The Tax Bill Itself

[Louetta]

http://docs.house.gov/billsthisweek/20171218/CRPT-115HRPT-466.pdf

[mrmarket]

That's a long ass bill.

[Louetta]

An English language explanation of the bill:

http://docs.house.gov/billsthisweek/20171218/Joint%20Explanatory%20Statement.pdf

[billyjoe]

I don't know if this is true, but I was told an individual making 12 million would be keeping an extra $2000 per day vs. old rate.

------------------billy

[Louetta]

I don't know if this is true, but I was told an individual making 12 million would be keeping an extra $2000 per day vs. old rate.

------------------billy

Is this too simplistic:

Max tax rate under the old plan = 39.6%, under the new = 37%. The difference is 2.6%.

$12,000,000 x .026 = $312,000 per year.

$312,000 per year / 365 days = $855 per day. That's for a wage earner, if you're pass thru or carried interest or something maybe it's different.

The biggest scam, I think, is talk of doubling the standard deduction. If you are married with three kids your standard deduction goes from (about) $12,000 to $24,000 but you lose the individual exemptions ($4050 I think) for 5 people ($20,250) so you have less, not more, net to deduct before you get to taxable income. Maybe I'm confused because nobody talks about this. Your tax rate does go down on what's left but not much.

[jiesen]

An English language explanation of the bill:

http://docs.house.gov/billsthisweek/...0Statement.pdf

Thanks for that, Louetta. Couldn't find a real breakdown in plain English anywhere in the news... but I see now that the 4 brackets originally proposed have been splintered back into 7 brackets (same as before the bill, more or less?)
Family of 4 making $80,000/yr originally would be paying 12% tax, and as amended now pay:
10% on the first $19k
12% on the next $58k
22% on the rest.
Is this better, worse? More complicated, or less? Who knows... but at least married couples can now have a $24k standard deduction, which may help reduce taxes for those not taking $24k or more in deductions already.

Reminds me of the conversation I had at work when the original bill first came out with the 4 brackets. The guy was confused and butthurt about that. Not enough brackets! was all he had as an argument, which I really didn't get. Why? What's the problem with fewer brackets?

Oh well, I guess his argument held out in the end, as the Senate agrees with him... the more brackets, the better!

[jiesen]

Is this too simplistic:

Max tax rate under the old plan = 39.6%, under the new = 37%. The difference is 2.6%.

$12,000,000 x .026 = $312,000 per year.

$312,000 per year / 365 days = $855 per day. That's for a wage earner, if you're pass thru or carried interest or something maybe it's different.

The biggest scam, I think, is talk of doubling the standard deduction. If you are married with three kids your standard deduction goes from (about) $12,000 to $24,000 but you lose the individual exemptions ($4050 I think) for 5 people ($20,250) so you have less, not more, net to deduct before you get to taxable income. Maybe I'm confused because nobody talks about this. Your tax rate does go down on what's left but not much.

The real problem here is when you change multiple variables in the equation, which all impact different families differently, it's impossible to say whose taxes go up and whose go down, without doing a separate calculation for everyone. Nobody around is good enough at the tax math to do it correctly, so everyone just ends up with confusion and butthurt every time it changes, regardless of whether they are good or bad changes. Only real way to fix that is to simplify it to the point where most can understand the damn math, and what the changes actually mean to them.

[Karel]

The real problem here is when you change multiple variables in the equation, which all impact different families differently, it's impossible to say whose taxes go up and whose go down, without doing a separate calculation for everyone. Nobody around is good enough at the tax math to do it correctly, so everyone just ends up with confusion and butthurt every time it changes, regardless of whether they are good or bad changes. Only real way to fix that is to simplify it to the point where most can understand the damn math, and what the changes actually mean to them.

I like a tax law that nobody understands, probably not even the writers/tinkerers. Well, apart from the parts where the really rich people get a really good deal, that at least seems to be pretty clear.

[billyjoe]

Of course it will take awhile to trickle down.

-------------billy

[blindsquirrel]

I love the debate about who benefits - rich or poor? I am of the opinion that most rich people got that way by being smarter with money than poor people. You can tax, penalize, change the rules all you want, but it won't make wealthy people dumber or poor people smarter. Most of the wealthy will get to know the new rules, adjust their behavior, and keep on building wealth because they are smart enough to come out ahead under almost any system. Poor people will keep on complaining about the rich and the government who taxes them. I know, I know, I'm just a big meanie.

[mimo_100]

Is this too simplistic:

Max tax rate under the old plan = 39.6%, under the new = 37%. The difference is 2.6%.

$12,000,000 x .026 = $312,000 per year.

$312,000 per year / 365 days = $855 per day. That's for a wage earner, if you're pass thru or carried interest or something maybe it's different.

The biggest scam, I think, is talk of doubling the standard deduction. If you are married with three kids your standard deduction goes from (about) $12,000 to $24,000 but you lose the individual exemptions ($4050 I think) for 5 people ($20,250) so you have less, not more, net to deduct before you get to taxable income. Maybe I'm confused because nobody talks about this. Your tax rate does go down on what's left but not much.

Not sure why you used 5 exemptions in your example. The average household size is about 3.

The 2010 Census enumerated 308.7 million people in the United States, a 9.7 percent increase from 281.4 million in Census 2000. Of the total population in 2010, 300.8 million lived in 116.7 million households for an average of 2.58 people per household.

[Louetta]

Not sure why you used 5 exemptions in your example. The average household size is about 3.

The 2010 Census enumerated 308.7 million people in the United States, a 9.7 percent increase from 281.4 million in Census 2000. Of the total population in 2010, 300.8 million lived in 116.7 million households for an average of 2.58 people per household.

I'm glad you brought that up. So a single mother's standard deduction goes from about $6,000 to about $12,000, an increase of $6,000. If she has one child (2.00 people per household) she loses 2x$4,050 = $8100. If two kids (3.00 people per household) 3x$4,050 = $12,150. The point is people are arguing about pass-thrus and carried interest and ignoring what affects the average person. P.S. I finally did hear a guy on the tube mention this.

[billyjoe]

I love the debate about who benefits - rich or poor? I am of the opinion that most rich people got that way by being smarter with money than poor people. You can tax, penalize, change the rules all you want, but it won't make wealthy people dumber or poor people smarter. Most of the wealthy will get to know the new rules, adjust their behavior, and keep on building wealth because they are smart enough to come out ahead under almost any system. Poor people will keep on complaining about the rich and the government who taxes them. I know, I know, I'm just a big meanie.

blindsquirrel, Good point. The key phrase is "being smarter with money". The smartest people I know are definitely not the smartest when it comes to dealing with financial matters. In my opinion we are witnessing a classical example in history right now. https://www.merriam-webster.com/dict...idiot%20savant Anyone agree , or disagree?

----------------billy

[mimo_100]

I'm glad you brought that up. So a single mother's standard deduction goes from about $6,000 to about $12,000, an increase of $6,000. If she has one child (2.00 people per household) she loses 2x$4,050 = $8100. If two kids (3.00 people per household) 3x$4,050 = $12,150. The point is people are arguing about pass-thrus and carried interest and ignoring what affects the average person. P.S. I finally did hear a guy on the tube mention this.

The actual average is 2.58 not 3 - so if you do not round it up, 2.58 times 4050 is $10449.

[Louetta]

The actual average is 2.58 not 3 - so if you do not round it up, 2.58 times 4050 is $10449.

Amazing...