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Thread: Trump Tax Cut

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    tWebber carpedm9587's Avatar
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    Trump Tax Cut

    Well, it appears that tax payers are about to see past the hype and to the reality of the impact of Trump's tax cuts. This is the first round of returns since the tax cut that are actually impacted by the tax cut. So what are we seeing?

    • Tax returns are trending downwards (by about 8.4%). According to reports, the reduced returns are essentially wiping out the slight increase people saw in their paychecks.
    • Less than 10% of the money corporations saved in taxes went to wages, bonues, or creation of new jobs. Most of the money going to employees went to them as a one-time bonus rather than a wage increase (which is a long-term commitment).
    • Stock buybacks have increased by $934B while employee salaries have increased by $7.1B. The richest 10% own 84% of all stocks.
    • Meanwhile, the tax cut that was supposed to "pay for itself" with booming economy growth is doing nothing of the kind. Instead, we are track for nearly a $1T deficit this year - and this is a good economy, when deficits should be shrinking.


    Economists predicted this. Many of us were solidly against Trump's approach. I suspect that this will become a significant issue in 2020. If the Dems are smart, they will pound on this theme. Popular support for addressing wealth disparity in this country is growing across the board. Unless the Reps wake up to it, I think 2020 is going to be a bad year for them.
    The ultimate weakness of violence is that it is a descending spiral begetting the very thing it seeks to destroy...returning violence for violence multiplies violence, adding deeper darkness to a night already devoid of stars. Darkness cannot drive out darkness; only light can do that. Hate cannot drive out hate; only love can do that. Martin Luther King

    I would unite with anybody to do right and with nobody to do wrong. Frederick Douglas

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    tWebber Tassman's Avatar
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    Quote Originally Posted by carpedm9587 View Post
    Well, it appears that tax payers are about to see past the hype and to the reality of the impact of Trump's tax cuts. This is the first round of returns since the tax cut that are actually impacted by the tax cut. So what are we seeing?

    • Tax returns are trending downwards (by about 8.4%). According to reports, the reduced returns are essentially wiping out the slight increase people saw in their paychecks.
    • Less than 10% of the money corporations saved in taxes went to wages, bonues, or creation of new jobs. Most of the money going to employees went to them as a one-time bonus rather than a wage increase (which is a long-term commitment).
    • Stock buybacks have increased by $934B while employee salaries have increased by $7.1B. The richest 10% own 84% of all stocks.
    • Meanwhile, the tax cut that was supposed to "pay for itself" with booming economy growth is doing nothing of the kind. Instead, we are track for nearly a $1T deficit this year - and this is a good economy, when deficits should be shrinking.


    Economists predicted this. Many of us were solidly against Trump's approach. I suspect that this will become a significant issue in 2020. If the Dems are smart, they will pound on this theme. Popular support for addressing wealth disparity in this country is growing across the board. Unless the Reps wake up to it, I think 2020 is going to be a bad year for them.
    I think we all knew that distribution of Trump tax cuts favoured the wealthiest at the expense of all.

    https://www.bloomberg.com/graphics/2...-consequences/
    “He felt that his whole life was a kind of dream and he sometimes wondered whose it was and whether they were enjoying it.” - Douglas Adams.

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    Troll Magnet Sparko's Avatar
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    You can't go by tax return refunds. That is just overpayment of taxes. I am getting slightly less refund back this year, but my actual tax burden owed is slightly less than last year, and this is after me getting an actual raise this year on top of the Trump tax break.

    I remember the payroll department was getting people to redo their W2 withholding in response to the Trump tax changes. I didn't bother to change anything. The result is that I am getting about $300 less back in my refund this year than last. But my actual taxes owed is slightly lower, even though because of the tax changes, I ended up having to do the standard deduction this year instead of itemized.

    Overall I came out ahead by $1000 - I made $1300 more in my paychecks this year (not including my raise) and lost $300 in refund.

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    tWebber firstfloor's Avatar
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    Since about WW2 the tax burden has progressively shifted from the very wealthy onto the middle and working classes and the wealth gradient has become ever steeper. Capitalism ensures that rare products and services are reserved for the very wealthy who pay a much smaller portion of their income in taxation.
    “I think God, in creating man, somewhat overestimated his ability.” ― Oscar Wilde
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    tWebber carpedm9587's Avatar
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    Quote Originally Posted by Sparko View Post
    You can't go by tax return refunds. That is just overpayment of taxes. I am getting slightly less refund back this year, but my actual tax burden owed is slightly less than last year, and this is after me getting an actual raise this year on top of the Trump tax break.
    Concerning the underlined section - this is true for any given tax return. It is not true when looking across the board at all of them. A trend-line to smaller returns is telling, unless there is cause to think that many people changed such things withholding data, etc. When the one thing that changed was the tax cuts, it is the prime candidate for the reduced returns.

    Quote Originally Posted by Sparko View Post
    I remember the payroll department was getting people to redo their W2 withholding in response to the Trump tax changes. I didn't bother to change anything. The result is that I am getting about $300 less back in my refund this year than last. But my actual taxes owed is slightly lower, even though because of the tax changes, I ended up having to do the standard deduction this year instead of itemized.

    Overall I came out ahead by $1000 - I made $1300 more in my paychecks this year (not including my raise) and lost $300 in refund.
    You are probably in the group that saw an average 1.2% increase in your income due to the tax cut. That would put your salary somewhere around $100K. The poorest saw a net gain of 0.04% and the wealthiest a gain of 2.9%. So someone making $1M per year walked away with a cool $29K increase. And someone making $20K saw $80. Yes, the rich should see a greater return with a tax cut - but not as a percentage.

    And of course, those are averages. The tax cut benefited people in red states more than most blue states because of the way it was structured. My guess is you live in a red (or purple) state if you are seeing these increases.

    So much for "the wealthy won't benefit from this tax cut." BTW, you should take a look at that analysis (link above). Most of what was promised in these tax cuts has actually not happened.
    The ultimate weakness of violence is that it is a descending spiral begetting the very thing it seeks to destroy...returning violence for violence multiplies violence, adding deeper darkness to a night already devoid of stars. Darkness cannot drive out darkness; only light can do that. Hate cannot drive out hate; only love can do that. Martin Luther King

    I would unite with anybody to do right and with nobody to do wrong. Frederick Douglas

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    Troll Magnet Sparko's Avatar
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    Quote Originally Posted by carpedm9587 View Post
    Concerning the underlined section - this is true for any given tax return. It is not true when looking across the board at all of them. A trend-line to smaller returns is telling, unless there is cause to think that many people changed such things withholding data, etc. When the one thing that changed was the tax cuts, it is the prime candidate for the reduced returns.



    You are probably in the group that saw an average 1.2% increase in your income due to the tax cut. That would put your salary somewhere around $100K. The poorest saw a net gain of 0.04% and the wealthiest a gain of 2.9%. So someone making $1M per year walked away with a cool $29K increase. And someone making $20K saw $80. Yes, the rich should see a greater return with a tax cut - but not as a percentage.

    And of course, those are averages. The tax cut benefited people in red states more than most blue states because of the way it was structured. My guess is you live in a red (or purple) state if you are seeing these increases.

    So much for "the wealthy won't benefit from this tax cut." BTW, you should take a look at that analysis (link above). Most of what was promised in these tax cuts has actually not happened.
    I don't make anything close to $100K.

    But like I said, everyone WAS changing their withholding. In my company they were trying to get everyone to redo their withholding W2s. I am sure that happened everywhere. I didn't. Maybe they all miscalculated the needed withholdings and everyone who did change their withholding got screwed and that is why they ended up owing or getting a much smaller return.

    Again, the return is only what people have overpaid. The only important number is how much more or less their overall tax burden was after deductions compared to last year. If it was less and they still ended up with a smaller return or owed money, then they in fact, paid less taxes than they did last year. If not, then they didn't. There are a lot of factors involved. Did they get a raise? Did they withhold too little? I file single, so maybe those with family withholding numbers were calculated wrong?

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    God, family, chicken! Bill the Cat's Avatar
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    Quote Originally Posted by Tassman View Post
    I think we all knew that distribution of Trump tax cuts favoured the wealthiest at the expense of all.

    https://www.bloomberg.com/graphics/2...-consequences/
    Well, I am in the top 4% now and I have to pay almost 2K this year because I lost out on my kids' college tuition exemption and I capped out on my own student loan exemption. So, no. The tax cuts did NOT favor the wealthy. Because I got a substantial raise, I LOST OUT on several deductions.


    Without a clear-cut definition of sin, morality becomes a mere argument over the best way to train animals --- Manya the Holy Szin --- The Quintara Marathon ---

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    tWebber carpedm9587's Avatar
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    Quote Originally Posted by Sparko View Post
    I don't make anything close to $100K.
    Then you are probably looking at the raw increase in your paycheck and not factoring in the various deductions that you lost. I suspect your return will shrink, offsetting that increase by some amount. But 1.2% is an average, and it is smaller in blue state and larger in red states, so...there is variation. As we've discussed before, personal experience is one data point - it does not a trend make.

    Quote Originally Posted by Sparko View Post
    But like I said, everyone WAS changing their withholding. In my company they were trying to get everyone to redo their withholding W2s. I am sure that happened everywhere. I didn't. Maybe they all miscalculated the needed withholdings and everyone who did change their withholding got screwed and that is why they ended up owing or getting a much smaller return.
    Maybe - but you are suggesting that the trend to reducing the size of the return is due to changes in taxpayer behavior when there is a more likely common cause: the tax cut itself. What appears to be happening is that people got a nice surprise of a slightly bigger paycheck, and they're discovering at the end that a significant amount of that is being offset by a smaller return.

    Quote Originally Posted by Sparko View Post
    Again, the return is only what people have overpaid. The only important number is how much more or less their overall tax burden was after deductions compared to last year. If it was less and they still ended up with a smaller return or owed money, then they in fact, paid less taxes than they did last year. If not, then they didn't. There are a lot of factors involved. Did they get a raise? Did they withhold too little? I file single, so maybe those with family withholding numbers were calculated wrong?
    And the numbers say they paid less, for now. The lowest paid and average of 0.4% less. The richest paid an average of 2.9% less. The tax cuts for the lowest and middle classes expire. Most of the tax cut for the richest is permanent. Of course - future congresses can change that - but that is how the current tax law was written.
    The ultimate weakness of violence is that it is a descending spiral begetting the very thing it seeks to destroy...returning violence for violence multiplies violence, adding deeper darkness to a night already devoid of stars. Darkness cannot drive out darkness; only light can do that. Hate cannot drive out hate; only love can do that. Martin Luther King

    I would unite with anybody to do right and with nobody to do wrong. Frederick Douglas

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    tWebber carpedm9587's Avatar
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    Quote Originally Posted by Bill the Cat View Post
    Well, I am in the top 4% now and I have to pay almost 2K this year because I lost out on my kids' college tuition exemption and I capped out on my own student loan exemption. So, no. The tax cuts did NOT favor the wealthy. Because I got a substantial raise, I LOST OUT on several deductions.
    Correction Bill - the tax cuts did not favor YOU. That does not mean they did not favor the wealthy. The numbers belie that claim. The pass-through changes by themselves will do a significant amount to benefit the wealthy, as will the reduction in corporate taxes. Numerically, over 70% of that tax savings is going directly to the wealthiest people.

    The tax cut did exactly what the economists predicted: it gave the economy a "shot of nitrous." As with a car, nitrous only lasts so long - it's a temporary boost. When the nitrous is gone, the engine goes back to it's normal performance. And the "boost" was not that substantial. We have not seen sustained GDP growth at or above 3%. Indeed, four of the top 5 quarters of GDP growth in the last 10 years happened under the Obama administration. And, if I may say, any moron can boost the economy by pumping $1T into it - which is essentially what the deficit represents. Bush and Obama did that in the midst of the worst recession since the great depression. Trump has no such excuse. The tax cut did NOT pay for itself, is not going to pay for itself, and we have rising deficits in a comparatively healthy economy.

    It's a mess. Yes, we have low unemployment (about one point below where they were when Obama left), and decent GDP growth (about at the same average as Obama's second term), and a rising stock market (at about the same rate as the Obama years). So, what we have is Trump inheriting a decent economy, juicing it with a $1T deficit, and leaving us deeper in debt as a nation and with an uncertain economic future.
    The ultimate weakness of violence is that it is a descending spiral begetting the very thing it seeks to destroy...returning violence for violence multiplies violence, adding deeper darkness to a night already devoid of stars. Darkness cannot drive out darkness; only light can do that. Hate cannot drive out hate; only love can do that. Martin Luther King

    I would unite with anybody to do right and with nobody to do wrong. Frederick Douglas

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    God, family, chicken! Bill the Cat's Avatar
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    Quote Originally Posted by carpedm9587 View Post
    Correction Bill - the tax cuts did not favor YOU. That does not mean they did not favor the wealthy. The numbers belie that claim. The pass-through changes by themselves will do a significant amount to benefit the wealthy, as will the reduction in corporate taxes. Numerically, over 70% of that tax savings is going directly to the wealthiest people.

    The tax cut did exactly what the economists predicted: it gave the economy a "shot of nitrous." As with a car, nitrous only lasts so long - it's a temporary boost. When the nitrous is gone, the engine goes back to it's normal performance. And the "boost" was not that substantial. We have not seen sustained GDP growth at or above 3%. Indeed, four of the top 5 quarters of GDP growth in the last 10 years happened under the Obama administration. And, if I may say, any moron can boost the economy by pumping $1T into it - which is essentially what the deficit represents. Bush and Obama did that in the midst of the worst recession since the great depression. Trump has no such excuse. The tax cut did NOT pay for itself, is not going to pay for itself, and we have rising deficits in a comparatively healthy economy.

    It's a mess. Yes, we have low unemployment (about one point below where they were when Obama left), and decent GDP growth (about at the same average as Obama's second term), and a rising stock market (at about the same rate as the Obama years). So, what we have is Trump inheriting a decent economy, juicing it with a $1T deficit, and leaving us deeper in debt as a nation and with an uncertain economic future.
    All I know is that there are some mighty pissed off people, and I am one of them. I'm not a tax professional. I'm just a guy who busted his hump for 30 plus years to finally make it where I am, while accruing quite a bit of debt trying to actually live life instead of just planning for it...


    Without a clear-cut definition of sin, morality becomes a mere argument over the best way to train animals --- Manya the Holy Szin --- The Quintara Marathon ---

    I may not be as old as dirt, but me and dirt are starting to have an awful lot in common --- Stephen R. Donaldson ---

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