Latest Incomplete Tax Plan

[cernjSHU]

Trump's new plan reduces rates to 12%, 25% and 35% - no income ranges given. However, given the plans set forth before, this will be a huge tax break to the wealthy. Meanwhile upper middle class people probably will see a tax raise. Let's see.

Bad news for NJ, elimination of deductions that will take big hit to the upper middle and middle class, property taxes deduction. On average, the deductions will be made up for the increase in the standard deduction of an additional $12,000 to $24,000. However, in many cases this represents a loss in deductions. I would certainly get hurt in this plan. Also State and local taxes will not be deducted. When you combine those two deductions, this is bad news for us.

What this plan so far is about is just a tax windfall for the rich. 4.5% reduction in the top rate to 35%. Then on top of it, those wealthy small business owners get another huge deduction on their pass through income. As it stands today, that pass through income on small business will be taxed at their individual tax rate. Now, that money will be taxed at 25%. That is a 10% cut (or a total of 14.5% reduction) to the wealthy that have small businesses.

It will eliminate the Federal estate tax which only affects those with estates worth $5.5 million.
And the big give away is to corporations from 35% to 20%.

This really only benefits the wealthy and looks like it will skyrocket the national debt. Interesting, nothing changes with regard to people who earn their income on investments like the stock market. They will continue to get taxed at the capital gains tax rate of 20% no matter how much income is generated from it. The very wealthy will be thrilled with this.

 

[SHUHoopsFan]

Definitely going to help the states Trump won. So many areas where real estate taxes for very nice homes are under $2,500 a year. A lot of working middle class families that probably take the standard deduction.

 

[cernjSHU]

Definitely going to help the states Trump won. So many areas where real estate taxes for very nice homes are under $2,500 a year. A lot of working middle class families that probably take the standard deduction.

Ok, these families will get an additional $12,000 deduction for a married couple. So they may gain an additional $10,000 in deductions when you factor in a lower property taxes. However, this $10,000 deduction will be eaten away when the state income tax deduction is eliminated. Also the personal tax deduction is eliminated most middle class families may actually have an increase in taxes.

 

[SHUHoopsFan]

Ok, these families will get an additional $12,000 deduction for a married couple. So they may gain an additional $10,000 in deductions when you factor in a lower property taxes. However, this $10,000 deduction will be eaten away when the state income tax deduction is eliminated. Also the personal tax deduction is eliminated most middle class families may actually have an increase in taxes.

If you don't itemize the state income tax deduction doesn't matter to you. When you pay less than $2,500 in real estate tax it makes it harder to itemize.

 

[Merge]

Definitely going to help the states Trump won. So many areas where real estate taxes for very nice homes are under $2,500 a year. A lot of working middle class families that probably take the standard deduction.

but lose personal exemptions so a family with 2 kids or more will pay more than they are currently paying in taxes. Works out a lot better for married couples with no kids who are renting an apartment though.

 

[Section112]

To simplify the taxes in the US you have to do away with many of the itemized deductions and that is what this plan is recommending. Bad for high tax states like NJ and NY. Good for about 70% of the country. That is why this tax plan does not benefit the rich as much as all the main street press is saying. The reality is there is not enough information yet to truly opine on this. By eliminating many of the itemized deductions which are used mostly by the top 30% of tax payers, wealthy taxpayers will pay more. The standard deduction increase will considerably help poor and middle class taxpayers that do not itemize. But it's really an incomplete until you can do the math.

The overtaxed states like NY and NJ will not benefit from this approach because we have to get our own overtaxed houses in order. You cannot worry about that if you are creating a better tax plan for the whole country. States with a brain would be incented to improve.

The other large issue is lowering the corporate tax. The US is simply not competitive and losing lots of corporations to other countries every day. Lower the corporate taxes and get rid of all the loopholes so they actually do pay some tax. Keep them here and the states and Fed govt get more tax dollars through the employees that the largest corporations employ in the US. But if you keep pushing those companies away from our shores, you lose the jobs and the tax revenue. This has to be fixed quickly.

Our economy cannot afford to lose more jobs. We will lose many jobs in the future to robotics and the digital economy. We can't also push the large corporations out too.

 

[shu09]

To simplify the taxes in the US you have to do away with many of the itemized deductions and that is what this plan is recommending. Bad for high tax states like NJ and NY. Good for about 70% of the country. That is why this tax plan does not benefit the rich as much as all the main street press is saying. The reality is there is not enough information yet to truly opine on this. By eliminating many of the itemized deductions which are used mostly by the top 30% of tax payers, wealthy taxpayers will pay more. The standard deduction increase will considerably help poor and middle class taxpayers that do not itemize. But it's really an incomplete until you can do the math.

The overtaxed states like NY and NJ will not benefit from this approach because we have to get our own overtaxed houses in order. You cannot worry about that if you are creating a better tax plan for the whole country. States with a brain would be incented to improve.

The other large issue is lowering the corporate tax. The US is simply not competitive and losing lots of corporations to other countries every day. Lower the corporate taxes and get rid of all the loopholes so they actually do pay some tax. Keep them here and the states and Fed govt get more tax dollars through the employees that the largest corporations employ in the US. But if you keep pushing those companies away from our shores, you lose the jobs and the tax revenue. This has to be fixed quickly.

Our economy cannot afford to lose more jobs. We will lose many jobs in the future to robotics and the digital economy. We can't also push the large corporations out too.

Great post. As you said, more details must be revealed to truly judge the plan. But this sums it up quite well at this point in the process.

 

[Merge]

he other large issue is lowering the corporate tax. The US is simply not competitive and losing lots of corporations to other countries every day. Lower the corporate taxes and get rid of all the loopholes so they actually do pay some tax. Keep them here and the states and Fed govt get more tax dollars through the employees that the largest corporations employ in the US. But if you keep pushing those companies away from our shores, you lose the jobs and the tax revenue. This has to be fixed quickly.

How accurate is that in the current environment? We have added around 6 million jobs in the last 5 years. Not to say that the US shouldn't be competitive in regards to taxes (which we are if you look at the effective tax rates) https://www.cbpp.org/research/feder...x-rates-are-in-line-with-comparable-countries

My concern about a cut in the US would be that other countries still want to attract businesses.. Couldn't they just keep lowering their rates and then we have to then drop ours again to be "competitive"?

 

[Section112]

How accurate is that in the current environment? We have added around 6 million jobs in the last 5 years. Not to say that the US shouldn't be competitive in regards to taxes (which we are if you look at the effective tax rates) https://www.cbpp.org/research/feder...x-rates-are-in-line-with-comparable-countries

My concern about a cut in the US would be that other countries still want to attract businesses.. Couldn't they just keep lowering their rates and then we have to then drop ours again to be "competitive"?

First of all the way you do it is lower the effective tax rate by lowering the rate and the deductions. You have to do very little research to realize that the rate of companies leaving the US is higher than ever. Here is a dated but good example. http://money.cnn.com/2014/07/07/news/economy/tax-advantage-inversion/index.html

Those jobs don't come back. The longer we wait the more we will lose it's that simple. You cannot measure the tax revenues by what the companies pay because the major tax revenues that are lost are from the employees that lose their jobs. Those jobs are hard to replace and so are the tax revenues. It's real - it's not a Dem or Repub issue. It needs to be fixed ASAP to be competitive.

 

[cernjSHU]

First of all the way you do it is lower the effective tax rate by lowering the rate and the deductions. You have to do very little research to realize that the rate of companies leaving the US is higher than ever. Here is a dated but good example. http://money.cnn.com/2014/07/07/news/economy/tax-advantage-inversion/index.html

Those jobs don't come back. The longer we wait the more we will lose it's that simple. You cannot measure the tax revenues by what the companies pay because the major tax revenues that are lost are from the employees that lose their jobs. Those jobs are hard to replace and so are the tax revenues. It's real - it's not a Dem or Repub issue. It needs to be fixed ASAP to be competitive.

Inversion mergers to avoid paying US taxes should be outlawed. Those mergers are a sham. Lowering corporate tax rates should not be lower than 30% Moreover, this does not help 70% of the country. We are talking people not territory and it hurts far more people than it helps. Moreover, those middle class people that it helps lower taxes are being bought off for $1000. Meanwhile the wealthy are benefiting by millions. Even Gary Cohen trying to sell this tax plan said that middle class Americans will save a $1000 a year that can be used to remodel a kitchen. (lol Really? Where can you remodel a kitchen for a $1000 even if it is formica and used appliances?)

Yes, we can't have a final judgement till the final details are revealed. However, what can be seen is a money grab to the 1%.

 

[Section112]

Inversion mergers to avoid paying US taxes should be outlawed. Those mergers are a sham. Lowering corporate tax rates should not be lower than 30% Moreover, this does not help 70% of the country. We are talking people not territory and it hurts far more people than it helps. Moreover, those middle class people that it helps lower taxes are being bought off for $1000. Meanwhile the wealthy are benefiting by millions. Even Gary Cohen trying to sell this tax plan said that middle class Americans will save a $1000 a year that can be used to remodel a kitchen. (lol Really? Where can you remodel a kitchen for a $1000 even if it is formica and used appliances?)

Yes, we can't have a final judgement till the final details are revealed. However, what can be seen is a money grab to the 1%.

You can't tell companies where to have their HQs. Inversion mergers are no more illegal than moving to another state with lower taxes which happens all the time? Do you also like how Bloomberg told everyone they couldn't buy big soda's? Difficult to legislate it and companies will always find a loophole.

Here's a crazy idea - why not create a welcoming environment for businesses that attracts them to America and puts us on an even footing with the rest of the world? Maybe instead of just losing US corporations, we could keep them AND attract foreign corporations to open up shop here. That brings jobs and tax revenues.

 

[cernjSHU]

You can't tell companies where to have their HQs. Inversion mergers are no more illegal than moving to another state with lower taxes which happens all the time? Do you also like how Bloomberg told everyone they couldn't buy big soda's? Difficult to legislate it and companies will always find a loophole.

Here's a crazy idea - why not create a welcoming environment for businesses that attracts them to America and puts us on an even footing with the rest of the world? Maybe instead of just losing US corporations, we could keep them AND attract foreign corporations to open up shop here. That brings jobs and tax revenues.

I feel sorry for multinternational corporations who make billions. They must try to scheme to try to open up sham HQ in the Cayman Islands and fake inversión mergers to avoid taxes. It’s a joke. Any corporation using an inversion merger should be be taxed as an American company. Or it officers be prosecuted for tax evasion. This is no more than saying you are No longer living in NJ because you bought a small condo in Florida. Meanwhile you spend your time in NJ and live nothing differently than before. But now because you have this small condo in Florida that you should no longer pay NJ taxes.[/QUOTE]