Next on 'Trump Agenda': Taxes [Update with 2018 tax data] (1 Viewer)

superchuck500

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Some financial observers think that the effort for tax reform will be 'easier' than repeal/replace because 'everyone [in the GOP] is in favor of tax cuts.' While that is essentially true, the revenue component can be tricky. The Freedom Caucus and other budget hawks have been beating the drum of fiscal responsibility for many years and they aren't going to simply cut taxes on the back of deficit spending. The revenue side of the equation has to make sense.

In addition, if the GOP intends to use the reconciliation process for the tax bill to avoid Senate filibuster, it has to be revenue neutral. This was going to be challenging anyway, and now without the tax savings that a repeal of ACA would have brought, it makes it an even tougher nut to crack.

Finally, the GOP will need to figure out where the tax proposal is coming from. Trump is likely going to want it to come from the executive (Treasury or White House), especially after getting burned on the ACHA, which came from the House. But Trump doesn't like to give public support to specific plans - he has refused to be pinned down on aspects of tax reform and his support to the ACHA came late and without a command of the bill's particulars. Further complicating the matter is Trump's leadership style, where he likes to have different power centers, with overlapping areas of focus, and all reporting to him directly. This makes a singular effort with unified support difficult.

As Forbes put it today, it isn't going to be easy and could likely be more difficult that healthcare:

Following the collapse of the House GOP health plan, President Trump and many congressional Republicans say they will pivot to tax reform. Passing that initiative, they insist, will be easier. For example, on Friday Treasury Secretary Steve Mnuchin put it this way: “In a way, it is a lot simpler. In health care, it’s a much, much more complicated issue.”

Mnuchin and others could not be more wrong. If lawmakers think rewriting the nation’s health laws are hard, just wait ‘til they tackle full-blown tax reform. There is a good reason why a major rewrite of the tax code has not happened for more than three decades.
https://www.forbes.com/sites/beltway/2017/03/27/no-tax-reform-is-not-easier-than-rewriting-the-health-law/#8c6f2925262a



For a detailed account of how the process is setting up and how the fissures from healthcare are going to carry over to tax, from the Washington Post: https://www.washingtonpost.com/news/wonk/wp/2017/03/27/divisions-threaten-trumps-hope-of-winning-his-next-big-legislative-battle-taxes/?hpid=hp_hp-top-table-main_wb-taxes-1145a:homepage/story&utm_term=.98e542572fd0


A revenue-neutral simplification of the tax system that lowers corporate tax and brings "repatriation" of off-shore funds would be a big success for all involved, and if they do it smartly, it could be a significant benefit to the economy. Right now, there's not a lot of reason to be optimistic.
 
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superchuck500

superchuck500

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I will also point out on thing I didn't realize at first.

That's just the largest 5 tech companies (largest by cash on hand).

That may not be the best slice to use to talk about CapEx
Fair enough but that chart is just representative. There are charts with wider representation of the business community and they look similar.
 

Saint_Ward

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Fair enough but that chart is just representative. There are charts with wider representation of the business community and they look similar.
If you find any recent ones, please share. I'm sure you're correct. Wage data supports it.
 

Saint_Ward

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https://finance.yahoo.com/news/salaried-workers-beware-gm-cuts-162852788.html

Lots of engineering and managerial jobs are being cut.

I get that batteries are the future, but why not see what your work force can and can't do? Most mechanical engineers also have to learn about robotics, machines, etc.

Especially getting rid of people who ensure quality. It may be for different components, but that's a lot of knowledge, skill being shown the door.
 

Saint_Ward

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First off, show me where someone actually said that.

Now, about the 300k family.... they said they weren't struggling. They said they made enough they decided to take on the risk of starting a small business. They added stress in their life, but they already had the means to do so, in their own words.

But don't be dishonest. I don't care where in the country you live. A $300k income is more comfortable than a $40k income.

Rent is probably the biggest factor and areas that are around $500/month (6000 annual) vs areas that have 1 bedroom apts going for 2000-2500/month (24000 - 30000 annual) is the main difference. So, in that case, making $40k to making $80k is probably a wash depending on where you live. Getting beyond that is in the favor of the higher income.

Yes, let me cry over that family who used a professional photo shoot photo with nice new clothes, rather than the middle class couple or the lower middle class lady who had pictures taken by the CBS reporter in their home/apt.

Taxation as a whole isn't interested in individual circumstances. We're all placed in income buckets, regardless of those outside factors.

Regarding spending, you are correct. What exactly should we or shouldn't we cut? Why? How? That's the trillion dollar question. Most programs republicans want to cut help the poor and needy. Or help us all.

I'm not a fan of gutting the Military, but why not cut 10% off their budget and re-align their mission footprint?

Why not drop 50k soldiers off the Army payroll? Why not streamline purchasing?

Why not even just turn around and use that money saved on the military to increase funding for vocational schools? Or would we rather just have the military be our "vocational" school training ground?

There are various ways to solve problems, but let's at least be honest about the real arguments and not just grab onto fringe statements or made up statements.

It's not about stealing or what's owed. It's about, why did we need to do this now with an economy at full strength? What will we do when the economy has another recession? How can we increase wages? What priorities are facing this country?

Saving that family making 150k around 650 dollars a year isn't helping them with increase healthcare costs, increasing rent, insurance rates, food costs, etc.
I guess this Friday I'll know if my check will be more or less.

So much of the tax decrease is tied up in child credits that I won't realize until I file my 2018 taxes in 2019. Which, already will be less, because one kid will be 17 in November...
Well, I haven't filed my taxes yet, but I've pretty much put them in and I know what I earned, what I paid, what I owed, and what I'm getting back. And I'll preface by saying we take the Standard Deduction, this year and last.

So, for 2018, I saved a grand total of $772 in taxes compared to 2017. I guess it would have been more, if the oldest wasn't 17 for the tail end of 2018.

Our AGI was about $3700 more than the previous year. Still same bracket.

However, our Taxable Income shot up by about $8600 with the Standard Deduction (no more exemptions for dependents)

We had about $2000 less withheld (so, some people may end up owing, if they don't have kids) compared to last year.

The credits were about 500 more than last year.

the taxes owed before credits was $200 less than last year, so that's what I'd look forward to without kids.

Now, I'm not sure if we qualify for anything with my wife going back for her Masters, so I'm waiting on that. However, that's also not standard.

But, with kids, we got $772 extra.. Thanks Trump.

When the kids age out, we'd have gotten just over $200. Thanks Trump.

Doesn't seem like much. Pays for the Internet, I guess.
 
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Well, the data is coming in.

https://www.reuters.com/article/us-usa-economy-investment/15-trillion-us-tax-cut-has-no-major-impact-on-business-capex-plans-survey-idUSKCN1PM0B0

The Trump administration’s $1.5 trillion cut tax package appeared to have no major impact on businesses’ capital investment or hiring plans, according to a survey released a year after the biggest overhaul of the U.S. tax code in more than 30 years.

The National Association of Business Economics’ (NABE) quarterly business conditions poll published on Monday found that while some companies reported accelerating investments because of lower corporate taxes, 84 percent of respondents said they had not changed plans. That compares to 81 percent in the previous survey published in October.

The White House had predicted that the massive fiscal stimulus package, marked by the reduction in the corporate tax rate to 21 percent from 35 percent, would boost business spending and job growth. The tax cuts came into effect in January 2018.
Who's surprised?
 

Saint_Ward

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Well, good news for us, we qualified for the Lifelong Learning credit, so that saved us a bit more in taxes, but I'm not going to include It in my analysis, since my wife wasn't in school in 2017, so it would make the tax law change more than it really is.

I just filed them tonight. I like to do it before Feb, when possible.
 

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Well, I haven't filed my taxes yet, but I've pretty much put them in and I know what I earned, what I paid, what I owed, and what I'm getting back. And I'll preface by saying we take the Standard Deduction, this year and last.

So, for 2018, I saved a grand total of $772 in taxes compared to 2017. I guess it would have been more, if the oldest wasn't 17 for the tail end of 2018.

Our AGI was about $3700 more than the previous year. Still same bracket.

However, our Taxable Income shot up by about $8600 with the Standard Deduction (no more exemptions for dependents)

We had about $2000 less withheld (so, some people may end up owing, if they don't have kids) compared to last year.

The credits were about 500 more than last year.

the taxes owed before credits was $200 less than last year, so that's what I'd look forward to without kids.

Now, I'm not sure if we qualify for anything with my wife going back for her Masters, so I'm waiting on that. However, that's also not standard.

But, with kids, we got $772 extra.. Thanks Trump.

When the kids age out, we'd have gotten just over $200. Thanks Trump.

Doesn't seem like much. Pays for the Internet, I guess.
Just to review......yall earned 3700 more than last year, had 2k less withheld (more disposable income) throughout the year..........and still came out 772 dollars better than last year?
 

brockmeaux

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I'm a single filer with an income virtually identical to last year's since we're on a salary schedule. My refund is in the ballpark of $100 less than last year's.
 

Saint_Ward

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Just to review......yall earned 3700 more than last year, had 2k less withheld (more disposable income) throughout the year..........and still came out 772 dollars better than last year?
Yes, mostly due to the child credit.

Just pointing out it wasnt really much of a cut.
 

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I'm a single filer with an income virtually identical to last year's since we're on a salary schedule. My refund is in the ballpark of $100 less than last year's.
Yes, mostly due to the child credit.

Just pointing out it wasnt really much of a cut.
Did yall have the expectation that you'd get to withhold less all year AND get noticeably larger refunds? It was a tax cut, not a tax elimination. Sounds to me like in both cases, there was more disposable income available throughout the year (I'm assuming that about Brock.......as you didn't specifically mention withholdings.....but there's pretty much no way they weren't lower)......and the refunds were (relatively) in-line with before.

For those who prefer larger refunds vs. seeing the money during the course of the year.......I suppose they could always change their Federal withholding allowances to "0" and have an additional amount withheld. Find a an old check stub from the timeframe when these cuts weren't going on, and adjust the withholdings to those levels. Then feel like a rock star next year during tax season ;).
 
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Saint_Ward

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Did yall have the expectation that you'd get to withhold less all year AND get noticeably larger refunds? It was a tax cut, not a tax elimination. Sounds to me like in both cases, there was more disposable income available throughout the year (I'm assuming that about Brock.......as you didn't specifically mention withholdings.....but there's pretty much no way they weren't lower)......and the refunds were (relatively) in-line with before.

For those who prefer larger refunds vs. seeing the money during the course of the year.......I suppose they could always change their Federal withholding allowances to "0" and have an additional amount withheld. Find a an old check stub from the timeframe when these cuts weren't going on, and adjust the withholdings to those levels. Then feel like a rock star next year during tax season ;).
You're missing my point. I don't care if I get a $1 refund. The refund doesn't matter. I'm with you, I'd much rather have more income during the year than get a bunch owed back.

I'm just talking about the difference in my overall tax burden from last year to this year.

So, my tax burden, was $772 less than 2017. i.e. the tax law gave me an extra $772. That was not my refund.

When my kids age out, that may drop down to $200. And I believe every year the tax relief gets a little less, so it will possible drop to nothing.

The issue I have, and we will see with more data, is that higher income earners will save a lot more in taxes. Not even linearly. i.e. if they make double than what I do, they'll save more than double the taxes. That's not right, and it's against the whole point of a progressive tax system (not political progressive, progressive as in it progresses each step). Also, remember this was sold as a big tax relief for the middle class. I am, by exact definition, middle class. This was relief, but I wouldn't characterize it as big.

I'm also following up with what I was predicting in 2017 when the details came out. I'm just providing data. Read over post 868 and the quotes, and you'll get it.
 
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gwballin

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I spent a few minutes recalculating my 2017 federal income tax liability accounting for the 2018 tax law change. I then calculated my 2018 liability under both.

In both instances, my liability is ~2.2% less (as a function of total compensation).

In my opinion, that savings is totally worth adding trillions to the deficit. :rolleyes:
 

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I'm a single filer with an income virtually identical to last year's since we're on a salary schedule. My refund is in the ballpark of $100 less than last year's.
IIRC, there is a small group of single filers, no kids, property owners living in HCOL states who might see increases due to a reduction in SALT. If you don’t fit that, then I would run the % income from last year and this year to see if it was the changes in withholding tables.
 

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Well, good news for us, we qualified for the Lifelong Learning credit, so that saved us a bit more in taxes, but I'm not going to include It in my analysis, since my wife wasn't in school in 2017, so it would make the tax law change more than it really is.

I just filed them tonight. I like to do it before Feb, when possible.
I've been told that one of the perks and tax savings we enjoy goes away.

When I buy my guys dinners, trips, Saints tickets, concert tickets, golf trips and stuff like that it's evidently no longer to be an expense.

Sucks.
 

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