Republican Tax Plan

[chemmie]

Severely limiting pre-tax 401K contributions and eliminating deductions for state and local taxes.

How do you guys feel about taxes going up for 90+% of normal Americans? Republicans aren't even trying to pull the wool over our eyes anymore, they are just going to sodomize all of us right in the open.

 

[NinjaKnight]

[citation needed]

 

[UCFWayne]

werent you a bernie guy?

 

[Bob the Citronaut]

They haven't even released the tax plan yet... Keep faux raging Crying Chuck.

 

[Great2BAKnight2]

Eliminating the local/state tax deductions doesn't mean much. Many people use the standard deduction and don't itemize, so eliminating an itemized deduction has no impact for them.

The 401k deduction would have a big impact. That is a deduction taken "above the line" and doesn't count towards itemizing. I can't imagine Wall Street would allow the government to siphon taxes from money that would have came to them un-taxed.

 

[UCFBS]

If they boost Roth 401k contribution limits, I'm -- personally -- all for it. The more I can save now, post-tax, that I can withdraw, without tax, I'd love it! That gives more money to the federal government now, that I will have later.

But I'm not like 90% of people.

And that's why Wall Street hates it, so Trump as well. People won't save if it's not pre-tax, and that's never good. So pre-tax (regular) 401k must remain, even though it hurts revenue.

The bigger problem is this ...
- We are spending more money than we can get in revenue, and ...
- The highest income tax brackets -- even if raised -- will not solve that problem, and worst of all ...
- The US has the highest corporate tax rate in the world, and was #2 for decades, resulting in no new investments

In the US, corporate taxes pay far more than in the rest of the developing world. Worse still? The "social welfare" payout is rather poor in comparison to those nations too. Too much special interest and waste. Then you have endless tax credits that were designed to help the poor, but the middle class gets as well.

And that's where it really gets smelly. Because ...
- As much as people talk about the rich getting richer ...
- The upper middle class, the top 20%, are also getting richer, and ...
- They pay far less tax today, than in 1979, even a bigger ratio of more income/wealth v. tax than the top 1%

So, what really needs to happen, but no one will do?
- The corporate rate needs to be slashed in half
- It should be paired by making human (salary) expenses a better write-off
- The top 20% middle class tax rate needs to go up, possibly even to 40%
- For small/self-employed, this also needs to be paired with the human (salary) expense write-offs

The idea here is this ...
- We want to give everyone incentives to invest their discretionary income
- Whether you are the top 1% or the top 20%, same "ability to do go"
- And the more that investment pays salaries, the better, hence those incentives

The problem?

That top 20% considers themselves "middle class." We haven't been able to write a new tax code that addresses that. Not only did Bush Sr. raise taxes, and lose the Presidency, but Clinton did as well, and the Democrats got slaughtered in 1994 as a result of the revenue falling short, which undermined the entire tax increase.

We've passed tax credit after tax credit since. That's why the code is a mess. The middle class -- especially the top 20% that makes so much more now, but pays half as much as they did in 1979 -- is totally against it. Small businesses don't want it either, especially self-employed or only a few.

So ... what the Republicans are trying to do here is find a way to increase revenue without raising the tax brackets. It's not going to ever fly, and is only going to piss everyone off ... including Wall Street that relies on 401k investments. It would never make it into the code, but the second someone brought it up, I'm sure it leaked so it would never be considered.

Bi-partisan support for 401k continues, and will never end.

Unfortunately, bi-partisan support for not increasing taxes on the middle class -- not even on the upper 20% -- is also the problem.

It cannot just be the 1%, or even 2-5% of the successful small business owners (US$250K+/year), but really needs to be the top 20% of earners. And that's never going to fly either.

I've long been for ...
- Simplifying the taxcode, and putting a 40% "flat tax" on around $100K+
- Limit deductions to kids at around $10K/each, up to 3 (diminishes on more than 3)
- Use a split corporate/employment tax that is reduces for more expenses that are labor (encourage salaried and hourly wage earners)
- Force any "repatriation" tax reductions to have to go at least 75%+ to labor (not letting companies just buy back stock, like happened under W.)

And you have to make them permanent, so businesses will re-invest in the US. This "it'll change during the next administration" keeps companies from investing in the US.

 

[UCFBS]

They haven't even released the tax plan yet... Keep faux raging Crying Chuck.

But there is good evidence that at least one Republican brought it up. It's come up before. It's easier to do that than raise taxes on the middle class.

But Wall Street hates even the suggestion, and that's why Trump does as well. And the real problem is that Americans don't save unless there is a tax incentive ... NOW. It cannot be a deferred tax savings, or even elimination, like with Roth 401K, Roth IRA, etc... They just won't save nearly as much, and that will hurt Wall Street.

Since the mid '00s, I've been putting 50% traditional 401k and 50% Roth 401k, as I know one will eventually be taxed less in the end. If the Republicans made it so I could get more "pay more tax now, pay less tax later," I'd be all for it.

But most Americans would not, and it would hurt Wall Street in the end.

 

[UCFWayne]

How does the plan look now? Good/bad/about the same?

 

[Bob the Citronaut]

How does the plan look now? Good/bad/about the same?

Chemmie was completely wrong and was just faux raging over what Chuck and Nancy were lying about.

 

[UCFWayne]

Chemmie was completely wrong and was just faux raging over what Chuck and Nancy were lying about.

thats what he does. that said, how does the new plan look?

 

[Bob the Citronaut]

I haven't looked at it myself but from what I've heard and read it will be good for business and a small bump for individuals. The rich are still being unfairly and unequally taxed though because the GOP is still afraid of the Dems faux raging.

 

[CommuterBob]

It's largely as expected - cut down to 4 tax brackets:
Married filing jointly:
$0-$24k - 0%
$24k-$90k - 12%
$90k-$240k - 25%
$240k - $1M - 35%
$1M+ - 36.9%

Most exemptions removed, including deductibility of business expenses, student loan interest, donations required to purchase college football tickets, and medical expenses. Modifications to the deductibility of mortgage interest (all new purchases would be capped at $500K for deductibility of interest), state and local taxes, and child care credits - but for most folks the expanded standard deduction would cover these vs. what they pay now and then some.

I don't hate it. I just wonder how it changes moving forward.

 

[UCFBS]

It's largely as expected - cut down to 4 tax brackets:
Married filing jointly:
$0-$24k - 0%
$24k-$90k - 12%
$90k-$240k - 25%
$240k - $1M - 35%
$1M+ - 36.9%

Most exemptions removed, including deductibility of business expenses, student loan interest, donations required to purchase college football tickets, and medical expenses. Modifications to the deductibility of mortgage interest (all new purchases would be capped at $500K for deductibility of interest), state and local taxes, and child care credits - but for most folks the expanded standard deduction would cover these vs. what they pay now and then some.

I don't hate it. I just wonder how it changes moving forward.

Most of it is targeted at people ...

• Making (income, not wealth) $1M+ (highest bracket)
• Buying $500K+ (expensive) houses
• Making a lot in states with high state tax brackets -- e.g., max $20K deduction
  • $400K+ in 5%+ state
  • $200K+ in 10%+ state

Very upper middle (and higher) in California and New York hate it. I don't have a problem with it. I kinda like it because it puts pressure on those states to lower their state income tax rates.

 

[goodknightfl]

I am all for doing away with state n local income tax deductions. It is a huge tax on dems who love taxes. NY, ILL, Calif, Conn will take huge hits while wont effect Floridians, and Tenn people at all.

 

[UCFBS]

I am all for doing away with state n local income tax deductions. It is a huge tax on dems who love taxes. NY, ILL, Calif, Conn will take huge hits while wont effect Floridians, and Tenn people at all.

Just go after the very high income earners. They're the ones that are always pushing for higher taxes on everyone, and vote Democratic.

 

[chemmie]

I am all for doing away with state n local income tax deductions. It is a huge tax on dems who love taxes. NY, ILL, Calif, Conn will take huge hits while wont effect Floridians, and Tenn people at all.

We get to deduct state sales tax, so it does affect us.

 

[UCFBS]

We get to deduct state sales tax, so it does affect us.

Under the Republican plan, up to $20K is still allowed. Again, it affects people 5x+ the poverty line, above 90% of the middle class.

Again, I like it because it penalizes people in states that overtax. I now live and work in Alabama, which has 5% above $3K (so, essentially, 5%). So I have to make $400K before I don't get to deduct it.

Spoiler

I don't make even 1/3rd of that now that I've taken another FTE position.

In fact, this is the first year since 2005 that I'm not maxing out my SS payroll deductions.

I miss that 'little bonus' come July - October, which depended on my 401k contributions (which are awesome if one is self-employed), as well as stock and bonuses for some clients, or a past employer where I was a consultant.

 

[KnighttimeJoe]

Under the Republican plan, up to $20K is still allowed. Again, it affects people 5x+ the poverty line, above 90% of the middle class.

Again, I like it because it penalizes people in states that overtax. I live in Alabama, which has 5% above $3K (so, essentially, 5%). So I have to make $400K before I don't get to deduct it. I don't make even 1/3rd of that now that I've taking a FTE position.

It will be interesting to see how republicans from those states will vote.

 

[UCFBS]

It will be interesting to see how republicans in those states will vote.

They are probably more concerned with the ACA changes, than the tax plan.

Now it is funny to watch people complain about Trump throwing a wrench into the ACA, to force Congress to address it (or not), when the ACA itself was a major wrench in the first place.

Spoiler

I.e., beyond the sheer cost of the system -- which covers less people for more money, than socialized medicine -- it was never funded, plus the states won their case (which was never covered by the mainstream media well) to prevent the US gov't from pushing the liabilities on them.

Even as a Libertarian, I think we've reached the point where a "lowest common denominator" socialized healthcare system would save money and cover the basics for more people. But yes, it will be as bad as the UK system, which means we'll need to do what the UK didn't ... not outlaw supplements, allowing the "private healthcare" to thrive on its own, above it. Just like Medicare supplement plans exist.

That's the only way I would support such. I have to have the right and choice to a "buy-up" plan so the government cannot kill me off. Because unlike private insurance companies, who we can sue as private citizens, we cannot sue the government. Just look at the UK system. You have no right to a 2nd opinion. You have no option to get a lawyer ... and the few times people have, they've always lost.

Even just trying to take their kid to the US, away from the UK.

 

[Bob the Citronaut]

We get to deduct state sales tax, so it does affect us.

The rich that itemize do. The middle class and lower class will use the doubled standard deduction. Why are you trying to protect the rich?

 

[UCFBS]

The rich that itemize do.

Indeed.

And that's what we're talking about here. Forcing them to either incorporate or eat the taxes, while 90% of the middle class still gets most of their existing deductions, below the cut-off they never hit.

I've done both Schedule A and Schedule C. I love being on Schedule C, especially with a Standard Deduction. Schedule A sux in comparison.

The middle class and lower class will use the doubled standard deduction.

Yep, and doubling it would do a lot.

Why are you trying to protect the rich?

Indeed.

 

[UCF11and1]

I want to see the deficit under this plan. I don't think they are paying for all the cuts

 

[UCFBS]

I want to see the deficit under this plan. I don't think they are paying for all the cuts

Nope, they are not. It doesn't work without cutting spending either.

Although it will like result in the upper middle class -- the top 20% -- paying more taxes. But from what I've seen, there's still a reduction in revenue, short-term.

The Republicans are hoping there are long-term investments, with the corporate tax rates coming down. But if they don't incentivize it correctly, corporations might not hire people, but just re-invest in their stock instead.

The best thing the Republicans ever did was give Bill Clinton the line item veto. It helped him get a lot of riders and pork removed. It quickly adds up.

Of course, Bill got the benefit of all the revenue generated as the result of "false (and later lost) wealth" created during the .COM boom, where people were issued stocks counted as income, or exercised options that moved the tax liability from the company to the employee and was also taxed as income (not just later gain when sold), and then it was worthless later -- but the government had already been paid the tax for the initial income/gain.

And W. got stuck with that check in the .COM bust that finally led to not only a revenue drop-off late in Bill's term (especially after the election in the Q4 results), but the layoffs of March-April. Layoffs destroy revenue as individual income taxes make up the bulk of the US gov't's.

And then there was the added pork of the Iraq War, which was more costly than the war itself, etc...

And we're still paying (and loading up our debt even further) as a result of the housing bust.

Each time we add debt, we seem to act like "oh, it's just a fact." Well, debt exceeding GDP is not looking good for us ... let alone just the interest on it.

 

[chemmie]

The rich that itemize do. The middle class and lower class will use the doubled standard deduction. Why are you trying to protect the rich?

You don't itemize?
Oh yea, you live in a hand-me-down trailer. Anyone who mortgages a home itemized. And now they lose most of their deductions.

 

[UCFBS]

You don't itemize?
Oh yea, you live in a hand-me-down trailer.

Yes, I grew up "White Trash Oviedo" (before it built up, and still only had 2-lane and dirt roads into town) and bought a "$65K fixer" because it was all I could afford while putting my wife though school, finishing my Engineering degree at UCF at the same time, making $40K/year working a couple of jobs (luckily I finally got a single salary in the same year).

Hence ...

Anyone who mortgages a home itemized.

^ This is hallmark upper middle class arrogance. You argue you're middle class, but you're actually complaining about things that only affect the top 10-20%.

My home interest was about 30-40% the standard deduction for a married couple at the time (yes, I married before graduating, to the dislike of my parents, as I broke my promise).

Also, the Republicans are talking about putting limits on, not removing, deductions ... as well as doubling the standard deduction. Those limits will only affect, again, upper middle class.

Now ... if they remove charitable contributions from deductions, then they're just as bad as the Democrats with their "Fair Share" argument -- which counts "charity" as a "non-deduction" (taxable) too. I'll be on them about that, absolutely. Understand the Democratic party has been making that sleight-of-hand argument, that charity should not be removed from gross income, to make their "Fair Share" case.

And now they lose most of their deductions.

The standard deduction is being doubled. That means, even at a 5% interest rate, you'll have to have a balance of over $400,000 to hit $20K/year in interest in the first year (take about $1.5K off per year for 15 year, just under $1K year for 30).

Again, people who are well-to-do, at least 4-5x the poverty-level, have those types of homes and loans. Seriously. Again, this is upper middle class arrogance at its finest.

 

[Bob the Citronaut]

You don't itemize?
Oh yea, you live in a hand-me-down trailer. Anyone who mortgages a home itemized. And now they lose most of their deductions.

I've always done the math both ways. The years I had a big purchase like a truck or boat I itemized. The other years I went with the standard. I won't need to itemize with doubling the standard deduction. You sound like a whiny hypocrite that doesn't want to pay their fair share.

 

[UCFBS]

I've always done the math both ways. The years I had a big purchase like a truck or boat I itemized. The other years I went with the standard. I won't need to itemize with doubling the standard deduction. You sound like a whiny hypocrite that doesn't want to pay their fair share.

Democrats use "Fair Share" as a "shutdown word/phrase" when it suits them. Now they are complaining about the upper middle class (along with the higher millionaires) not getting itemized deductions, not realizing that's exactly what President Obama was arguing to take away too!

As I used to say to Progressives about 'Fair Share,' "So charity is competition for the US gov't, right? It should be taxed as income?"

As I always put to my Progressive friends, how about a 'Flat Tax, but Progressive Charity Rate?' But you can only give money to charities, as tax deductible, if they are rated as at least 4-star (out of 5-stars) by at least 3 independent rating entities that are certified by the gov't every decade (like the decennial census).

Several Liberals I am good friends with actually like that idea. Not one single Progressives likes it. Of course I start using the Clinton Foundation and, worse yet, Clinton Global Initiative as charities, and that gets my Liberal friends to chuckle, at the expense of the Progressives.

As always, I'm a really annoying Libertarian. When I see hypocrisy, I call it out. Most Liberals recognize this, as do true Conservatives. But Progressives and Neo-Conservatives don't.

 

[Great2BAKnight2]

The standard deduction doubling eliminates the personal exemptions and only accounts for 3 people. A family of 4 who uses the standard deduction will find themselves having more income taxed than before, although at a lower rate.

Just as an example, I bought a house this year and will certainly be itemizing with 4 exemptions. Under the new tax plan, I likely won't be itemizing (or at least it will be close) and I'll lose the personal exemptions. I'm likely to expose a significant amount to more taxes under that new plan.

There will be winners and losers in the new plan. Larger middle class families will lose. Lower income single filers or childless couples will win.

 

[Great2BAKnight2]

I'm not a fan of removing the state/local tax deduction. I get that Trump is trying to create outcry at local officials to push taxes down across the board, rather than have the federal government shoulder all of the revenue loss. However, I can't wrap my head around paying federal income taxes on money that goes directly to the state and local governments. Anything that is a mandatory payment (state/local taxes, health insurance, etc.) should be an "above the line" deduction (pre Social Security, Medicare, and Income Taxes).

 

[UCFBS]

The standard deduction doubling eliminates the personal exemptions and only accounts for 3 people. A family of 4 who uses the standard deduction will find themselves having more income taxed than before, although at a lower rate.
Just as an example, I bought a house this year and will certainly be itemizing with 4 exemptions. Under the new tax plan, I likely won't be itemizing (or at least it will be close) and I'll lose the personal exemptions. I'm likely to expose a significant amount to more taxes under that new plan.
There will be winners and losers in the new plan. Larger middle class families will lose. Lower income single filers or childless couples will win.

Larger ... or higher income middle class families? If the rate is lower, that will definitely factor in.

I have no problem with people making 6 figures paying more. And yes, this would affect my wife and I too.

 

[Great2BAKnight2]

Larger ... or higher income middle class families? If the rate is lower, that will definitely factor in.

I have no problem with people making 6 figures paying more. And yes, this would affect my wife and I too.

Larger as in more kids. Those families will lose due to the loss of exemptions. Even if they had $30k in itemized deductions. Under the current plan it would be $30k plus the personal exemptions. New plan would just be $30k, maybe less since some deductions are going away.

 

[LA-Knights]

Has to be the worst tax analysis I’ve ever read or the funniest. Can’t decide.

This tax law bill is a shit sandwich. There is no spin. Cutting corporate taxes won’t do shit. Corps go other places because wages are so low we can’t compete or there are little to no regulations. We are a global economy. US corporate tax rates are not bringing jobs back. The few they do won’t matter in the grande scheme of things.

Consolidated tax brackets only increase effective rates. People with children in college lose. People taking care of parents lose. All above the line deductions are about gone.

Spin it how you want, just don’t bitch when you get the bill.

 

[sk8knight]

Has to be the worst tax analysis I’ve ever read or the funniest. Can’t decide.

This tax law bill is a shit sandwich. There is no spin. Cutting corporate taxes won’t do shit. Corps go other places because wages are so low we can’t compete or there are little to no regulations. We are a global economy. US corporate tax rates are not bringing jobs back. The few they do won’t matter in the grande scheme of things.

Consolidated tax brackets only increase effective rates. People with children in college lose. People taking care of parents lose. All above the line deductions are about gone.

Spin it how you want, just don’t bitch when you get the bill.

If you're going to bring up regulations, you have to at least be honest and say that the current administration is cutting regulations as well. Labor, on the other hand, is the largest constraint, however in many industries it may even out if tax and regulatory burdens are lessened.

 

[fabknight]

Has to be the worst tax analysis I’ve ever read or the funniest. Can’t decide.

This tax law bill is a shit sandwich. There is no spin. Cutting corporate taxes won’t do shit. Corps go other places because wages are so low we can’t compete or there are little to no regulations. We are a global economy. US corporate tax rates are not bringing jobs back. The few they do won’t matter in the grande scheme of things.

You do realize that most corporations are just small businesses and not large publicly traded entities, right? Cut taxes on these small businesses and they are more likely to be able to afford to reinvest and hire.

 

[Great2BAKnight2]

Perhaps it's worth a look at how Apple repatriates its money tax-free to an offshore tax-shelter, I think I saw it was in the hundreds of billions. Talk about a drain on the economy if all of the Fortune 500 companies are doing this and keeping capital out of circulation in the economy and avoiding taxation. At a minimum it might be a loop hole to look into and tie up.

 

[Bob the Citronaut]

You do realize that most corporations are just small businesses and not large publicly traded entities, right? Cut taxes on these small businesses and they are more likely to be able to afford to reinvest and hire.

EVIL BILLION DOLLAR MULTI NATIONALS ARE THE ONLY ONES GETTING A TAX CUT!!! Who cares that small businesses provide 50% of the jobs in the country.

 

[LA-Knights]

EVIL BILLION DOLLAR MULTI NATIONALS ARE THE ONLY ONES GETTING A TAX CUT!!! Who cares that small businesses provide 50% of the jobs in the country.

Hahaha nice try. The majority of those businesses don’t exceed those tax rates anyway. Small businesses use the individual rates which effectively stay below 25% anyway. Keep searching Fox and try again. The grand majority of small businesses are plumbers and painters and little restaurants, etc. But please do go on.

 

[Bob the Citronaut]

Hahaha nice try. The majority of those businesses don’t exceed those tax rates anyway. Small businesses use the individual rates which effectively stay below 25% anyway. Keep searching Fox and try again. The grand majority of small businesses are plumbers and painters and little restaurants, etc. But please do go on.

There are still pass throughs taxed at a top rate of 43.4%. I don't care if it's only one company taxed like that. It is bullshit. Not to mention the thousands it would save every business in accountant and tax attorney fees trying to find all the loopholes.

 

[LA-Knights]

It's a shit sandwich. Not saying there are not things that can't be improved but we are talking about this bill in particular and this bill in particular is a shit sandwich. No spin.

 

[sk8knight]

And that, I think, many of us can agree on, if not for the same reasons. Honestly, though, can you have any tax cuts put in place without a complimentary reduction in spending? The theory of an economy improved by cuts bolstering revenue is all good and well, but when it comes to it, we really need to address both sides of the equation. Simply balancing is not good enough at this point, and isn't it sad that even that is a pipe dream?