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Trumps tax plan

So what do you guys think?  I really don't want to lose the property tax deduction because that's our biggest expense. Not knowing what the income levels are for the new tax brackets are, I don't know if my income taxes would go up but I would be surprised if they wouldn't. 

http://www.cnbc.com/2017/04/26/the-white-house-just-outlined-its-tax-plan-heres-whats-in-it.html
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Re: Trumps tax plan

  • Hard to tell how the article was written if the mortgage interest deduction is one that goes, or one that they are planning on keeping.   Either way, we'd be screwed without that, we deduct both our house and the interest on our camper, and since we're higherish earners with no kids, we need every deduction we can get.  
  • smerkasmerka
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    Mortgage interest stays. But the standard deduction will be double. 
  • I didn't see the property tax deduction talked about (unless I missed it), but it did talk about eliminating the mortgage interest deduction.

    But, to me, it's a lot of meaningless without knowing what the new tax brackets are.

    I read in a different article that lowering the corporate tax from 35% to 15% would mean $2.4 trillion dollar loss in federal revenues over the next 10 years.  That's trillion.  With a T.  And why in the world would corporations get to pay a lower tax than most citizens?

    Sorry, I know this isn't the political board.  But I'm finally having the "aha" moment of Trump's ulterior motive con game in becoming President. 

    LillibetteV
  • I didn't see the property tax deduction talked about (unless I missed it), but it did talk about eliminating the mortgage interest deduction.

    But, to me, it's a lot of meaningless without knowing what the new tax brackets are.

    I read in a different article that lowering the corporate tax from 35% to 15% would mean $2.4 trillion dollar loss in federal revenues over the next 10 years.  That's trillion.  With a T.  And why in the world would corporations get to pay a lower tax than most citizens?

    Sorry, I know this isn't the political board.  But I'm finally having the "aha" moment of Trump's ulterior motive con game in becoming President. 

    I read a different article this morning that said he would stand to cut the taxes he pays on his personal business by HALF. But yea....that's just a lucky coinkydink and he's totally looking out for the majority of Americans and not just himself and his rich friends. 
    short+sassysmetter04
  • edited April 26

    I didn't see the property tax deduction talked about (unless I missed it), but it did talk about eliminating the mortgage interest deduction.

    But, to me, it's a lot of meaningless without knowing what the new tax brackets are.

    I read in a different article that lowering the corporate tax from 35% to 15% would mean $2.4 trillion dollar loss in federal revenues over the next 10 years.  That's trillion.  With a T.  And why in the world would corporations get to pay a lower tax than most citizens?

    Sorry, I know this isn't the political board.  But I'm finally having the "aha" moment of Trump's ulterior motive con game in becoming President. 

    'Cause I guess whatever a business doesn't pay into taxes, they can re-invest in the company and pay out more for updates, research, employees, benefits, and buy more whatever (land, materials, employees) they need to expand. Or, am I crazy?

    Does this tax break extend to all businesses from large corporations down to the little mom and pops? If so, I totally see it being a good thing, especially if the "little guys and gals" are included.

  • hoffsehoffse
    Sixth Anniversary 2500 Comments 500 Love Its Name Dropper
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    I think about tax policy a lot.  Deductions are sexy because it's a way to "sell" certain behaviors - like home ownership.  However, the mortgage interest deduction and the deduction for health insurance are some of the most expensive tax perks out there.  If we live in a world with deductions, then obviously as somebody who pays taxes I want all of them.

    But if I was writing the tax code from scratch, there would be no deductions, and we would just pay a marginal rate on income and a lesser rate on capital gains, plus I would impose a consumption tax similar to VAT in Europe, in lieu of state sales taxes.  Functionally this means your tax return would be a single page, and employers would be able to withhold EXACTLY the right amount of tax from your paycheck.  It would help close the tax gap - which is currently around $400 billion - because compliance would be simple, and people wouldn't be able to use employer withholdings as a way to manipulate the system.  The IRS would also be able to audit far more people each year.

    The only reconciling I would do on a tax return is allow a tax credit for charitable contributions up to a certain percentage of the tax paid - say 25%.  So if my total tax liability is $40,000, I have the option to send $10,000 of it to charities of my choice, and I can get a refund for that credit.  This would dramatically increase charitable contributions - because I'm pretty sure EVERYONE would rather send money to charity than to the IRS.  And charities are often better equipped to help serve local needs than the federal government.

    In exchange I would like to see a single payor health system and lower marginal rates. 

    I know it's a pipe dream, but that's what I would do.  Regardless, we need some new policy.  The last time the tax code was overhauled was 1986.  I'm most interested to see what happens with partnership and corporate taxation - not in terms of rates, but in terms of HOW those entities are taxed.  Currently corporate/deal lawyers spend an awful lot of time structuring transactions to maximize pass-through taxation of partnerships and minimize double taxation of corporations, and word on the street is that these sections might finally be overhauled so that LLCs and corporations are treated the same way.  That would literally change everything in my world.


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    MommyLiberty5013Xstatic3333short+sassy
  • I just read the article.  So far I see some good things in there.  I'm willing to see how this plays out.  Besides, it still has to go through Congress and you know they'll mess it up somehow.
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  • hoffsehoffse
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    Oh and fun story - Reagan signed the tax code of 1986 into law the day before I was born.  So all of the newspapers ran that story as the front page the day I was born.  I tell my mom it was a sign lol
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  • I agree with all of this. Simple makes sense. I think in the primaries, Carly Fiorina talked a lot about this sort of reform for taxes and I really agreed.
  • smerkasmerka
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    This is a transcript from the press conference. The only deductions are mortgage interest and charitable donations. Local and state income taxes - gone. Property taxes gone.  Medical expenses (over 10% threshold) - gone. Job related expenses - gone. 

    https://www.whitehouse.gov/the-press-office/2017/04/26/briefing-secretary-commerce-steven-mnuchin-and-director-national
  • hoffsehoffse
    Sixth Anniversary 2500 Comments 500 Love Its Name Dropper
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    edited April 26
    @MommyLiberty5013, the article is misleading to imply that large corporations and mom and pops are taxed differently.  Entities are taxed based on the type of entity they are when formed, not how large they are - partnerships, C-corporations, or S-corporations.  Most small businesses are partnerships or S-corporations (the "S" literally stands for "small business"), which have tax advantages over C-corporations.  You read about corporations in the news often because older companies are all corporations - LLCs didn't exist in most states until the 1990's.  
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  • smerkasmerka
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    I REALLY like the idea of pre-filled out tax forms. The IRS sends you your tax return with the numbers it has already entered - W2, 1099R, unemployment, interest, etc. If you agree, you don't do anything. If you disagree or need to add something, you fix it. It would put me out of a job, but sounds excellent. Other countries already do this. 
    labro
  • I didn't see the property tax deduction talked about (unless I missed it), but it did talk about eliminating the mortgage interest deduction.

    But, to me, it's a lot of meaningless without knowing what the new tax brackets are.

    I read in a different article that lowering the corporate tax from 35% to 15% would mean $2.4 trillion dollar loss in federal revenues over the next 10 years.  That's trillion.  With a T.  And why in the world would corporations get to pay a lower tax than most citizens?

    Sorry, I know this isn't the political board.  But I'm finally having the "aha" moment of Trump's ulterior motive con game in becoming President. 

    'Cause I guess whatever a business doesn't pay into taxes, they can re-invest in the company and pay out more for updates, research, employees, benefits, and buy more whatever (land, materials, employees) they need to expand. Or, am I crazy?

    Does this tax break extend to all businesses from large corporations down to the little mom and pops? If so, I totally see it being a good thing, especially if the "little guys and gals" are included.

    I don't think you're crazy - just overly optimistic. Historically when taxes have been cut for corporations the economy has not been stimulated as hoped/expected. Think of the really large corporations that have executive compensation in the tens of millions - they could afford to pay their lowest level workers a living wage and decent benefits while still giving more than enough to their CEOs but most don't. Walmart is one of the biggest beneficiaries of food stamps because they chose to underpay their employees not because they are broke. People are greedy.

    My understanding is that the tax cuts are also geared toward small business as well at least. 
    short+sassylabro
  • smerka said:
    This is a transcript from the press conference. The only deductions are mortgage interest and charitable donations. Local and state income taxes - gone. Property taxes gone.  Medical expenses (over 10% threshold) - gone. Job related expenses - gone. 

    https://www.whitehouse.gov/the-press-office/2017/04/26/briefing-secretary-commerce-steven-mnuchin-and-director-national
    This makes me very nervous since I live in a state with high state taxes. There's a good chance that with the standard deduction doubled we wouldn't be itemizing at all; since our home isn't that expensive even the mortgage deduction isn't always enough for us to itemize. I assume SL interest would be gone as well. It's a lot of math for me right now but I'm not sure we're better off this way. 

    In any case, the plan as written has almost no chance of passing the Senate. They can only avoid a Democratic filibuster if they can prove the plan won't increase the deficit outside of a ten year window, which they have yet to do. Whatever ultimately passes will be either much less drastic or temporary. 
  • hoffse said:
    Oh and fun story - Reagan signed the tax code of 1986 into law the day before I was born.  So all of the newspapers ran that story as the front page the day I was born.  I tell my mom it was a sign lol


    Speaking of Reagan, the whole "we'll make up for in growth what we lose from corporate revenues" is sounding really Trickle-Down Economics-esque.


    I don't think you're crazy - just overly optimistic. Historically when taxes have been cut for corporations the economy has not been stimulated as hoped/expected. Think of the really large corporations that have executive compensation in the tens of millions - they could afford to pay their lowest level workers a living wage and decent benefits while still giving more than enough to their CEOs but most don't. Walmart is one of the biggest beneficiaries of food stamps because they chose to underpay their employees not because they are broke. People are greedy.

    My understanding is that the tax cuts are also geared toward small business as well at least. 
    Which doesn't work.
    smerka
  • smerkasmerka
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    The current plan is one page long. They don't have any details. 
  • hoffsehoffse
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    smerka said:
    I REALLY like the idea of pre-filled out tax forms. The IRS sends you your tax return with the numbers it has already entered - W2, 1099R, unemployment, interest, etc. If you agree, you don't do anything. If you disagree or need to add something, you fix it. It would put me out of a job, but sounds excellent. Other countries already do this. 
    Agreed 100%.
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  • labrolabro
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    hoffse said:

    But if I was writing the tax code from scratch, there would be no deductions, and we would just pay a marginal rate on income and a lesser rate on capital gains, plus I would impose a consumption tax similar to VAT in Europe, in lieu of state sales taxes.  Functionally this means your tax return would be a single page, and employers would be able to withhold EXACTLY the right amount of tax from your paycheck.  It would help close the tax gap - which is currently around $400 billion - because compliance would be simple, and people wouldn't be able to use employer withholdings as a way to manipulate the system.  The IRS would also be able to audit far more people each year.

    This would be fantastic. I hope it would also resolve the issue of married couples with dual incomes if this pipe dream were ever real :). The only thing that "saves" us is deducting our mortgage interest, state income taxes, and property tax (although I think Georgia just approved a new flat tax of 5.4% which will change things slightly for us). I'm already having to do an extra $200 per paycheck of my own volition to avoid owing money plus penalties at the end of the year and it would be nice to have something a bit more straightforward.
    short+sassy
  • I don't know enough from that to really have a good opinion.  We are both self employed so we really count on all deductions so we owe less at tax time.  Now if this new tax plan will be in our favor then I'm all about it!
  • labro said:
    hoffse said:

    But if I was writing the tax code from scratch, there would be no deductions, and we would just pay a marginal rate on income and a lesser rate on capital gains, plus I would impose a consumption tax similar to VAT in Europe, in lieu of state sales taxes.  Functionally this means your tax return would be a single page, and employers would be able to withhold EXACTLY the right amount of tax from your paycheck.  It would help close the tax gap - which is currently around $400 billion - because compliance would be simple, and people wouldn't be able to use employer withholdings as a way to manipulate the system.  The IRS would also be able to audit far more people each year.

    This would be fantastic. I hope it would also resolve the issue of married couples with dual incomes if this pipe dream were ever real :). The only thing that "saves" us is deducting our mortgage interest, state income taxes, and property tax (although I think Georgia just approved a new flat tax of 5.4% which will change things slightly for us). I'm already having to do an extra $200 per paycheck of my own volition to avoid owing money plus penalties at the end of the year and it would be nice to have something a bit more straightforward.
    This is our problem.  My wife and I both work.  Neither employer takes into consideration that our real income is higher than what either one of them thing we make.  So I have an additional $50 coming out of my check this year after owing for the last three years and I'm hoping that it's enough.

    I also think we need a balanced budget amendment with a provision that requires us to actually pay off the debt in some reasonable time frame.
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  • hoffsehoffse
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    edited April 27
    @Labro, yes in my dreamworld it would not matter if you were married or not - rates would not change.  Actually, it would be amazing if they changed the rule for joint filing and required everybody to file separately.  I have a case right now where one spouse forged the other's signature on their joint return.  "Innocent spouse" is an entire concept/area of the tax law that only exists because we have joint filing, and I encounter it way more than seems reasonable.  Treatises have been written on it.  It would be much better if every person was taxed on their own income individually.  It was be harder to hide income, and it would mean that one spouse couldn't offer the other spouse up a tribute when the IRS isn't paid.
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    short+sassylabro
  • Yea we did better on our taxes back when we lived together pre-marriage, but we also both paid more in health care by having two individual plans. I would be curious to do the math on the total overall economic benefit of marriage compared to just living together since many of us have the marriage penalty, but then we also get different perks. 
  • smerkasmerka
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    Yea we did better on our taxes back when we lived together pre-marriage, but we also both paid more in health care by having two individual plans. I would be curious to do the math on the total overall economic benefit of marriage compared to just living together since many of us have the marriage penalty, but then we also get different perks. 
    When you live together and have kids, you are better off because you file as single and head of household. 
  • hoffse said:
    @Labro, yes in my dreamworld it would not matter if you were married or not - rates would not change.  Actually, it would be amazing if they changed the rule for joint filing and required everybody to file separately.  I have a case right now where one spouse forged the other's signature on their joint return.  "Innocent spouse" is an entire concept/area of the tax law that only exists because we have joint filing, and I encounter it way more than seems reasonable.  Treatises have been written on it.  It would be much better if every person was taxed on their own income individually.  It was be harder to hide income, and it would mean that one spouse couldn't offer the other spouse up a tribute when the IRS isn't paid.
    Curious....did they have POA? Can people who have POA for their spouse sign taxes?
  • hoffse said:
    @Labro, yes in my dreamworld it would not matter if you were married or not - rates would not change.  Actually, it would be amazing if they changed the rule for joint filing and required everybody to file separately.  I have a case right now where one spouse forged the other's signature on their joint return.  "Innocent spouse" is an entire concept/area of the tax law that only exists because we have joint filing, and I encounter it way more than seems reasonable.  Treatises have been written on it.  It would be much better if every person was taxed on their own income individually.  It was be harder to hide income, and it would mean that one spouse couldn't offer the other spouse up a tribute when the IRS isn't paid.
    My issue with doing that with the current tax code is that from my understanding is that if one spouse itemizes, then both must.  So who gets the mortgage interest deduction or the property tax deduction.  Granted, not as much of an issue if those deductions go away under the new plan.  But I could see that causing problems with how it works now.
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  • hoffse said:
    @Labro, yes in my dreamworld it would not matter if you were married or not - rates would not change.  Actually, it would be amazing if they changed the rule for joint filing and required everybody to file separately.  I have a case right now where one spouse forged the other's signature on their joint return.  "Innocent spouse" is an entire concept/area of the tax law that only exists because we have joint filing, and I encounter it way more than seems reasonable.  Treatises have been written on it.  It would be much better if every person was taxed on their own income individually.  It was be harder to hide income, and it would mean that one spouse couldn't offer the other spouse up a tribute when the IRS isn't paid.
    Curious....did they have POA? Can people who have POA for their spouse sign taxes?
    I'm not sure about the POA, but my wife and I file eletronically with TurboTax.  No signatures required.  My wife is from Thailand.  No idea how any of this works.  I do it all, and explain it to her as much as I can.  Even being forced to do it separately, I'd be doing both returns.
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  • hoffsehoffse
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    @jtmh2012 I'm talking about a world where we don't have deductions and there is no marriage penalty or benefit.  Even if we didn't go to my super simple grand plan I would like to see a system that allows spouses to file separately without the built-in penalties.

    @MommyLiberty5013 there was no POA in my current case - her ex-husband literally forged her signature.  It happens all. the. time.  I would say that in most marriages one person "does the taxes" and then the other person just signs assuming they are fine.  But once you sign, the IRS can go after you for the entire amount.  Of course you trust your spouse to do the right thing and report everything honestly, but I have seen taxes get screwed up by one spouse who then keeps the other spouse in the dark on a number of occasions.  In one of my cases the spouse who falsified everything literally disappeared, and the IRS could not find him... so they went after the guy's ex-wife instead who was on a need-to-know basis about the family's finances for her entire marriage to him.  He had formed multiple companies that she did not know existed.

    I would like a system where everybody has to file their own returns to avoid those kinds of situations.  It disproportionately affects women.  The vast majority of innocent spouse cases are women.  Literally one of the factors the IRS looks at is whether there was physical abuse in the relationship.  The whole framework is appalling, and since our current system disincentivizes filing separately there are a lot of people (women) who get caught by it.  At the very least people should be able to choose whether to file jointly or separately without there being penalties for choosing one vs. the other.
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  • hoffsehoffse
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    jtmh2012 said:

    I'm not sure about the POA, but my wife and I file eletronically with TurboTax.  No signatures required.  My wife is from Thailand.  No idea how any of this works.  I do it all, and explain it to her as much as I can.  Even being forced to do it separately, I'd be doing both returns.
    When you file with Turbotax you enter your prior year's AGI or PIN, and that serves as your electronic signature.
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  • hoffse said:
    jtmh2012 said:

    I'm not sure about the POA, but my wife and I file eletronically with TurboTax.  No signatures required.  My wife is from Thailand.  No idea how any of this works.  I do it all, and explain it to her as much as I can.  Even being forced to do it separately, I'd be doing both returns.
    When you file with Turbotax you enter your prior year's AGI or PIN, and that serves as your electronic signature.
    Which in at least my case gets pulled forward from last years return.  You can enter your drivers license number, but I don't believe it's required.
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  • jtmh2012jtmh2012
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    edited April 27
    hoffse said:
    At the very least people should be able to choose whether to file jointly or separately without there being penalties for choosing one vs. the other.
    I wouldn't be against the choice.

    However, regardless, at least in our circumstance, it'd still be me doing both of ours.  So maybe it helps someone, but I don't see how it would stop either spouse from saying "go ahead and do our taxes and let me know where to sign".

    Sorry, not trying to be a jerk, but I just finished helping my parents do theirs across state lines.  Joint federal + mock separate federals for each parent + resident Virginia + resident North Carolina + non-resident Virginia (my parents are in the process of retiring/moving).  That's in addition to my brother's return and my wife and I's joint return.

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