I am sick and tired of politics. These tax bills – and let’s get this right – these are TAX BILLS, not tax cuts for most of us. Yes, you could say they are tax reform because they change how the tax system works. OK, here goes.
Permanent tax cuts of note:
Corporate tax rate reduced to 20%
Pass-through entities taxed at corporate rate instead of individual rates
Alternative Minimum Tax set at 20% or abolished
Estate tax threshold raised or tax abolished (depending on which bill)
Fewer tax bands (depends on where you lie in each band whether this is a cut or increase)
TEMPORARY tax cuts (Senate):
Personal deduction doubled until 2025
(House) Tuition waivers now taxed as income (#WarOnEducation)
Student Loan interest deduction abolished
The raised personal deduction will mean that fewer individuals itemize deductions which will effectively mean they won’t be able to deduct charitable donations, meaning a likely loss of $38B to charities.
Will rise between $1T and $1.5T over the next decade.
The Supposed Benefit
Businesses will use their increased wealth to invest in R&D and jobs.
Personal deduction will decrease taxes for some households, and cut them altogether for lowest earners.
Taxes less complicated so you don’t have to pay someone to do them for you.
Increased productivity means more income and high taxable income.
College Students and Graduate get a MASSIVE tax hike. If you get a tuition waiver from a University that charges $50,000 per year, you will be paying tax on at least $30,000 of it. That’s $6,500 in taxes per year, plus you will pay tax on any job you take on to pay those taxes, as well as on any stipend or assistantship you receive (which was already taxed, thanks to President Reagan). To rub salt in the wound, they have then taken away your tax deductions for your student loan interest. They get you coming and going. The result, fewer go to college, meaning that those that don’t go will have decreased earning power over their lifetimes, saving corporations money, but reducing the skills pool.
More truth? Many charities will cease to exist. Many in the GOP say that charities will take up the slack after the ACA is fully repeals. What charities? They will be gone.
More jobs? We are at nearly “full employment”. Yes, 5% unemployment is the threshold for full employment. Where are the job seekers going to come from? The non-college-educated, those without even high school diplomas, immigrants.
Higher GDP? I don’t see that lasting long. Historically, we can’t sustain high growth. The government will have to find another way to kick-start growth, then another, and another.
Trickle down has never worked. What makes you think it will this time? It caused the Depression, and a recession in the early ’90s. The stock market is at an all-time high. Surely, it will fall back to Earth soon, destroying all our savings, IRAs, and investments.
And the deficit keeps going up. It would be better to increase taxes a little to pay off some of the deficit slowly, and save our children from inevitable bankruptcy. But no, give the top 1% even more money. A little pain now will save a lot later.
So what do you like about this tax bill?