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Ariadne22, much clearer now. You were talking about a $3200 reduction in taxable income, not a decrease in the standard deduction to $3200. Thank you for example which made this clear.
Trump's plan does not double the "personal exemption". It doubles the "standard deduction". The personal exemption is to be eliminated, which for most families will be a net increase in taxes.
How many retirees will have "families" that would result in a net increase in taxable income from losing the personal exemption? My guess is that there would be very few.
How many retirees will have "families" that would result in a net increase in taxable income from losing the personal exemption? My guess is that there would be very few.
My son and dil would be one "family." They have no kids, however, so maybe that isn't a "family." Anyway, they exactly fit the profile of my example above. Only one of them works. I can say, for sure, an extra $4,000 in taxes would be seriously painful.
In the end, the kickers are the new higher tax rates and loss of personal exemption.
I do not know what it is but reducing taxes is a plus. Especially corporations.
Then reduce expenses that do not result in positive results.
Support for the needy should not result in them having a higher standard of living than a tax payer earning the same amount of money and then having to pay taxes that go to the needy.
"Needy" isn't a defined term within the concept of government social programs. Probably the closest to a bottom of the barrel existence, is the Supplemental Security Income program (SSI), which pays a set amount to the disabled who have insufficient SS credits to qualify for regular disability. That amount is currently $735 a month for a single person. Any person working full time is going to take home more money than that. All other programs require the individual to work. I suppose you could make a case for a single parent with several kids, that works a low wage job and receives various government benefits, as having the equivalent income of someone who earns the same amount. But I would wager that such a comparison doesn't provide the single parent with a higher standard of living than the working stiff.
Such archaic thinking, is a throwback to the LBJ Great Society era a half century ago. All these programs have been revised over the years, whereas the mythical bum living high on the hog off government welfare no longer exist. Any who are, are getting money under the table from somewhere else.
What may be PLANNED and what gets PASSED are two different things.
Well habe to wait and see.
I'm so far liking the $24k standard deductions, but fear the 2% tax hike on our income over that, if I understand that right.
I'll pay more in taxes than I have in years.
But our income is more than it has been in years.
Because an incentive now to purchase in a high-tax states are the writeoffs for state taxes, property taxes, and interest. In some states, property taxes are killers. In my area, the average property tax is about $8k, at least. On the east coast double that, easily. We have plenty of homes here in certain areas with $12K-$18k taxes.
I am single and have always itemized because my deductions (primarily property taxes and interest, substantial charitable contributions when I worked, and state taxes) were always well in excess of even the standard deduction for a married couple. Raising the standard deduction and raising the tax rate, assuming there is no change in income threshold between tax brackets, will result in me paying more in taxes. The Reagan tax overhaul also resulted in me paying more taxes.
I've always done Roth conversions with bracket creep in mind. I'm hoping the thresholds for these brackets will increase by at least $15k.
Any way it's cut, however, this will cost me. There is nothing in this plan for me but higher taxes. As usual, the GOP is not here to help me.
On top of that those of us with public pensions should remember that many of us come from states with high personal and property taxes. Remove that deduction and you put pressure on those states being able to raise taxes and maintain their tax base. It will increase the number of higher income retirees transplanting etc. Add to that the thought that many of those states expanded Medicaid and with possible changes to that funding a big Bada Dang could be coming.
Currently, annually, the personal exemptions and the standard deduction increase to account for inflation. I don't see anything in these plans mentioning that the new standard deduction will ever be raised. Effectively, we could wind up with more of our income taxed currently and down the road.
The fact that the personal exemptions are being eliminated means that the standard deduction is not being "doubled". In point of fact the total non-taxed amount of income is not being raised significantly at all. This has already been mentioned several times above.
The government has been working on getting rid of the Schedule A for decades. It started with making consumer interest (i.e. think credit card interest, auto loan interest, etc. which in the distant past was always a large line item on Schedule A) not deductible. It changed some deductible items on the Schedule A to a 2% floor, and most recently it changed medical deductions to a 10% floor. It also increased the burden of proof for charitable contributions. With each of these changes fewer people were able to itemize on Schedule A. I see the current proposed changes further restricting who will be able to itemize.
Regarding a "postcard" type system filing, I see this as hurting the accounting industry. There will not be as great a need for tax preparers, CPAs, EAs. It may reduce the need for tax preparation software.
Despite the fact that I still don't know what the tax bracket ranges will include, I see this as benefiting the wealthy and doing little positive for the middle class.
I don't like putting all of my eggs in one basket by loosing deductible expenses and having to depend upon the tax bracket to be favorable to me. What happens when under the tax laws we are unable to reduce our taxable income through deductions and tax-advantaged strategies but the tax brackets don't shield us from inflation and being pushed into higher and higher tax brackets?
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