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Economy

Here’s the GOP tax plan…and it sucks if you live in New Jersey or California

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The GOP has finally unveiled details of the “tax reform” plan coming out of the House Ways and Means Committee. Yay.

I use scare-quotes around “tax reform” because it doesn’t really reform much, but it does monkey with deductions, exemptions, tax credits and brackets. For many Americans on a paycheck it will put more cash into their pockets. But if you live in a high tax state like New Jersey, New York, or California, you might get soaked.

I’ll get to that in a minute…first, some highlights.

The top bracket will remain at 39.6%. They wanted to lower it but Democrats won the day here. As for deductions, the standard deduction nearly doubled from $12,700 (married) to $24,400, along the same lines as the head of household and single deductions. But the personal exemption of $4,050 will disappear. So, the question here is: will the added standard deduction result in a lower tax bill or not?

Democrats are claiming it will increase most Americans’ tax burden. But that’s been debunked. Apparently they only looked at Democrats in high tax states, not, you know, the whole country. The WaPo fact checker gave them the dreaded “four Pinnochios.” For shame.

Democrats are lying about Republican tax plan, says Washington Post fact-checker

http://www.washingtonexaminer.com/democrats-are-lying-about-the-gop-tax-plan-says-washington-post-fact-checker/article/2639367The Washington Post’s fact-checker said Thursday that Democrats aren’t telling the truth when they say the Republican tax plan would raise taxes on most middle-class families. In an early Thursday morning story, fact-checker Glenn Kessler gave Democrats four Pinocchios for making that claim. Kessler noted that the data Democrats used to make their argument actually showed that taxpayers in each of the five income bands used in the analysis would see a tax cut, not a hike, and that the average cut would be $450 for 80 percent of families.

Less itemization

That all depends on if you itemize. With such a high standard deduction, some of the caps proposed to what used to be itemized deductions may cause more people to file a non-itemized return. That’s the “reform” part, I guess. Less work for Uncle Sam looking at the Schedule A and associated documents.

The big deal is a cap of $10,000 for property tax only, and no deduction at all for other state and local taxes. If you live in a high income-tax state, well, ouch. That part of the bill may not survive.

One way for Californians and other meta-socialist dwellers to get their deductions back would be to give more to charity. I know, Democrats would rather pay taxes and let the government give away their money, but charity is still completely deductible. That’s good news for Christians, who give the most.

For high-value home buyers, the interest deduction, currently capped at loans up to $1 million, will cut in half to $500,000. Meh. And the dreaded Alternative Minimum Tax (AMT), will go away. That’s bad for the super rich and their accountants. Again for the rest of us, meh.

No changes will be made to the $18,000 pretax deferral for 401(k) contributions. At least they didn’t monkey with our retirement (as if Social Security isn’t a 10-ton gorilla monkeying with our retirement, but that’s a different story).

Reports

Republicans Release Tax Plan, Cutting Corporate and Middle-Class Taxes

https://www.nytimes.com/2017/11/02/us/politics/tax-plan-republicans.html?action=Click&contentCollection=BreakingNews&contentID=66033953&pgtype=Homepage&_r=0The compromise, as it had been sketched out this week, would preserve the deduction for property taxes, but not for state and local income taxes, and it appeared as if there would be a cap on the deduction. But at first glance, it did not appear as if that was enough to win over all of the New York and New Jersey members.

What the Republican Tax Plan Means for You – WSJ

https://www.wsj.com/articles/what-the-republican-tax-plan-means-for-you-1509629815The highlights include lower rates for many individual households but not the highest earners; fewer individual tax brackets; a larger standard deduction for households who don’t itemize their tax bills; trimmed-back deductions for state and local taxes; eventual repeal of the estate tax; and much lower rates for corporate profits and profits for individuals on unincorporated business income.

Reactions

Final thoughts

The real question here: Is the GOP tax plan better than doing nothing? In government, doing nothing is almost always better than doing something, since legislators tend to screw up everything they do. The less they do, the less to screw up. But in this case, the jury is still out for me. Personally, it would likely be a wash. I don’t make enough money to be affected by the high tax bracket and AMT issues. I don’t live in a relatively high-tax state (Georgia isn’t Florida, Texas or New Hampshire, but it’s not New Jersey either). The rest of the changes might put some cash in my pocket–or not.

I think it’s a good start. But the more these things get kicked around, the more they get turned into rotting fly-infested carcasses that don’t resemble the thing they were supposed to be. This is why the jury is out…we may yet find out that doing nothing was the right move.

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1 Comment

1 Comment

  1. Jan

    November 2, 2017 at 9:13 pm

    We will have to do our taxes to tell if this a tax cut or not.

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Economy

The number of companies helping employees thanks to tax cuts is 164 and rising

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The number of companies helping employees thanks to tax cuts is 164 and rising

Republican tax cuts were met with instant success on the business front when the President signed them into law last month. Companies across the nation rewarded their employees and customers by passing on some of the saving they’ll get. It’s helping to push the economy even higher than it was last year.

As Nick Givas covered over at Daily Caller, the total number of companies giving back to their people is 164 and rising:

164 Companies Credit Tax Reform For Bonuses And Pay Raises

One hundred sixty-four companies have gone on record stating they gave bonuses and pay raises to employees because of the new tax reform law, according to Americans for Tax Reform. The list has been continually updated and jumped from 40 companies to 164 in 10 days, The Washington Examiner reports. The businesses include: American Airlines, AT&T,… (more…)

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Democrats

With both sides wanting more spending, Wednesday’s government funding discussions end in a stalemate

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With both sides wanting more spending Wednesdays government funding discussions end in a stalemate

There was no movement Wednesday as top Republican and Democratic leaders met at the White House to lay down their ultimatums for funding the government. With two weeks of funding still allotted, neither side seemed to be in a hurry to compromise.

One of the main sticking points was purely political. Democrats wanted something written into the spending agreement that would give certain guarantees to “Dreamers” who they say are having their futures jeopardized by President Trump’s rescinding of President Obama’s DACA executive order. This is purely for show to try to win back some of the Hispanic voters they lost in 2016 and into 2017. With the President showing more compassion for “Dreamers” than anticipated by preemptively demanding that Congress put together a permanent fix, Democrats needed to regain ground and act as if they’re the ones fighting on behalf of illegal immigrants.

Republicans were equally theatrical with their opposition to such an addition to the funding agreement, claiming they wanted to first fund the government, then address DACA before the March deadline. They could just as easily allowed something in the funding agreement, knowing they’re going to pass some variation of amnesty in the next month and a half, but instead chose to draw the red line.

The more alarming sticking point in the funding deal is that both sides want to spend more and are actually leveraging the other side’s spending increases to negotiate for spending increases of their own. Republicans want to raise defense spending. Democrats are opposed unless they can raise non-defense spending as well. In the end, it’s very likely that this “impasse” will result in both sides getting what they want: move spending across the board.

Further Reading

No spending deal after GOP, Dems meet with White House officials Wednesday

http://www.washingtonexaminer.com/no-spending-deal-after-gop-dems-meet-with-white-house-officials-wednesday/article/2644897“It is important that we achieve a two-year agreement that funds our troops and provides for our national security and other critical functions of the Federal government,” the White House, House Speaker Paul Ryan, R-Wis., and Senate Majority Leader Mitch McConnell, R-Ky., said in a joint statement. “It also remains important that members of Congress do not hold funding for our troops hostage for immigration policy.”

“We’ve been clear about these budget priorities from the beginning and hope that further discussions will lead to an agreement soon,” they added.

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Economy

Leon H. Wolf on both major parties growing government and budgets

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Leon H Wolf on both major parties growing government and budgets

Leon H. Wolf, managing editor at The Blaze, is a big fan of limited government. Unfortunately most Republicans and all Democrats on Capitol Hill tend to favor expanding government. It’s no wonder Wolf is opposed to the way leaders in the two major parties are attempting to fund government.

In a recent article, he went after the parties and the whole process being initiated with the new year. One line in particular is worth highlighting:

“It should be noted that almost no one in either branch of government on either side is attempting to actually reduce the size of the government or its budget.”

Source: The Blaze

Republicans and Democrats open 2018 by arguing over how much to grow the size of government

http://www.theblaze.com/news/2018/01/01/republicans-and-democrats-open-2018-by-arguing-over-how-much-to-grow-the-size-of-governmentAs the holiday season comes to a close, Republicans and Democrats are opening the new year by resuming debate over a measure to fund the government through the end of 2018. The two sides failed to reach a compromise before the end of the year on such thorny issues as protection for Deferred Action for Childhood Arrivals (DACA) recipients and funding for a wall on the southern border. But in addition to these sticking points, the two sides also appear to disagree over exactly how much the government should grow.

According to Reuters, the White House is pushing for massive increases in military spending along with a 7 percent increase in overall non-discretionary non-military spending, while Democrats are holding out for an 11 or 12 percent increase in non-discretionary spending.

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