sundin13 said:
Gladly: 1) Through deductions, most of the people making within the raised zero tax level were already paying nothing. This makes things easier but not really much cheaper. 2) While the standard deduction is increased, many itemized deductions have been eliminated which again leaves most people close to breaking even, or possibly paying more if they were in a situation which benefited from deductions (ie States with high income taxes, families with numerous children, people with high student loan interest, people with high medical bills, etc). 3) Similar to above, while the child tax credit is increased from 1k to 1.6k, they are cutting the dependent exemption of $4k. That means for middle and upper income families with multiple children, the extra $600 of credits may not cover the loss of $4000 of exemptions. And for an analysis of where the savings go if you want to look past how things sound in theory and into how they work in practice, look to the Tax Policy Center's analysis of the Unified Framework plan:
As you can see, middle and low income individuals get around a 0.2% to 1% boost in after tax income on average (as previously stated, depending on specific situations certain individuals will be paying more) while those in the top 5% of income get about an 8-10% boost in after tax income. Virtually all of the direct benefit of this plan falls onto corporations and the very wealthy. Now, you might be thinking "well a cup of coffee is better than nothing", but you also have to consider the effects of decreased government revenue on different populations. Primarily the negative impacts of increased federal debt which is felt by everybody and in the long term could easily overtake any miniscule benefit these tax breaks have on the poor and middle class. Then there is how government outlays have to adapt to lowered revenue. As we have seen with the Republican budget, this typically involves cutting programs which disproportionately help the poor such as Medicare/Medicaid and the SNAP program, which will often leave lower income individuals having to pay more out of pocket, reducing their real spending power. |
So here is how it affects me. AFter putting money into my HSA and 401K I will net right at about 60K. With my wifes business depending on deductions it will probably clear 20K or so. At the moment I dont itemize and take the standard deduction plus the child deduction. So that equates to 12K plus the personel exemption of 4K and 3K for my kids. So 19K in deductions. Under the new plan I get 24K off the top plus 1.6K per kid and 300 for my wife. So 29.1K in deductions. Even if I owned my home which I will this year, it will be under 500K, I do have student loans that I will start to pay but the interest on those wont be 12K a year. Add to this that my tax rate will go from 10%, 15% and 25%down to 12% and I will save even more. I am Middle class truely. Anyone who says they are middle class and lives in the city with a 4K a month rent payment or a 1 million dollar home is delusional.
Here is the current tax structure for reference.
| Rate | Taxable Income Bracket | Tax Owed |
|---|---|---|
|
10% |
$0 to $9,325 | 10% of Taxable Income |
|
15% |
$9,325 to $37,950 | $932.50 plus 15% of the excess over $9325 |
|
25% |
$37,950 to $91,900 | $5,226.25 plus 25% of the excess over $37,950 |
|
28% |
$91,900 to $191,650 | $18,713.75 plus 28% of the excess over $91,900 |
|
33% |
$191,650 to $416,700 | $46,643.75 plus 33% of the excess over $191,650 |
|
35% |
$416,700 to $418,400 | $120,910.25 plus 35% of the excess over $416,700 |
|
39.60% |
$418,400+ | $121,505.25 plus 39.6% of the excess over $418,400 |
| Rate | Taxable Income Bracket | Tax Owed |
|---|---|---|
|
10% |
$0 to $18,650 | 10% of taxable income |
|
15% |
$18,650 to $75,900 | $1,865 plus 15% of the excess over $18,650 |
|
25% |
$75,900 to $153,100 | $10,452.50 plus 25% of the excess over $75,900 |
|
28% |
$153,100 to $233,350 | $29,752.50 plus 28% of the excess over $153,100 |
|
33% |
$233,350 to $416,700 | $52,222.50 plus 33% of the excess over $233,350 |
|
35% |
$416,700 to $470,700 | $112,728 plus 35% of the excess over $416,700 |
|
39.60% |
$470,700+ | $131,628 plus 39.6% of the excess over $470,700 |
| Rate | Taxable Income Bracket | Tax Owed |
|---|---|---|
|
10% |
$0 to $13,350 | 10% of taxable income |
|
15% |
$13,350 to $50,800 | $1,335 plus 15% of the excess over $13,350 |
|
25% |
$50,800 to $131,200 | $6,952.50 plus 25% of the excess over $50,800 |
|
28% |
$131,200 to $212,500 | $27,052.50 plus 28% of the excess over $131,200 |
|
33% |
$212,500 to $416,700 | $49,816.50 plus 33% of the excess over $212,500 |
|
35% |
$416,700 to $444,500 | $117,202.50 plus 35% of the excess over $416,701 |
|
39.60% |
$444,550+ | $126,950 plus 39.6% of the excess over $444,550 |
| Source: IRS. |
