Tax Credit Clarification

[SageBrush]

Did you put a huge chunk of money in a Roth IRA? Would that increase your federal tax due?

Not Roth per se; an IRA to Roth conversion (that incurs income tax liability.)

 

[lupend88]

Did you put a huge chunk of money in a Roth IRA? Would that increase your federal tax due? Would that count? Talk to a tax person toot sweet

*Googles "toot sweet"*

Thank you so much, I'll chat with them asap!

 

[Jersey Shore Tom]

"semi-wealthy" is your opinion. I suggest staying with "~ top 40% of US household incomes eligible."

Was the reduced capital gains on investments "designed" to benefit the wealthy ?
Is non-progressive taxation, e.g. on car fuel, "designed" to benefit the wealthy ?
Are the myriad tax breaks only available to small business "designed" to benefit the wealthy ?
Are the tax breaks available to organized religion "designed" to benefit the wealthy ?
Are the tax breaks available to corporations "designed" to benefit the wealthy ?
Are the tax breaks available to homeowners "designed" to benefit the wealthy ?

I'm tired of typing, so if you don't yet see the fallacy in your reasoning I give up.

Thanks for calling my opinion a fallacy, I had no idea.

BTW, since the credit were passed in 2009, ~ top 30% income would be the more appropriate number to look at.

Yes, most of the tax breaks you listed are designed to benefit the wealthy. Most of them benefit the wealthy far more than the non wealthy. Passing a law that has a predictable effect means you have accepted that effect as part of the design. There may be reasons why you think that effect is acceptable but not acknowledging it is disingenuous at best.

As a side note the fact that tax benefits are politically more acceptable than direct Government payments is stupid considering that economically they are the same thing.

Steps off of soapbox.

 

[SageBrush]

Passing a law that has a predictable effect means you have accepted that effect as part of the design. There may be reasons why you think that effect is acceptable but not acknowledging it is disingenuous at best.

I see the effect; my point is that your proclivity to conclude that ONE effect of a tax law that benefits the wealthy (whatever that means) is proof of a grand design for the wealthy (again: whatever that means) is silly.

To the extent that an EV on the road has a societal benefit, that benefit is not determined by the income of the driver. Sheesh

 

[Jersey Shore Tom]

I see the effect; my point is that your proclivity to conclude that ONE effect of a tax law that benefits the wealthy (whatever that means) is proof of a grand design for the wealthy (again: whatever that means) is silly.

To the extent that an EV on the road has a societal benefit, that benefit is not determined by the income of the driver. Sheesh

Yes it is, I'm also pretty sure that people with less income are more likely to drive older more polluting cars. Society would benefit more from replacing those with EVs.

You could easily make the tilt toward the wealthy less egregious, why isn't the credit refundable? That plays a major factor in tilting the benefit to the wealthy.

I guess you don't see the fallacy.

 

[SageBrush]

Yes it is, I'm also pretty sure that people with less income are more likely to drive older more polluting cars. Society would benefit more from replacing those with EVs.

Ah ... the 20 year old beaters poor people pick up for $1000. Do you really think these owners are just waiting for your refundable credit to buy a $35k Tesla ?

I get it -- you want a refundable credit. So do I. But let's not turn this into some class warfare argument for fools.

 

[Jersey Shore Tom]

Ah ... the 20 year old beaters poor people pick up for $1000. Do you really think these owners are just waiting for your refundable credit to buy a $35k Tesla ?

I get it -- you want a refundable credit. So do I. But let's not turn this into some class warfare argument for fools.

If pointing out reality amounts to class warfare, then I am guilty as charged. I will not stop.

 

[SageBrush]

If pointing out reality amounts to class warfare

The only reality here is you want a refundable credit. The rest is window dressing.

 

[Jersey Shore Tom]

The only reality here is you want a refundable credit. The rest is window dressing.

So the bias in the tax credit towards those with higher incomes is a figment of my imagination?

 

[SageBrush]

So the bias in the tax credit towards those with higher incomes is a figment of my imagination?

ANY tax credit available to all is "biased" towards higher incomes.

I read today that Apple received a 100M tax break from Nevada to build a data centre near Reno. DAMN those politicians and their bias towards rich iphone owners.

 

[ccutrer]

So the bias in the tax credit towards those with higher incomes is a figment of my imagination?

Perhaps the backer of the original bill wanted a refundable credit, but the opposition balked simply on budgetary grounds. And the compromise was to make the credit non-refundable, since some study said it would cost the government x% less to do that. The end result is a credit that looks like (and in practice does) favor the wealthy, but that wasn't the original goal, or even the final goal, simply a side effect of another competing goal that ended up having a higher priority. I could be totally wrong. I wasn't there for these negotiations. Were you?

 

[cpa]

Just to clarify on some tax matters: There are many, many income tax benefits that are lost as a taxpayer's income increases, so they are available to the less "wealthy" and unavailable to the more "wealthy."

--Earned Income Credit (refundable) and Refundable Additional Child Tax Credit
--Retirement Contribution Savings Credit
--Education Credits like the Lifetime Learning Credit
--Personal exemptions for the taxpayer, spouse and dependents
--Student loan interest deduction from gross income
--Up to 85% of Social Security benefits includible in gross income
--Itemized deduction phaseout of 3% of AGI over a threshold based upon filing status
--Increased chance of being subject to AMT, thereby losing out on personal exemptions and the itemized deduction for taxes (although at really high levels of income the regular tax starts to exceed the AMT again.

In addition, there is the Additional Medicare Tax of .9% for earned income received over 200K (single)/250K (MFJ). The Net Investment Income Tax (3.8%) is triggered on those with interest, dividends, capital gains, rents, royalties, investment partnerships and S Corporations, and some annuities who have income >200/250K.

I am just trying to point out that there are indeed a number of income tax benefits or exclusions that are available to those with smaller incomes that are eliminated or added to those with higher incomes.

Whether we agree with this concept or not, it remains that the two refundable credits above (EIC and ACTC) pour billions and billions of dollars per year from the Treasury into the hands of parents or guardians of children who do not earn much money. I would suspect that the amount of tax savings for those who claimed the Section 30D credit pales in comparison.

 

[EVNow]

So the bias in the tax credit towards those with higher incomes is a figment of my imagination?

Ofcourse, it is ! Warren Buffet should obviously have a lesser tax rate than his secretary !

PS : I suggest anyone still in doubt, read something on how laws get made and passed in US. Hint : Congressmen spend more time sitting in small cubicles in DC and begging for money than actual law making.

 

[Jersey Shore Tom]

Perhaps the backer of the original bill wanted a refundable credit, but the opposition balked simply on budgetary grounds. And the compromise was to make the credit non-refundable, since some study said it would cost the government x% less to do that. The end result is a credit that looks like (and in practice does) favor the wealthy, but that wasn't the original goal, or even the final goal, simply a side effect of another competing goal that ended up having a higher priority. I could be totally wrong. I wasn't there for these negotiations. Were you?

I suspect that is pretty close to what happened. I understand that comprises happen, in fact they necessary, but I think people need to be honest about the effects of their ideas and compromises.

 

[desimom99]

We are very late in this game. I am getting ready to put in the $1000 to stand in line. At this point the most I can expect is a phased out credit, correct? Is there ANY way we would be eligible for a full credit?

PS: We do pay LOT more than $7500 in taxes to the federal govt.

 

[bmms8]

Probably not unless you get an S/X or somehow a floor model 3 in a few months if they have them.

 

[zenmaster]

Used with rebate included in sales price.

 

[KarenRei]

For a Model 3, at best you'll get a half credit. Quarter credit is most likely.

 

[Runt8]

We don’t know how vehicles will be allocated in the U.S. vs international, and we don’t know the percentage of U.S. reservations vs international. I would say there’s a very slim possibility of getting the full credit if Tesla greatly prioritizes U.S. orders to maximize the credit (which Elon did hint at in a tweet), but I wouldn’t count on it. Tesla may have a full blown mutiny if they do that to an extreme.

 

[JeffK]

Assuming a good ramp up, it's extremely likely you'll get the half credit because that's going to end at the end of 2018.