Federal Income Tax Reform Proposal - Effect on Californians (Stanford: real estate, student loans)

[CA4Now]

Originally Posted by davidt1

The LA Time is too anti-Trump. They will put a negative spin on anything related to Trump. Good newspaper for people who think the same way, I suppose. For those who need neutral and unbiased news analysis, you would be better served by reading other news sources.

I'm not sure that there are many major news publications that believe this bill is a good one.

“The myriad changes in the code would actually raise taxes on nearly 13 million tax filers who earn $100,000 a year or less, according to preliminary calculations using the open-source economic modeling software TaxBrain.”

https://www.nytimes.com/2017/11/03/o...-tax-plan.html

There are winners and losers in any tax bill. In general, large families and those that currently take a lot of deductions for medical expenses or state and local taxes are hurt the most by the changes in the GOP plan. Some are already calling it a hit to "blue states" since a lot more people in states like California, Connecticut, New York and New Jersey earn upper middle class incomes and benefit heavily from the state and local tax deduction.

Some middle-class Americans would pay higher taxes under GOP bill, congressional report says - Chicago Tribune

A new study by the Tax Foundation showed the top 1% would do much better than everyone else in most scenarios if Republicans pass the tax legislation.

CNN/Money: Trump and his kids likely would do very well under House tax bill - Nov. 4, 2017

[phantompilot]

Originally Posted by CA4Now

I'm not sure that there are many major news publications that believe this bill is a good one.

“The myriad changes in the code would actually raise taxes on nearly 13 million tax filers who earn $100,000 a year or less, according to preliminary calculations using the open-source economic modeling software TaxBrain.”

https://www.nytimes.com/2017/11/03/o...-tax-plan.html

There are winners and losers in any tax bill. In general, large families and those that currently take a lot of deductions for medical expenses or state and local taxes are hurt the most by the changes in the GOP plan. Some are already calling it a hit to "blue states" since a lot more people in states like California, Connecticut, New York and New Jersey earn upper middle class incomes and benefit heavily from the state and local tax deduction.

Some middle-class Americans would pay higher taxes under GOP bill, congressional report says - Chicago Tribune

A new study by the Tax Foundation showed the top 1% would do much better than everyone else in most scenarios if Republicans pass the tax legislation.

CNN/Money: Trump and his kids likely would do very well under House tax bill - Nov. 4, 2017

It doesn't raise taxes. The taxes remain the same. The deductions are eliminated...this sends a message to profligate and wasteful state and local governments that THEY are the only ones imperiling the financial security of their residents, since THEY are the ones imposing costs that aren't deductible.

Personally I think the tax plan doesn't go far enough. I would add another requirement so that only taxes paid that benefit citizens of the United States and that are spent on current expenses (ie, not pensions) are tax deductible.

This would put the pressure on CA to reform its evil ways of letting illegals and public employee unions rape their taxpayers.

[payutenyodagimas]

when the next recession comes, how will the govt stimulate it? another round of tax cuts and trillions of borrowing

so much for being the party of responsible govt

shouldn't the govt be taxing more to pay off the trillions of debt accumulated? after all, the economy is booming

[CA4Now]

Originally Posted by phantompilot

It doesn't raise taxes.

About 17 percent of households earning between $50,000 and $150,000 would see their taxes rise immediately, according to the only rigorous analysis so far, by the Tax Policy Center. Among households earning between $150,000 and $250,000, the share is about 35 percent. These numbers would grow over time...

https://www.nytimes.com/2017/10/29/o...ise-taxes.html

[phantompilot]

Originally Posted by expatCA

CA has not been paying a higher share. American Citizens living in CA have paid at the same rates as everyone else. The State has nothing to do with it.

Right now the Feds are subsidizing CA by giving CA residents a tax break for the State Tax they pay. Why do that, as it does not help the Fed's income?

Well let me play the devil's advocate for a second here, and point out that one concept of fairness when it comes to taxation is that if money is taxed by some other means it shouldn't be taxed again. Is it really income if its not available to the person who earned it, because it was confiscated already?

On the same basis, all interest paid to anyone using monies that derive from central banking, should be tax exempted, because those funds are the product of the exercise of government privilege and wouldn't even exist if the government were not lending out the property of the people of the United States for private purposes and profit (only available to financial institutions via the private banking system known as the Federal Reserve). The most fundamental concept of fairness would dictate that you shouldn't be taxed for borrowing what is already yours in the first place, and even worse, from a private cartel that has wormed its way into controlling the money of the people of the nation. That's just disgusting and perverted.

[CA4Now]

Congress wants us to believe that lowering the pass-through tax rate would grow America’s small businesses by encouraging entrepreneurial risk-taking and new hiring. The House press release crows about providing “Main Street job creators” with “the lowest tax rate on small business income since World War II.”

But the discounts aren’t really aimed at small businesses. They go to any business, large or small, that happens to be organized as a partnership or an S corporation, as long as it isn’t a service business. (That is, it would go to the owner of a muffler shop, but not an accountant who has her own firm. Why the government wants to subsidize muffler shops over accounting firms is a discussion for another time.)

Nor are these proposals targeted to encourage growth. If that were the goal, they would apply to incremental revenue increases year over year, not to all business earnings. They also would include service businesses...

Beware the fine print

[payutenyodagimas]

Originally Posted by phantompilot

THEY are the ones imposing costs that aren't deductible.

So once passed, the states/local government units will need to pass a law also that housing cost/rents will only amount to so much because the people couldn't deduct anymore state income tax, property tax and interest

[Independentthinking]

Originally Posted by RosieSD

That's what I'm wondering too. There are a couple of calculators online that purport to tell you what your Federal taxes will be if this goes through as is, but so far all of them also have a caveat saying that it's not yet known where the tax tiers will fall in terms of income spreads.

If we came out the same, I'd be fine with this aspect. But, somehow, I can't help thinking that won't be the case.

Rosie, I didn't want to spend the time reading all the responses in your thread, since there's 3 threads on the same thing. There really isn't any debate on this. Here's my post from the other thread...

But of course those two items are exactly the point of contention (in reference to SALT and personal exemptions). This is really such a basic math problem that it's hard for me to understand how anyone could attempt to debate how harmful this is to the Working Class families in high COL areas. In no way is it a wash. The original proposal to take away SALT will prevent a family like this from itemizing their deductions. The standard deduction for 2016 was $12,600 for a married couple and then they could take $8.100 for a personal exemption. The write off for someone not itemizing was $20,700, so with the original plan proposed, the non-itemizing couple would get to write off a whopping $3,300 more for deduction. At a 15% effective tax rate, that's a savings $495. Now, let's look at someone itemizing. The breakeven on itemized deductions with the proposed plan using the old system would be $15,900 (that's your wash...and for those that don't understand math, that's 15,900+8,100). And anyone that truly thinks a taxpayer who itemizes only took $15,900 on their 2016 tax return, is delusional to say the least. A couple that took just $25k in their itemized deductions (which by no means is unreasonable), would have been able to deduct $33,100 from their taxable income (when you add in the personal exemptions eliminated by the Republican plan). That's a difference of $9,100 from the Republican plan ($24k) and at a 15% effective tax rate, is $1,365 more in taxes they will pay. It's not a wash by any means for that Working Class family in that $100k-$150k range I speak of (again, no different than that $50k-$75k family in a lower COL area)

The problem with most people is they either don't understand taxes and how itemized deductions work, or have to rely on others to do the calculation for them because they're not intelligent enough (or too lazy) to do a simple math computation.

[TheFlats]

The "reform" as it's currently written is basically designed to funnel money to the wealthy and corporations.

If reform was truly the name of the game things like carried interest and other corporate loopholes would have been closed along with the reduction in corporate rates and subsidies like the mortgage interest, charity, and SALT deductions would have been entirely eliminated along with the reduction in income tax rates.

If middle class tax relief was the objective, then just double the standard deduction, lower the rates, and maybe cut payroll taxes a bit and introduce new tax credits (like Obama did in 2009 through the ARRA).

This bill is just a confused mess. Luckily it won't pass in its current form.

[Elliott_CA]

Originally Posted by payutenyodagimas

when the next recession comes, how will the govt stimulate it? another round of tax cuts and trillions of borrowing

so much for being the party of responsible govt

shouldn't the govt be taxing more to pay off the trillions of debt accumulated? after all, the economy is booming

Exactly right. Not long ago the Repubs were chomping at the bit for a Balanced Budget Amendment. It's amazing how they have suddenly reversed their position and now fully embrace deficit spending. These tax cuts will cost about $5 Tril over the next 10 years, all added to the public debt.