GOP tax plan musing...capping 401k contributions at $2400 year

[senseamp]

Republicans are the ones saying states should do more and the federal government less.

 

[senseamp]

Silicon Valley represents a vanishingly small percentage of the US population. We don’t make national tax policy based on there.

SV is not the only place in the country with median house prices well in excess of $500K.

 

[fskimospy]

SV is not the only place in the country with median house prices well in excess of $500K.

Taking your previous statement as true it is certainly the only place I can think of where $200k a year would be considered ‘middle class’. We make a bit less than that in NYC and do not consider myself middle class by any stretch of the imagination.

To calibrate your reality I suggest using this tool, it’s illuminating just how rich many people are who consider themselves middle class.

https://www.washingtonpost.com/news...ddle-class-in-america/?utm_term=.c5fced2761d7

 

[obidamnkenobi]

I basically agree with you on all points. One thing about SALT though is that the states affected by its removal are already some of the largest net tax contributors to the federal treasury. Removing that deduction would make things truly comically imbalanced to where those states are basically being plundered.

I definitely support removing the state and local deduction but it would need to be done in a way that mitigated the overall revenue impact somewhat.

Yes certainly true. It's a distortion, but complicated with effects on many levels. Probably shouldn't be a huge priority removing it, and might require something to offset it. I don't know the details, but on the face of it the GOP proposal for a cap doesn't sound like a terrible idea to me, or some other form of phase-out. Same with the MID which should obviously be phased out slowly, not cut overnight. That would be insanity.

 

[obidamnkenobi]

$200K is middle class, and not far into it, in Silicon Valley. Look up average 1500sf house price in San Jose, it's in the 7 figures. We aren't talking about rich towns like Portola Valley here. I don't care about BMW's either, but people in South Carolina building them might. Anyways, do what you do. But at the end of the day, the middle class has some of the highest propensity for spending, whereas the rich have some of the lowest. Middle class spending less on housing and related items is going to hurt the economy directly, Ivanka getting an estate tax cut is not going to make her get more gold toilets.

But why? From what I know mainly from the housing prices right? Which is partially caused by the mortgage deduction in the first place! And to larger extent by zoning and building restrictions (often to protect the value of existing homeowners). I don't believe groceries and gas cost 4x as much in silicon valley? And from what I remember reading the price to rent ratios are also crazy, so you're better off renting. As mentioned, I also don't think we should set national tax policy based on runaway purchase prices for homes in one tiny region, populated by over-compensated tech workers. But if you do that's your right, just ask that you're honest about it.

 

[senseamp]

Taking your previous statement as true it is certainly the only place I can think of where $200k a year would be considered ‘middle class’. We make a bit less than that in NYC and do not consider myself middle class by any stretch of the imagination.

To calibrate your reality I suggest using this tool, it’s illuminating just how rich many people are who consider themselves middle class.

https://www.washingtonpost.com/news...ddle-class-in-america/?utm_term=.c5fced2761d7

Compared to Trump supporting opiod junkies we "rich." But in terms of standard of living relative to first world, we are middle class at best.

 

[senseamp]

But why? From what I know mainly from the housing prices right? Which is partially caused by the mortgage deduction in the first place! And to larger extent by zoning and building restrictions (often to protect the value of existing homeowners). I don't believe groceries and gas cost 4x as much in silicon valley? And from what I remember reading the price to rent ratios are also crazy, so you're better off renting. As mentioned, I also don't think we should set national tax policy based on runaway purchase prices for homes in one tiny region, populated by over-compensated tech workers. But if you do that's your right, just ask that you're honest about it.

I am renting for this exact reason. Place I am renting would be 2x as much monthly to buy. I am OK with this hike, maybe prices will crash and I will buy a house, and then when Democrats come back they'll bring back SALT and increase mortgage deduction. But don't fool yourself into thinking it's not going to impact overall economy. For better or worse, SV is going to automate a lot of jobs and a big chunk of that money is going to go from the non-tech workers to "over-compensated" tech workers. Their spending is going to be key to keeping the economy afloat.

 

[fskimospy]

Compared to Trump supporting opiod junkies we "rich." But in terms of standard of living relative to first world, we are middle class at best.

Compared to most Americans we are rich. Remember your (household?) is making somewhere around as much as four other American households put together. If you use that tool I linked you'll see you're above the 80th percentile in basically every county in the country and for most of them you are WAAAAAY above it. As compared to other first world countries in general you are probably even more affluent as much of the first world has median incomes lower than the US. (not all though)

You're making more money than more than 80% of other households in one of the richest areas of one of the richest countries on earth. Are you really sure you're middle class? If you are, who isn't?

 

[senseamp]

Compared to most Americans we are rich. Remember your (household?) is making somewhere around as much as four other American households put together. If you use that tool I linked you'll see you're above the 80th percentile in basically every county in the country and for most of them you are WAAAAAY above it. As compared to other first world countries in general you are probably even more affluent as much of the first world has median incomes lower than the US. (not all though)
You're making more money than more than 80% of other households in one of the richest areas of one of the richest countries on earth. Are you really sure you're middle class? If you are, who isn't?

Yes, I am pretty sure I am middle class. Maybe affluent, but by no means rich. Rich would be medium to large business owners and executives. Over $500K annual compensation and eight digits in assets.

 

[fskimospy]

Yes, I am pretty sure I am middle class. Maybe affluent, but by no means rich. Rich would be medium to large business owners and executives. Over $500K annual compensation and eight digits in assets.

Using this calculator if $500k is your cutoff that indicates that you consider only people in the top 0.6% of the income distribution to be 'rich'.

https://dqydj.com/household-income-percentile-calculator-2016/

Does that seem reasonable? By that definition the middle class encompasses basically everyone so the term has no meaning.

 

[PricklyPete]

Using this calculator if $500k is your cutoff that indicates that you consider only people in the top 0.6% of the income distribution to be 'rich'.

https://dqydj.com/household-income-percentile-calculator-2016/

Does that seem reasonable? By that definition the middle class encompasses basically everyone so the term has no meaning.

You are arguing with someone who willfully is ignoring statistics for feels. Reminds of our dear leader.

 

[snoopy7548]

Yes, I am pretty sure I am middle class. Maybe affluent, but by no means rich. Rich would be medium to large business owners and executives. Over $500K annual compensation and eight digits in assets.

Different people have different definitions of wealth. I'd consider myself to be wealthy, but others may see me as rich. I make <$100k but I save >50% and own a house. I'd see somebody as never having to worry about work or money as being rich, so maybe close to $1-1.5MM in liquid assets (that could cover reasonable expenses if they chose to stop working) and a home owned outright. If I was saving the same percentage I do now and making $200k, I'd consider myself to be rich even if I didn't have over $1MM in liquid assets yet.

The eight digits are reserved for the uber rich. Nine digits for filthy stinking rich. Ten digits for your entire bloodline until the end of time will be filthy stinking rich. Eleven digits... f you.

 

[BigDH01]

MID needs to die. Based on what I see around me (east coast), homes are simply overpriced. Case-Shiller is back to 2008 levels. In the coming decades Americans need more mobility, not less. People need to rethink what home ownership actually means for them.

I'd prefer we eliminate most deductions honestly. Simplify the damn tax code, stop trying to encourage certain behaviors, and eliminate brackets. Tax on a parabolic curve with the symmetry about the y-axis. You want to know how much tax you're going to pay? Here's a simple equation, have fun.

 

[zinfamous]

ps: your misuse of less instead of fewer is quite grating. Fewer BMWs..

 

[K1052]

Looks like the MID for 2nd homes buys it entirely now. That'll be a problem for costal GOP reps.

 

[senseamp]

Different people have different definitions of wealth. I'd consider myself to be wealthy, but others may see me as rich. I make <$100k but I save >50% and own a house. I'd see somebody as never having to worry about work or money as being rich, so maybe close to $1-1.5MM in liquid assets (that could cover reasonable expenses if they chose to stop working) and a home owned outright. If I was saving the same percentage I do now and making $200k, I'd consider myself to be rich even if I didn't have over $1MM in liquid assets yet.

The eight digits are reserved for the uber rich. Nine digits for filthy stinking rich. Ten digits for your entire bloodline until the end of time will be filthy stinking rich. Eleven digits... f you.

I guess I am "rich" by your definition. But not in Silicon Valley. I guess we may rake in some more dough and bail on this place to a life of luxury and liberal elitism elsewhere.

 

[zinfamous]

Yes, I am pretty sure I am middle class. Maybe affluent, but by no means rich. Rich would be medium to large business owners and executives. Over $500K annual compensation and eight digits in assets.

wtf?

 

[zinfamous]

I guess I am "rich" by your definition. But not in Silicon Valley. I guess we may rake in some more dough and bail on this place to a life of luxury and liberal elitism elsewhere.

again, wtf? lolno.

 

[snoopy7548]

I guess I am "rich" by your definition. But not in Silicon Valley. I guess we may rake in some more dough and bail on this place to a life of luxury and liberal elitism elsewhere.

If you can stand the winters, the Northeast has some really nice low to medium COL areas. You can have your choices of nice, sometimes new, houses in great areas for under $300k less than a hour away from Boston.

 

[senseamp]

If you can stand the winters, the Northeast has some really nice low to medium COL areas. You can have your choices of nice, sometimes new, houses in great areas for under $300k less than a hour away from Boston.

We'd probably stick around the West somewhere. Not big fan of east coast humidity.

 

[ewdotson]

I feel like the problem here is a lack of granularity in terms. Perhaps it would be fair to distinguish between the middle class, the upper class and the [stinking] rich? The scale goes asymptotic enough at the high end that it probably *is* worth differentiating the latter two groups. In my opinion, at least.

 

[fskimospy]

We'd probably stick around the West somewhere. Not big fan of east coast humidity.

Psssh, I don't trust air I can't cut with a knife.

 

[Jmegapac]

This plan is already dead. I live in Virginia and several of my friends are contractors that do various house-related work in Northern Virginia. They just told me that exurbs of large cities, many of which are represented by GOP congressmen/women, cannot vote for this bill as it would devastate the contractor businesses. There are a lot of houses between 750k-1.5mil in districts represented by both Dem and GOP, while vast majority of contractors live in exurbs and sometimes even farther out and commute to cities and suburbs for contract work. They told me that if those house owners stop making renovations to their houses due to loss of house value, then they would all be out of jobs.

It sounded like this situation is fairly common in large cities and their surrounding suburb/exurbs. If this is true I don't see how this bill can pass with reduction in MID.

 

[snoopy7548]

We'd probably stick around the West somewhere. Not big fan of east coast humidity.

That's why god invented central air!

 

[senseamp]

This plan is already dead. I live in Virginia and several of my friends are contractors that do various house-related work in Northern Virginia. They just told me that exurbs of large cities, many of which are represented by GOP congressmen/women, cannot vote for this bill as it would devastate the contractor businesses. There are a lot of houses between 750k-1.5mil in districts represented by both Dem and GOP, while vast majority of contractors live in exurbs and sometimes even farther out and commute to cities and suburbs for contract work. They told me that if those house owners stop making renovations to their houses due to loss of house value, then they would all be out of jobs.

It sounded like this situation is fairly common in large cities and their surrounding suburb/exurbs. If this is true I don't see how this bill can pass with reduction in MID.

Orange county and San Diego area Republicans would be signing their own resignation letters too if they vote for this.