State and Local Tax Deduction

[LesGovt]

If you are married with ONE kid, the new "doubled" standard deduction is a effective tax INCREASE over current law that allows a std. deduction plus exemptions, and overall the "doubled" standard deduction and eliminating exemptions is a net $50 billion per year tax INCREASE on individuals as a group. Somehow Republican propagandists have convinced the public this "doubled" thing is good - that's just false.

Okay, give me the stats by person:

Current Proposed
Dad
Mom
Child

IMO, it's pretty stupid and irresponsible to be handing out big tax cuts when we're looking at $10 trillion in deficits over the next 10 years, but we know the GOP doesn't care about deficits when republicans are in power. They only care about deficits when Democrats control Congress and/or the WH.

We don't know any such thing. We know both parties have been reckless with their spending. I want them to balance the budget in the next ten years and the sooner the better.

 

[Media_Truth]

As part of tax reform, do you support ending state and local tax deductions on your Federal taxes? Why or why not?

I should have had the qualifier in the poll question, but I missed it. Rats!

No, this is just another way of hurting the Middle Class. A Tax Cut gives the Middle Class very little, but rewards those earning millions of dollars substantially. Everything the Middle Class gets back with the tax cut, will be nullified by removing this deduction.

 

[LesGovt]

Because most of the benefits of corporate tax breaks flow to investors/shareholders and they are mostly wealthy.

There are many people wondering how their 401k makes them wealthy.

Well, don't worry, thank goodness that the already rich earning record shares of income and owning record shares of wealth will in fact get generous tax cuts every year! It's only fair - big donors paid good money to buy a GOP Congress and WH and they deserve the big tax cuts they were promised!

LOL!

I'll have to figure out what that amendment might be. Not sure at this point.
Lots of individuals run businesses as pass through entities and they need to plan, too. And I have nothing against businesses. I've said I'm in favor of bringing corporate tax rates down. I just think the tax plans are bad policy overall.
As to the shoe store not donating - so what? The Fortune 500 and other types have donated many $billions over the years to GOP causes, and to Democrats for that matter. Best Congress money can buy!

Thank you for the honesty in this one.

First of all the "problem" isn't solved with ending the sunset. The "problem" is $300 billion per year tax cuts in 2025 on top of $1.2 trillion projected deficits under current law. So in 2025 we have a $1.5 Trillion deficit problem that we don't know how to solve. The GOP solution is, to this point, "spending cuts to be named later" which is IMO chicken crap legislating, but YMMV.. :roll:

Don't forget about the 4 or 5% growth in economy. :shock:

 

[LesGovt]

No, this is just another way of hurting the Middle Class. A Tax Cut gives the Middle Class very little, but rewards those earning millions of dollars substantially. Everything the Middle Class gets back with the tax cut, will be nullified by removing this deduction.

Prove it. Compare various incomes for two people (one in NY and one in Texas). Have them have identical circumstances and show the two at $20k increments so that we can see the results. You can use either the House or Senate plan. I await your numbers.

 

[JasperL]

Okay, give me the stats by person:

Current Proposed
Dad
Mom
Child

Current Law:

Standard Deduction Married Filing Joint - $12,700
Exemptions - $4,050 per person X 3 = $12,150
Total = $24,850

Proposed:
Exemptions - $0.00 per person.
One standard deduction for all married couples filing joint returns, with or without children = $24,000

We don't know any such thing. We know both parties have been reckless with their spending. I want them to balance the budget in the next ten years and the sooner the better.

LMAO. In the face of $10 trillion in projected deficits, they're proposing more deficits of $2 trillion. That's going the wrong way to balancing the budget. Where are the proposed spending cuts so we know who is going to bear the brunt of them? Oh yeah, we'll learn those AFTER their rich donors get their permanent tax cuts!

I'm kind of looking forward to that part. The political ads write themselves. In the House they eliminated the estate tax so Buffy and Chad III inherit more from mommy and daddy, and to pay for that they're going to have to make huge cuts to Medicare, SS, Medicaid. Corporations can deduct the expenses of closing a plant in Ohio and moving it to Vietnam, but if you get transferred and forced to move across 4 states, the money your company pays for that move is now taxable income. If mom gets cancer and spends all her income that year on treatments because she's uninsured, sorry, but there is no medical expense deduction anymore and she'll have to pay tax on the money she withdrew from her 401(k) to pay for those chemo treatments. Same thing if Grandma spends all her SS, and IRA money on nursing home care because she fell and broker her hip - she'll have to pay tax on all of her income. So sorry. The rich needed their tax cuts. Etc...

 

[JasperL]

There are many people wondering how their 401k makes them wealthy.

It's just a fact that the vast majority of stocks are owned by the wealthy. Sure, lots have 401(k) plans but most have very little in those plans and so tax cuts that flow to shareholders just do provide most of those benefits to the wealthy. About 1/3 of the benefits of corporate tax cuts will flow to foreigners who own U.S. stocks.

Don't forget about the 4 or 5% growth in economy. :shock:

Right, forgot about that. Corporations are sitting on $trillions in cash, corporate profits at record highs, stock market doing great, extremely low interest rates. What they need to get them going is MORE cash and profits that break already record highs as a share of GDP.

https://fred.stlouisfed.org/graph/fredgraph.png?g=eQpI

 

[JMR]

You said, "It is my understanding that the standard deduction is being increased. Therefore, taxpayers in lower tax areas will receive a windfall of a higher standard deduction."


I'm not seeing any "windfall" for the poor there. Some will get the benefit of an expanded child credit, but that's not refundable so the poorest won't benefit from that. Bottom line is it's a small tax cut for most people, but about 1% of income after it's all said and done.

I never said it was a windfall for the poor. It is a windfall for those who live in low tax states. My point is that many of those people do not itemize but use the standard deduction...for the simple reason that the standard deduction is greater than what their itemized deduction would be. NOW that standard deduction is even larger, sheltering a bit more of their income from taxes. On the other hand, many of us in higher taxed states used itemized deductions because that was higher than the standard deduction. So losing the state and local tax deductions, the sales tax deductions, the medical expenses deductions, exposes more of our income to taxes. Seems simple enough to me to understand this.

 

[Born Free]

Well, kind of.

I'm not so sure that half a dozen different "simple" options would be any more effective than one semi-complex option.

It would depend on production requirements. If your company is expanding in sales of cars do to offering more options, you need more production. And more production requires more lines and more plants distributed across the country. But if your a no growth company I agree with your semi-complex option.

As for our tax code IMO it's so complex and totally inefficient it's ridiculous. In my days I had at that time one of the big 5 accounting firms in close contact to insure we were not taking advantage of the tax code or getting into an area of taxes that would greatly diminish our efforts. As it is our tax code requires an army of tax lawyers, tax accounts, loss of productive company man hours etc.

 

[Born Free]

Completely unresponsive to my post. What do state taxes have to do with what I posted?

This was your post, what does it have to do with deducting state taxes. NOTHING :doh

Quote Originally Posted by upsideguy View Post
"If its used in a trade or business you can. In fact, you can often get a section 179 deduction and write off the entire car. If you financed it, the reduction in your tax bill may be larger than the total number of payments that first year."

 

[apdst]

No. It's naive to see the move as anything but an attempt to punish blue states.

It'll make folks in those states rethink allowing those high ass taxes to be be passed.

I missvoted. Mesnt to vote "yes"

 

[ALiberalModerate]

No. It's naive to see the move as anything but an attempt to punish blue states.

The vast majority of those blue states already pay far more in taxes than they get back in federal spending. So the welfare queen red states just want more of their money. It is as simple as that.

The whole bull**** argument against the estate tax is that it is supposed double taxation. If Republicans are so concerned about double taxation, then why would they eliminate deducting your state and local taxes from your federal liabilities as in doing so, they are implementing the biggest double taxation in American history.

 

[LesGovt]

Current Law:

Standard Deduction Married Filing Joint - $12,700
Exemptions - $4,050 per person X 3 = $12,150
Total = $24,850

Proposed:
Exemptions - $0.00 per person.
One standard deduction for all married couples filing joint returns, with or without children = $24,000

LMAO. In the face of $10 trillion in projected deficits, they're proposing more deficits of $2 trillion. That's going the wrong way to balancing the budget. Where are the proposed spending cuts so we know who is going to bear the brunt of them? Oh yeah, we'll learn those AFTER their rich donors get their permanent tax cuts!

I'm kind of looking forward to that part. The political ads write themselves. In the House they eliminated the estate tax so Buffy and Chad III inherit more from mommy and daddy, and to pay for that they're going to have to make huge cuts to Medicare, SS, Medicaid. Corporations can deduct the expenses of closing a plant in Ohio and moving it to Vietnam, but if you get transferred and forced to move across 4 states, the money your company pays for that move is now taxable income. If mom gets cancer and spends all her income that year on treatments because she's uninsured, sorry, but there is no medical expense deduction anymore and she'll have to pay tax on the money she withdrew from her 401(k) to pay for those chemo treatments. Same thing if Grandma spends all her SS, and IRA money on nursing home care because she fell and broker her hip - she'll have to pay tax on all of her income. So sorry. The rich needed their tax cuts. Etc...

I knew I should have kept the conversation on my original point. As for the net result on taxes, I will wait to see the final package. As for the rich, I don't worry about them. They most likely have problems of their own that are not assisted by wealth. And, as for the deficit, will you join me in pushing for a closing of the Depts. of Education and Energy?

 

[ALiberalModerate]

Yes. It's naive to see these deductions as anything but a free "gimme" to blue states.

A "gimme" to blue states. Many if not most blue states get already pay far more in federal income taxes than they get back in spending. In contrast, the typical red state gets back in spending more than it's citizens pay in taxes. By double taxing state and local taxes, all that is accomplished is those blue states then get even less of their money back in spending while you get an even bigger geographic wealth transfer from urban blue states to rural red states.

 

[ALiberalModerate]

I knew I should have kept the conversation on my original point. As for the net result on taxes, I will wait to see the final package. As for the rich, I don't worry about them. They most likely have problems of their own that are not assisted by wealth. And, as for the deficit, will you join me in pushing for a closing of the Depts. of Education and Energy?

What does eliminating the Department of Education and Energy accomplish in terms of reducing the deficit? The biggest deficit drivers are SS, Medicare, Medicaid, and Defense spending. Talk about chasing nickels around dollar bills.

 

[LesGovt]

It's just a fact that the vast majority of stocks are owned by the wealthy. Sure, lots have 401(k) plans but most have very little in those plans and so tax cuts that flow to shareholders just do provide most of those benefits to the wealthy. About 1/3 of the benefits of corporate tax cuts will flow to foreigners who own U.S. stocks.

Right, forgot about that. Corporations are sitting on $trillions in cash, corporate profits at record highs, stock market doing great, extremely low interest rates. What they need to get them going is MORE cash and profits that break already record highs as a share of GDP.

https://fred.stlouisfed.org/graph/fredgraph.png?g=eQpI

I am very pleased that corporate profits are going up. That means my IRAs keep going up. They will now the incentive purchase new equipment, expand their businesses. If they don't do it, they will not gain on that part of the tax reform.

 

[LesGovt]

What does eliminating the Department of Education and Energy accomplish in terms of reducing the deficit? The biggest deficit drivers are SS, Medicare, Medicaid, and Defense spending. Talk about chasing nickels around dollar bills.

Are those departments free?

 

[Media_Truth]

Prove it. Compare various incomes for two people (one in NY and one in Texas). Have them have identical circumstances and show the two at $20k increments so that we can see the results. You can use either the House or Senate plan. I await your numbers.

Savings from proposed tax reductions:

Savings from Proposed Tax cuts – Reduction of Top Tier percent from 39.6 to 35%.
Taxable Income, after deductions / Savings
$50,000 / $2300
$100,000 / $4600
$1,000,000 / $46,000
$20,000,000 / $920,000
$50,000,000 / $2,300,000

With above numbers, the $50K income level will probably lose all his $2300, by not getting the State tax deduction. The $50,000,000 income person, assuming his house is worth 4x as much, will lose about $10K for not getting the State tax deduction, which still leaves him with a gain of over $2 MILLION DOLLARS!

 

[ALiberalModerate]

Are those departments free?

No of course not, but its chasing nickels just the same. They represent a tiny fraction of government spending. Its like a guy bitching about his wife buying 5 dollar bath bombs because he thinks they don't have the money for it, but going out and buying a $50,000 dollar bass boat himself.

 

[JasperL]

I knew I should have kept the conversation on my original point. As for the net result on taxes, I will wait to see the final package. As for the rich, I don't worry about them. They most likely have problems of their own that are not assisted by wealth. And, as for the deficit, will you join me in pushing for a closing of the Depts. of Education and Energy?

No. Education funds among other things Pell grants and federal student loans, special education, and more. Don't see why we'd cut funding for education to fund tax cuts.

And most of the Department of Energy is related to our nuclear program, including our nuclear weapons program, and funding for our national research labs. So, no, I don't support defunding our national labs or our nuclear programs.

Futhermore, take those two programs to zero and you've found roughly $1 trillion (Energy about $30B per year, Education about $70B) of the now $12 trillion projected deficits for the next decade. Good job! just $11 trillion more in spending cuts and you've got that budget balanced!

 

[LesGovt]

Savings from proposed tax reductions:

Savings from Proposed Tax cuts – Reduction of Top Tier percent from 39.6 to 35%.
Taxable Income, after deductions / Savings
$50,000 / $2300
$100,000 / $4600
$1,000,000 / $46,000
$20,000,000 / $920,000
$50,000,000 / $2,300,000

With above numbers, the $50K income level will probably lose all his $2300, by not getting the State tax deduction. The $50,000,000 income person, assuming his house is worth 4x as much, will lose about $10K for not getting the State tax deduction, which still leaves him with a gain of over $2 MILLION DOLLARS!

Probably? Probably is not proof.

 

[LesGovt]

No. Education funds among other things Pell grants and federal student loans, special education, and more. Don't see why we'd cut funding for education to fund tax cuts.

And most of the Department of Energy is related to our nuclear program, including our nuclear weapons program, and funding for our national research labs. So, no, I don't support defunding our national labs or our nuclear programs.

Futhermore, take those two programs to zero and you've found roughly $1 trillion (Energy about $30B per year, Education about $70B) of the now $12 trillion projected deficits for the next decade. Good job! just $11 trillion more in spending cuts and you've got that budget balanced!

I was not saying that the two departments would balance the budget, but every dollar counts. Naturally, many, many, many other things would be cut. Will you support a comprehensive plan? You want to cut the military. Fine. Let's bring all troops home, close all bases and reduce the military budget by 2/3s. Would you support that? Let's end Federal health care for everyone. Would you support that? Tell us what you would support,

 

[Media_Truth]

Probably? Probably is not proof.

LOL!!! I provide a detailed analysis (never using the word "probably"), and this is your response. And yet you provide nothing. NADA. ZILCHO!

 

[JasperL]

I was not saying that the two departments would balance the budget, but every dollar counts. Naturally, many, many, many other things would be cut. Will you support a comprehensive plan? You want to cut the military. Fine. Let's bring all troops home, close all bases and reduce the military budget by 2/3s. Would you support that?

1) No I don't support that, and
2) It wouldn't matter if I did because that is not happening. That might get 5 real votes in the Senate.

Let's end Federal health care for everyone. Would you support that? Tell us what you would support,

We can't do that. We've got millions of seniors on Medicare, millions and millions more have paid into Medicare for decades and will expect benefits as promised when they retire. Furthermore, we could end Medicaid, and disability (I assume you want to keep funding the VA for military veterans), but that just moves the problem to states and I see no reason to believe shifting funding to the 50 states will be more efficient than our current hybrid approach.

 

[<alt>doxygen]

Sorry, but again, we differ. Here is what Article I, Section 8 includes:

"To declare War, grant Letters of Marque and Reprisal, and make Rules concerning Captures on Land and Water;
To raise and support Armies, but no Appropriation of Money to that Use shall be for a longer Term than two Years;
To provide and maintain a Navy;
To make Rules for the Government and Regulation of the land and naval Forces;"

I read that they can raise and support armies. Congress can do this. Also, they can provide and maintain a Navy. They can do this too.

As for the cop of the world, both parties of Congress have abdicated their authority. They need to take it back.

Seems I put more weight on this part than you do : ...no Appropriation of Money to that Use shall be for a longer Term than two Years.

We shall agree to disagree once more. Anyway, here's some links you might find interesting.

American Resistance to a Standing Army | Teachinghistory.org
https://history.army.mil/books/AMH-V1/ch05.htm

Good references if nothing else.

 

[Taylor]

A "gimme" to blue states. Many if not most blue states get already pay far more in federal income taxes than they get back in spending.

That's because those states make a far greater share of income.

In contrast, the typical red state gets back in spending more than it's citizens pay in taxes.

Yes, this is called "progressive taxation" - people that make more money pay more taxes and people that make less money receive more value.

By double taxing state and local taxes, all that is accomplished is those blue states then get even less of their money back in spending while you get an even bigger geographic wealth transfer from urban blue states to rural red states.

Yes, noted. You're against "fairness" when it means cancelling a regressive tax scheme that benefits higher income people in states you like.