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The GOP rolled out there tax reform plan calling it a tax cut for most. It drops the corporate profits tax rate from 35 down to 20 percent, reduces seven tax brackets to three 12, 25 and 35 % doubles the standard deduction and eliminates most tax deductions including state and local taxes.
If they pass it as it is now I'd come out a winner due to the doubling of the standard deduction.
What do you think?

An opinion that crunches some details:

http://www.cnn.com/2017/09/27/opinions/trump-tax-plan-opinion-mccaffery/index.html

Single-parent households. While loudly trumpeting the doubling of the standard deduction, the Trump plan would not be kind to single parents. It would eliminate the rate structure for single-parent households, which now splits the difference between married taxpayers and singles without children. Millions would suffer.

Larger families. Back to that standard deduction trick. Trump's plan would roughly double the "standard deduction" given to taxpayers who do not itemize their deductions, from roughly $6000 to $12,000 for single persons, twice as much for married couples. But the plan would also eliminate personal exemptions, presently roughly $4,000 per person, including children. So there is a net gain of $2,000 for single persons. Married couples without children gain $4,000 on net ($12,000 in rise in standard deduction, but $8,000 in losses from removing their exemptions.) Having a single child makes the change neutral (gain $12,000, lose $12,000), and having more than one child makes your family a loser. Some of this effect will be affected by the raise in the lower bracket from 10% to 12% and the as-yet unspecified increase in the child credit, but larger families will still lose out in this math.

Blue state earners. The repeal of the state and local tax deduction will mainly hurt upper middle income earners in states with high income taxes -- which means California, New York and Illinois. One can check various color-coded electoral maps available in the White House to see for whom these states voted in 2016.

The future. Even with all the details being nowhere close to in place, the Trump plan would be a "massive" increase in the debt and deficit. .....

My opinion is that they are trying to figure out a way to mess with the middle class so that they can have more and we can have less. And they have hoodwinked the lower middle class into thinking that Our Dear Leader is looking out for them. Eliminating the estate tax is a particularly good way of keeping those who have a lot on top while the rest of us strivers continue to toil away on the bottom.

My opinion is they should adopt the Reagan tax plan from 1985-86 that was already proven to massively increase government revenues.

I did not see anything about getting rid of personal exemptions just itemized deductions beyond mortgage interest and charitable contributions. As they are raising the child tax credit to $1000 per child and increasing the income limits eligible for it I don't think they will get rid of personnel exemptions. If they did some large families would become tax payers for the first time.
Last year a couple filing jointly had a standard deduction of $12,600 and personal exemptions of $8100 so had $20,700 free of income tax. (SS and Medicare taxes on every dollar of course). If I read it right that would jump to $24,000 =$8100 so $32,100 before paying income tax. You would have to have very high state and local taxes and quite a large mortgage balance to need to itemize deductions and if interest is no longer deductible you would have to have mansion.

My wife the Tax Accountant said that if this plan becomes law our Federal tax rate based on our modest present income (my Social Security and her salary) will increase from around 17% to 25%.

Revi wrote:My opinion is that they are trying to figure out a way to mess with the middle class so that they can have more and we can have less. And they have hoodwinked the lower middle class into thinking that Our Dear Leader is looking out for them. Eliminating the estate tax is a particularly good way of keeping those who have a lot on top while the rest of us strivers continue to toil away on the bottom.

The estate tax on farmland is a major burden that often forces the sale of farms when the owner dies even if he has sons or grandsons who wish to continue. I do think capital gains taxes need to be paid on stocks when they are handed down and they should get rid of all these trust funds that are just a tax dodge.

I think we need more detail to really know, so this is based on the high points I've read.

And of course, we don't know how much it might be modified before it passes, if the GOP can pass it.

If the NYT is any indication, the Dems are going to fight it tooth and nail, predictably. (Whining as usual about "tax cuts for the rich", as though, the poor don't receive net federal tax credits, or as if the lower middle class or even moderate income earners with lots of deductions pay much in federal income taxes. That silly trope gets pretty old, but apparently the left never tires of that political game.)

As a reminder, despite all the crying about the top 1%, they pay almost half of the federal income taxes. The top 20% pay about 85%, and the bottom 60% pay about 2%. (So again, how do you have income tax cuts for "the poor"? You can't. You have to have tax cuts for people paying the tax. Far left Liberals are generally as illogical about this as the far right often is about science vs. their ideology).

https://www.cnbc.com/2015/04/13/top-1-p ... taxes.html

I like a flatter tax curve. I like less deductions / complexity, with a much larger and simple standard deduction.

I think I'll come out within a stones throw of even, from what we know. So my opinion on this is based on principles I believe are better for the country in the long run.

I don't like eliminating deducting taxes in principle. In theory (not currently) the wealthy could end up paying almost 100% taxes, without the ability to deduct any. I realize the math free far left would love that, but how reasonable is that?

I'd rather it be that the rich have to pay the top rate on EVERYTHING they earn after a certain point. Then they'd be paying their fair share, and we could reasonably eliminate the estate tax. Or if that's not good enough, then make the deduction for the estate tax something like $20 million, so only very wealthy families of people are actually paying a punative tax for being "too successful" when they die. As it is, the estate tax is like a big double dip for the left that hits all financially very successful people, regardless of how they earned their income after they paid a lifetime of taxes -- and I don't think it's right UNTIL you get to the Mitt Romney types.

So, for example, if Mitt Romney and Warren Buffett, etc. couldn't play games% and have effective federal income tax rates of 14% or roughly 0%, and they paid a ton of money in taxes the entire time they were wealthy, then I don't think an estate tax is needed or reasonable.

KaiserJeep wrote:My wife the Tax Accountant said that if this plan becomes law our Federal tax rate based on our modest present income (my Social Security and her salary) will increase from around 17% to 25%.

They haven't pegged the income level where 25% starts and you would pay 12% on the income between $32,100 and wherever the 25% bracket starts.

Doubling the standard deduction is a big tax cut right there. For middle class people who use the standard deduction, this should reduce their final tax bill by about 15-20%.

I like it.

Plantagenet wrote:Doubling the standard deduction is a big tax cut right there. For middle class people who use the standard deduction, this should reduce their final tax bill by about 15-20%.

I like it.

From my link, above:

Back to that standard deduction trick. Trump's plan would roughly double the "standard deduction" given to taxpayers who do not itemize their deductions, from roughly $6000 to $12,000 for single persons, twice as much for married couples. But the plan would also eliminate personal exemptions, presently roughly $4,000 per person, including children. So there is a net gain of $2,000 for single persons. Married couples without children gain $4,000 on net ($12,000 in rise in standard deduction, but $8,000 in losses from removing their exemptions.) Having a single child makes the change neutral (gain $12,000, lose $12,000), and having more than one child makes your family a loser......

Trump's plan would roughly double the "standard deduction" given to taxpayers who do not itemize their deductions, from roughly $6000 to $12,000 for single persons, twice as much for married couples. So there is a net gain of $2,000 for single persons. Married couples without children gain $4,000 on net

So far so good.

But the plan would also eliminate personal exemptions, presently roughly $4,000 per person, including children.

Time for some fact-checking.

The plan does call for the elimination of the personal deduction----but the increase in the standard deduction more than makes up for that and adds up to a net win for taxpayers.

AND, in addition, the Trump tax plan does NOT eliminate the child tax credit---in fact it calls for an INCREASE in the child tax credit.

Increases the size of the child tax credit. ......the proposal is to make the first $1,000 of the child tax credit refundable and increase the income level at which the credit would phase out.

Thats good for most middle class taxpayers.

Cheers!

Gosh, Plant, I can't speak for the voracity of my source, but at least I provided one. What's yours?

Ghung's source was CNN (the Clinton news network) so it was a case of "Trust but verify" I had to go all the way to the GOP's house site but CNN and Ghung are indeed correct in that they are rolling personal exemptions into the higher standard deduction.
Not as good as what I first read but it will cut a couple's taxes by $1600 if they don't itemize.
I expect that will be quite the subject of debate when it comes to the floor. One of my neighbors growing up had eleven children and never paid a dime in tax. Can't imagine they can make that one stick.
https://fairandsimple.gop/

The proposed special pass-through business tax rate is fundamentally disingenuous, even though I would probably end up benefiting from it. Owners in partnerships, LLCs, etc. already avoid most corporate tax plus take advantage of expensing everything they possibly can. Then they only pay their personal tax rate at whatever is left over. So the proposal is to let them not pay corporate tax, get a lower personal tax rate AND get to keep expensing everything they can. That's a steal. Literally.

drwater wrote:The proposed special pass-through business tax rate is fundamentally disingenuous, even though I would probably end up benefiting from it. Owners in partnerships, LLCs, etc. already avoid most corporate tax plus take advantage of expensing everything they possibly can. Then they only pay their personal tax rate at whatever is left over. So the proposal is to let them not pay corporate tax, get a lower personal tax rate AND get to keep expensing everything they can. That's a steal. Literally.

Agreed. And here, perhaps, would be a place to compromise on things by both sides.

Liberals don't generally like the pass through rates. Conservatives generally don't like the Estate tax. So, perhaps some kind of compromise where both of these are limited to a great extent might make the most sense for the country.

But of course, we can't have THAT, because both sides would lose talking points.

From conservatives, that liberals hate business and are bad for business if they try to do things like limit pass-through income abuse. From liberals, that conservatives are evil if they consider the Estate (i.e. death) tax abusive, because it taxes an estate that was already subject to income taxes for someone's entire life.

And so, aside from nibbling at the edges, nothing much really changes, and a complete arbitrary mess of a tax system lives on to confuse and enrage lots of people.

The one group of people who consistently win from such a big mess are the tax preparers, who have their own strong arm of the financial services lobby.

drwater wrote:The proposed special pass-through business tax rate is fundamentally disingenuous, even though I would probably end up benefiting from it. Owners in partnerships, LLCs, etc. already avoid most corporate tax plus take advantage of expensing everything they possibly can. Then they only pay their personal tax rate at whatever is left over. So the proposal is to let them not pay corporate tax, get a lower personal tax rate AND get to keep expensing everything they can. That's a steal. Literally.

We are talking about a bare framework here with no final language or rules to agree or disagree with. Given that my view is that that income needs to be taxed one time not twice or three times. I think the rule should be "He who spends it owes the taxes on it." I would consider money skimmed off a company and directed elsewhere including an individuals bank account as "spent".

And to clarify things, lower taxes and lower spending would be very good things in my opinion. Getting our corporate tax rate more comparable to the rest of the world would be a good thing (cutting down on the double taxation as VT says). But coming up with a special lower rate for pass-through income is a double serving of goodies for wealthy business owners versus salaried and hourly workers.

I think they should make a top 1/10th of 1 percent bracket and they should have to pay a 50% tax. The people that have benefited most should have to give back to their country to some degree.

How about this radical idea: generate enough in taxes to pay for what we spend. This tax plan puts us further in the red. Everyone wants government services. But no one wants to pay for them. If you are cutting revenue, you need to cut outlays as well.

Amid all the controversy and questions surrounding President Donald Trump’s tax-reform blueprint, one thing seems pretty clear to most economists: It will increase the federal government’s budget deficits.

The increased red ink also would come after past criticism of President Barack Obama by Republicans -- and by then-candidate Trump -- for allowing government debt to roughly double on his watch. Rather than reducing the deficit, the tax framework Trump and congressional leaders released on Wednesday could add $2.2 trillion to the gap through 2027, according to the Committee for a Responsible Federal Budget.

“With the plan essentially $2 trillion shy of being revenue-neutral, the likelihood of it happening is slim, especially since there are a lot of states that get clobbered by the changes.”

Most Economists Agree: Trump Tax Plan Will Widen Budget Deficit