replacement too.

"Well who knows why, but these blue states seem to get way more federal dollars than red states and I think that's unfair!" - Lindsey Graham
(Hint, blue states expanded Medicaid. Red states could do that too.)
https://slate.com/business/2017/09/lindsey-graham-and-bill-cassidy-have-a-really-bad-excuse-for-taking-money-from-blue-states.html

Of course in general Democratic states will tend to subsidize Republican states, since Democratic states tend to be rich and get richer and Republican states tend to be poor and get poorer. But yes they are very intentionally trying to accelerate the process.

dandarc

  • Magnum Stache
  • ******
  • Posts: 4737
  • Age: 39
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #338 on: November 02, 2017, 01:29:57 PM »
where was state income tax done away with.  i saw property tax deductions capped at 10k but i saw nothing about eliminating state and local income deductions unless it was just  a delete this paragraph line item.
I think it is on pages 104 / 105 of the bill text.

Quote
‘‘(D) subsection (a)(3) shall not apply to
4 State and local taxes.’’.

Section 164(a)(3) is the deduction for state, local, and foreign income taxes.

NextTime

  • Pencil Stache
  • ****
  • Posts: 806
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #339 on: November 02, 2017, 01:36:42 PM »
So basically a family with 2 children taking the standard deduction will come out $3,100 worse off with this plan? 

Is my math correct?

Currently:
Std Deduction = $12,700
Personal Exemptions = 4(4050) = $16,200
Child Tax Credit = 2(1000) = $2,000
Total = $30,900

Proposed:
Std Deduction = $24,000
Child Tax Credit = 2(1600) = $3200
Family Tax Credit = 2(300) = $600
Total = $27,800


ZiziPB

  • Magnum Stache
  • ******
  • Posts: 3339
  • Location: The Other Side
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #340 on: November 02, 2017, 01:42:34 PM »
So basically a family with 2 children taking the standard deduction will come out $3,100 worse off with this plan? 

Is my math correct?

Currently:
Std Deduction = $12,700
Personal Exemptions = 4(4050) = $16,200
Child Tax Credit = 2(1000) = $2,000
Total = $30,900

Proposed:
Std Deduction = $24,000
Child Tax Credit = 2(1600) = $3200
Family Tax Credit = 2(300) = $600
Total = $27,800
You are conflating deductions with tax credits.  You can't add the two together.

Undecided

  • Handlebar Stache
  • *****
  • Posts: 1092
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #341 on: November 02, 2017, 01:42:45 PM »
So this is basically Blue states paying for Red states yet again? Or am I misunderstanding?

You are not misunderstanding. That was a "feature" of the Cassidy-Graham Obamacare replacement too.

"Well who knows why, but these blue states seem to get way more federal dollars than red states and I think that's unfair!" - Lindsey Graham
(Hint, blue states expanded Medicaid. Red states could do that too.)
https://slate.com/business/2017/09/lindsey-graham-and-bill-cassidy-have-a-really-bad-excuse-for-taking-money-from-blue-states.html

Of course in general Democratic states will tend to subsidize Republican states, since Democratic states tend to be rich and get richer and Republican states tend to be poor and get poorer. But yes they are very intentionally trying to accelerate the process.

Well, it's high-income wage earners in those states, mostly, rather than everyone. Equally-high-income business owners are essentially restored or made better off by capping their business income at 25%.

boarder42

  • Walrus Stache
  • *******
  • Posts: 8838
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #342 on: November 02, 2017, 01:42:54 PM »
So basically a family with 2 children taking the standard deduction will come out $3,100 worse off with this plan? 

Is my math correct?

Currently:
Std Deduction = $12,700
Personal Exemptions = 4(4050) = $16,200
Child Tax Credit = 2(1000) = $2,000
Total = $30,900

Proposed:
Std Deduction = $24,000
Child Tax Credit = 2(1600) = $3200
Family Tax Credit = 2(300) = $600
Total = $27,800



incorrect b/c the credit are credits not deductions.  so it depends on the bracket you're in for the tax credits to be depicted properly but a 25% bracketeer would see 3800/.25 return or 15200 should be added to the bottom line not just 3800

and the 2000 from the top would be 2000/.25 or 8k

if you take the standard deductions you came out ahead here. if you itemized you may have lost

So original should be 36900

Proposed will be 39200 in the 25% bracket as the top end of your income.  if youre in the 12% that gap gets wider.
« Last Edit: November 02, 2017, 01:45:38 PM by boarder42 »

NextTime

  • Pencil Stache
  • ****
  • Posts: 806
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #343 on: November 02, 2017, 01:51:22 PM »
So basically a family with 2 children taking the standard deduction will come out $3,100 worse off with this plan? 

Is my math correct?

Currently:
Std Deduction = $12,700
Personal Exemptions = 4(4050) = $16,200
Child Tax Credit = 2(1000) = $2,000
Total = $30,900

Proposed:
Std Deduction = $24,000
Child Tax Credit = 2(1600) = $3200
Family Tax Credit = 2(300) = $600
Total = $27,800



incorrect b/c the credit are credits not deductions.  so it depends on the bracket you're in for the tax credits to be depicted properly but a 25% bracketeer would see 3800/.25 return or 15200 should be added to the bottom line not just 3800

and the 2000 from the top would be 2000/.25 or 8k

if you take the standard deductions you came out ahead here. if you itemized you may have lost

So original should be 36900

Proposed will be 39200 in the 25% bracket as the top end of your income.  if youre in the 12% that gap gets wider.


Thanks Boarder.

ZiziPB

  • Magnum Stache
  • ******
  • Posts: 3339
  • Location: The Other Side
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #344 on: November 02, 2017, 01:52:03 PM »
Now that we know the details in this bill, anyone care to speculate on the chances of its passing?

dandarc

  • Magnum Stache
  • ******
  • Posts: 4737
  • Age: 39
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #345 on: November 02, 2017, 01:55:06 PM »
Now that we know the details in this bill, anyone care to speculate on the chances of its passing?
They might be re-writing it this weekend, so not sure how many details we actually have.  I'd bet even the folks who wrote the bill don't think this will pass.  "Well, we tried to pass tax cuts for damn near everyone, but those darn democrats blocked it in the senate!" might be all the republicans want / need out of this bill.

DarkandStormy

  • Handlebar Stache
  • *****
  • Posts: 1452
  • Age: 32
  • Location: Midwest, USA
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #346 on: November 02, 2017, 02:01:35 PM »
Section 1204 - axes the student loan deduction (+$47.5 billion for the govt. over 10 years).

Section 1601 - the govt. loses $127b in revenue by doubling the exemption for estate transfers (from $5m to $10m).

Section 3001 - dropping the corporate rate to a flat 20% costs the U.S. $1.5 trillion over 10 years.

Republicans cannot claim to be fiscal conservatives any longer.  It's a lie.

sherr

  • Handlebar Stache
  • *****
  • Posts: 1543
  • Age: 36
  • Location: North Carolina, USA
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #347 on: November 02, 2017, 02:16:44 PM »
Now that we know the details in this bill, anyone care to speculate on the chances of its passing?

I think it's probably still pretty low, but close. I think if they just left the estate tax alone and maybe one other thing, add back in the AMT or strike the Carried Interest tax for example, that their chances would be a lot better.

On the other hand I think the Republicans need to do something or they're going to get killed in the midterms, and I think they think that too, so I would not be surprised if they pass it as-is.

Undecided

  • Handlebar Stache
  • *****
  • Posts: 1092
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #348 on: November 02, 2017, 02:19:34 PM »
Now that we know the details in this bill, anyone care to speculate on the chances of its passing?

I think it's probably still pretty low, but close. I think if they just left the estate tax alone and maybe one other thing, add back in the AMT or strike the Carried Interest tax for example, that their chances would be a lot better.

On the other hand I think the Republicans need to do something or they're going to get killed in the midterms, and I think they think that too, so I would not be surprised if they pass it as-is.

I don't know the numbers, but if they eliminate the state income tax deduction, I doubt many would pay significant AMT.

maizefolk

  • Walrus Stache
  • *******
  • Posts: 6207
Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #349 on: November 02, 2017, 03:09:59 PM »
So basically a family with 2 children taking the standard deduction will come out $3,100 worse off with this plan? 

Is my math correct?

Currently:
Std Deduction = $12,700
Personal Exemptions = 4(4050) = $16,200
Child Tax Credit = 2(1000) = $2,000
Total = $30,900

Proposed:
Std Deduction = $24,000
Child Tax Credit = 2(1600) = $3200
Family Tax Credit = 2(300) = $600
Total = $27,800



incorrect b/c the credit are credits not deductions.  so it depends on the bracket you're in for the tax credits to be depicted properly but a 25% bracketeer would see 3800/.25 return or 15200 should be added to the bottom line not just 3800

and the 2000 from the top would be 2000/.25 or 8k

if you take the standard deductions you came out ahead here. if you itemized you may have lost

So original should be 36900

Proposed will be 39200 in the 25% bracket as the top end of your income.  if youre in the 12% that gap gets wider.

Yup. A deduction like the personal exemption is worth more for people in high marginal tax brackets than for people in low marginal tax brackets. A credit is equally valuable to both.

The net effect for a family of 4 is a loss of $4,900 of tax deduction/exemption and a gain of $1,800 in tax credits. So it's a net win for families of four with marginal tax rates below (1,800/4,900) = 36.7% (so given the new proposed tax brackets couples with taxable income of less than $1M/year).

This part of the bill (in isolation) actually makes the tax code more progressive, not less.