Individuals who make $112,500 – $190,150 will see their federal marginal income tax rate go up by 5%, from 28% to 33%!
I’m not sure why Trump wants to raise taxes on the middle class. It’s good to hear he plans to abolish the Alternative Minimum Tax (AMT) and the 3.8% Net Investment Income tax on individuals/couples who make more than $200,000/$250,000. But those benefits accrue mostly to individuals who make more than $190,150.
It’s nice Trump plans to nix the estate tax (death tax) for individuals / married couples with more than $5.45M / $10.9M. Getting taxed again after you already paid taxes on your wealth sounds like robbery. But given most of us don’t plan to die within 4-8 years, any changes to the death tax don’t really matter because they’ll surely be changed again.
A 5% tax hike on the middle class and a 6.4% tax decrease on the top 1% income earners who make over $415,050 is not helping the majority of people keep their hard earned money. In fact, it’s estimated that the top 1% will enjoy ~50% of all the tax benefits.
He wants to make standard deduction $15k single and $30k married. Marginal rates are pretty meaningless. Effective rate is what matters. That’s what most people don’t realize about other countries. They have the same or higher marginal rates than the US, and they lack our deductions. People actually pay very close to their marginal rate which would be a massive tax increase for about 80% of Americans. In Canada, you can’t deduct mortgage interest or property tax. I don’t think you can deduct provincial taxes on federal either. Take those away and look at how much your tax bill would increase. Then the lower income people would get killed in taxes without the earned income tax credit.
Tax increase? If Trump proposes a tax increase, his supporters will boot him out of the office. Are most people with 112k to 190k income Hillary voters?
But anyway, Ryan’s tax plan is probably worth more attention.
Trump probably only cares about one term…A one term president can get more done…But in reality he has only two years…If the people reject him they can get a Democrat controlled Congress in 2 years…Let’s see what happens in the first 100 days…
So when could these rates take effect? Is he keeping property tax deduction? If yes and you are in AMT now, it could be worth paying late fee and property taxes next year.
If I pay my property tax a few weeks late does the bank have a problem?
They are talking about passing it early in 2017 and effective for 2017. I think they are dropping the property tax and state income tax deductions. That’s the idea of increasing the standard exemption to $30k for married couples. For the middle class, they’d come out ahead vs the current $12,600 exemption. I think that’s also the idea behind eliminating AMT. AMT isn’t needed if you’re only deductions are mortgage interest and charitable donations.
Wouldn’t you want to pay property tax this year to get the deduction against a higher marginal tax rate?
It does make me wonder if we’ll see more aggressive migration to states without income tax and lower property taxes.
112k is solidly above middle class in the US. In fact, it’s twice the median. The fact that so many of us consider it middle class shows how out of touch we are with the rest of the nation - and why we continue to lose influence at the national level. Trump supporters will have no problem with it - the vast of majority of them make less then 112k.
As for the estate tax - amoral, unethical, and also bad economics. Getting rid of it will likely increase revenues in the long run.
The point is that we have massive, and growing, income and wealth inequality. We need some tailor made policies to address this. Just hoping a faster growing economy will sweep it under the rug is not solving the problem at all. Who do you think will benefit more in an economy growing at 5%? We folks living on the wealthy coasts? Or coal miners in West Virginia?
Income inequality is really about comparing with the Jones. It’s not enough for folks in the Rust Belt having a job at Best Buy making 35K, while a bunch of college kids sell their apps for 1B. Even though 35K may earn them a comfortable living in rural Iowa they will still fell resentful. Fact is these people are not equipped to participate in the new economy.
Yes and income inequality is highest in places with the most liberal policies. Those policies are producing the exact opposite result of what people think. Free college isn’t going to help when people use it for liberal arts degrees. We will just have more college grads that are bitter about their lack of career prospects after college.
Also, the new economy isn’t creating jobs at the same rate. Look at snap chat and what’s app. Most companies with their value employ thousands if not tens of thousands of employees. Snap is under 400 and what’s app was under 100 when acquired for $17B. Most unicorns aren’t employing as many people as prior generation companies at the same valuations. That’s going to concentrate wealth even more.
The app companies hardly employ people. They employ less people than traditional software companies like MSFT and ADBE, and much less than manufacturing companies like Apple and Cisco. App companies leverage the cloud computing platform and plumbing laid by traditional tech and telecom companies.
California has worse inequality than Iowa because we have the high paying jobs and Iowa doesn’t. For whatever the ills of income inequality, it’s still vastly better than uniform poverty.
It’s very difficult problem to crack. I don’t think anyone has a sure fire way to solve it. The recent rapid rise of min wage along the coasts is one possible way, but we will see if it makes any difference.
The upcoming wave of automation will make things 10x worse. What if all trucks drive themselves and we don’t need truck drivers anymore?
Inevitable outcome of the advancement in technology. As technology advances, there would be lesser jobs. If left unstopped, we would end up with only the elite 1% (may be a much smaller %) have jobs, the other 99% (which include I think most of us here) would be out of a job or no need for a job since most products are free. Essentially approaching paradise. But do we have faith and are comfortable on our journey there?
