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Thread: I don't believe the Tax plan will save you what you think it will.

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    Educator Rich123's Avatar
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    I don't believe the Tax plan will save you what you think it will.

    I have searched the tax brackets for 2017 and 2018 and assumed a married couple filing jointly with a gross income of $40,000.00. Then I took that result and applied the CNN tax plan calculator to those results. AS the CNN tax plan calculator doesn't factor itemized deductions neither did I assume any. Here are my numbers

    In 2017 a married couple filing jointly with a gross salary of $40,000.00 would be in the 15% bracket.

    The first $13,350.00 of earnings in that bracket is subject to a 10% tax resulting in a partial tax of $1335.00
    Then $13,350.00 is deducted from your total gross of $40,000.00 = $26,650.00 is taxed at 15% which equals $3997.50
    The final tax is computed by adding $1,335.00 the 10% rate and $39997.50 the 15% rate which equals a total tax of $5347.50

    In 2018 a married couple filing jointly with a gross of $40,000.00 and no deductions computes as follows.

    $40,000.00 again puts a married couple in the 15% bracket but the numbers are a little different.
    The first $13,600.00 is subject to 10% which results in a partial tax of $1,360.00
    $40,000.00 minus $13600.00 equals $26,400.00 subject to 15% which equals $3,960.00
    $3,960.00 plus $1,360.00 results in a total tax of $5,320.00

    Take $5,320.00 from $5347.50 and that equals the difference between 2017 and 2018 and that is $27.50

    Now if you apply the CNN tax plan calculator for the same scenario as above the calculator says a married couple filing jointly with a gross earnings of $40,000.00 you get a savings of .5%

    .5% has a decimal equivalent of .05
    .05 times the taxes for 2018 equals .05 times $5320.00 which equals $266.00 plus the savings from 2017 of $27.50 equals a total savings of $293.50 per year.
    So for some to claim they will save $2900.00 they have to factor the ten year tax plan.

    Of course I realize my scenario does use itemized deductions but CNN tax calculator doesn't allow it .
    I

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    Re: I don't believe the Tax plan will save you what you think it will.

    Quote Originally Posted by Rich123 View Post
    I have searched the tax brackets for 2017 and 2018 and assumed a married couple filing jointly with a gross income of $40,000.00. Then I took that result and applied the CNN tax plan calculator to those results. AS the CNN tax plan calculator doesn't factor itemized deductions neither did I assume any. Here are my numbers

    In 2017 a married couple filing jointly with a gross salary of $40,000.00 would be in the 15% bracket.

    The first $13,350.00 of earnings in that bracket is subject to a 10% tax resulting in a partial tax of $1335.00
    Then $13,350.00 is deducted from your total gross of $40,000.00 = $26,650.00 is taxed at 15% which equals $3997.50
    The final tax is computed by adding $1,335.00 the 10% rate and $39997.50 the 15% rate which equals a total tax of $5347.50

    In 2018 a married couple filing jointly with a gross of $40,000.00 and no deductions computes as follows.

    $40,000.00 again puts a married couple in the 15% bracket but the numbers are a little different.
    The first $13,600.00 is subject to 10% which results in a partial tax of $1,360.00
    $40,000.00 minus $13600.00 equals $26,400.00 subject to 15% which equals $3,960.00
    $3,960.00 plus $1,360.00 results in a total tax of $5,320.00

    Take $5,320.00 from $5347.50 and that equals the difference between 2017 and 2018 and that is $27.50

    Now if you apply the CNN tax plan calculator for the same scenario as above the calculator says a married couple filing jointly with a gross earnings of $40,000.00 you get a savings of .5%

    .5% has a decimal equivalent of .05
    .05 times the taxes for 2018 equals .05 times $5320.00 which equals $266.00 plus the savings from 2017 of $27.50 equals a total savings of $293.50 per year.
    So for some to claim they will save $2900.00 they have to factor the ten year tax plan.

    Of course I realize my scenario does use itemized deductions but CNN tax calculator doesn't allow it .
    I
    I'm not a tax doctor, but if you aren't itemizing, shouldn't you account for the standard deductions, rather than scoring gross income as though they did not exist?

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    Re: I don't believe the Tax plan will save you what you think it will.

    Quote Originally Posted by Rich123 View Post
    I have searched the tax brackets for 2017 and 2018 and assumed a married couple filing jointly with a gross income of $40,000.00. Then I took that result and applied the CNN tax plan calculator to those results. AS the CNN tax plan calculator doesn't factor itemized deductions neither did I assume any. Here are my numbers

    In 2017 a married couple filing jointly with a gross salary of $40,000.00 would be in the 15% bracket.

    The first $13,350.00 of earnings in that bracket is subject to a 10% tax resulting in a partial tax of $1335.00
    Then $13,350.00 is deducted from your total gross of $40,000.00 = $26,650.00 is taxed at 15% which equals $3997.50
    The final tax is computed by adding $1,335.00 the 10% rate and $39997.50 the 15% rate which equals a total tax of $5347.50

    In 2018 a married couple filing jointly with a gross of $40,000.00 and no deductions computes as follows.

    $40,000.00 again puts a married couple in the 15% bracket but the numbers are a little different.
    The first $13,600.00 is subject to 10% which results in a partial tax of $1,360.00
    $40,000.00 minus $13600.00 equals $26,400.00 subject to 15% which equals $3,960.00
    $3,960.00 plus $1,360.00 results in a total tax of $5,320.00

    Take $5,320.00 from $5347.50 and that equals the difference between 2017 and 2018 and that is $27.50

    Now if you apply the CNN tax plan calculator for the same scenario as above the calculator says a married couple filing jointly with a gross earnings of $40,000.00 you get a savings of .5%

    .5% has a decimal equivalent of .05
    .05 times the taxes for 2018 equals .05 times $5320.00 which equals $266.00 plus the savings from 2017 of $27.50 equals a total savings of $293.50 per year.
    So for some to claim they will save $2900.00 they have to factor the ten year tax plan.

    Of course I realize my scenario does use itemized deductions but CNN tax calculator doesn't allow it .
    I
    Not even close.

    Married couple with no kids and no itemizing makes $40k. 2016 rates give you a standard deduction of $12,600 and personal exemptions of $8,100 ($4,050 each). Taxable income is $19,300 ($40k less $20,700 in deductions). 10% bracket cutoff is $18,550 so you've got $1,856 tax plus 15% of the remaining $750 which is another $113 for total tax of $1,969.

    TCJA tax calculation is $40k less $24k for taxable income of $16,000. The 10% bracket cuts off at $19,050 so all taxable income is 10% meaning you pay tax of $1,600. You save $369. That's roughly a 20% tax decrease.

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    Re: I don't believe the Tax plan will save you what you think it will.

    Quote Originally Posted by Rich123 View Post
    CNN tax calculator
    Um... I don't know if CNN would be a good place to source information about politically charged stories. That would be akin to trusting the Fox News analysis of, say, the ACA.
    "Political speech and writing are largely the defense of the indefensible. . . . Thus political language has to consist largely of euphemism, question-begging and sheer cloudy vagueness."
    ~Orwell, Politics and the English Language

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    Re: I don't believe the Tax plan will save you what you think it will.

    Quote Originally Posted by cpwill View Post
    I'm not a tax doctor, but if you aren't itemizing, shouldn't you account for the standard deductions, rather than scoring gross income as though they did not exist?
    Well I considered that fact as well. Since CNN presented the calculator which gave a result in terms of a persent of income,' made the assumption that the calculator adjusted for the standard deduction.
    When one does their taxes you generally can choose the standard deduction or itemization.
    The language put forth ' n CNN says there is no itemization.
    But later today I had already planned to explore that possibility.
    Thank you for thoughts.

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    Re: I don't believe the Tax plan will save you what you think it will.

    Quote Originally Posted by Lutherf View Post
    Not even close.

    Married couple with no kids and no itemizing makes $40k. 2016 rates give you a standard deduction of $12,600 and personal exemptions of $8,100 ($4,050 each). Taxable income is $19,300 ($40k less $20,700 in deductions). 10% bracket cutoff is $18,550 so you've got $1,856 tax plus 15% of the remaining $750 which is another $113 for total tax of $1,969.

    TCJA tax calculation is $40k less $24k for taxable income of $16,000. The 10% bracket cuts off at $19,050 so all taxable income is 10% meaning you pay tax of $1,600. You save $369. That's roughly a 20% tax decrease.
    O.k. that is exactly my point. You put savings at $369.00 I put it at $293.00 but without itemizing on my part with itemizing on your part. Either way it's not some $2000.00 to $3000.00 per year as some seem to think as evidenced by their post IMO. That 2k to 3k is over the life of the tax plan which is a ten year plan.
    Thank you very much for your thoughts.

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    Re: I don't believe the Tax plan will save you what you think it will.

    one calculator said that i'd save a grand or so. the other one said between 0 and $210. when you take into account what i'll probably lose when they go after Medicare and other programs, even several thousand dollars a year wouldn't be worth it. imagine the research that won't get funded, too. the NIH and NSF cover a lot of fundamental research. that research is the foundation that for profit scientific innovation builds its house on. for example, when creating a new drug or therapy, researchers rely heavily on fundamental research like you would use a roadmap to get from New York to LA. idiots like Trump and many in the GOP seem to think that scientific research is nothing more than a conspiracy to keep them from putting gasoline in their cars. this is just astounding to someone who has spent most of his career in public research. i lost that job after the stupid sequester bull****, and am now in industry. i know both sides of it and how it works. if they pare back public research even more, it won't work in the mid to long term. also, consider education. we'll be left in the dust by other countries that aren't led by panting fools.

    so you got a couple grand? great. my advice is to save it. you'll need it.

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    Re: I don't believe the Tax plan will save you what you think it will.

    Quote Originally Posted by Rich123 View Post
    O.k. that is exactly my point. You put savings at $369.00 I put it at $293.00 but without itemizing on my part with itemizing on your part. Either way it's not some $2000.00 to $3000.00 per year as some seem to think as evidenced by their post IMO. That 2k to 3k is over the life of the tax plan which is a ten year plan.
    Thank you very much for your thoughts.
    I didnít include anything about itemizing and looking for a $2k tax cut for a couple that doesnít even owe $2k is ridiculous. They get a 20% tax cut. Expecting a tax cut of 100% or more is unrealistic.

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    Re: I don't believe the Tax plan will save you what you think it will.

    Quote Originally Posted by Lutherf View Post
    Not even close.

    Married couple with no kids and no itemizing makes $40k. 2016 rates give you a standard deduction of $12,600 and personal exemptions of $8,100 ($4,050 each). Taxable income is $19,300 ($40k less $20,700 in deductions). 10% bracket cutoff is $18,550 so you've got $1,856 tax plus 15% of the remaining $750 which is another $113 for total tax of $1,969.

    TCJA tax calculation is $40k less $24k for taxable income of $16,000. The 10% bracket cuts off at $19,050 so all taxable income is 10% meaning you pay tax of $1,600. You save $369. That's roughly a 20% tax decrease.
    People who do not itemize will definitely be making out with the new plan. No question about that. And, the lower rates or higher threshold between rates (depending on how you want to look at it) can't hurt either.

    Of course, paying less is not my bitch about the new plan. Society getting less is however.

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    Re: I don't believe the Tax plan will save you what you think it will.

    Quote Originally Posted by calamity View Post
    People who do not itemize will definitely be making out with the new plan. No question about that. And, the lower rates or higher threshold between rates (depending on how you want to look at it) can't hurt either.

    Of course, paying less is not my bitch about the new plan. Society getting less is however.
    "Society getting less"....sheesh. If people still have their money then it's already in society. Your concern seems to be more along the lines of government no longer being allowed to determine how much a given individual is allowed to have.

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