Under Trump's tax plan, my taxes will [edit] decrease

[jammix]

I think the idea is that companies will invest in assets for the tax benefit. If those assets are new buildings, then they will hire construction companies to build it. Construction companies will buy new equipment. Equipment builders will but more steel. Refiners will purchase mined metals. Shipping companies will ship the ore and steel and equipment. All along the way people are hired to perform those duties. Those people all pay taxes. I think that's the way it's supposed to work...

 

[PokerGuy]

So, OP has been owned by his own ignorance. First claims his taxes will go up 46% under Trump's plan, then it turns out that depending on his particular situation his taxes will not only not go up 46% but will likely go down (possibly significantly).

Ouch.

 

[werepossum]

I don't see any value whatsoever in tax cuts at this moment. We're finally in solid recovery mode, economy's humming, virtually everyone who wants a job can find one. What are we stimulating? People on disability, welfare, or retirement aren't coming back into the work force unless wages go waaay up, and while this might happen as a result of other things, I don't see how a tax cut in personal rates is going to help.

 

[Fanatical Meat]

As I said before its too early to tell but this isn't the first time I've heard big tax cuts especially at the top will help everyone.
What usually happens is that wealth gets locked up in minimal growth type investments (by minimal I mean it doesn't generate many jobs) then we're left with a budget hole that the guys who wanted the big tax cuts get concerned about but they never cut spending.

/rant done

 

[fskimospy]

I'm seeing the new deduction all over the place. I have seen it as low as 12,100 to as high as 25,000. But it is definitely going up from 6300 for single filers in 2016 under his plan. I think the goal is to get rid of schedule A for avg people. I am fine with that imo.

Upping the standard deduction that high basically wipes out the mortgage interest deduction, student loan interest deduction, etc for most regular people. While I'm fine with eliminating those deductions in principle, what this is actually proposing is getting rid of those deductions for those who aren't ultra rich. That is particularly shitty and cynical. Same deal goes for his 'child care deduction'. Guess who takes advantage of deductions instead of tax credits? Well off people. The people who actually need help with paying for child care will see little or nothing from that deduction.

If it actually goes through as currently formulated there are going to be a lot of working class people who get a very rude awakening.

 

[fskimospy]

I don't see any value whatsoever in tax cuts at this moment. We're finally in solid recovery mode, economy's humming, virtually everyone who wants a job can find one. What are we stimulating? People on disability, welfare, or retirement aren't coming back into the work force unless wages go waaay up, and while this might happen as a result of other things, I don't see how a tax cut in personal rates is going to help.

It does seem like an odd time for stimulus as inflation expectations have finally increased, wage growth seems to be actually happening, and unemployment is low. I think some modest stimulus could actually be helpful as our growth rate still isn't great and wages are only now growing decently after years of stagnation. That being said, tax cuts for rich people is about the least effective form of stimulus possible so it seems like a poor target. The size also seems dramatically out of proportion with what is appropriate.

 

[theeedude]

If you can't deduct CA income tax from federal gross income, that would be a big hit.

 

[pauldun170]

I think the goal is to get rid of schedule A for avg people. I am fine with that imo.

Medical expenses, state and local taxes, interest, charitable, job related crap?
In many cases you are going to need a pretty huge standard deduction increase to cover the loss of schedule A and the loss of claiming individual dependents

 

[mrjminer]

Is it? I can't find the detail on that. If it is, my taxes will decrease by $300.

That's how it works. You are taxed at the rate that those dollars fall between. For instance (i'm too lazy to use the actual numbers, but this should explain it to you):

0-10,000 = 0% = You don't get taxed on the first $10,000 of your income
10,001 - 30,000 = 10% = The next $20,000 of your income is taxed at 10%. If you don't make $30,000, then whatever you make from 10,001 - (for instance) 25,000 would be taxed at 10%.
30,001 - 75,000 = 20% = The next $45,000 of your income is taxed at 20%. If you don't make $75,000, then whatever you make from 30,001 - (for instance) 65,000 would be taxed at 20%.
etc.

So, you only pay the tax rate for the specified tier for the money that you have made that falls within that tier.

 

[MrSquished]

It's called a progressive tax rate system. income is parceled into brackets and tax at certain rates so if you do get a raise into a higher bracket your income will not go down, as only the income in that bracket gets taxed at the higher rate.

something I'm sure the repubs would get rid of if they could in order to implement a pure flat tax, which becomes regressive.

but yeah those of us in the middle income brackets will see minimal token cuts under Trump. it seems single middle income filers will get screwed. those with kids will see some love. the rich will get windfalls.

 

[vi edit]

Upping the standard deduction that high basically wipes out the mortgage interest deduction, student loan interest deduction, etc for most regular people. While I'm fine with eliminating those deductions in principle, what this is actually proposing is getting rid of those deductions for those who aren't ultra rich. That is particularly shitty and cynical. Same deal goes for his 'child care deduction'. Guess who takes advantage of deductions instead of tax credits? Well off people. The people who actually need help with paying for child care will see little or nothing from that deduction.

If it actually goes through as currently formulated there are going to be a lot of working class people who get a very rude awakening.

Is it though? The bolded part. Mortgage interest deduction and student loan interest gradually go down year after year reducing your effective deduction. A "not well off" family likely isn't ever going to go above the proposed $30,000 deduction via interest or student loan deduction. They likely aren't hitting it now and are just taking the standard deduction of $12,000.

For me, it's actually going to be a win since I've got mortgage interest, my wife's student loan interest, and child care. We're at the point where it's above the standard deduction, but we make too much to claim the student interest so we just eat that. With this plan, I'd just take the $30,000 standard and move on. Wouldn't even go itemized. And with the $30,000 standard, the ever decreasing deduction from the interest based deductions would be a non-issue.

 

[jaydee]

Is it though? The bolded part. Mortgage interest deduction and student loan interest gradually go down year after year reducing your effective deduction. A "not well off" family likely isn't ever going to go above the proposed $30,000 deduction via interest or student loan deduction. They likely aren't hitting it now and are just taking the standard deduction of $12,000.

For me, it's actually going to be a win since I've got mortgage interest, my wife's student loan interest, and child care. We're at the point where it's above the standard deduction, but we make too much to claim the student interest so we just eat that. With this plan, I'd just take the $30,000 standard and move on. Wouldn't even go itemized. And with the $30,000 standard, the ever decreasing deduction from the interest based deductions would be a non-issue.

Are you taking into account the loss of the personal exemption?

What bugs me, large families (3+ kids) are going to get hit with the loss of the personal exemption. The more kids you have, the worse it gets. I have close ties to a handful of families with 7 or more kids each. It's going to make a significant impact if the personal exemptions really do go away.

 

[fskimospy]

Is it though? The bolded part. Mortgage interest deduction and student loan interest gradually go down year after year reducing your effective deduction. A "not well off" family likely isn't ever going to go above the proposed $30,000 deduction via interest or student loan deduction. They likely aren't hitting it now and are just taking the standard deduction of $12,000.

If you live in New York City you can fairly easily hit the standard deduction just through state and local income taxes. (you hit $6,500 per person at about $75k of income) I get to fully deduct all of my interest for both my personal mortgage and my share of the co-op's larger mortgage on the property. Overall, about half of homeowners utilize the mortgage interest deduction, so that's plenty of people.

For me, it's actually going to be a win since I've got mortgage interest, my wife's student loan interest, and child care. We're at the point where it's above the standard deduction, but we make too much to claim the student interest so we just eat that. With this plan, I'd just take the $30,000 standard and move on. Wouldn't even go itemized. And with the $30,000 standard, the ever decreasing deduction from the interest based deductions would be a non-issue.

Right, meaning that the mortgage interest deduction and child care deductions are going to be tax benefits that only apply to the very rich. Why on earth would we want to have special exemptions for child care and mortgage payments that only apply to the ultra rich? Do they somehow need either incentives or assistance to buy homes or child care? If not, what's the point?

While I'm totally on board with eliminating the mortgage interest deduction as it is stupid tax policy this plan is about the dumbest way imaginable to scale it back. First, the overwhelming majority of mortgage interest benefits already go to the rich, so this won't actually eliminate that much of it. Second, it's leaving deductions in place for people who need them the least. What this is really doing is simplifying the tax code for some people (good!) while leaving in place most of the ill effects from the policy and concentrating the benefits among the absolute richest people. (bad!)

 

[vi edit]

Are you taking into account the loss of the personal exemption?

What bugs me, large families (3+ kids) are going to get hit with the loss of the personal exemption. The more kids you have, the worse it gets. I have close ties to a handful of families with 7 or more kids each. It's going to make a significant impact if the personal exemptions really do go away.

I did not see that on the NPR link. In going back and doing various articles it's been hit or miss on if that is part of it or not. I would really have to run the math on it(or wait for a calculator to come out) to see how that compares to a much larger standard deduction.