Tax Bill for Individuals
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A great deal for the middle class:
Don’t agree with all of the bill, but agree there is some good accomplished for the middle class.
A great deal for the middle class:
Biggest percentage cuts are to the lower middle and middle class. If you listen to Chuck Schumer and Nancy Pelosi, you'd never know.
Why do they hate the middle class so much? Or is it they won't have as much taxpayer money to funds their pet projects?
Yea the new talking points are "in ten years this is gonna be really bad." Well in ten years they will have history behind them to see if it was a good or bad bill and they can extend the tax cuts (like they did with the Bush tax cuts when Obama was Pres) or they can say it did not work and make changes. I am in the wait and see category to see if this is good or not. I like the tax cuts but it will only work if we reduce spending and corporates invest in infrastructure and increase jobs. I don't like the deficit increase but we will know more in 5-7 years or so.
On CBS this morning they profiled three different families. Single mother of one child making $48k per year in NC. Two professors in RI making about $150-$175k per year - no kids. And a family of four in CA (wife is a Pharm Rep and husband started his own business - a gym) that made $300k last year. They all thought they were going to pay more in taxes next year and said that on air. Every one of them had a reduction in taxes and they were all significant numbers
I spoke to my accountant yesterday and he said for all of his clients he has worked thru their taxes and believes lower and middle class will all get a tax cut. He did notice an anomoly with the $100k - $125k bracket and he said some there will pay more for some reason and he hopes they adjust that going forward if it becomes consistent because he said it did not make sense to him just yet. Said all his clients making a lot of money $500k + are going to pay more because they will lose lots of itemized deductions (doesn't bear true on the numbers above but I trust this guy). He is a numbers guy and has never mentioned anything political to me - I really don't know where he stands politically so not sure he has any bias.
I wonder how Congress people who represent very poor city areas that are Dems were able in good conscience to vote no when 80-90% of their poor constituents (assuming most don't itemize) would get a nice tax cut and many poor families would not pay taxes and get back $1,400 per child with the increased child tax credit? This is where you can see that our system both Dems and Repubs are completely off the rails that God forbid one of them votes for a bill sponsored by the other party if it helps their constituents. Why is the news not covering that?
On CBS this morning they profiled three different families. Single mother of one child making $48k per year in NC. Two professors in RI making about $150-$175k per year - no kids. And a family of four in CA (wife is a Pharm Rep and husband started his own business - a gym) that made $300k last year. They all thought they were going to pay more in taxes next year and said that on air. Every one of them had a reduction in taxes and they were all significant numbers
I spoke to my accountant yesterday and he said for all of his clients he has worked thru their taxes and believes lower and middle class will all get a tax cut. He did notice an anomoly with the $100k - $125k bracket and he said some there will pay more for some reason and he hopes they adjust that going forward if it becomes consistent because he said it did not make sense to him just yet. Said all his clients making a lot of money $500k + are going to pay more because they will lose lots of itemized deductions (doesn't bear true on the numbers above but I trust this guy). He is a numbers guy and has never mentioned anything political to me - I really don't know where he stands politically so not sure he has any bias.
I wonder how Congress people who represent very poor city areas that are Dems were able in good conscience to vote no when 80-90% of their poor constituents (assuming most don't itemize) would get a nice tax cut and many poor families would not pay taxes and get back $1,400 per child with the increased child tax credit? This is where you can see that our system both Dems and Repubs are completely off the rails that God forbid one of them votes for a bill sponsored by the other party if it helps their constituents. Why is the news not covering that?
Due to the pass-through 20% deduction, I will not pay more in taxes now so I;'m more on-board.
Tax cuts without spending cuts won't work though.
Tax cuts without spending cuts won't work though.
You’re reading that chart wrong.
It’s the biggest only because those are true groups with the most people.
The percentage each person in those groups is higher for the wealthy than the middle class.
https://www.npr.org/2017/12/19/5717...h-of-gop-tax-cuts-will-go-to-the-middle-class
That's because the NPR uses after-tax income as its denominator which includes the payroll tax deduction which is of course a much larger pct. of the middle class' after tax income than the rich.
A neat sleight-of-hand but not germane to the federal income tax cuts.
If we could only reform payroll taxes and social security/medicare.....................
Yeah, I’m just pointing out what your original chart was actually showing. It wasn’t that the middle class was getting the majority of the tax benefits. It was that the number of people in those brackets is more significant. and of course wealthy individuals will be getting a larger break than the poor and middle class. Some of these provisions will not benefit poor and middle class families at all... pass through deduction, doubling the estate tax threshold etc.
From the chart you posted, taxpayers making less than 100k per year (majority of Americans) will pay in about 70 million less than they would have under the previous tax law. This bill costs 1.5 trillion dollars with no direct stimulus. Pitching this as a middle class relief bill as it was, is disingenuous.
It’s $52 billion for the under $100K crowd in just one year, 2019, a 23% reduction, that’s huge and shouldn’t ge denigrated. The wealthy will always benefit from tax cuts as they pay an unfair, enormous pct. of the overall taxes but this bill also provides significant middle class relief.
One sneaky tax increase that is flying below the radar is Social Security earnings tax.
The 2017 taxable earnings cap was raised from $118,500 to $127,200.
That nets to a $1,080 increase ($540 for the employee) for those making $127,200 or more.
It only going up to $128,700 in 2018 which is $186 increase.
This is one way they are going to try to fund SS for the future. Additionally, I see the retirement age inching up on a continued basis. I also expect the Medicare age to bump up at some point.
The 2017 taxable earnings cap was raised from $118,500 to $127,200.
That nets to a $1,080 increase ($540 for the employee) for those making $127,200 or more.
It only going up to $128,700 in 2018 which is $186 increase.
This is one way they are going to try to fund SS for the future. Additionally, I see the retirement age inching up on a continued basis. I also expect the Medicare age to bump up at some point.
I would assume that they will take off the cap completely to fund social security. That is just a matter of time.
Yeah, I know it’s a year. Under 100k income get 70 billion of the 230 billion reduction in taxes... quantify that further and around 120 million people will pay 70 billion less in taxes and about 30 million people will pay in 150 billion less in taxes.
I’m not saying this middle class is getting hosed or anything. I’m just saying this bill was significantly more about having the wealthy keep more money than it was for the middle class.
We can certainly debate the merits, although I’m going to have a hard time understanding why the wealthy, who have done extraordinarily well over the last 10 years while the middle class has stagnated, need a tax cut right now.
Your numbers are incorrect. The number of taxpayers in the $40,000 to $100,000 income groups is 44,427,000. Again, the wealthy, who pay the overwhelming share of taxes, will get a larger dollar tax cut but the middle class gets a larger percentage cut. Class warfare is just another way of dividing people. Middle class taxpayers should be overjoyed at an average $1,575 tax cut.
LOL, we know from previously linked studies in this forum (from awhile back) that twice as many have moved up from the middle class than have moved down in class.
Lol. being bought off for a $1500. You think that the middle class should be grateful for that huge sum of money. Yet somehow, the wealthy will benefit a tremendous amount. This is class warfare. It is the wealthy pulling a fast one on the rest of the country. What will the effects of this tax cut on the middle class with the increasing debt? What will be the effect of this bill with essentially making Obamacare premiums skyrocket? What will the effects of property values decrease in NJ due to this bill.
Don't you find it ironic that Trump wants to Make America Great in which in his opinion was the 1950's. Also a time when the rich paid up to 70% in federal income tax. Reagan drops it to 50%. Then it goes down to 28% where the debt is piling up. During the 90's the tax rate goes up to 39%. Is it a coincidence that it during these years we see for the first time surpluses for four years.
We are experiencing tremendous corporate profits over the past 5 years. I can see a cut in the corporate rate to 29% or 30%. But not to 21%. I can't see the wealthy getting a tax rate reduction as well. This is not good for country.
Oh stop, the deficit has been an issue for a long time but all of a sudden you are worried about it, LOL? Spending is half the issue. Obamacare premiums have always been skyrocketing. You've been duped by NJ into high property taxes because the federal government made others finance that for you, you rich, spoiled brat, LOL.
During the surplus years of 1998-2001, spending averaged 17.6825% of GDP, now it's 23.65% of GDP. During the surplus years of 1998-2001, individual income taxes averaged 9.5% of GDP and corporate income taxes averaged 1.9% of GDP. Now individual income taxes are 9.3% of GDP and corporate income taxes are 2.2% of GDP.
I agree, let's go back to those days.
The debt is always an issue. An ongoing expensive war with no end in sight will always drive up the debt. Combine that with lowering taxes as we spend more will drive up the debt. That’s just simple math. So we are going to exacerbate the problem with debt by cutting taxes? Makes no sense. Plus Trump now wants to spend on infrastructure which should have been the first thing that should have been accomplished.
NJ issue with property taxes is home rule. That created over 500 municipalities and 500 area of power and patronage. Until NJ changes home rule and the constitution of this state, property taxes will always be too high.
This was in the Morning Call today(Lehigh Valley Area, Route 78 inside PA).
http://enewspaper.mcall.com/infinit...spx?guid=d1696545-859d-4453-92da-e07fcec9cf82
"O’Brien said they paid about $12,500 a year in property taxes in New Jersey. Now, that annual amount is in the ballpark of $3,500."
Hall85, make your move sooner than later. Welcome to the Valley!
http://enewspaper.mcall.com/infinit...spx?guid=d1696545-859d-4453-92da-e07fcec9cf82
"O’Brien said they paid about $12,500 a year in property taxes in New Jersey. Now, that annual amount is in the ballpark of $3,500."
Hall85, make your move sooner than later. Welcome to the Valley!
John, hope to close on a piece of property in January...lol. It's a no-brainer for us. With the surge of new employers (Amazon, Stitch-Fix and Fed-Ex, etc.), will be interested to see if labor growth will also impact housing demand. Also anticipate growth of 55+ communities. Saw some stats from LVPC that supports this.
I am in the market to purchase a house. However, I will hold off buying that house for the next year to see where property values go in NJ. I expect a decrease property values in NJ. Will that decrease justify buying in the town that I want to be in? I want to buy in Montclair but that is one of the municipalities with the highest property taxes in the State. It's a wonderful community but this tax bill just really priced me out.
I have absolutely no interest in buying in PA or even Western NJ. It is a difficult time to be a NJ resident.
I have absolutely no interest in buying in PA or even Western NJ. It is a difficult time to be a NJ resident.
That's awesome news!! lol
(Just kidding. I couldn't resist. You kinda teed that one up)
Back in '86 we bought a $60K duplex. 2 years later they opened I78 and we sold for $90K.
I think our housing will jump again due to tax bill. We can get to 287 in 45 minutes. For someone who is living in NJ and commuting 45 minutes now, it will be enticing.
Plus, we are progressing here in PA. I had running water installed in the house last year; which is a real treat. It used to get real cold getting up in the middle of the night and having to run outside to take a pee.
More silliness.
Many towns like Montclair have been jacking up your property taxes due to the federal subsidy that benefits the rich like you.
Many NJ towns that have lower property taxes will see significant increases in property values.
It's not just about you.
Stop, it's been like this for many, many years, Trump Derangement Syndrome notwithstanding.
From a recent article by Pat Buchanan
"Another problem for Democrats is the new $10,000 limit on the tax deduction for state and local income and property taxes.
In blue states like Oregon, Minnesota, New Jersey, Vermont, Hawaii, the top state income tax rate is 8 to 10 percent. In Jerry Brown's California and Andrew Cuomo's New York, it hits 13 percent — before adding property taxes on homes and condos in Manhattan and second homes out on Long Island.
Virtually eliminating state and local tax deductions is going to cause some of the rich to consider relocating to low-tax or no-tax red states in the Sun Belt like Florida. And it is going to put pressure on blue state pols to cease adding to the state and local tax burdens that Uncle Sam is no longer helping to carry."
"Another problem for Democrats is the new $10,000 limit on the tax deduction for state and local income and property taxes.
In blue states like Oregon, Minnesota, New Jersey, Vermont, Hawaii, the top state income tax rate is 8 to 10 percent. In Jerry Brown's California and Andrew Cuomo's New York, it hits 13 percent — before adding property taxes on homes and condos in Manhattan and second homes out on Long Island.
Virtually eliminating state and local tax deductions is going to cause some of the rich to consider relocating to low-tax or no-tax red states in the Sun Belt like Florida. And it is going to put pressure on blue state pols to cease adding to the state and local tax burdens that Uncle Sam is no longer helping to carry."
Here is a news flash Pat, the rich can afford it. They are also getting tax breaks 2.5% reduction on their income tax. Someone making a million dollars a year that is a cool $25,000 reduction in federal income tax. The people that this hurts is the upper middle class. People who have worked hard moved up the ladder and now find themselves owing a lot more.
What is it SPK? Am I jealous of the rich or am I rich myself. You just seem to label me one or the other to fit your argument. But you can't have it both ways.
I like how you label double taxation as a subsidy. Nice twist of phrase but very untrue. If you want to go after federal subsidies go rant about the subsidies that go to farmers in the midwest.
I HAVE ranted here about farmer subsidies as well as sugar subsidies, renewable energy subsidies, nuclear energy subsidies, etc.
Given you are single and have the income you once disclosed here, you are considered rich, you deserve it, but you have to pay your fair share now don't you? If you chose to live in a high property/income tax area, that's a choice, not to be subsidized by others who don't or can't make that same choice.
A few things that some folks should consider in these last few days of December and tax year 2017. Consider making your seat donation this year for next as the benefit of deducting contributions for sports seats will go away. You can do it online at Pirate Blue and make sure you click on the box that says something Mens Basketball Priority Seating Donation.
If you qualified for the AMT on your taxes in previous years it most likely does not make sense to prepay property taxes in 2017 for 2018. The press has been so disingenuous on this issue and none of them understand how this works and are giving out tons of misinformation. It could actually work against you if you get hit with additional AMT taxes. So beware and don't listen to anyone in the media on this. Their hate for Trump is clouding their stories and noone is doing the math or really understands the tax code. And the politicians are piling on. I watched Yahoo Business do a story on this today and was appalled at what I saw and heard. Can you say clueless and 100% wrong?
And what is worse is they are saying things like making charitable contributions will not make sense going forward??? WTF? I guess they think people only do it because they get a tax benefit if they itemize. Just appalling stuff. So many will get a tax cut from this bill and all you hear is negative stuff about it. I get the deficit issue and the fact that they will have to cut spending. But low income folks will benefit from this considerably with the combination tax cut and increased child care credit and due to the press they don't even know it and think this is bad. Complete dishonesty.
If you qualified for the AMT on your taxes in previous years it most likely does not make sense to prepay property taxes in 2017 for 2018. The press has been so disingenuous on this issue and none of them understand how this works and are giving out tons of misinformation. It could actually work against you if you get hit with additional AMT taxes. So beware and don't listen to anyone in the media on this. Their hate for Trump is clouding their stories and noone is doing the math or really understands the tax code. And the politicians are piling on. I watched Yahoo Business do a story on this today and was appalled at what I saw and heard. Can you say clueless and 100% wrong?
And what is worse is they are saying things like making charitable contributions will not make sense going forward??? WTF? I guess they think people only do it because they get a tax benefit if they itemize. Just appalling stuff. So many will get a tax cut from this bill and all you hear is negative stuff about it. I get the deficit issue and the fact that they will have to cut spending. But low income folks will benefit from this considerably with the combination tax cut and increased child care credit and due to the press they don't even know it and think this is bad. Complete dishonesty.
The charitable contribution stuff seems to be coming from the “council of foundations” which says the changes in the tax law will reduce charitable contributions between 16-24 billion.
https://www.cof.org/news/council-foundations-statement-passage-tax-cuts-and-jobs-act
It will be interesting to see how that plays out as giving to charity will now cost some people more money, although I have no idea how that will align with how much people give. The change in estate tax laws may have an impact here as well.. but again no idea how significant that will be.
The bill is covered fairly negatively for a lot of reasons. While I won’t be mad to have an extra $50-$100 per month... that doesn’t frame my opinion that now is not the time to be giving a tax break to the wealthy. I’m not against deficit spending when it’s intended to improve our economy. I don’t feel increasing our debt so wealthy people can have more money is good policy. We should lower their taxes when we are getting more revenue from the middle class via wage growth.
The Council of Foundations backs nothing up in their estimate. Many charitable Americans will still give to good causes. I give to some causes each year even if I don't get the write off. It's what most charitable people do. All those GoFundMe pages are not allowable for tax purposes but millions are raised every year. It could effect some giving but by and large I think most people are charitable and will continue to give.
The Estate Tax is double taxation. That money was already taxed. I think they handled it perfectly in this bill. They raised the cap for families but still kept the Estate Tax for the very rich. That seems to fit your bias to keep taxing the rich so not sure why you would not like that.
I would have liked to have seen the assumptions from the council of foundations. I was just saying where the point was coming from.
I don't necessarily disagree with you. Only 30% of American households itemized and around 60% give to charities.
Obviously some people donating were getting no tax benefit, but it's not really wrong to wonder if there is there a correlation for that 30% in how much they give and how much it costs them? If they are in the 25% bracket, a $100 donation really only costs them $75.
I wasn't framing my opinion of the estate tax. I was stating that it may have an impact on how much estates end up giving to charity. Part of estate planning is lowing any amounts of tax to be paid and that includes charitable giving. Again, not really wrong to wonder what impact that will have on charitable giving.
Also, estate taxes are not necessarily double taxed since much of the balance in large estates would be capital gains which have never been taxed.
There are so many ways to avoid these taxes, it is really only a tool for the encourage economic activity from the ultra wealthy.
I have to disagree with this quote. Many estate taxes are incurrend when business owners die and their families have to pay estate taxes based on the value of the business causing them to have to sell the business or the farm etc. Also as people age they have to take money out of their IRAs, forcing them to pay taxes on their earnings so lots of those capital gains you speak of are not there anymore or are diminished and get taxed when folks have to make their minimum withdrawals each year. Your assumption makes me believe that you think people are only invested in the stock market which is false.
Wasn't really looking for a debate on estate taxes. Just pointing out that this law will impact estate planning which includes tax minimization.
Wasn't an assumption though. All estates include untaxed gains. The amount varies by size of the estate.
2013 study from the federal reserve estimates it by estate size.
https://www.federalreserve.gov/pubs/feds/2013/201328/index.html
Agree. Any time the tax law changes it affects estate planning. As soon as it goes into law lots of lawyers and accountants are looking for loopholes. This is no different.
I could be wrong, but my understanding is that you pay the estate tax on the value of asset independent of its tax status.
If the asset is pre-tax it then gets taxed again when it is withdrawn or sold.
I'm an auditor and not a tax accountant so I am not 100% but if I recall correctly, only the gains from that point would be taxable on a step up basis.
Assume for 2018 law, your parents have an estate worth 10 mil which includes 5 million of capital gains.
On the date of their death, you take ownership of their estate at the fair market value.
Their 5 mil in gains would never be taxed. You would pay tax on the gain above 10 mil when you sell it.
If their estate was worth 15 million, you would pay estate tax on 5 million.
There is some potential for double taxation there if they were holding less than 5 million in capital gains.
Again though, I'm not really making an argument for or against the estate tax here.
Just saying, the change in the tax law will likely have an impact on charitable contributions from estates going forward.
Correct. I think what Merge is saying is some estates include appreciated assets that are not subject to the Cap Gains tax. This is a benefit to heirs to get the step-up in basis. The Estate Tax will tax the total assets over the minimum amount that is taxable.
And investments as well.
In 2013, for every 500 deaths in America, 1 person had an estate tax liability.
Increasing the size of the threshold that will be an even smaller percentage.
Then you are talking about estates greater than 15-20 million who could potentially have a "double taxation" problem... but when you start getting into estates that large, they are more creating in finding ways to avoid taxes altogether.
I just really don't believe there is a double taxation problem here.
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