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House Just Passes Tax Overhaul With All Republican Votes: Impact On You

edited November 2017 in Off-Topic
FYI: The House of Representatives passed its version of a tax overhaul Thursday, advancing a key Republican priority. The bill, called the Tax Cuts and Jobs Act, would cut the corporate rate to 20%; set up four tax brackets; and switch the U.S. to a so-called territorial tax system. House passage is just one step, however. The Senate Finance Committee is working on a separate measure that differs in key respects, notably by repealing Obamacare's individual insurance mandate. The House and Senate must agree on a single measure before sending it to President Donald Trump. The House bill passed 227 to 205.

Impact: Winners & Losers:


  • edited November 2017
    Alright!!!! A 7% tax break!!!!!!!!!!! (per the market watch chart).

    Oh, wait... that's for people making a million a year or more. Darn it, looks like it "trickled down" to me at a little over 1%. Hmm, I'm wondering, is that fair or should I just be happy with the crumbs?
  • msf
    edited November 2017
    MikeM said:

    Alright!!!! A 7% tax break!!!!!!!!!!! (per the market watch chart).

    Oh, wait... that's for people making a million a year or more. Darn it, looks like it "trickled down" to me at a little over 1%. Hmm, I'm wondering, is that fair or should I just be happy with the crumbs?

    But, but, ... you don't understand. They pay so much more in taxes they deserve a bigger cut in rates. Maybe on a percentage basis, it's not so unfair after all.

    Using the Joint Committee's (Nov. 3) figures for 2021 (as done elsewhere in the article), the average household's rates would drop from 14.7% to 13.6%. You might look at that and see a 1% drop. I might look at it the same way.

    But the House looks at it and says: 1.1%/14.7% = 7.4% reduction in the tax rate (not the amount of taxes paid). This is how the game is played.

    Likewise, they see a drop for high earners from 32.4% to 30.7% (quoted in article). That might look like a 1.7% drop to you and me (50% more than we're getting), but in "reality" it's 1.7%/32.4% = 5.2%. See? You and I are even coming out "ahead", with our 7.4% drop in our tax bracket.

    Never mind that in 2027, under this bill our taxes will drop just 0.5%, from 14.5% to 14.0%. That's a 3.4% reduction in rates. Their rates will drop from 1.5% from 32.1% to 30.6%. That's 4.7%.

    Now we're cookin'. That gives us ten years to boost our incomes up to $1M, so that we too can get that bigger piece of the pie. And with companies using their tax breaks to pour all that money into wages, we're on our way.

  • I am a bit unsettled by what appears to be sarcasm, if not outright ridicule in the comments of some posters here. There is no place for such commentary on a site dedicated to mutual fund investing!!!


  • Just kidding!
  • Once AGAIN: Welcome to the Dystopian Oligarchy. Enjoy your stay. AAAaaarrrggghhhhh.
  • Beginning of the end...
    I think our children are going to revolt.
  • msf
    edited November 2017
    Ted, did I misquote any figures or fail to cite their sources? Was my arithmetic in error? I offered multiple perspectives, including percentage of income saved and percentage of taxes reduced.

    Regarding the latter: Is it not the case that if everyone's taxes are cut by half, those paying 39.6% will see their taxes drop by about 20%, while those in the middle class paying 25% will see around a 13% drop? Is that an unfair representation of the argument that those who pay the most should get the biggest cuts?

    Have I misrepresented "Trump's Top Economist Say[ing] Corporate Tax Cuts Will Raise Worker's Wages"? (Okay, maybe Trump isn't promising to make us all millionaires, just wealthier laborers through corporate tax breaks.)

    Didn't the administration say that a middle class family could use tax savings of $1,000 to go out and buy a car? Me, I'll go out and buy more funds.

    If some of that looks ridiculous, well whom are you going to believe, the White House and Congress or your lying eyes?

  • @msf, whom are you responding to ??

    @VF, agree about our children and their responses
  • This can't possibly pass. Can it? Can they really raise taxes on the middle class to cut taxes on the rich? If so, we're not a democracy any more.
  • expatsp...this bill is a compendium of conservative tax items which have been on their wish lists for decades. I'm surprised that a repeal of Medicare and Social Security aren't included, but the reality is that both will get hit in future years as the Deficit Hawks wake up after their short slumber.

    Unfortunately, I do think it can pass. I am holding out hope that a combination of McCain, Collins and Murkowski put the brakes on within the Senate.

    If it passes, my taxes should increase by about $6K. My total out of pocket items will increase 10X that when you fold in the sabotage of the healthcare market.
  • To me the worst thing for our society could be the impact on higher education and society from the grad student tax . Here is an argument against it which does not even point out that this tax collects all of $5.4 billion over 10 years
  • @jerry An uneducated populace is a pliable one.
  • @msf, whom are you responding to ??

    "Ted, did I ...?"

    I juxtaposed multiple perspectives of the House bill, and in doing so, illustrated how ridiculous some of those perspectives sound. Ted's right about that.

    Gay Cohn hyped the 1% reduction in taxes that some people might get by saying that this amounts to $1K for a $100K family, and look at how valuable that $1K is. He didn't say that this 1% will shrink to 1/2% (while the break on million dollar incomes will remain about 1.5%).

    Also, by representing this as typical of American households, he failed to note that such a household income is more typical in higher income, higher tax states where the elimination of SALT deductions may overwhelm that small tax rate reduction.

    There's more to figures than averages.

    How to garner support for corporate tax cuts? A traditional argument is that since we're all investors (through 401k plans, even though only 3/8 of workers participate in these plans) , "everyone" benefits.

    The argument has shifted to speculating that if companies have more cash (due to reduced taxes), they'll pay higher wages. This fails to address the fact that companies are already sitting on piles of cash.

    One doesn't have to ascribe this to greed. Possibly some companies simply aren't well run, or possibly they're waiting for "the next big thing" - both are discussed in this NYTimes article, "Why Are Corporations Hording Trillions". Regardless, the fact is that companies already have cash they could use to pay higher wages if they were going to.

    I've said that there are some good things in the bill. I heard Paul Krugman say the same thing - he specifically praised the new tax on large college endowments, adding words to the effect that "now that he's no longer at one of those universities."

    Overall though, one looks at the bill and the arguments supporting it, and one has to laugh or cry. In my post, I chose to laugh.
  • @jerry - this is just the latest and one of the largest assaults on the funding of education. The taxing of graduate students began in the 70s when TAs and RAs were first taxed on their paychecks. Schools came up with a workaround by saying that the pay was for work done to satisfy degree requirements.

    It's not just graduate programs. Nothing is too petty to be ignored. The bill eliminates the $250 deduction that K-12 teachers can take if they spend their own money for school supplies.
  • Which industries would benefit or loose the most if passed?
  • edited November 2017
    See first item here, Hatch repping the poor, he claims:

    This is astonishing, looks impossible, does not include HC premium increases, I think:
  • Did the Senate drop their bill in favor of forwarding the House's bill?
  • No, they have yet to vote on their version; after vote, reconciliation (if possible) with House version.
  • Thanks @Old_Joe , it was beginning to sound like they were advancing the same bill the House built.
  • @Anna- There are a lot of similarities, but also some major differences. In some ways the Senate bill is even harsher than the House version. Would have thought that it would be the other way around.
  • @Old_Joe Who knows, it might be some sort of strategy. People get scared of one bill and are relieved when the other wins the most points, forgetting they didn't like either to begin with. I've never been good at politics and may just miss the point.
  • "I've never been good at politics"

    @Anna- Most likely because you're too honest for that occupation.
  • @Ted - apologies. OJ has got your rhythm down a little too pat.

    Ignoring the political issues (hard to do here), there's still plenty for investors to focus on.

    Do you accelerate contributions this year since (with the higher std deduction and loss of medical/SALT/other deductions) you may not be itemizing next year?

    Should you hurry to do that elective surgery this year, when you could take a deduction for it, or take more time to consider health and other impacts of a rush job?

    If you're self-employed, do you put off billing for late year services until next year, thus deferring income into 2018 when the tax rates may be lower?

    Should you do a Roth conversion this year (when it may be better because the IRA is worth less) or next year (when it may be better if tax rates drop)?
  • I know NOTHING!!
  • OJ as I have been told many times myself there is no reason to state the obvious.
  • TedTed
    edited November 2017
    @Old_Joe "I am a bit unsettled by what appears to be sarcasm, if not outright ridicule in the comments of some posters here. There is no place for such commentary on a site dedicated to mutual fund investing!!!" Don't ever again put my name on something I never wrote signing my name to and making it appear I posted it.
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