$1.5 Trillion GOP Tax Cut Thread

[jaichind]

My dad lives in Portland ,has an upper middle class job ,and this tax plan would reduce my dad's taxes .

Well it depends on what is upper middle class job/income.  Lets do the math. 

We can define upper middle class income in OR as either AGI of 750K (that is the standard where I live in Scarsdale) or  500K or 250K.

If we go with 750K (of which around 37.5K are qualified dividends) then we can use state income tax of around 71.7K, real estate tax of around 15K (OR real estate taxes are around 1% so you figure 1% of $1.5 million dollar house) and charity of around 15K.  I assume no mortgage.  If we do that under current law in 2018 the fed tax would be around 199K.  If we go with the Trump plan even though the qualified dividends would be taxed at a lower 15% rate vs 20% under the current plan the loss of deductions means that the tax bill would be 209K which is an increase of 10K.

If we go with 500K (of which around 20K are qualified dividends) then we can use state income tax of around 47K, real estate tax of around 10K (OR real estate taxes are around 1% so you figure 1% of $1 million dollar house) and charity of around 7.5K.  If we do that under current law in 2018 the fed tax would be around 132K.  If we go with the Trump plan even the tax bill would be 125K which is a decrease of 7K.

If we go with 250K (of which around 7.5K are qualified dividends) then we can use state income tax of around 22.2K, real estate tax of around 5K (OR real estate taxes are around 1% so you figure 1% of 500K house) and charity of around 3.8K.  If we do that under current law in 2018 the fed tax would be around 46K.  If we go with the Trump plan even the tax bill would be 44K which is a slight decrease of 7K.

The main drivers here are at 500K AMT is kicking in strong which having AMT going away in the new plan help offset losing those deductions.  At 250K the new plan is almost wash relative to existing plan.   And at 750K the new plan is a clear loss.  Now, OR has fairly low real estate taxes ergo the impact on higher income taxpayers is smaller than other even higher tax states.  I agree OR is high state tax but you have compare that to places like NYC (where there is the city tax) or NYC suburbs where real estate taxes are high.  Same for CA.

[Ban my account ffs!]

The mental magic that you call 'logic' is toxic, jaichind.  The GOP should hike taxes for people in Democratic stayes so they will vote GOP... right.  I guess I should start shoveling in the carbs to lose weight by that logic.

[OSR stands with Israel]

My dad lives in Portland ,has an upper middle class job ,and this tax plan would reduce my dad's taxes .

Well it depends on what is upper middle class job/income.  Lets do the math. 

We can define upper middle class income in OR as either AGI of 750K (that is the standard where I live in Scarsdale) or  500K or 250K.

If we go with 750K (of which around 37.5K are qualified dividends) then we can use state income tax of around 71.7K, real estate tax of around 15K (OR real estate taxes are around 1% so you figure 1% of $1.5 million dollar house) and charity of around 15K.  I assume no mortgage.  If we do that under current law in 2018 the fed tax would be around 199K.  If we go with the Trump plan even though the qualified dividends would be taxed at a lower 15% rate vs 20% under the current plan the loss of deductions means that the tax bill would be 209K which is an increase of 10K.

If we go with 500K (of which around 20K are qualified dividends) then we can use state income tax of around 47K, real estate tax of around 10K (OR real estate taxes are around 1% so you figure 1% of $1 million dollar house) and charity of around 7.5K.  If we do that under current law in 2018 the fed tax would be around 132K.  If we go with the Trump plan even the tax bill would be 125K which is a decrease of 7K.

If we go with 250K (of which around 7.5K are qualified dividends) then we can use state income tax of around 22.2K, real estate tax of around 5K (OR real estate taxes are around 1% so you figure 1% of 500K house) and charity of around 3.8K.  If we do that under current law in 2018 the fed tax would be around 46K.  If we go with the Trump plan even the tax bill would be 44K which is a slight decrease of 7K.

The main drivers here are at 500K AMT is kicking in strong which having AMT going away in the new plan help offset losing those deductions.  At 250K the new plan is almost wash relative to existing plan.   And at 750K the new plan is a clear loss.  Now, OR has fairly low real estate taxes ergo the impact on higher income taxpayers is smaller than other even higher tax states.  I agree OR is high state tax but you have compare that to places like NYC (where there is the city tax) or NYC suburbs where real estate taxes are high.  Same for CA.

Upper middle class is 90k-250k

[jaichind]

Upper middle class is 90k-250k

Ok. Well if that were the case then for sure I would agree that this tax plan does lower taxes for this group.  My point about wealth transfers were mostly for people in the 500K levels and above between metropole and non-metropole regions.

Of course if you ask people in my neighborhood they will define upper middle class at 750K but I get different regions have different views on this.

[#gravelgang #lessiglad]

This bill is so f**king toxic and it is very clear the GOP is cynically going after the groups that didn't vote for them.  Lots of people will see a tax hike while corpoations and the super rich make out like bandits. 

This pile of bullsh**t needs to be killed with fire.

The GOP is going for lower tax rates, an higher standard deduction paid for by less loopholes (and higher deficits). That's pretty much the standard formula for tax reform. The only thing in the tax plan that I would describe as downright cynical is the endowment tax (and perhaps some of the measures for students). Repeal/limitation of the SALT deduction always was going to be part of a tax reform, it costs a huge amount of revenue so not touching it means you'd have to slash even more popular deductions/tax breaks (or you'd have to look at things like the VAT or the carbon tax).

I'm disappointed that they're not going further in limiting the corporate interest deduction. They could have used the revenue for further corporate tax cuts or deficit reduction.

And removing casual loss deductions for anything other than hurricane damage

[Frodo]

While we're at it, let's take another swipe at Obamacare:

Conservatives push to repeal Obamacare mandate in tax package

[Southern Senator North Carolina Yankee]

While we're at it, let's take another swipe at Obamacare:

Conservatives push to repeal Obamacare mandate in tax package

Of course, they cannot let a good thing happen without letting stupidity get in the way.

[Attorney General & PPT Dwarven Dragon]

While we're at it, let's take another swipe at Obamacare:

Conservatives push to repeal Obamacare mandate in tax package

Are they trying to make me (and America) rabidly oppose this?

[OSR stands with Israel]

just pass the plan you outlined please . Its a a good tax plan , please dont ruin it.

[True Federalist (진정한 연방 주의자)]

just pass the plan you outlined please . Its a a good tax plan , please dont ruin it.

Translation: It helps me personally, so who cares about the damage it does to the public fisc.

[jaichind]

One thing I missed is PEASE deduction reduction would be gone (since there are pretty much little deductions options left in the first place.)  If that were the case then the hit on Blue State high income population would be bad but slightly less bad then I first thought (for AGI 2000K in SF the hit would be something like 61K instead of 71K.)

[jaichind]

In low local tax states there seems to be a sweet spot of around AGI of 125K-150K where the tax cut is the largest in % of AGI terms.  This bunch seems to benefit from the low tax rates and higher standard deduction while under the present tax regime they do not benefit from itemization.   In high local tax states there seems to be a similar sweet spot of of AGI of around 500K where this bunch benefits from the new tax plan where as taxpayers in AGI regions somewhat below or above tends to pay more.  This has to do with the fact that AMT hits the hardest around this income range but now AMT now gone under this plan.

[SoLongAtlas]

It kills federal student loan interest deductions http://money.cnn.com/2017/11/02/pf/college/house-tax-bill-student-loan-interest-deduction/index.html

I, along with 40 million others, claim this each year. Terrible idea. They do allow states to continue deductions for student loan interest, however.

[Holy Unifying Centrist]

this tax plan somehow manages to both make my family pay more taxes and get less benefits

great plan gop lmao

[Person Man]

And people wanted to know the cause of the next recession..

[SoLongAtlas]

Can the mods sticky this considering this will be a hot topic until at least late December when they will try to pass it? Thanks.

[OSR stands with Israel]

It kills federal student loan interest deductions http://money.cnn.com/2017/11/02/pf/college/house-tax-bill-student-loan-interest-deduction/index.html

I, along with 40 million others, claim this each year. Terrible idea. They do allow states to continue deductions for student loan interest, however.

The student loan interest deduction is capped at 2,500 dollars a year .


Your standard deduction will go up from 12k to 24k so no people who are struggling to pay back loans will not get hit .

[Blue3]

just pass the plan you outlined please . Its a a good tax plan , please dont ruin it.

[jaichind]

https://www.google.com/amp/s/amp.businessinsider.com/gop-tax-reform-plan-bubble-rich-rates-trump-2017-11

Just found out about this bubble tax which has a de facto 45.6% marginal tax rate between 1 mil to 1.2 miles for singles and 1.2 mil to 1.4 mil for married couples.  I will get hit by this which will put me in the, if only slightly, loser camp.   The issue here is the GOP need more revenue but politically cannot raise the top 39.6 rate. So they came up with this.

[jaichind]

This plan is a plan that seems to encourage love and marriage.  It pretty much closes the marriage penalty for higher income earners.  It also disourages divorce by making alimony payments after tax versus the reciever of alimony pay tax. This has the de facto affect of being pro ex-wife vs the ex-husband since most of the time it is the man that pays alimony. The governments gets more revenue since the ex-husband is more likely than the ex-wife to be in a higher tax bracket which also means divorce is now more expensive. This is a policy social conservatives and NOW can both jointly back and the government gets more money.  Everyone is a winner except for the ex-husband. 

[Badger]

My dad lives in Portland ,has an upper middle class job ,and this tax plan would reduce my dad's taxes .

Well it depends on what is upper middle class job/income.  Lets do the math. 

We can define upper middle class income in OR as either AGI of 750K (that is the standard where I live in Scarsdale) or  500K or 250K.

If we go with 750K (of which around 37.5K are qualified dividends) then we can use state income tax of around 71.7K, real estate tax of around 15K (OR real estate taxes are around 1% so you figure 1% of $1.5 million dollar house) and charity of around 15K.  I assume no mortgage.  If we do that under current law in 2018 the fed tax would be around 199K.  If we go with the Trump plan even though the qualified dividends would be taxed at a lower 15% rate vs 20% under the current plan the loss of deductions means that the tax bill would be 209K which is an increase of 10K.

If we go with 500K (of which around 20K are qualified dividends) then we can use state income tax of around 47K, real estate tax of around 10K (OR real estate taxes are around 1% so you figure 1% of $1 million dollar house) and charity of around 7.5K.  If we do that under current law in 2018 the fed tax would be around 132K.  If we go with the Trump plan even the tax bill would be 125K which is a decrease of 7K.

If we go with 250K (of which around 7.5K are qualified dividends) then we can use state income tax of around 22.2K, real estate tax of around 5K (OR real estate taxes are around 1% so you figure 1% of 500K house) and charity of around 3.8K.  If we do that under current law in 2018 the fed tax would be around 46K.  If we go with the Trump plan even the tax bill would be 44K which is a slight decrease of 7K.

The main drivers here are at 500K AMT is kicking in strong which having AMT going away in the new plan help offset losing those deductions.  At 250K the new plan is almost wash relative to existing plan.   And at 750K the new plan is a clear loss.  Now, OR has fairly low real estate taxes ergo the impact on higher income taxpayers is smaller than other even higher tax states.  I agree OR is high state tax but you have compare that to places like NYC (where there is the city tax) or NYC suburbs where real estate taxes are high.  Same for CA.

Upper middle class is 90k-250k

That statement shows just what an utterly enriched bubble World you live in.

Do some research as to what the actual median household income in the country is, and what percentile 200 Grand a year and up really constitutes.

[True Federalist (진정한 연방 주의자)]

It also discourages divorce by making alimony payments after tax versus the receiver of alimony pay tax.

If you really think alimony is a significant factor in whether to get a divorce, or even in the behavior that leads to alimony being granted, I pity you.

[pbrower2a]

It gives me every incentive to be reborn as a Rothschild or a Rockefeller. But what can you expect from a President who fits a Marxist stereotype of a capitalist pig?

[GeorgiaModerate]

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[Attorney General & PPT Dwarven Dragon]

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Ding Dong, the bill is dead