Tax Bill and EV Tax Credit Discussion

[Dr. J]

BTW, all your income is taxed at a lower rate as well. Just so you know. Not only lower brackets but the taxes are progressive, meaning that the first $X has 0% tax, the next $Y amount is taxed at a lower rate then today. Again, not an accountant, but you live in Texas, your getting a tax cut. Period. It might not be tens of thousands of dollars but you will pay less tax and your paycheck will be bigger. Enjoy.

Yes, I live in Texas and that changes absolutely nothing about my personal tax situation which I have detailed extensively.

BTW, I actually made a mistake above, but in the opposite direction from your assertion. It's true that the brackets are moving around some (although we won't know until later where they've settled, after the conference committee report is made public) and maybe that will help a little. However, the extra taxable income I calculated above will not, in reality, be taxed at 10%, but rather at my marginal income tax rate--the highest rate I pay, which in any given year is either 15% or 25% (or whatever the newest rates are, which we still don't know for sure).

Again, you're not an accountant, and I am an enrolled agent.

 

[Reciprocity]

Yes, I live in Texas and that changes absolutely nothing about my personal tax situation which I have detailed extensively.

BTW, I actually made a mistake above, but in the opposite direction from your assertion. It's true that the brackets are moving around some (although we won't know until later where they've settled, after the conference committee report is made public) and maybe that will help a little. However, the extra taxable income I calculated above will not, in reality, be taxed at 10%, but rather at my marginal income tax rate--the highest rate I pay, which in any given year is either 15% or 25% (or whatever the newest rates are, which we still don't know for sure).

Again, you're not an accountant, and I am an enrolled agent.

Ok enrolled agent, what ever that is and no I wont follow the link and read.

From here: Trump Tax Plan: Details and How It Affects You - SmartAsset

2016 tax brackets, only went up to middle class cuz im not rich:

Married Filing Jointly or Qualifying Widow(er)
Taxable Income Tax Rate
$0—$18,550 10%
$18,551—$75,300 $1,855 plus 15% of the amount over $18,550
$75,301—$151,900 $10,367.50 plus 25% of the amount over $75,300
$151,901—$231,450 $29,517.50 plus 28% of the amount over $151,900

New brackets:

Single Filers Married Filing Jointly Tax Rate
$0 – $45,000 $0 – $90,000 12%
$45,001 – $200,000 $90,001 – $260,000 25%

Lets assume your agi is 154,000 - 24,000 = 130,000

You pay 12% on the first 90k and 25% on the next 40k = 10800+10000 or 20800.

Under the old plan, lets say your right and you are losing so much, then you agi and deductions are only 120,000 or 10k less (you said $9,200 additional income is taxed).

You would pay 10% on the first 18,550 = 1,855
You would pay 15% on the 18-75k = 8,512
and 25% on the rest = $11,175 + 8512 + 1855 = 21542 - 20800 = 742 savings.

This is very back of the napkin, so it could be much different. If you had two kinds, you would be saving MUCH MUCH more. This tax plan was meant to help middle class families. I am sorry if you are not one of those. I live in IL with $20k+ in local deductions that are going away between state and property tax and I still break even or save a little on the tax plan. I am almost certain you havnt thought it out.

 

[Dr. J]

what ever that is

Because learning is hard.

 

[Reciprocity]

Because learning is hard.

It appears so is math.

 

[Dr. J]

Ok enrolled agent, what ever that is and no I wont follow the link and read.

From here: Trump Tax Plan: Details and How It Affects You - SmartAsset

2016 tax brackets, only went up to middle class cuz im not rich:

Married Filing Jointly or Qualifying Widow(er)
Taxable Income Tax Rate
$0—$18,550 10%
$18,551—$75,300 $1,855 plus 15% of the amount over $18,550
$75,301—$151,900 $10,367.50 plus 25% of the amount over $75,300
$151,901—$231,450 $29,517.50 plus 28% of the amount over $151,900

New brackets:

Single Filers Married Filing Jointly Tax Rate
$0 – $45,000 $0 – $90,000 12%
$45,001 – $200,000 $90,001 – $260,000 25%

Lets assume your agi is 154,000 - 24,000 = 130,000

You pay 12% on the first 90k and 25% on the next 40k = 10800+10000 or 20800.

Under the old plan, lets say your right and you are losing so much, then you agi and deductions are only 120,000 or 10k less (you said $9,200 additional income is taxed).

You would pay 10% on the first 18,550 = 1,855
You would pay 15% on the 18-75k = 8,512
and 25% on the rest = $11,175 + 8512 + 1855 = 21542 - 20800 = 742 savings.

This is very back of the napkin, so it could be much different. If you had two kinds, you would be saving MUCH MUCH more. This tax plan was meant to help middle class families. I am sorry if you are not one of those. I live in IL with $20k+ in local deductions that are going away between state and property tax and I still break even or save a little on the tax plan. I am almost certain you havnt thought it out.

You've proven that an entirely hypothetical taxpayer will save money under the new tax plan.

 

[Reciprocity]

You've proven that an entirely hypothetical taxpayer will save money under the new tax plan.

That was the only info I had to work with. This hypothetical taxpayer was one that had a situation just like yours. Losing 9200 in deductions and still saving money. I really feel for you that you are not saving money with this tax plan. I am not either, but I blame my state and local governments for the insane tax rates they charge, not the Fed. I pay more in SALT and property tax then I will in Fed taxes, its really out of control and I get why they are eliminating the deductions.

 

[SageBrush]

This tax plan was meant to help middle class families.

No, this is an unfunded tax giveaway to corporations, and a peanut for you.

 

[Reciprocity]

No, this is an unfunded tax giveaway to corporations, and a peanut for you.

Kinda beats the unfunded spending of the last 8 years to the tune of $10 trillion. At least this plan has a chance to pay for itself and is only $1.5T over 10 years. Corporations should have 0 tax rate, because its you and I who pay the corporations taxes in higher prices. Its pretty simple, if you lower their taxes, they must lower their prices to remain competitive. Those prices are eventually paid by everyone. You should tax things you dont want people to do and not things you do what them to do and Corporations create jobs so its silly to tax them when they just pass along those to us in higher prices.

 

[bkp_duke]

Note that the deduction for charitable contributions was gone (from both bills, I believe) and has only been added back (reportedly) in the conference committee. They saved themselves from a major blunder, but all those lucky people who no longer itemize also lose their incentive to give charitably. Like me. That aspect of the tax bill is not going to benefit society as a whole.

If you are giving "charitably" just to get a tax deduction . . . then you are missing the point of charitable giving.

 

[ohmman]

If you are giving "charitably" just to get a tax deduction . . . then you are missing the point of charitable giving.

Completely agree, however I can see where the tax deduction can make larger donations possible for some individuals. Without it, they may not have as large a giving budget.

edit as I think about this: We give away 20% of our annual income to charity. That's the limit for deductions of appreciated stock. 20% seems like a reasonable number, but it's quite likely I'd increase that up to 30% if the ceiling were raised. So I may be psychologically constrained by the tax code as well, or just a miser of some sort.

 

[bhzmark]

The tax bill is out and the explanatory statement confirms that EV credit is NOT repealed.

 

[Karma]

The tax bill is out and the explanatory statement confirms that EV credit is NOT repealed.

bhzmark: just wondering if now that it's about to signed into law, is this still the case? Has anyone had a chance to review the actual House and Senate bill?

 

[SageBrush]

Kinda beats the unfunded spending of the last 8 years to the tune of $10 trillion.

Have you forgotten that the deficit spending was to save the country from a Bush/Repuke engineered recession ?

Recessions, oil wars, and Corporate giveaways, from the party of Pay-As-You-Go ...

Sickening

 

[thx1139]

Kinda beats the unfunded spending of the last 8 years to the tune of $10 trillion. At least this plan has a chance to pay for itself and is only $1.5T over 10 years. Corporations should have 0 tax rate, because its you and I who pay the corporations taxes in higher prices. Its pretty simple, if you lower their taxes, they must lower their prices to remain competitive. Those prices are eventually paid by everyone. You should tax things you dont want people to do and not things you do what them to do and Corporations create jobs so its silly to tax them when they just pass along those to us in higher prices.

What unfunded spending of the last 8 years? I dont mean to nitpick, but over the last 8 years you cant name a NEW long-term program that expanded the deficit. The programs that expanded the deficit were existing programs and the near depression that the last administration stopped. Those programs are still in place. Federal revenue plummeted with the great recession. This resulted in huge deficits which added to the debt. Spending programs werent cut, in fact because of the way social safety net programs work they automatically increased. Hey you pay unemployment insurance for a reason. Yet the Obama administration didnt add new long term spending programs. No ACA the CBO cut the deficit and debt. It was automatic safety net programs, continued spending on the wars which although the direct expenses decreased the long term costs continue and will for 50 years. Veterans hurt get lifetime health benefits at VA medical centers.

Also to be clear the $1.5T is not the expected deficit spending the next 10 years. It is the additional deficit spending beyond the current expectations. The FY2018 (Oct 1 2018 through Sept 30 2019) deficit for instance is expected to be $440B. Estimates through 2021 before the new law had the expected deficits to be between $400-$500 billion per year.

I sorta agree with dont tax corporations, but as a consultant who has worked in many very large corporations. I know that the lower tax expenses wouldnt go to lower prices and higher wages for the average person. They would go to executives, dividends and stock buy backs.

 

[thx1139]

No, this is an unfunded tax giveaway to corporations, and a peanut for you.

This is how they will sell it.

The average guy will see a few hundred to a couple thousand deduction in taxes. They will think great. It will be a small percentage deduction. While the rich and corporations will see huge deductions. Thats why the JCT says that the vast majority of people will split 23% of the tax reductions and the vast minority will see 77% of the tax deductions. At the same time the tax changes for the vast majority will have the reductions go away in 10 years. Yes this will likely change, but the point of getting rid of the reductions in 10 years was so the additional deficit is pegged at $1.5T instead of a considerably larger number. Its saying we wont spend the money at the same time as saying of course we will spend the money.

 

[thx1139]

Reciprocity. Let me give u a little back of the napkin example of how corporations will do things. Yesterday gave us some examples.

ATT, which had a $20B pre-tax profit this past fiscal year, is giving employees a $1000 bonus because of the tax cuts. Thats great and it adds up to a hefty $200M which is 1% of the $20B pre-tax profits. Now the max corporate tax rate is changing from 35% to 21%. So that means ATT will pay 14% less in taxes. They are giving 1 of those 14 points to employees.

Employees go hooray look at that I am benefiting from the tax cut. Executives snicker in the board room.

 

[dmode]

What unfunded spending of the last 8 years? I dont mean to nitpick, but over the last 8 years you cant name a NEW long-term program that expanded the deficit. The programs that expanded the deficit were existing programs and the near depression that the last administration stopped. Those programs are still in place. Federal revenue plummeted with the great recession. This resulted in huge deficits which added to the debt. Spending programs werent cut, in fact because of the way social safety net programs work they automatically increased. Hey you pay unemployment insurance for a reason. Yet the Obama administration didnt add new long term spending programs. No ACA the CBO cut the deficit and debt. It was automatic safety net programs, continued spending on the wars which although the direct expenses decreased the long term costs continue and will for 50 years. Veterans hurt get lifetime health benefits at VA medical centers.

Also to be clear the $1.5T is not the expected deficit spending the next 10 years. It is the additional deficit spending beyond the current expectations. The FY2018 (Oct 1 2018 through Sept 30 2019) deficit for instance is expected to be $440B. Estimates through 2021 before the new law had the expected deficits to be between $400-$500 billion per year.

I sorta agree with dont tax corporations, but as a consultant who has worked in many very large corporations. I know that the lower tax expenses wouldnt go to lower prices and higher wages for the average person. They would go to executives, dividends and stock buy backs.

This whole "debt went up by $10T" is a political talking point. See how it is never followed by a solution. How are you supposed to suddenly cut deficit in the middle of a recession ? Since 80% of US Fed spending is SS, Medicare, and Military, what was the government supposed to do when tax receipts go down. Stop paying Social Security ? Cut the Military budget ? Not pay unemployment ?

This tax bill is wildly irresponsible (probably designed this way). You don't run up deficits when times are good, you try to close them. Imagine how the US will be crippled when the next recession comes around (likely in the next 2-3 years). The deficit will absolutely explode resulting in SS and Medicare cuts.

 

[ItsNotAboutTheMoney]

Corporations should have 0 tax rate, because its you and I who pay the corporations taxes in higher prices. Its pretty simple, if you lower their taxes, they must lower their prices to remain competitive. Those prices are eventually paid by everyone. You should tax things you dont want people to do and not things you do what them to do and Corporations create jobs so its silly to tax them when they just pass along those to us in higher prices.

Corporations should _not_ have 0 tax rate, because that would break the income tax system.
Income taxes use net income as a means of taxing generated wealth.
.Determine entity's income. Determine entity's expenses. Subtract expenses from income. Take result and calculate government's cut.
The entity can be a person, a group of people or an organization.
If you exclude corporations you're excluding a large chunk of generated wealth and having missed the window to tax it, it might never taxed. The result is a shift of tax burden to other entities. It's not a desirable thing to do.

Your rationale could be used to argue for not taxing individuals:
Corporations pay individuals to do work,
Individuals want more wealth.
Loss of wealth through taxation causes individuals to seek higher wages.
Higher wages increases corporation expenses.
Corporations want more wealth.
Higher corporation expenses increases prices.
Therefore if we don't tax individuals, prices will be lower.

The _rational_ argument for having corporation tax rates be lower than non-corporation tax rates is global tax rate competition. That of course, leads us on a race to the bottom and 0%. But maybe at some point it'll get so insane that there will be an international agreement on corporation tax that stops tax shopping.

Nah.

 

[Reciprocity]

Reciprocity. Let me give u a little back of the napkin example of how corporations will do things. Yesterday gave us some examples.

ATT, which had a $20B pre-tax profit this past fiscal year, is giving employees a $1000 bonus because of the tax cuts. Thats great and it adds up to a hefty $200M which is 1% of the $20B pre-tax profits. Now the max corporate tax rate is changing from 35% to 21%. So that means ATT will pay 14% less in taxes. They are giving 1 of those 14 points to employees.

Employees go hooray look at that I am benefiting from the tax cut. Executives snicker in the board room.

Almost everything you said was wrong. First, ATT lost some tax Write offs as the rate was lowered. Almost no corps int he US pay the full rate, its more like 24%:

Actual U.S. Corporate Tax Rates Are in Line with Comparable Countries

So in fact, most corporations only really received a net savings of 3%. Some more then others.

ATT competes with other cable and phone operators. To compete, their prices have to be competitive and they have to retain their best assets, their employees. Some savings will be passed along to consumers in either lower prices or higher quality services. The 1% went to employees. Many more corporations will do this and many more will higher and expand their businesses to be competitive with companies doing the same.

 

[thx1139]

Almost everything you said was wrong. First, ATT lost some tax Write offs as the rate was lowered. Almost no corps int he US pay the full rate, its more like 24%:

Actual U.S. Corporate Tax Rates Are in Line with Comparable Countries

So in fact, most corporations only really received a net savings of 3%. Some more then others.

ATT competes with other cable and phone operators. To compete, their prices have to be competitive and they have to retain their best assets, their employees. Some savings will be passed along to consumers in either lower prices or higher quality services. The 1% went to employees. Many more corporations will do this and many more will higher and expand their businesses to be competitive with companies doing the same.

What writeoffs were lost? It is my understanding that all or most of the writeoffs werent removed.

Oh ATT after tax income was $13B this past year. So $20B pre-tax and $13B post tax. You do the math. The $200M is a drop in the bucket compared to the tax savings.