View Full Version : Tax Reform: Will You Pay MORE or LESS income tax?
dado potato
11-17-17, 12:43pm
Americans were promised "Tax Reform" and "Lower Taxes".
As one bill was passed by the House of Representatives, and as another bill wends its way through the Senate, it looks as though changes will be passed into law. It is too early to know what all the exact changes in federal income tax will be, and when they will take effect (and when they will "sunset").
Some pundits are saying taxpayers with less than $75,000 income will pay higher taxes. I need to do some research and find out what that prediction is based on.
The Senate bill would eliminate the ACA (Obamacare) mandate. Without a mandate (penalty in the income taxes) more healthy people would choose to let health insurance lapse, or never buy it. So an indirect cost of this "reform" would be self-selection, whereby older and sicker individuals participate in the insurance risk pool, but healthier and younger individuals do not ... with the effect that higher insurance premiums will be charged for the same coverage by the insurers. And if the USA has a larger proportion of the population uninsured, it seems likely that more people will be impoverished by the costs of medical care.
As you good people figure out the net effects of the changes on your individual tax situation, I am wondering if anybody will be paying more or less. I am interested in the overall impact... I am not asking for any private or personal information.
Teacher Terry
11-17-17, 12:46pm
As usual with the Repub's the middle class is going to get poorer while the rich get more tax breaks and get richer. I think we will be paying more.
dado potato
11-17-17, 3:30pm
The House bill was 429 pages long.
I still need to research details, but I understand there would be 4 tax brackets instead of 6. Top (39.5%) marginal rate for joint filers would be applied to their taxable income in excess of $1,350,000. The bottom bracket tax rate, for joint filers with taxable income under $18,650 would increase from 10% to 12%.
Businesses' tax rates would go down permanently. The rate for pass-through businesses, such as LLCs, generally would drop from 39.5% to 25%. ( A boon for real estate investors. )
Corporations repatriating profits from abroad will be taxed at 12%. In future, multinational corporations will be taxed by the USA on profits made in the USA (a "territorial" tax system, rather than a global system).
Smaller independent businesses in which the owners make $150,000 or less per year can look forward to a 9% tax rate on the first $75,000... phasing in gradually to 2022.
Brackets for joint filers in the House bill:
12% ... 0-$90,000
25% .. $90,001 - $260,000
35% .. $260,001 - $1,000,000
39.5% $1,000,001 +
2017 Brackets for Joint Filers
10% ... $0 to $18,650 ... this group could be paying more if the reforms become law
15% ... $18,651 - $75,900
25% ... $75,901 - $153,100
28% ... $153,101 - $233,350
33% ... $233,351 - $416,700
35% ... $416,701 - $470,700
39.5% $470,701+
So it would appear that for joint filers:
Taxable Income from 0 to $18,650 would see the tax rate INCREASE from 10% to 12%
Taxable Income from $18,651 to $75,900 would see the marginal tax rate drop from 15% to 12%.
... from $75,901 to $90,000 would see the marginal tax rate drop from 25% to 12%
... from $153,101 to $233,350would see the marginal tax rate drop from 28% to 25%.
... from $233,351 to $260,000 would see the marginal tax rate drop from 33% to 25%.
... from $260,001 to $416,700 would see the marginal tax rate INCREASE from 33% to 35%.
The House bill increases the Standard Deduction for joint filers from $12,700 to $24,400 and it eliminates most personal exemptions.
All my figures are based on journalistic coverage. I stand to be corrected. I am not a tax professional. I would recommend anyone who wants to understand their tax situation should consult a competent tax professional.
Teacher Terry
11-17-17, 3:32pm
The plan also calls for billions to be cut from Medicare. Great idea with so many baby boomers coming down the pipeline>:(
flowerseverywhere
11-17-17, 3:50pm
We have been reading and trying to figure this out. But from what we can deduce, our taxes will perhaps be a few hundred dollars lower or a wash. It is very hard to tell. We are almost at Medicare age so expect that cost to increase to probably offset any savings if there are some. Issues of the estate tax for estates 5 million+, child care credits and mortgage deductions elimination for mortagages over half a million will not effect us. Of course, I imagine some people could decrease charitable contributions if they are not deductible.
I inderstand that part of the bill repeals the individual health care mandate. I understand why the individual mandate is so controversia, but without it I cannot imagine our premiums won’t see a huge increase.
I’m still waiting for the Republican Congress, senate and White House to repeal and replace Obamacare with something that is better, covers more people and cost less like Donald promised over and over.
A tax bill that helps middle class people like me seems doubtful, however I don’t mind paying taxes so kids can attend school, there are police and fire departments, trash pick up and so on. All part of the deal.
Teacher Terry. cutting Medicare is truly making those that do so a death panel. Living in a big retirement community I know many people who worked their whole lives at decent jobs, are not extravagant, have one car and so on that simply have little extra money.
edited to correct Teacher Terror to Teacher Terry. Honestly...
Teacher Terry
11-17-17, 4:14pm
I believe you:)) I have a few friends that live in low income senior housing after running out of $. Plus our rents are skyrocketing as are our housing prices.
Williamsmith
11-17-17, 4:52pm
Americans were promised "Tax Reform" and "Lower Taxes".
As one bill was passed by the House of Representatives, and as another bill wends its way through the Senate, it looks as though changes will be passed into law. It is too early to know what all the exact changes in federal income tax will be, and when they will take effect (and when they will "sunset").
Some pundits are saying taxpayers with less than $75,000 income will pay higher taxes. I need to do some research and find out what that prediction is based on.
The Senate bill would eliminate the ACA (Obamacare) mandate. Without a mandate (penalty in the income taxes) more healthy people would choose to let health insurance lapse, or never buy it. So an indirect cost of this "reform" would be self-selection, whereby older and sicker individuals participate in the insurance risk pool, but healthier and younger individuals do not ... with the effect that higher insurance premiums will be charged for the same coverage by the insurers. And if the USA has a larger proportion of the population uninsured, it seems likely that more people will be impoverished by the costs of medical care.
As you good people figure out the net effects of the changes on your individual tax situation, I am wondering if anybody will be paying more or less. I am interested in the overall impact... I am not asking for any private or personal information.
I wont be paying more no matter how you slice it......I will see to that.
I’ll have to see what they pass before I can tell. I doubt if there will be much change for me.
catherine
11-17-17, 5:36pm
These chart are pretty helpful in figuring it out.
https://www.nytimes.com/interactive/2017/09/27/us/politics/six-charts-to-explain-the-republican-tax-plan.html?_r=0
I don't itemize so I probably will get a small decrease. But if I lose my job/health insurance I will pay a lot more for medical.
goldensmom
11-17-17, 7:47pm
I don’t know. We have sources of income in addition to my husbands employment and my pension, i.e. leases, oil, farm and I have no idea how the reforms would affect farm income but I'm sure it will somehow. Our taxes are complicated so we will still be using a CPA and not a postcard. Whatever it is I will not fret, we will pay as we always have….give unto Caeser.
iris lilies
11-17-17, 8:11pm
Deficit spending is a bad thng.
I don’t allow my household to do it, my city doesnt do it, my state doesnt do that.
I dont want my national government to do it.But I dont see Trumpster reigning in the spending. We are all doomed.
Deficit spending is a bad thng.
I don’t allow my household to do it, my city doesnt do it, my state doesnt do that.
I dont want my national government to do it.But I dont see Trumpster reigning in the spending. We are all doomed.
He is reigning in spending, just not reining in spending.
Initially I think I will pay less, but it's a wait and see. I don't itemize and the doubling of standard deductions will help. No huge change in my tax bracket.
I am more concerned about a longer horizon with a budget based on what most are saying as projected unrealistic economic growth to compensate for the lose in tax revenue. More than one alternate possibility could be bad for my finances.
iris lilies
11-17-17, 10:58pm
He is reigning in spending, just not reining in spending.
Haha. That is good! I wont even make a correction to my post!
flowerseverywhere
11-18-17, 12:20am
He is reigning in spending, just not reining in spending.
maybe raining in spending. Dollar bills fluttering from the unknown into cronies coffers under the guise of tax cuts, contracts to rebuild Puerto rico’s Infrastructure, defense spending. I would love to know what the ratio of taxes we pay go to actually funding things that actually benefit the taxpayers and what percent go to cronyism, feathering the lawmakers nest or nepotism.
It looks like the final version of the tax bill is about to become reality. It might be an over simplification, but the charts from an NPR article showed a simplified version of how things would look for different income levels. I don't see any significant benefit to what I consider the middle class. I probably fall into the Bernie and Elizabeth Warren school that this mostly just a big break for the upper incomes.
https://www.npr.org/2017/12/19/571754894/charts-see-how-much-of-gop-tax-cuts-will-go-to-the-middle-class
Everyone should figure this out early - I know I need to go through what passes and try to determine if I need to update my W-4. I expect a lot of people won't and will not only owe the IRS a big chunk of cash in 2019, but get hit with penalties for not withholding enough, as well.
JaneV2.0
12-19-17, 12:15pm
Republicans are historically against deficit spending during Democratic administrations, but fine with it when they're doing it. This tax bill will add trillions, but that's OK--they'll just gut Social Security, Medicare, Medicaid, welfare, and other programs to make up the difference. Which has long been a goal for them.
catherine
12-19-17, 12:16pm
I'm wondering if I need to bother with itemizing. I typically have high property taxes, state taxes, mortgage interest, to declare but still--I need to know if it's going to exceed $25,000. Plus supposedly 65+ people get a bonus deduction. What happens if only one of you is over 65, I wonder?
Williamsmith
12-19-17, 1:12pm
I may just be one of those Rust Belt nitwits But when I was in elementary school and they had these tests with one number on one side and another number on the other and a <,>,= sign in the middle. The before new tax bill figure is < the after tax bill figure by something like $800-$1,000. Thats 33 bottles of Makers Mark! I’ll take it and thank you very much Uncle Sam. So the rich guy down the road gets his wife a new diamond necklace.......eh. The economy moves on moving money.
ApatheticNoMore
12-19-17, 1:31pm
If they actually do try to use it as an excuse to cut social security and medicare (not a reality as the government deficit spends when it wants to fund something and another option would be just fund it with payroll taxes also, but reality versus and what rationalizations we will get are two different things), then yes we can drink to forget how bad things are going to be long term, but really alcohol is nowhere near a strong enough drug for that.
Williamsmith
12-19-17, 2:27pm
If they actually do try to use it as an excuse to cut social security and medicare (not a reality as the government deficit spends when it wants to fund something and another option would be just fund it with payroll taxes also, but reality versus and what rationalizations we will get are two different things), then yes we can drink to forget how bad things are going to be long term, but really alcohol is nowhere near a strong enough drug for that.
Well, the tax break is right there in black and white for Fred and Freda to see. Nancy and Chuck are just fear mongering. Middle Class Joe understands greenbacks and he doesn’t see any of this negativity rubbing off on Trump. The Russian thing is turning into a morass for the Dems and establishment Republicans and a “told ya so” for Trump, the economy is improving steadily, he whole sexual misconduct atmosphere is fizzling. The guy is so unpopular he might even get elected for a second term.......how’d that be? I’m thinking booze might be a good thing to stockpile....better than bitcoins!
I may just be one of those Rust Belt nitwits But when I was in elementary school and they had these tests with one number on one side and another number on the other and a <,>,= sign in the middle. The before new tax bill figure is < the after tax bill figure by something like $800-$1,000. Thats 33 bottles of Makers Mark! I’ll take it and thank you very much Uncle Sam. So the rich guy down the road gets his wife a new diamond necklace.......eh. The economy moves on moving money.
I think Paul Ryan went to the same school. One thing it is not is a "big" tax break for the middle class, which is one pitch I've heard from him. I sort of liked it when Bush just gave rebates to everyone for the same amount.
On negative list, that many bottles of Maker's Mark could have it's own down side.
catherine
12-19-17, 3:11pm
The guy is so unpopular he might even get elected for a second term.......how’d that be? I’m thinking booze might be a good thing to stockpile....better than bitcoins!
If he gets elected in 2020, I'm definitely counting on a stockpile of booze to get me through. I'll take mine in the form of Bailey's and Pinot Grigio.
Here's one box score of winners and losers by income range, although I've heard some wildly different estimates.
https://www.marketwatch.com/story/here-are-the-winners-and-losers-of-the-final-version-of-the-republican-tax-bill-2017-12-18
Williamsmith
12-19-17, 4:17pm
Here's one box score of winners and losers by income range, although I've heard some wildly different estimates.
https://www.marketwatch.com/story/here-are-the-winners-and-losers-of-the-final-version-of-the-republican-tax-bill-2017-12-18
Williamsmith! You are a Winner! Winner! Chicken Dinner!
Why does every estimate article have to talk about what happens in ten years......my oh my....ten years nothing in politics actually happens in a ten year period. Well, there was that assault weapons ban thingy. Oh and the Iranians hit the nuclear jackpot in a ten year time span.
Catherine.....start stocking up. Although, if I were you I’d invest in a good off the grid composting toilet, and/or a down payment on a nice solar power inverter. Is it windy in Vermont? Maybe a nice windmill to block your view of the lake. I’m just kidding! You know I’m kidding right?
Rogar....I will definitely have to up my game a weeee bit on the Makers Mark if I am going to make room for next years tax break.
catherine
12-19-17, 4:25pm
Catherine.....start stocking up. Although, if I were you I’d invest in a good off the grid composting toilet, and/or a down payment on a nice solar power inverter. Is it windy in Vermont? Maybe a nice windmill to block your view of the lake. I’m just kidding! You know I’m kidding right?
Hmmm.. you're kidding, but I'm serious. OK, no windmill, and I already have a beautiful restored vintage clawfoot tub connected to a septic field, so no composting toilet. But I'm thinking solar in the near future for sure. Why not?
It looks like I will come out a bit ahead. Even with some of the new caps on deductions, it will still make sense for us to itemize. I like that we'll be able to pay for K-12 private school out of a 529 account. I'm pleased with the reduction in excise taxes for craft distillers. The change in brackets will help us. If being allowed to keep a little more of what I earn is a "gift", then I'm happy with mine.
Looks good to me. Ill be stocking up on the Makers 46 and Woodford Reserve myself. Not sure how much I’ll be saving yet, every few thousand helps though.
Williamsmith
12-19-17, 5:45pm
Looks good to me. Ill be stocking up on the Makers 46 and Woodford Reserve myself. Not sure how much I’ll be saving yet, every few thousand helps though.
Perhaps you will be feeling so gleeful that you’ll share some of that with the ones who only get $10?
Williamsmith
12-19-17, 5:47pm
Hmmm.. you're kidding, but I'm serious. OK, no windmill, and I already have a beautiful restored vintage clawfoot tub connected to a septic field, so no composting toilet. But I'm thinking solar in the near future for sure. Why not?
Why not indeed! I am having a grand time designing my tiny house in the mountains of Tennessee (pensions aren’t taxed there) and one of my energy sources will be solar power.
Teacher Terry
12-19-17, 6:12pm
Even though it looks like we will save a little $ I am totally against this tax cut. The rich will really benefit, our deficit sky rockets and then they will try to cut SS and Medicare and you will have old people having to decide between meds and food, etc. I think the rich want the old people to die faster so they won't be a burden on society. Unfortunately, many wealthy people don't care about others and the middle class is quickly disappearing. This current administration is really ruining this country.
Williamsmith
12-19-17, 6:26pm
Even though it looks like we will save a little $ I am totally against this tax cut. The rich will really benefit, our deficit sky rockets and then they will try to cut SS and Medicare and you will have old people having to decide between meds and food, etc. I think the rich want the old people to die faster so they won't be a burden on society. Unfortunately, many wealthy people don't care about others and the middle class is quickly disappearing. This current administration is really ruining this country.
Im thinking about exercising my option to decline the tax cut and forward more than my share back to the IRS where that money will be put to good use by the government and mediate the burgeoning deficit. Okay, that was long enough. Maybe I’ll get a new guitar.
Rogar....I will definitely have to up my game a weeee bit on the Makers Mark if I am going to make room for next years tax break.
I calculated that if I can max out my two alcoholic beverages a day limit I'll get maybe a 6 or 7 month supply of our wimpy Colorado craft beer. If I shop sales. Something to shoot for.
Unfortunately, Washington voters--in their infinite wisdom--voted for privatization of liquor sales, enabling us to stand around in the aisle at Safeway waiting for some entry-level employee to open the vault so we can pick our poison. And then pay a much higher price for it. I never bought much liquor when it was a cheaper and more pleasant experience, but I depend on the kindness of Oregonian friends to supply me now.
ApatheticNoMore
12-19-17, 8:34pm
very odd, you can just pick up liquor with your food here at any grocery, trader joe etc. and it's not locked up (or liquor stores or stores that just sell beverages - if you are that serious about your alcohol I guess). Can't imagine a neighborhood quite bad enough to keep it locked up really, well maybe the really expensive stuff but not the cheap stuff.
$1000 or so is nothing in the grand scheme of things,it's nothing to me and I'm pinching the unemployed pennies here, but what is it, one months rent, pfft like I said I'd rather have the hope of social security some day (it's not an immediate hope alas, unfortunately I'm nowhere near that age now). Plus it doesn't even mean just potential cuts to retirement programs but it's not EVEN a tax cut in the long run, as changing the inflation measure for taxes as they are doing will even eat that up so taxes on the middle class at any rate will be back up where they were in a few years, yes even the Bush refund was likely more honest.
catherine
12-19-17, 9:51pm
Unfortunately, Washington voters--in their infinite wisdom--voted for privatization of liquor sales, enabling us to stand around in the aisle at Safeway waiting for some entry-level employee to open the vault so we can pick our poison. And then pay a much higher price for it. I never bought much liquor when it was a cheaper and more pleasant experience, but I depend on the kindness of Oregonian friends to supply me now.
Well, we can't even get it at the supermarket, vault or no vault, nor can we get it in convenience stores. New Jersey only sells liquor, including beer and wine, in liquor stores, and there are a limited number of very exorbitant liquor licenses in each town. So, for instance, a new Trader Joe's just opened a couple of miles up the road, but alas! No two-buck Chuck for me because there were no liquor licenses available in that town for TJ to buy.
It's a little weird, but OTOH, I don't mind. I might drink more than I needed to if I had a chance to pop a bottle in the cart every time I went out for bananas. Now I'll be on the way home from food shopping and I'll ask myself, do I really want to fight traffic and sit at lights for the next 10 minutes just to go to BuyRite for a bottle of wine? And I usually answer, nah.
sweetana3
12-20-17, 7:10am
Never knew there were such wide variances in liquor sales. Here in IN, we cannot buy on Sunday but groceries have it all and I think they are fighting to get cold beer in convenience stores. Dont buy much ever but it is always there to buy.
I didn't appreciate the quiet, orderly ambience of our state liquor stores, where you could browse to your heart's content and pick up a few mini-bottles of hooch to experiment with until they were gone. Oh well--there are always the cannabis dispensaries...
I refer to our local convenience store as the "Substance Abuse Mart," since--like all such places--they specialize in beer, junk food, and weed accoutrements...
I fortunately never developed a taste for wine or distilled spirits, but do like a beer while cooking or a couple with friends, but not much more. It's one of life's simple pleasures and apparently not that unhealthy. Maybe it's a guy thing, but it's at the top of my social pleasures to have a couple of beers with an old friend on a porch or at the kitchen table.
I make a shopping voyage about once a week and drop off things at the recycle center, get groceries (they can't sell liquor), pick up little beer at the liquor store, and maybe something at a box store. Funny, but I was thinking how odd it must be for out of staters, because the route takes me past maybe five marijuana stores. One is called the Cannabis Superstore and is painted Bronco blue and orange. It's just across the street from a Walmart. I have to chuckle when I go by.
“If more of us valued food and cheer and song above hoarded gold, it would be a merrier world.” ― J.R.R. Tolkien (https://www.goodreads.com/author/show/656983.J_R_R_Tolkien)
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