‘I trusted you!’ Trump voters seethe after realizing they’re getting screwed by the GOP’s tax plan

justabubba said:

it is other peoples' money at risk
the money manager is without financial risk, but is eligible for reward

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and as is knew it was a waste of time trying to educate you on it.
being legally obligated is a risk. it is a huge risk.

don't believe me ask the madoff family.

I just ran a basic return for a high income couple living in California and paying California income tax just to see how bad the SALT limitation would be for them. I used the same numbers under both 2017 and 2018 rules.

Taxpayer situation as follows:
Taxpayer is married with no dependents
Income consists of:
- wages of $1.2M with $100k Ca income tax withheld
- Ordinary interest of $100k
- Interest from CA municipal bonds of $350k
- Dividend income of $35,000, $32,500 of which is Qualified Dividends and $115k capital gains distributions
- $2,250,000 other capital gains
- The only itemized deductions claimed are $100k state income tax, $65k property tax and $4500 personal property tax


In theory, the SALT limitation would mean that the taxpayer would not be allowed to itemize and, sure enough, that's exactly what happens. Under 2017 rules the tax payer had $169,500 itemized deductions and in 2018 they are only allowed $10k. That should jam the taxpayer up!

Well, not exactly. Under 2017 rules the high income taxpayer was not allowed to claim all their itemized deductions. In fact, their itemized deductions could be limited by up to 80%. Anyway, in this case the taxpayer was still allowed to deduct roughly $68 k of their itemized deductions. They were not allowed to deduct personal exemptions because high income taxpayer simply weren't allowed that deduction. The result is that under 2017 rules the taxpayer has $3,632,000 taxable income and under 2018 rules they have $3,676,000 taxable income

From here the tax calculation is pretty much the same under both sets of rules. There is a calculation for additional medicare tax and then ordinary tax is calculated based on capital gains rates for CG income and ordinary rates for ordinary income. The result is that under 2017 rules the taxpayer would owe right around $1,014,000 and under 2018 rules they'd owe roughly $995,000....which is LESS than 2017.

So, is it really the SALT limit that screws taxpayers in high income states? No, it isn't. If I cut all the figures to 10% of the example above we end up with comparable results. Even if I back out most of the capital gains and have the taxpayer avoid limitations on itemized deductions they STILL come out better under the 20108 rules.

The question, then, is why are these people having problems with Trump's tax cuts?

Well, the most likely reason is that their withholding was reduced too much. If you will owe $3,000 less tax but have $6,000 less withheld it will sure FEEL like you paid more. The other possibility is that these people were deducting "unreimbursed employee expenses" such as the cost of eating lunch while at work, the cost of needing a cell phone for work, the cost of travel related to work, etc. Since those deductions are no longer allowed (and were often HIGHLY abused) that can cause a whole lot of tax difference.

ludin said:

and as is knew it was a waste of time trying to educate you on it.
being legally obligated is a risk. it is a huge risk.

don't believe me ask the madoff family.

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then you are sharing with us an inability to distinguish between investment and fraud

Xelor said:

Gross income, adjusted gross income and after-tax income indeed are different from taxable income; however, the only one that one's tax liability is calculated on is taxable income. Given the information the member provided, most especially his specific reference to his "taxes owed" (aka, tax liability), taxable income is the only income value that makes sense to use in evaluating the plausibility/legitimacy of the member's assertion.

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But he said his income increased by about 2%, which you took to mean that his taxable income increased by 2%. This fails to account for the change in the standard deduction, which is one of the most significant changes that occurred.

Unless he's pulling in close to $200,000, his taxable income is actually less this year than in 2017, despite the 2% pay increase.

Let's take a quick look at someone making $30,000/year in 2017.

Income: $30,000
Standard Deduction: $10,400
Taxable Income: $19,600
Tax Liability: $2,474

Let's say he gets a 2% raise for 2018:
Income: $30,600
Standard Deduction: $12,000
Taxable Income: $18,600
Tax Liability: $2,042

Thus, despite an increase in income, the taxpayer benefits not only from a reduced tax rate, but an increase in the standard deduction. Taxable income actually goes down. The overall tax savings for this individual is $432. While I would call this a 17% reduction in tax over the previous year, you could also say that he paid 21% more last year than he did this year, which is completely in line with the original claim.

Taylor said:

But he said his income increased by about 2%, which you took to mean that his taxable income increased by 2%. This fails to account for the change in the standard deduction, which is one of the most significant changes that occurred.

Unless he's pulling in close to $200,000, his taxable income is actually less this year than in 2017, despite the 2% pay increase.

Let's take a quick look at someone making $30,000/year in 2017.

Income: $30,000
Standard Deduction: $10,400
Taxable Income: $19,600
Tax Liability: $2,474

Let's say he gets a 2% raise for 2018:
Income: $30,600
Standard Deduction: $12,000
Taxable Income: $18,600
Tax Liability: $2,042

Thus, despite an increase in income, the taxpayer benefits not only from a reduced tax rate, but an increase in the standard deduction. Taxable income actually goes down. The overall tax savings for this individual is $432. While I would call this a 17% reduction in tax over the previous year, you could also say that he paid 21% more last year than he did this year, which is completely in line with the original claim.

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Blue:
From a tax analysis standpoint, that's the only income measure that makes any sense to use, particularly given that the member referred expressly to his tax liability, something that is calculated based on taxable income, not AGI and not gross income. Had the member's remarks given me reason to use any other income measure, I wouldn't have bothered to perform the analysis I did, but s/he didn't, and s/he damn sure could have...2018 is clearly not the member's "first rodeo" as a taxpayer. The member's specific point of reference was his/her tax liability.


Red:
It's hardly that at all. What they did was eliminate personal exemptions and merge a portion of the formerly available reductions to AGI that formerly came from personal exemptions into the standard deduction (SD).


Pink:
If his taxable income is indeed lower, a supposition that doesn't follow from the context of the member's remarks, then of course, his tax liability will be lower provided the tax rate applicable to his taxable income is lower than the relevant 2017 rate. Nobody's suggesting that Trump didn't lower the tax rates.

That notwithstanding, look at the example you provided. It doesn't account for the claim that the member's tax liability decreased by 22% -- which is a very specific number, it's not ~22% (which would make it be anything from 21.5% to 22.4%) it's not 21% or 17% -- and that assertion is the one with which I took exception and it's the assertion for which I showed no average rate extant in the TCJA will make that decrement happen.

Xelor said:

From a tax analysis standpoint, that's the only income measure that makes any sense to use, particularly given that the member referred expressly to his tax liability, something that is calculated based on taxable income, not AGI and not gross income. Had the member's remarks given me reason to use any other income measure, I wouldn't have bothered to perform the analysis I did, but s/he didn't, and s/he damn sure could have...

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Then I don't know what to tell you other than your analysis is predicated on a false assumption and therefore doesn't address the claim. When someone says "My income was pretty much the same year to year- only about a 2% increase year over year. Poor me!" they are, in fact, referring to their income - not Line 10 from their 1040. He made no reference whatsoever to taxable income, so I don't know why you'd assume that. I had no trouble whatsoever examining that from a tax analysis standpoint in my previous post.

Taylor said:

Then I don't know what to tell you other than your analysis is predicated on a false assumption and therefore doesn't address the claim. When someone says "My income was pretty much the same year to year- only about a 2% increase year over year. Poor me!" they are, in fact, referring to their income - not Line 10 from their 1040. He made no reference whatsoever to taxable income, so I don't know why you'd assume that. I had no trouble whatsoever examining that from a tax analysis standpoint in my previous post.

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Red:
You just keep thinking that....


Blue:
That'd normally be so, but normally, people don't from there proceed to expressly mention their tax liability, which is exactly what the member did. Indeed, I suspect one can "count on one hand" the quantity of folks who expressly remark about tax liability.

Nap said:

This is precisely my original argument on the matter. What you pay in state taxes is irrelevant to federal taxation as they are seperate entities providing different services. So we agree there should be no SALT

So you want a tax reward for advocating federal policies that sends money to Mississippi.....This is the entire thing you are missing even though it has been pointed out repeatedly. States like Mississippi have a disproportionate amount of poor people so when you advocate for federal social welfare programs the obvious result is more tax money (per capita) is going to go to that state. YOU (Blue states, not you individually) are the reason this is happening. You can't complain and believe you should be rewarded for something that you caused.

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We do not agree. Perhaps you missed my argument. which is that what you pay at the state level is certainly relevant to the federal taxation as long as that cost helps people elevate above the federal poverty line and draw less resources from the federal government. Therefore SALT deductions should reward more those who contribute to lessening the federal burden. And of course when states pay low minimum wage and do not tax their well off citizens to fund education they create high levels of poverty.

ludin said:

*sigh* this is called not knowing what you are talking about.

The effective rate only goes up if the deductions allowed goes down.
when it came to clinton and gore they raised taxes and the rates went up yes but
reagan had already cut most of the deduction and closed most of the loopholes from
the 1984 tax bill.

that is why all this bull**** about OMG the 90% tax rate the 90% tax rate.

no one paid it. the effective tax rate was only about 50%. same during the 70's
when it was about 70%. the effective tax rate was about 45% with all the deductions they were allowed.

Reagan nixed most of the deductions and Trumps bill clamped down on them further.

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Sigh:roll: Historically, the effective rate goes up when the top tier is raised. Reagan was the one that started the deficit mess with his trickle down BS...

pamak said:

We do not agree. Perhaps you missed my argument. which is that what you pay at the state level is certainly relevant to the federal taxation as long as that cost helps people elevate above the federal poverty line and draw less resources from the federal government. Therefore SALT deductions should reward more those who contribute to lessening the federal burden. And of course when states pay low minimum wage and do not tax their well off citizens to fund education they create high levels of poverty.

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Except that is the opposite of what SALT does. SALT allows blue states to keep increasing taxes and allow the citizens of those states to deduct it from federal taxes so they don't feel the pain of what they are advocating. You are increasing the federal burden not lessening it, on top of the fact that the bulk of the federal burden are policies implemented from blue states.

Media_Truth said:

Sigh:roll: Historically, the effective rate goes up when the top tier is raised. Reagan was the one that started the deficit mess with his trickle down BS...

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wrong.
while you might get a small increase it is not as much as you think.
hell you could raise the tax rate to 100% isn't going to change the fact that people that know how to do it
will manage to safe or limit their liabilities.

You can go check it out for yourself that you are wrong not that you will.
leftists are interested in facts but appeal to emotion arguments.

PS all the soak the rich taxes that have been attempted have failed.

ludin said:

wrong.
while you might get a small increase it is not as much as you think.
hell you could raise the tax rate to 100% isn't going to change the fact that people that know how to do it
will manage to safe or limit their liabilities.

You can go check it out for yourself that you are wrong not that you will.
leftists are interested in facts but appeal to emotion arguments.

PS all the soak the rich taxes that have been attempted have failed.

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WRONG! Your second sentence even admits that I'm right. Since Reagan, Republicans have done nothing but raise deficits and reward the rich.

Media_Truth said:

WRONG! Your second sentence even admits that I'm right. Since Reagan, Republicans have done nothing but raise deficits and reward the rich.

View attachment 67250070

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correlation without causation fallacy.

IE your graph is simply bull****.

there were multiple things happening during those thing that had little to do with tax increases.

bush was dealing with a recession that was just starting to end.
clinton inhereted a already thriving economy by the time he was elected.

your right he did raise taxes which only started to sink the economy before we hit the .com bust.
the .com bust lead to a recession.

bush became president right at the beginning of that recession.
we were then hit with 911 and the accounting scandals back to back.

so as i said your chart is bull **** when you leave out the facts of what happened.
which goes back to what i said. leftist don't care about facts just appeal to emotion arguments.

Xelor said:

Red:
You just keep thinking that....

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I will, because it's correct :2razz:. When somebody says "my income went up only about 2% last year" they are talking about their income. Not their taxable income from line 10 of their 1040. It's a cost of living increase. Pretty standard stuff.

Xelor said:

Blue:
That'd normally be so, but normally, people don't from there proceed to expressly mention their tax liability, which is exactly what the member did. Indeed, I suspect one can "count on one hand" the quantity of folks who expressly remark about tax liability.

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As I read it, he had completed his tax return, observed that he paid less, and calculated that to be about 22%, and was saying this was true even though his income basically remained the same, and even increased slightly. I don't know if the 22% was calculated correctly, but there are ways to get there if your income is really low or if you paid slightly more in student loan interest, etc. Thus, I can't say it's true but I can say it's certainly possible.

Nap said:

Except that is the opposite of what SALT does. SALT allows blue states to keep increasing taxes and allow the citizens of those states to deduct it from federal taxes so they don't feel the pain of what they are advocating. You are increasing the federal burden not lessening it, on top of the fact that the bulk of the federal burden are policies implemented from blue states.

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You present opinions without support which means nothing!

I gave you links with detailed calculations showing that rich blue states like CA and NY actually draw less federal funds than what they contribute to the federal budget in contrast to poor red states like Mississippi which get way more funds compared to what they contribute. So, OBVIOUSLY the type of economy we have in NY or CA (you call it socialism) does NOT increase the federal burden. On the contrary, it reduces it and therefore this should be rewarded by the federal tax law. It is red states like Mississippi which draw more funds than what they contribute because they have not figured out how to develop an economic system that elevates people above the federal poverty level.

https://www.theatlantic.com/busines...tates-are-givers-and-which-are-takers/361668/

pamak said:

You present opinions without support which means nothing!

I gave you links with detailed calculations showing that rich blue states like CA and NY actually draw less federal funds than what they contribute to the federal budget in contrast to poor red states like Mississippi which get way more funds compared to what they contribute. So, OBVIOUSLY the type of economy we have in NY or CA (you call it socialism) does NOT increase the federal burden. On the contrary, it reduces it and therefore this should be rewarded by the federal tax law. It is red states like Mississippi which draw more funds than what they contribute because they have not figured out how to develop an economic system that elevates people above the federal poverty level.

https://www.theatlantic.com/busines...tates-are-givers-and-which-are-takers/361668/


View attachment 67250081

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Tell me something, Which states typically advocate for expanding the social safety net?

Edit: Also, it isn't the system that brings people above the poverty line but the decisions those individuals make. All you have to do is not have a kid before marriage, graduate high school, and get a job to reach the middle class.

Nap said:

Tell me something, Which states typically advocate for expanding the social safety net?

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In general the blue states!

But the bottom line of which state creates a burden or not is measured in dollars. So, if your argument is that advocating for a better safety net is a good reason for penalizing those who advocate it I disagree. As long as those who advocate for such safety net policies contribute more to the federal budget than what they get back, they should not be forced to pay even more.

Besides, one can use the same logic to ask which states advocate for more corporate tax cuts or more military expenses or more farm subsidies. Would you then say that the tax law should penalize more proponents of such ideology (including middle-class proponents) JUST because they have a different political opinion?

Taylor said:

As I read it, he had completed his tax return, observed that he paid less, and calculated that to be about 22%, and was saying this was true even though his income basically remained the same, and even increased slightly. I don't know if the 22% was calculated correctly, but there are ways to get there if your income is really low or if you paid slightly more in student loan interest, etc. Thus, I can't say it's true but I can say it's certainly possible.

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He may well have done exactly that, but paying less and having a lower tax liability aren't the same things, yet the member expressly referred to his tax liability, not his tax payment(s) (Line 18).

Of course, like you, I can conjure all sorts of thing the other member may have meant -- e.g., s/he could have meant that figure on line 22 is his/her tax owed -- but, when I read the member's assertions, I took the wo-/man as:

• someone other than an absolute idiot,
• someone who wouldn't just say "any ol' thing" in service of "God knows what," and
• someone who aimed to illustrate/make an actual point that "holds water."

Indeed, the only reason I bothered to convert the member's assertions into an equation was to confirm for myself whether his remarks would bear out.

And, frankly, I did that not so much because I gave a damn about his taxes, but because I was, before "doing the math," curious/optimistic whether it be plausible that my own tax liability may fall by 22%.

ludin said:

correlation without causation fallacy.

IE your graph is simply bull****.

there were multiple things happening during those thing that had little to do with tax increases.

bush was dealing with a recession that was just starting to end.
clinton inhereted a already thriving economy by the time he was elected.

your right he did raise taxes which only started to sink the economy before we hit the .com bust.
the .com bust lead to a recession.

bush became president right at the beginning of that recession.
we were then hit with 911 and the accounting scandals back to back.

so as i said your chart is bull **** when you leave out the facts of what happened.
which goes back to what i said. leftist don't care about facts just appeal to emotion arguments.

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I'm afraid the facts don't favor you. You have nothing but your rhetoric to back you up.

Nap said:

Tell me something, Which states typically advocate for expanding the social safety net?

Edit: Also, it isn't the system that brings people above the poverty line but the decisions those individuals make. All you have to do is not have a kid before marriage, graduate high school, and get a job to reach the middle class.

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Bold mine

I missed the editing which came after my reply:

My answer to your editing is that economic results are not SOLELY a matter of "personal responsibility," as many conservatives want to argue (when it fits them). Two people with equal sense of personal responsibility, work ethics and intellectual abilities will earn different amounts in societies where policies help the bargaining power of workers (I mentioned the case of Germany where worker union control almost 50% of the seats in the corporate board of directors), or in societies which pay more for the education of the poor or in societies which pay their low-skilled workers higher minimum wages.

The idea that personal responsibility is the sole driver of economic activity is a myth! Take the business and corporate law in very advanced capitalist societies and notice how there is often a deliberate attempt to actually REDUCE the personal responsibility of the participants and shield them from the economic consequences of their decisions!

Example

https://www.investopedia.com/video/play/limited-liability/

Limited liability is a legal concept that protects equity owners from personal losses due to their ownership interest in the company. When equity owners have limited liability, the amount they can lose will not exceed the amount they invested.The types of limited liability ownership interests are stock in a corporation, membership interests in a limited liability company, and a limited partnership interest in a limited partnership.

https://dictionary.cambridge.org/us/dictionary/english/liability



liability

the responsibility of a person, business, or organization to pay or give up something of value:

pamak said:

In general the blue states!

But the bottom line of which state creates a burden or not is measured in dollars. So, if your argument is that advocating for a better safety net is a good reason for penalizing those who advocate it I disagree. As long as those who advocate for such safety net policies contribute more to the federal budget than what they get back, they should not be forced to pay even more.

Besides, one can use the same logic to ask which states advocate for more corporate tax cuts or more military expenses or more farm subsidies. Would you then say that the tax law should penalize more proponents of such ideology (including middle-class proponents) JUST because they have a different political opinion?

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Now what do you think happens when you institute a social safety net over an area that does not have very much economical opportunities and the vast majority are poor to upper middle income? Unlike heavily populated states there isn't much room to spread the cost around, on top of that there isn't much economic opportunities.

From an ideological and cultural standpoint Mississippi and Texas are virtually identical and Texas is a donor state with no state income tax so it is obviously not ideology at play here.

As far as your question about penalizing them over ideology, of course not. My argument has always been that they should have an equal share of the federal burden, my comment about them paying more was in response to your rhetoric about being rewarded and I prefaced it with "if anything". I was merely pointing out that it was policies that Blue states pushed for that is causing states like Mississippi to take in more money than they send to the federal government, they simply don't have the tax base to implement those policies. You have to actually have money before you can redistribute it and there are a large number of people in poverty in Mississippi.

pamak said:

Bold mine

I missed the editing which came after my reply:

My answer to your editing is that economic results are not SOLELY a matter of "personal responsibility," as many conservatives want to argue (when it fits them). Two people with equal sense of personal responsibility, work ethics and intellectual abilities will earn different amounts in societies where policies help the bargaining power of workers (I mentioned the case of Germany where worker union control almost 50% of the seats in the corporate board of directors), or in societies which pay more for the education of the poor or in societies which pay their low-skilled workers higher minimum wages.

The idea that personal responsibility is the sole driver of economic activity is a myth! Take the business and corporate law in very advanced capitalist societies and notice how there is often a deliberate attempt to actually REDUCE the personal responsibility of the participants and shield them from the economic consequences of their decisions!

Example

https://www.investopedia.com/video/play/limited-liability/

Limited liability is a legal concept that protects equity owners from personal losses due to their ownership interest in the company. When equity owners have limited liability, the amount they can lose will not exceed the amount they invested.The types of limited liability ownership interests are stock in a corporation, membership interests in a limited liability company, and a limited partnership interest in a limited partnership.

https://dictionary.cambridge.org/us/dictionary/english/liability



liability

the responsibility of a person, business, or organization to pay or give up something of value:

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I never said that personal responsibility was the sole driver of economic activity. I was merely pointing out that for the vast majority (98%) it is incredibly easy to escape poverty. The problem is rather than teaching kids about personal responsibility we teach them that they are victims oppressed by society. It becomes a self fulfilling prophecy.

Nap said:

Now what do you think happens when you institute a social safety net over an area that does not have very much economical opportunities and the vast majority are poor to upper middle income? Unlike heavily populated states there isn't much room to spread the cost around, on top of that there isn't much economic opportunities.

From an ideological and cultural standpoint Mississippi and Texas are virtually identical and Texas is a donor state with no state income tax so it is obviously not ideology at play here.

As far as your question about penalizing them over ideology, of course not. My argument has always been that they should have an equal share of the federal burden, my comment about them paying more was in response to your rhetoric about being rewarded and I prefaced it with "if anything". I was merely pointing out that it was policies that Blue states pushed for that is causing states like Mississippi to take in more money than they send to the federal government, they simply don't have the tax base to implement those policies. You have to actually have money before you can redistribute it and there are a large number of people in poverty in Mississippi.

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The argument of there is not room to spread the cost around because of the smaller population does not make much sense since lower population density increases the availability of natural resources per capita. Also, my argument is not that I expect every state to lift a bigger part of its population to join the "middle-class." Not even NY and CA can do this without radical political changes which is a topic of another discussion. Poverty will continue to exist and poverty among different states will still vary as a result of different factors, (for example Texas has oil). HOWEVER, none of the above is an argument which can excuse the retaining of very low minimum wages which do not lift people above the poverty level. So, I can still expect from the MIDDLE_CLASS and the business-owners in states like Mississippi to pay more within their state to make sure that they help more people live above the federal level of poverty and get better education. And living above the federal level of poverty does not mean that someone has joined the middle-class. He is still poor but at least he does not get as much benefits from the federal government as he does when he lives below the federal level of poverty.

Also, ideology is certainly affecting poverty levels. So, "socialist" countries in Europe which are more committed to equality have reduced levels of extreme poverty at the cost of having also reduced levels of extreme wealth through a scheme of wealth redistribution by government policies. But I accept that ideology is not the sole factor that determines poverty levels and since other factors do play role as well (as for example availability of natural resources), it is possible to see states with the same ideology differ radically regarding poverty levels.

Xelor said:

Indeed, the only reason I bothered to convert the member's assertions into an equation was to confirm for myself whether his remarks would bear out.

And, frankly, I did that not so much because I gave a damn about his taxes, but because I was, before "doing the math," curious/optimistic whether it be plausible that my own tax liability may fall by 22%.

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What he asserted was that his income increased about 2%. Translating that to mean that he was referring to the "taxable income" value calculated on his 1040 seems to me quite a stretch.

Nap said:

I never said that personal responsibility was the sole driver of economic activity. I was merely pointing out that for the vast majority (98%) it is incredibly easy to escape poverty. The problem is rather than teaching kids about personal responsibility we teach them that they are victims oppressed by society. It becomes a self fulfilling prophecy.

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I do not think that Europeans are more "responsible" than American workers. Overall Europeans workers work less than Americans and still have lower levels of extreme poverty. This is because it is definitely easier to escape poverty when you get higher wages and more educational opportunities. And children of parents who have time to spend with them because they do not need to have two full time jobs to earn a decent living have better chances to grow up and become successful.