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The 24K standard deduction is offset by eliminating the exemptions. Now a married couple with 1 kid gets 24K in exemptions and standard deduction. If this bill passes, they get the same amount. Any more kids than 1 and they lose. The rates do compensate but not nearly enough, so that after 2 kids they will pay more taxes unless they are really lower income. The sweet spot is only for lower income middle class. The other side of the range will be paying potentially thousands more.
Yes, the personal exemptions are eliminated, but the increase in the child tax credit counteracts that measure. Credits are better than deductions. Your rates will be lower regardless.
Here in Seattle and King County, the median price for condos in downtown is around 600k (2+ bedrooms are usually over 1 million, and the median price for single family homes within 10 miles of downtown ranges from 600k to 2.2 million depending on the district. The county property tax is a little over 1% of assessed value (determined annually). Limiting property tax deductions to 10k and mortgage deductions to 500k can affect a lot of people in this region.
Okay, let's take a look:
New individual tax brackets:
12%: <$45,000 individual, $90,000 couple.
25%: $45,000-200,000 individual and $90,000-260,000 couple.
35%: $200,000-$500,000 individual and $260,000-1,000,000 million couple.
39.6%: $500,000+ individual and $1,000,000+ couple.
Old individual tax brackets:
10%: <$9,325 individual, $18,650 couple.
Let's say you are a childless couple making $150k. You pay an effective 6% state income tax ($9k), $12k property tax, and $18k mortgage interest.
Under current law, you itemize & get two personal exemptions:
Exemptions: $8,100
Itemized deductions: $39,000
Taxable income is $150k less $47,100: $102,900
You pay 17,202.50 in federal taxes.
Under the R proposal, you take a standard deduction and have no exemptions: $24,000
Your taxable income is $126,000. You pay 10,800 on the first $90k & $9k on the next 36,000. Your federal tax bill just rose to 19,800--an increase of ~$2,600. If you have children, or deductible education expenses, student loan interest, deductible medical expenses, or other eliminated breaks: this bill further increases your taxes.
NP.
State governments can raise corporate tax rates and rebate those losses to their citizens.
Here in Seattle and King County, the median price for condos in downtown is around 600k (2+ bedrooms are usually over 1 million, and the median price for single family homes within 10 miles of downtown ranges from 600k to 2.2 million depending on the district. The county property tax is a little over 1% of assessed value (determined annually). Limiting property tax deductions to 10k and mortgage deductions to 500k can affect a lot of people in this region.
King County can increase corporate tax rates and then reduce the property taxes on those affected.
And it comes in at a mere 429 pages! Such brevity is uncommon in our federal government, and is to be lauded.
429 pages is not much when you consider the 2400 pages of the ACA. The amazing thing is that it was just released a couple of hours ago and the Leftists have read every word, looked up all the Sections from past laws and made Hyperbolic Statements on some of this. Does anybody believe that?
Here's a good rule of thumb -- IF whoever is making wild claims of Armageddon for Taxpayers OR even savior for Taxpayers in any "class" can't quote the Section of the Law that actually PROVES that - Ignore them.
Wait for some decent information instead of Political Ideology information.
This is a big deal for all of us, we deserve to know exactly what it means .... not what it means for the Politicians, but what it means for the Citizens.
This bill is a catastrophe and will hurt most of the country. But Republican voters will cheer as they lose thousands more in their bank accounts, while the top 1% get millions.
Probably like how democrat voters cheered for the tax increase called the Affordable care act, which resulted in millions of Americans loosing thousands.
In that range you will still see a reduced tax burden, 12% up to 90k, and 25% to 260k. The rates are lower and the brackets have been expanded so that the rates apply to higher income ranges.
In that range, people are likely to see an increase. The loss of exemptions and deductions will impact most people in that range more than the bracket tweaks.
I don't understand why so many liberals seem to want corporations not to help out.
It's very easy for state and local governments to increase corporate taxes to offset any "losses" due to federal tax increases.
Since so many things like pay scales, cost of housing, property taxes, etc etc vary so much from location to location, it allows for such taxes and credits to be tailored to the region while avoiding subsidizing states that try to avoid taxes.
Okay, let's take a look:
New individual tax brackets:
12%: <$45,000 individual, $90,000 couple.
25%: $45,000-200,000 individual and $90,000-260,000 couple.
35%: $200,000-$500,000 individual and $260,000-1,000,000 million couple.
39.6%: $500,000+ individual and $1,000,000+ couple.
Old individual tax brackets:
10%: <$9,325 individual, $18,650 couple.
Let's say you are a childless couple making $150k. You pay an effective 6% state income tax ($9k), $12k property tax, and $18k mortgage interest.
Under current law, you itemize & get two personal exemptions:
Exemptions: $8,100
Itemized deductions: $39,000
Taxable income is $150k less $47,100: $102,900
You pay 17,202.50 in federal taxes.
Under the R proposal, you take a standard deduction and have no exemptions: $24,000
Your taxable income is $126,000. You pay 10,800 on the first $90k & $9k on the next 36,000. Your federal tax bill just rose to 19,800--an increase of ~$2,600. If you have children, or deductible education expenses, student loan interest, deductible medical expenses, or other eliminated breaks: this bill further increases your taxes.
Your example is flawed because under the GOP plan current mortgages are not affected and you'd still be able to claim up to 10k in property taxes.
Yes, the personal exemptions are eliminated, but the increase in the child tax credit counteracts that measure. Credits are better than deductions. Your rates will be lower regardless.
For some perhaps, but upper middle class people do not get child credits as it is income limited. It is people in the $120K to maybe $250 who are getting screwed over in this tax plan and this is one example. It starts to phase out at only $75000K for single people and $110 for marrieds. Under the current plan they get a $4000 deduction above the line for each kid. Under the new plan, they get nothing and pay taxes on that $4K for every child over one.
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