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  • #46




    Zaphod you’re right. It’s very clever and will probably work. The big question is what the long term consequences will be. Both political and economic. What will we, the upper middle class, do in response to these changes? Will people migrate out of HCOL areas and thus change the make up of the voting population in LCOL states? Will we all find ways to simply dodge these taxes through loopholes? Will the housing market suffer enough to cause another market downturn? These are big unknowns in my mind. More importantly we have 3 more years of an idiot president doing things like trying to sell fossil fuels instead of helping the rest of the world solve a climate change crisis (one that I believe is easily fixable if we all work together). Interesting times, a little scary too.
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    who says you are upper middle class?

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    • #47




      Saw a nice article detailing the house plan today form USA Today: https://www.usatoday.com/story/money/personalfinance/2017/11/02/tax-plan-republicans-outlines-sweeping-changes-individuals/825232001/

      I’m surprised more of you aren’t excited about the AMT going away. That’s huge for high income professionals. In fact, the only bad thing I saw there for high income pros was the loss of the state income tax deduction.
      The GOP plan envisions reducing the current seven tax brackets for individuals to the following: 12%, 25%, 35% and 39.6%.

      That 39.6% bracket would kick in above $1 million in income for married couples, or $500,000 for others.

      That’s huge for highly paid docs and two doc couples. Instead of kicking in at $418K ($471K married), now it kicks in at $500K/$1M. That also helps the marriage tax penalty.

       
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      Well, it's hard to be excited about the AMT because I don't know exactly how it's going to affect my bottom line with all the other proposed changes.  I have paid it at least the last 2 years.  I'm in a LCOL state and my mortgage is well under the 500k limit.  I don't pay a huge amount in state taxes (OH), but I do typically get some deduction from that.  I'm pretty sure we get some benefit from the personal exemptions, but perhaps I'm wrong based on what you said about it phasing out at certain incomes.  I need to calculate what the brackets will do to our taxes.  We make 325k/yr (289k taxable after 401k contributions).  So, the new brackets will put 29k of our income into the 35% range.  However, the first 260k might actually be taxed less.  Not sure how that calculates out exactly.

      You're right that the new brackets help highly paid, two doc couples.  But, let's face it, those are the couples that need a tax break the least.  It's true you can't make everyone happy in tax reform.  There's always going to be winners and losers.  But, I don't believe in trickle down, Reagan-era economics.  It doesn't work.  We're just going to be accumulating more and more wealth at the top where it will stay locked up in people's estates, inheritances, etc.  This plan is trickle down economics on IV steroids.

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      • #48







        Zaphod you’re right. It’s very clever and will probably work. The big question is what the long term consequences will be. Both political and economic. What will we, the upper middle class, do in response to these changes? Will people migrate out of HCOL areas and thus change the make up of the voting population in LCOL states? Will we all find ways to simply dodge these taxes through loopholes? Will the housing market suffer enough to cause another market downturn? These are big unknowns in my mind. More importantly we have 3 more years of an idiot president doing things like trying to sell fossil fuels instead of helping the rest of the world solve a climate change crisis (one that I believe is easily fixable if we all work together). Interesting times, a little scary too.
        Click to expand…


        who says you are upper middle class?
        Click to expand...


        In general I'm referring to high income professionals/white collar workers. According to this wiki article my assumptions on income levels for the upper middle class was a little off.  If these numbers are correct, than I'm making a lot more than the definition of upper middle class.  My bad.

        https://en.wikipedia.org/wiki/Upper_middle_class

        Comment


        • #49







          Thanks for your comments.

          Phew. Looking like investment properties are safe, those limits are on primary residence.

          I do see this as a better deal for married and with children, and punishment for being single. Even moreso than before. This is intellectually dishonest and doesn’t make sense.

          How about rewarding those who contribute to the economy or create objective and subjective value? Getting married or having children requires zero creativity or intelligence. It arguably places a large strain on the economy and the environment (well it does).

          Output and value should be rewarded. We aren’t China, just making warm bodies doesn’t make you more powerful in and of itself. I know I will get a lot of flack for this because most physicians on here are married, but last time I checked we all see the same patients and do the same work. Why should I be taxed more?
          Click to expand…


          Not giving you flack, but I think your logic is a little off.  Actually the tax code penalizes you for being married if you think about it correctly.  If the tax bracket for a single person has a 200k cut off for the 25% rate, wouldn’t you expect that a married couple should have a 400k cut off for the 25% rate?  There are two people working, therefore the potential for twice as much income.  If they were both single making the same amount they’d be taxed at the lower rate.  Instead, the married couple filing jointly gets the 35% bracket at 260k, meaning combined they pay a larger percentage of taxes than they would if they were both single.  So, being married actually hurts you when filing for taxes in many instances.  From a tax perspective, it would be better for a couple making 200k each, to not be married and instead file separate taxes.
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          I think it is more your situation rather than thinking about it "correctly." I am single and all of my partners are married with spouses who do not generate income. They have a lower tax burden than I do. I would pay less taxes if I got married to someone who didn't generate income (of course I would have more expenses as well) but if I married someone making the same income as I do our total tax burden would increase.

          In my opinion, married couples should be allow to file two single tax returns (not the current married filed separately but the same return a single person would file). This would eliminate any marriage penalty. When I see the threshold for the 39.6% bracket jumping so much more for married than single, it feels like marriage is being favored but I am sure some see it as a wrong that is being corrected.

          Comment


          • #50




            The per capita demand for electricity has been increasing every year. Electricity is generated from an electromagnet powered by steam, which is generated from coal, natural gas, and oil. So until you invent another scalable and reasonably priced option, fossil fuels are here to stay. Or don’t use your house lights.
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            Thanks for the lesson on how electricity is generated.  I'm actually very well aware of where our electricity comes from.  It's a subject I follow and study intensely.  15% of US electricity came from renewables in 2016 and that number is growing and is expected to continue growing despite our retarded president.  An additional 20% comes from nuclear.  That's already 35% of our electricity coming from non-fossil fuels.  Fossil fuels are here for the time being, but the trend across the world is to move away from them.  Regardless of where we are now, we should be leading the charge in renewable energy so that we can help the rest of the world solve this problem.  And it is solvable. The solutions are there.  Solar specifically is very scalable and very affordable already and it's becoming more affordable every year.  The solar technology we have today is much much different than the solar technology you started hearing about in the 1990s and early 2000s.

            Did you know that the sun striking the earth delivers enough energy every hour to power the whole world for an entire year?  I also remember reading that if we could cover just 10% of the state of Nevada (or Arizona, can't remember which) with solar panels it would produce enough electricity to power the entire country.  That's doable.  The real problem right now is energy storage for when the sun isn't shining.  Battery technology needs to continue to grow and improve.  There are lot's of other solutions being sought to that problem as well.  We're capable of doing far better than fossil fuels and we can create jobs and grow the economy while we move away from it.  The problem is getting everyone on board and not letting the oil tycoons and others with conflicts of interest get in the way.  When it comes to this sort of thing, I'm very much an optimist.  Americans are very good at solving big problems and I think that as long as we have the will we can solve this one too.

            And all of my house lights are LED and we purchase our electricity specifically from a renewable energy company, so I can use my house lights as much as I please Although, I still turn them off whenever we're not in the room because I don't like to waste money.

            Comment


            • #51


              Will people migrate out of HCOL areas and thus change the make up of the voting population in LCOL states?
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              This is already happening.  Look at NC for example.  The town I was born in has a huge Northern retiree population now. The state has swung from solidly red to purple.

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              • #52


                I didnt understand the foreign tax one time thing and it becomes free after that? How does that work?
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                I think that is in reference to taxing the foreign earnings of say apple held overseas at a one time 10-12% rate to get all this money repatriated and put to work here (and taxed but less than 35%).

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                • #53













                  Lithium wrote:We also have 7 brackets currently, and they’re proposing cutting it to 4.

                  That requires no extra work, doesnt matter if there are 50 brackets. You enter the info, it spits out a number. What complicates the code are all the loopholes, etc…not the basics.
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                  Exactly this!  I don’t understand why any cares how many brackets there are.  Type income number into computer, out pops the result, simple.

                  But, the deductions and credits and different kinds of qualified income that create things like backdoor ROTHs, 1-person corporations with profit sharing employer contributions to 401(k)s, high deductible HSAs that are really IRAs in disguise, and tax-loss harvesting – that’s the stupid crap that complicates our tax system and creates unfair disadvantages.  When can we get a congress that will simplify that stuff into oblivion?
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                  It’s intimidating for your average taxpayer, let alone lowest common denominator taxpayer, to do that much arithmetic.  Most people don’t understand how tax brackets work, let alone nine or ten of them.

                  More brackets feels, to many americans, more unfair.  Why are so many people being treated so differently.

                  And in general, it makes it more convoluted, more nebulous what the tax man is hitting you up for.  If there was one huge flat rate with all your social security tax, unemployment, medicare, federal, state, local, gain, sales, property, excise, value added, medical device, etc., people would see the one huge number and flip their ************************.
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                  First, come on. Over 90% of all returns are done electronically. Very few do any paper anything, there is no computing anything. Second, even in those forms its a minimum math required effort, you find your income/agi/etc on a line and then it says what the number to be imputed to the next round is. We’re making up a friction where it doesnt exist. If they cant do the basic subtraction of a-b on their phone, well I dont think it matters as they likely dont owe taxes anyway.
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                  It's not a question of whether or not they can input their data or have someone else input their data and spit out a number.  Obviously turbotax and H&R block works for almost everybody.

                  It's a question of whether or not they understand why and how.

                  Most people weren't as smart as you and me.  At least not when it comes to arithmetic and low level algebra.   

                  Comment


                  • #54
















                    Lithium wrote:We also have 7 brackets currently, and they’re proposing cutting it to 4.

                    That requires no extra work, doesnt matter if there are 50 brackets. You enter the info, it spits out a number. What complicates the code are all the loopholes, etc…not the basics.
                    Click to expand…


                    Exactly this!  I don’t understand why any cares how many brackets there are.  Type income number into computer, out pops the result, simple.

                    But, the deductions and credits and different kinds of qualified income that create things like backdoor ROTHs, 1-person corporations with profit sharing employer contributions to 401(k)s, high deductible HSAs that are really IRAs in disguise, and tax-loss harvesting – that’s the stupid crap that complicates our tax system and creates unfair disadvantages.  When can we get a congress that will simplify that stuff into oblivion?
                    Click to expand…


                    It’s intimidating for your average taxpayer, let alone lowest common denominator taxpayer, to do that much arithmetic.  Most people don’t understand how tax brackets work, let alone nine or ten of them.

                    More brackets feels, to many americans, more unfair.  Why are so many people being treated so differently.

                    And in general, it makes it more convoluted, more nebulous what the tax man is hitting you up for.  If there was one huge flat rate with all your social security tax, unemployment, medicare, federal, state, local, gain, sales, property, excise, value added, medical device, etc., people would see the one huge number and flip their ************************.
                    Click to expand…


                    First, come on. Over 90% of all returns are done electronically. Very few do any paper anything, there is no computing anything. Second, even in those forms its a minimum math required effort, you find your income/agi/etc on a line and then it says what the number to be imputed to the next round is. We’re making up a friction where it doesnt exist. If they cant do the basic subtraction of a-b on their phone, well I dont think it matters as they likely dont owe taxes anyway.
                    Click to expand…


                    It’s not a question of whether or not they can input their data or have someone else input their data and spit out a number.  Obviously turbotax and H&R block works for almost everybody.

                    It’s a question of whether or not they understand why and how.

                    Most people weren’t as smart as you and me.  At least not when it comes to arithmetic and low level algebra.   ????
                    Click to expand...


                    Oh its a given they dont understand, but they also dont really care, you know ignorance is bliss.

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                    • #55







                      Someone correct me and please tell me I am wrong.
                      With this new proposal, I won’t be able to deduct mortgage interest on my rentals? For me, this amounts to 5 figures of tax savings every year, and the ability to pay virtually $0 tax on my real estate side business. No way I see Trump the real estate mogul dreaming up something this asinine.
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                      I know there were exceptions carved out for real estate businesses in other things, but I dont know which for sure. We’ll see, Im also concerned about this.
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                      This and the property tax deductions are for residences and applicable to itemized deductions. Business property is not affected. By that same token, I will presume that the home office deduction will still apply for the full cost of residences costing above $500k.

                      Also, the $500k limitation is for primary residences purchased before 11/2/17. Those already owned are grandfathered under the old rules. This is not good for the real estate industry.
                      Our passion is protecting clients and others from predatory advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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                      • #56
                        I find myself today being really pissed off about this.  Can't get over how they're keeping the marriage penalty.

                        Comment


                        • #57
                          After going over this more, the new tax brackets will actually help me by lowering my tax bill by about 7k (if I applied it to 2017 earnings).  However, the loss of the personal exemption for my wife and I ($8100) and especially the loss of the SALT deduction will overall increase my bill.  I pay over 20k/yr in state and local income tax and none of that will lower my taxable income any longer.  So the net result for me will be a tax increase, depending on how much I give to charity, which I will likely ramp up so that I don't have to write the IRS a check at the end of the year.  I'll gladly write a check for 5k to the National Park Service or my undergrad college if it will prevent me from sending more money to trump and his insane clown posse.

                          I'm mostly pissed off by where this money will be going.  I have no problem paying my fair share when it's going to useful things that benefits everyone fairly, but I don't want to see the ultra rich and giant corporations getting richer.  That's going to hurt us all long term.

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                          • #58


                            I’ll gladly write a check for 5k to the National Park Service or my undergrad college if it will prevent me from sending more money to trump and his insane clown posse.
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                            With all due respect, comments such as these belong in The Lounge rather than on a thread discussing the proposed tax policies.
                            Our passion is protecting clients and others from predatory advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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                            • #59




                              After going over this more, the new tax brackets will actually help me by lowering my tax bill by about 7k (if I applied it to 2017 earnings).  However, the loss of the personal exemption for my wife and I ($8100) and especially the loss of the SALT deduction will overall increase my bill.  I pay over 20k/yr in state and local income tax and none of that will lower my taxable income any longer.  So the net result for me will be a tax increase, depending on how much I give to charity, which I will likely ramp up so that I don’t have to write the IRS a check at the end of the year.  I’ll gladly write a check for 5k to the National Park Service or my undergrad college if it will prevent me from sending more money to trump and his insane clown posse.

                              I’m mostly pissed off by where this money will be going.  I have no problem paying my fair share when it’s going to useful things that benefits everyone fairly, but I don’t want to see the ultra rich and giant corporations getting richer.  That’s going to hurt us all long term.
                              Click to expand...


                              There we go on the "giant corporation" thing again. Who is the giant corporation? Which giant corporation are you talking about? Because most of the people on this board are part of that giant corporation.

                              At any rate, there is spectrum of people across the political spectrum. Approximately half would like to see a more progressive tax code and half would like to see a less progressive tax code. That's why it is set where it is. It swings back and forth a bit over the years (i.e. more progressive when Dems in control and less progressive when Reps in control) so it shouldn't be a surprise when the country sends a republican congress and president to Washington that it becomes a little less progressive.

                              There are so many changes here it's tough for me to tell what the overall effect is going to be on my taxes. I think the main two effects for me are a lower tax rate on the $470K-$1M of earnings and the loss of the state income tax deduction, and those will pretty much balance out. So this 1%er isn't going to see any significant changes on his total tax bill.

                              Also, I'm not sure you understand how the charitable (and really any) deduction works. Your tax bill only goes down by 30-50 cents for every dollar you donate. So you don't come out ahead sending money to charity instead of the "ICP." That's fine, I give to charity too, but you just need to realize you don't get to choose one or the other.
                              Helping those who wear the white coat get a fair shake on Wall Street since 2011

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                              • #60




                                I find myself today being really pissed off about this.  Can’t get over how they’re keeping the marriage penalty.
                                Click to expand...


                                I think one good thing about this is that everyone has a reason to be “pissed off”, perhaps unifying the country behind a single cause. Silver lining, bro!

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