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Tax Reform?

November 15th, 2017 at 10:14 pm

My thoughts on the tax reform? It appears the reform is going to hurt all families with more than 1 kid. If you had 2 kids before and took the standard deduction you had $12k standard deduction and $16k in personal exemptions for $28k. Now with the standard deduction raised to $24k but personal exemptions gone by the way side it appears to be less than the $28k the family with 2 kids had. Assuming a larger child tax credit is $600/per child for $1200 in tax credit.

It really depends on the bracket but if I had to guess most families will end up paying more in taxes with more than 2 children. The $600 tax credit won't offset the personal exemptions.

As far as the SALT I think they should keep it instead of the mortgage deduction to be fair. After all it's a double taxation. And honestly they should probably do away with the mortgage deduction period. But that's impossible with the lobby groups. I also have seen a lot of elderly people use the medical deduction and if you are in nursing home care the bills for that are astronomical and easily fufill the 10% income minimum to write off.

Something that does bother me is that estate tax going away. Seriously so $22 million tax free inheritance is not enough? And the middle class needs to give away inheritances above that tax free? And it's inherited at a step-up basis? Really those 5000 people who have enough to leave more than $22 million need the tax break?

I have to admit I'm pretty liberal. But I'm a bit stunned these tax cuts have come without really cutting the budget. That republicans are okay with increasing the deficit so much? I thought it was supposed to be cut taxes, shrink government and deficit? Seems resonable and responsible budgeting. But instead we're cutting taxes and still spending wildly?

I am curious what will pass. It'll be an interesting sell.

3 Responses to “Tax Reform?”

  1. creditcardfree Says:

    I'm all for people keeping as much of their own money as possible regardless of which tax bracket you are in. Family farms and business are lost because of the estate taxes...those businesses and farms provide jobs.

    Republicans love to spend just as much as Democrats in my opinion. That's why you have the rift between the Tea Party GOP and the traditional GOP. The spending in this country is out of control. Too many people think it's the federal governments job to do everything. It is not.

    We've just reached the point of no longer getting the child tax credit. Once your child hits 17 it no longer applies. I used a quick online calculator and yes we will pay more. Although I'm not clear if the American Opportunity Act still applies.

  2. Joe Says:

    There is still a lot of negotiation that needs to take place so I think things will change - how much I dont know. I know I will be pissed if they don't get rid of the 'carried interest loophole'.

    LAL, to your point about double taxation. We pay all kinds of other taxes that are not deductible, including payroll taxes. And States don't allow you to deduct federal taxes or payroll taxes either. Mortgage interest deduction should be limited to your primary house and limited to the average house price in the zip code you live.

    CCF, AOTC for now is safe. Also, I have heard the plan would create a $300 "family flexibility credit." This would be a credit of $300 for yourself and $300 for your spouse.

  3. LivingAlmostLarge Says:

    CCF but the family farms and small business leaving to people is less than 100 families considering most farms are large corporations and most aren't more than $22m already allowed tax free. Already estates up to $22m can be tax free so would you consider that only 100 families are even touched by going over $22M? Versus everyone else who has way more and needs to not have an estate tax?

    I do agree though I'm a little horrified by the spending the government is thinking of doing with tax cuts and no cuts on the spending side. I recall Regan did cut taxes but he also did entitlement reform and cut spending to make the books balance. It does not appear to be that sort of thinking right now. It's a little disconcerting they are saying sure the $1.4T tax cuts should be just passed.

    Joe, I find it also sad that the pass through income is not being cut like the corporate taxes. Sure you want to grow the economy but what about small business? Instead it seems purely a tax cut for very wealthy and corporations. I don't see the point if you really want to stimulate the economy.

    I'm not sure about the mortgage interest but it will cause I'm sure people to not sell homes. But the mortgage deduction is limited to primary residences as it stands. Rentals are backed out of the rents the interest anyway so it's moot for landlords. And most secondary homes are often treated as rentals as well.

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