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

[Jhhnn]

Don't let facts get in the way of your illogical thought process:

All you need to do now is correlate that with spousal support to have an argument, and a silly one at that. There are ~5X as many white people as black people in this county. A 10 point spread in the divorce rate won't make up for that.

 

[zinfamous]

Thinking about converting your Roth to a traditional IRA? Do it before December 31 because that goes away under Section 1501.

why would you do that anyway? the only benefit is going the other direction, no?

 

[evident]

Well... glad i invested heavily in my 401k (and roth) while I could

 

[s0me0nesmind1]

why would you do that anyway? the only benefit is going the other direction, no?

The only reason you would do that is if you had a magic 8-ball and could tell if that the tax brackets that you contributed to the ROTH under are going to be reduced when you take the IRA out and declare its income in alter years will be less.... Which of course, we can never know for sure until we are in the future. Tax rates can go up or tax rates could go down.

At the same time, they could also impose something for ROTH accounts when you try to withdrawal from them even though income taxes were already paid. We may never know.

 

[Exterous]

Section 1307 of the bill repeals the deduction for tax prep services. While not huge it's a flick in the nuts to the middle class.

I'm wondering if the thinking is that with the standard deduction increasing to $24k for many people + the cuts in itemized deduction options = fewer people needing tax prep services.

why would you do that anyway? the only benefit is going the other direction, no?

It would depend on your current tax brackets. Given that a large group of people already have access to similarly structure tax plans like 401ks and the phase out of the deduction for larger incomes (who would be more likely to benefit given their current high tax rates) I think the biggest impact will be on those who accidentally make contributions to the wrong retirement account

 

[fleshconsumed]

Haven't seen this one posted in the thread yet - apparently CNN reports the bill also kills student loan interest deduction as well. Keep in mind that you can claim this deduction without itemizing but it's phased out after 65-80K income. So it's a straight middle class tax benefit. I'm baffled how anyone can see this bill as anything other than upstream wealth redistribution. Sure, the middle class may see a small cut to their marginal tax rate, but the bill also kills pretty much any deduction available to middle class, and keep in mind there aren't that many deductions available to middle class in the first place anyway. I wouldn't be surprised if in the end middle class won't see any reduction in the tax burden at all. And you know what, if the argument was that we need to buckle up and reduce our budget deficit and pay down our debts while the economy is strong, I'd accept it, nobody likes their tax bill going up, but if that was the argument, I'd go along with it. But this is not what's happening as we'll be going into deficits to finance 0.1% tax cuts. Unbelievable. This will be the heist of the century if it passes.

http://money.cnn.com/2017/11/02/pf/...nterest-deduction/index.html?iid=hp-stack-dom

 

[K1052]

The more i read about the bill the less convinced I am anything resembling it will make it out of the Senate. There are too many non-starters for many Rs. For example the PTC wind down for wind power is made more aggressive and sooner...something Chuck Grassly expressly said he would not support. There's a lot more items like that that individual senators aren't going to swallow.

There is also concern that the House legislation violates the Byrd rule by having too large a deficit and one that will grow outside the 10 year limit.

 

[fskimospy]

Haven't seen this one posted in the thread yet - apparently CNN reports the bill also kills student loan interest deduction as well. Keep in mind that you can claim this deduction without itemizing but it's phased out after 65-80K income. So it's a straight middle class tax benefit. I'm baffled how anyone can see this bill as anything other than upstream wealth redistribution. Sure, the middle class may see a small cut to their marginal tax rate, but the bill also kills pretty much any deduction available to middle class, and keep in mind there aren't that many deductions available to middle class in the first place anyway. I wouldn't be surprised if in the end middle class won't see any reduction in the tax burden at all. And you know what, if the argument was that we need to buckle up and reduce our budget deficit and pay down our debts while the economy is strong, I'd accept it, nobody likes their tax bill going up, but if that was the argument, I'd go along with it. But this is not what's happening as we'll be going into deficits to finance 0.1% tax cuts. Unbelievable. This will be the heist of the century if it passes.

http://money.cnn.com/2017/11/02/pf/...nterest-deduction/index.html?iid=hp-stack-dom

And remember, these cuts are being made to finance a reduction and then elimination of the estate tax, which is estimated to cost $200 billion over a 10 year period. That's right, they are raising taxes on middle class students and literal orphans in order to give more money to people inheriting more than $10 million from their parents.

 

[ivwshane]

Lets not forget that the middle class "cuts" are temporary while the big corporate tax cuts are permanent.

 

[zinfamous]

Haven't seen this one posted in the thread yet - apparently CNN reports the bill also kills student loan interest deduction as well. Keep in mind that you can claim this deduction without itemizing but it's phased out after 65-80K income. So it's a straight middle class tax benefit. I'm baffled how anyone can see this bill as anything other than upstream wealth redistribution. Sure, the middle class may see a small cut to their marginal tax rate, but the bill also kills pretty much any deduction available to middle class, and keep in mind there aren't that many deductions available to middle class in the first place anyway. I wouldn't be surprised if in the end middle class won't see any reduction in the tax burden at all. And you know what, if the argument was that we need to buckle up and reduce our budget deficit and pay down our debts while the economy is strong, I'd accept it, nobody likes their tax bill going up, but if that was the argument, I'd go along with it. But this is not what's happening as we'll be going into deficits to finance 0.1% tax cuts. Unbelievable. This will be the heist of the century if it passes.

http://money.cnn.com/2017/11/02/pf/...nterest-deduction/index.html?iid=hp-stack-dom

But it all fits on one card! It's better because there's less work and it's simple! major benefit to the middle class! Less time to fill out their taxes means more time to work and get overtime bonuses!

(now watch as this is the single, approved response to any and all criticism about the massive pullback on real deductions and real benefits)

 

[sportage]

Was watching Fox News, which I try to avoid but lets face it sometimes you just need a little un-fake news (hehe haha hoho).
Naturally, fox was ranting about Hilary emails or whatever it was up their arse, but the interesting thing was the fox news scroll across the bottom of the screen while fox was loving Hilary.

The scroll display listing all the hits that the Trump tax plan would inflect on the middle class.
Limiting home mortgage deductions and with this lets be totally real people....
The "plan" or mob like hit on the middle class might initially involve homes over $500,000, but we all know how this works. We've been here before during Reagan and credit card interest deductions.
$500,000 to start, then, $400,000 then $300,000 then $200,00 and eventually all home mortgage deductions would be eliminated.
Give them a foot in the door and suddenly there they are, in the house.

Your home deduction whether that be a $500,000 home or an $5 home, that deduction will be GONE!
This is simple logic. Simple math.
As the Trump tax plan fails after implementation and the economy begins to crash, we all know republicans in congress will have no choice but to expand the damage targeting all middle class taxpayers. Attempting to keep their tax plan afloat for benefitting their wealthy upper class.
Who needs reminding that trickle-down DOES NOT WORK!!! Never has....
So believing this initial cap at $500,000 is somehow set in stone is foolish nonsense for middle class Americans.

Then... on this same bottom of the screen scroll, the tax plan would also eliminate deductions on college loans.
Still another hit aimed at the middle class.

And the horrors of this Trump tax plan middle class hit went on and on scrolling along the bottom of the screen.
Cutting this, eliminating that, everything which currently benefits the middle class and only the middle class tax payer wiped away.
And this was on Fox News.
Obviously, the guy that controls the fox scroll is not a game player. haha

And then we have the ""IF"".
That... "well, I don't know", from those at the Trump camp whenever explaining this Trump tax plan.
Whenever asked, they can not and will not commit that initial middle class tax reductions will stick.
Will be there come next year.
"Well....." (they say) "Well.... its not clear "IF" the plan will continue those initial middle class tax cuts during the following years."
"We don't know..."

Something sounds a lot like that Trump university bait and switch.
Promising much, then pulling that old bait and switch Donald Trump is so famous for pulling.
The art of the con.

Donald Trump is a lier. His tax plan is full of lies.
His Trump congress promotes the lies and stands behind every lie.
Mitch McConnell and Paul Ryan know exactly how hard this Trump tax plan will hit the middle class.
They know any initial carrot at the end of this stick is only a temporary carrot, rotting away by the minute.
They know the bait and switch of this Trump tax plan.
They know... The all know...

 

[Fern]

And remember, these cuts are being made to finance a reduction and then elimination of the estate tax, which is estimated to cost $200 billion over a 10 year period. That's right, they are raising taxes on middle class students and literal orphans in order to give more money to people inheriting more than $10 million from their parents.

Did they touch gift taxes?

If gift taxes still apply, well I'd find that incongruous. Would serve as a perverse motivation for parricide (the killing of one's parents). "Well son, I'm limited to how much I can gift you. You'll have to wait until I'm deceased and it's all tax free". "Dad, I've got a solution..."

Fern

 

[sactoking]

I saw no change to gift tax rules.

 

[fleshconsumed]

https://www.washingtonpost.com/news...bill-they-will-no-longer-get-a-tax-deduction/

So apparently tax deduction for whatever teachers spend out of their own pockets on children in their classroom is also gone. God damn. I seriously think GOP sat down with a single minded task of eliminating every single middle and working class deduction they could find while leaving the biggest 0.1%-nter loopholes intact. This seriously is it. How petty/ruthless/relentless/heartless do you have to be to take away teacher's expense deduction? Come on...

 

[Puffnstuff]

Looks like the GOP is backtracking on their tax plan.
https://www.cbsnews.com/news/house-...bill-to-tax-income-at-higher-rates-over-time/

 

[Engineer]

https://www.washingtonpost.com/news...bill-they-will-no-longer-get-a-tax-deduction/

So apparently tax deduction for whatever teachers spend out of their own pockets on children in their classroom is also gone. God damn. I seriously think GOP sat down with a single minded task of eliminating every single middle and working class deduction they could find while leaving the biggest 0.1%-nter loopholes intact. This seriously is it. How petty/ruthless/relentless/heartless do you have to be to take away teacher's expense deduction? Come on...

From the article that Puffnstuff linked...

Brady, in a statement releasing the revised bill, stressed "pro-growth tax reform that will deliver more jobs, fairer taxes, and bigger paychecks for people across our country."

That's exactly how the GOP feels about this.....by cutting taxes for those at the top the most by far and then barely cutting those in the bottom/middle, if not raising them, means fairer taxes.

 

[shortylickens]

Lets not forget that the middle class "cuts" are temporary while the big corporate tax cuts are permanent.

Any chance they end immediately after congressional elections?

 

[Jhhnn]

Another great thing about cutting corporate taxes is that it will further enrich wealthy foreigners who hold ~35% of US equities. Krugman explains under Trump's $700B foreign aid program down the page-

https://krugman.blogs.nytimes.com/

So much for America first...

 

[Exterous]

That's exactly how the GOP feels about this.....by cutting taxes for those at the top the most by far and then barely cutting those in the bottom/middle, if not raising them, means fairer taxes.

I haven't read all of it but I don't think there is much chance taxes would be raised for anyone making below $100k. Almost 70% of Americans use the standard deduction so I don't think removing most of these deductions will impact most middle class Americans. By my back of the napkin math the raising of the standard deduction to $24k for married couples will save almost $2000 in taxes which would more than offset deductions like the one for classroom expenses for those that qualify.

Not I think this plan would do well for us overall

 

[Meghan54]

I haven't read all of it but I don't think there is much chance taxes would be raised for anyone making below $100k. Almost 70% of Americans use the standard deduction so I don't think removing most of these deductions will impact most middle class Americans. By my back of the napkin math the raising of the standard deduction to $24k for married couples will save almost $2000 in taxes which would more than offset deductions like the one for classroom expenses for those that qualify.

Not I think this plan would do well for us overall

How in the heck would raising the standard deduction to $24K for most married couples save them $2K in taxes?

True, a married couple would gain $3200 in deductions over current law (2016-the latest year for which there's complete tax info available and will be the tax year figures I use throughout), but that does not translate into $2K in taxes, unless you're referencing a taxable income well beyond $100K.

For instance: married couple with taxable income of $99,200 in 2016 would have paid $16,349 in income taxes. Reducing their taxable income by that increased standard deduction amt. of $3200 gives them a taxable income of $96,000 with a tax due of $15,549. True, that's a decrease in tax due, but only $800. And this decrease of your taxed income is less when you're over 65 as that group already had a standard deduction/personal exemption total of $23,200....an $800 decrease in their taxable income liability.....and that can translate into something like a much more modest $120 tax decrease at $50K taxable income.

And that doesn't even address the fact their first $18,550 would have been taxed at 12% instead of 10%, the current rate. Nor does this address the removal of other deductions currently available for use without having to itemize, such as the student loan interest deduction, moving expenses, alimony payments, health ins. payment deduction for self-employed, amongst others.

And we haven't even broached the subject of losing dependent (children) deductions.

This is a tax reform for the rich, nothing else.

 

[brycejones]

Another great thing about cutting corporate taxes is that it will further enrich wealthy foreigners who hold ~35% of US equities. Krugman explains under Trump's $700B foreign aid program down the page-

https://krugman.blogs.nytimes.com/

So much for America first...

That's a dirty lie! Investors are going to want to give workers a yuge raise instead of taking that extra money as dividends.

That is what the administration says.

 

[Exterous]

How in the heck would raising the standard deduction to $24K for most married couples save them $2K in taxes?

The original articles I was reading failed to mention the elimination of the personal exemptions in addition to raising standard deduction - throwing my understanding of the bill and my math off

 

[Engineer]

https://finance.yahoo.com/news/senate-tax-tweak-curb-pretax-185627873.html

Amendment in Senate to cut out "pretax" catch up contributions. Just when I near 50 (49 in January), they cut this when I was ready to use it. Figures.

 

[MomentsofSanity]

https://finance.yahoo.com/news/senate-tax-tweak-curb-pretax-185627873.html

Amendment in Senate to cut out "pretax" catch up contributions. Just when I near 50 (49 in January), they cut this when I was ready to use it. Figures.

Wow and removing IRA Re-characterizations on Roth Conversions.

 

[ch33zw1z]

https://finance.yahoo.com/news/senate-tax-tweak-curb-pretax-185627873.html

Amendment in Senate to cut out "pretax" catch up contributions. Just when I near 50 (49 in January), they cut this when I was ready to use it. Figures.

You should buy better bootstraps.