Details of Proposed Tax Plan

[nasa1974]

Just looked at my 2016 taxes. Itemized deductions plus exemptions it came to $24,300. It looks like I will stay in the same tax bracket but will lose some of my itemized deductions. I will have at least $300 less in deductions for when the new tax laws take effect. So I guess that would be a break even for me.

 

[evilanne]

Re: My taxes are going upppp - alot

Nevermind...if the 1st bracket starts at zero, that isn't much help.

 

[Scout333]

Re: My taxes are going upppp - alot

Just keep an eye on the ball. Lots of juggling left to do! Still a little confused about where the money comes from to pay for this plan. I understand the theory is that the economy is going to grow which will create jobs, etc. but still that's a lot of cuts overall! Would be surprised if there isn't some sort of deduction for state and local income taxes included before they're done haggling. Most tax plans tend to affect all the states relatively evenly. That is how they get enough support to get passed.

 

[nasa1974]

I think the create jobs is all smoke and mirrors. If I own a company now that is making a profit and I get more money from the government why would I hire more workers? Or if I can't find skilled laborers now to fill my positions why would I use the money coming from the government to try and hire more people I couldn't find already. Just more money in my pocket.

 

[tsptalk]

Has anybody read any estimate on how much they would make on the 12% tax on the repatriation of overseas money coming back to the U.S.? Are they assuming all (or a percentage of) companies will bring the money back, or have they not factored that in yet?

 

[FireWeatherMet]

Has anybody read any estimate on how much they would make on the 12% tax on the repatriation of overseas money coming back to the U.S.? Are they assuming all (or a percentage of) companies will bring the money back, or have they not factored that in yet?

Some would say "why would any of it come back if their not getting it taxed overseas, or still getting it taxed at a lower rate in many 3rd world banks"?
And if corporations are already hoarding record amounts of cash, why wouldn't that cash go into those corporate coffers, as opposed to going into economic development?

I don't know if I trust many of the claims made on overseas cash.

 

[tsptalk]

I don't know if I trust many of the claims made on overseas cash.

I don't know if I trust many of the claims made on ... [fill in the blank].

 

[alevin]

My quick estimate is I'd get about 1500 back in my pocket vs what I'd be paying this year. better than I thought when I did earlier calculations on the subject. I read this morning (ZH again), that they were thinking of having the corporate tax cut only good for 10 years, then go back up to what it is now. Skeptical ZH commenters questioned how many business CEOs would repatriate and do cap ex for operations here if tax cut only good for 10 years. Guess we'll see if this does play out.

Being as how I was thinking of starting 2-3 inter-related small businesses post-retirement in 2-4 years, I don't know at this point how these changes would affect those ideas. especially since I haven't figured out what kind of biz set up would work best for those ideas. single proprietorships generally end up as pass through and rate as personal income as I understand it.

 

[uscfanhawaii]

I don't mind if certain deductions go away.....but there should be a correspondingly LOWER tax rate. I don't see that in the plan.
And the oft repeated 'Individual Exemption nearly doubled' is very misleading due to other exemptions being eliminated.
Bottom line...looks like the reduction in corporate taxes is being paid for by upper middle class.

https://finance.yahoo.com/news/apos-home-pay-could-change-171600109.html

 

[FireWeatherMet]

Sarah Huckabee gives a concise, clear cut description of how the tax plan would affect average Americans.

 

[tsptalk]

Source: Washington Post / Tax Policy Center

 

[tsptalk]

As the onion gets pealed...

The hidden 46% tax bracket

House Republicans claim the tax plan they introduced Thursday keeps the top individual rate unchanged at 39.6 percent—the level at which it’s been capped for much of the past quarter-century. But a little-noticed provision effectively creates a new band in which income is taxed at over 45 percent.

Thanks to a quirky proposed surcharge, Americans who earn more than $1 million in taxable income would trigger an extra 6 percent tax on the next $200,000 they earn—a complicated change that effectively creates a new, unannounced tax bracket of 45.6 percent.

https://www.politico.com/agenda/story/2017/11/02/the-gops-hidden-46-tax-bracket-000570

 

[FireWeatherMet]

As the onion gets pealed...

The hidden 46% tax bracket



https://www.politico.com/agenda/story/2017/11/02/the-gops-hidden-46-tax-bracket-000570

Is that to make up for not paying Social Security tax on income over 120K? The wealthy have always gotten a several percent tax cut on that, that no one ever mentions.

From the article its on the next 200K of income (above 1 mil). So it would have a profound effect on those making just a little over a million, but be just a tiny blip on the radar for those making 2 Million or more.

 

[evilanne]

Is that to make up for not paying Social Security tax on income over 120K? The wealthy have always gotten a several percent tax cut on that, that no one ever mentions.

From the article its on the next 200K of income (above 1 mil). So it would have a profound effect on those making just a little over a million, but be just a tiny blip on the radar for those making 2 Million or more.

SS Wage Base is $127K, however medicare applies to all wages with an extra .9% for those making over $200K that was added in support of ACA starting in 2012 https://www.irs.gov/taxtopics/tc750/tc751 Per the article the bubble is to make up for the lower 12% rate on the 1st $45K, nothing to do with SS.

 

[Jackbnimble]

While the corporate tax has an advertised rate of 35%, it has 2 of these "bubble rates". https://en.wikipedia.org/wiki/Corporate_tax_in_the_United_States

The first bubble rate is to eliminate the benefit of the lower rates. So companies that make over $335,000 basically pay 34% of that amount. Historically the individual rates were such that the surtax or bubble tax was not in play. So they actually paid 15% on the first part of their income(whatever their bracket amount was depending on filing status). And 25% on the next and on and on. Never really paying the full 39.6% on their total income due to the lower reduced rates.

This bubble tax on individuals seems to be a new philosophy and as stated would only touch people with taxable income of over $1,000,000.

 

[uscfanhawaii]

Sarah Huckabee gives a concise, clear cut description of how the tax plan would affect average Americans.

I'm not sure Ms. Huckabee Sanders was successful in defending the upper class getting a bigger piece of the tax cut pie.
looks like there will be a lot of resistance to the Tax Bill. Much like the Health Care bill.

Republicans' tax overhaul pitch faces skeptical public, Post-ABC poll finds

 

[uscfanhawaii]

Here's a somewhat humorous look at some of the lesser known provisions of the New Tax Code:

All the weird parts of the tax reform bill, in one post

 

[FireWeatherMet]

In a nutshell,

 

[alevin]

Update: I ran the math wrong earlier-I would owe approximately 2K more next year in fed tax, not 1500 less. Maybe I'll bump up my charitable contributions even further next year, at least I'll know where the money is going. and pay a little less in fed tax. makes it harder to save for business startup in a couple years, even if I can do full deduct for expenses in a given year. Got to fork out the funds for the expenses first before can deduct them.

I want to avoid using OPM for startup funds. Would like to not worry about loan repayments until I know I'm turning a profit, not pay interest on top of not having a net profit right away. For me, it's all about having initial savings for startup capital, and then managing cash flow. I never took any business classes, never had any interest until I started looking into what I might do in retirement to be productive, stay interested by developing current hobby interests into small biz and desired retirement lifestyle. now I'm learning biz development by bootstrap, similar to how I've learned other things over the years, as needed. :laugh:

There are other interesting items in the tax bill, at least of interest to me. won't point out all the ones of interest to me but there are some of general interest perhaps.

Think really hard about divorce, if you would be the one paying alimony. You will be paying the taxes on the alimony payment. The ex would not be paying them.
Think hard about bouncing around to new job every couple years or otherwise exchanging primary residences. No more cap gains exemption unless stay in same primary residence 5 of past 8 years.
Make suuure you get a written receipt signed and dated, for every charitable donation valued at $250 or more.

https://www.scribd.com/document/363314543/Tax-Cuts-and-Jobs-Act-Section-by-Section#from_embed

 

[FireWeatherMet]

Think really hard about divorce, if you would be the one paying alimony. You will be paying the taxes on the alimony payment. The ex would not be paying them.
https://www.scribd.com/document/363314543/Tax-Cuts-and-Jobs-Act-Section-by-Section#from_embed

From the bill:
Under the provision, alimony payments would not be deductible by the payor or includible in the income of the payee.
So does this mean that the receiver of alimony doesn't have to include the alimony payment as income either?

The provision would be effective for any divorce decree or separation agreement executed after 2017.
Yipeeee! I catch a break on that one (lol)

Think hard about bouncing around to new job every couple years or otherwise exchanging primary residences. No more cap gains exemption unless stay in same primary residence 5 of past 8 years.

https://www.scribd.com/document/363314543/Tax-Cuts-and-Jobs-Act-Section-by-Section#from_embed

Wow, thats going to hurt a lot of companies looking for employees outside their local area. Could be a big impact on the economy, especially already having a worker shortage in most sectors.
Not to mention Fed agencies and those looking to move up the career ladder by moving. Wonder if the Federal Gov't and its employees get an exemption thru RITA???