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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

  • #2
    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.

    Comment


    • #3
      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.

      Comment


      • #4
        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
        “And if there were a God, I think it very unlikely that He would have such an uneasy vanity as to be offended by those who doubt His existence” ― Bertrand Russell
        “not all there” - you know who you are

        Comment


        • #5
          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.

          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

          Comment


          • #6
            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?

            Comment


            • #7
              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.
              That's what
              - She

              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

              Comment


              • #8
                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.

                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.

                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

                Comment


                • #9
                  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

                  Comment


                  • #10
                    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...
                    That's what
                    - She

                    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

                    Comment


                    • #11
                      Originally posted by Bill the Cat View Post
                      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...
                      That's a tough spot to be in, so I can understand your dissatisfaction. If you are in the top 4%, however, you are a statistical rarity. It might be related to the debt. Same to assume that you don't have a lot of investments? It was primarily through owning a business or investments that the tax cut benefited the wealthy. If you don't have either, that might account for why you were hit instead of gaining.
                      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

                      Comment


                      • #12
                        Originally posted by carpedm9587 View Post
                        That's a tough spot to be in, so I can understand your dissatisfaction. If you are in the top 4%, however, you are a statistical rarity.
                        'Tis the life of an IT guy.

                        It might be related to the debt.
                        Most definitely. It's rather difficult to be under such debt that accumulated simply trying to better myself and make sure my kids got a degree.

                        Safe to assume that you don't have a lot of investments?
                        Yeah, investments were back seat to things like rent/mortgage, car repairs, and a few times, things as simple as food.

                        It was primarily through owning a business or investments that the tax cut benefited the wealthy. If you don't have either, that might account for why you were hit instead of gaining.
                        Most definitely. Losing the tuition and student loan interest exemptions because I got a raise definitely hurt, although I consider THOSE investments.
                        That's what
                        - She

                        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

                        Comment


                        • #13
                          Originally posted by Bill the Cat View Post
                          'Tis the life of an IT guy.
                          Cool. You're (partly) in my field. I teach the telecom sales people that sell to you guys!

                          Originally posted by Bill the Cat View Post
                          Most definitely. It's rather difficult to be under such debt that accumulated simply trying to better myself and make sure my kids got a degree.

                          Yeah, investments were back seat to things like rent/mortgage, car repairs, and a few times, things as simple as food.
                          OK - so color me confused. How can you be in the top 4% and be struggling to met these needs and have no savings and significant debt? It doesn't sound like you're getting particularly good financial advice.

                          Originally posted by Bill the Cat View Post
                          Most definitely. Losing the tuition and student loan interest exemptions because I got a raise definitely hurt, although I consider THOSE investments.
                          Me too. When my wife and I had our boys, the very week they were born we budgeted $40 a week to go into the "school" fund. Every 3 months the accumulated $ would go into an investment vehicle. We also socked away all the gifts the boys got until they were old enough to have an "allowance" in a separate fund. When they were old enough to have an allowance, we required them to "budget" their allowance into the "four Ss: savings, school, spend, and share (charity). The "school" (50% of their allowance or any gift) went into that separate fund. By the time the boys were 18, our pot for college was at around $85K and their pot was around $15K.

                          The rule for college is simple. They have to pay for their college out of "their pot." However, at the end of the semester they can bring me their report card, and I will reimburse them 100% for every A, 75% for every B, and 50% for every C - nothing for D or F. So if they get good grades, they finish college with little/no debt. Indeed, if they get straight As, at the end of college they get their initial investment back and walk away with their "pot." If they get lower grades, the pot will be less or gone. If they run out of money...they'll need to figure it out.

                          So far - so good!
                          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

                          Comment


                          • #14
                            Originally posted by carpedm9587 View Post
                            Cool. You're (partly) in my field. I teach the telecom sales people that sell to you guys!
                            Cool!


                            OK - so color me confused. How can you be in the top 4% and be struggling to met these needs and have no savings and significant debt? It doesn't sound like you're getting particularly good financial advice.
                            For years, I was struggling in helpdesk jobs. I actually got told once by an interviewer for a security job that I didn't meet their demographics needs. I've been a contractor for years, had companies I worked for just up and close, lost jobs on an hour's notice because contracts changed hands, and been generally underpaid as a result. I FINALLY got someone to take a chance on me, and I received a $50K raise to put us where we are now, but only after years and years of crippling debt and just plain bad timing. I can't tell you how many times I have moved to a contract where they were transitioning people to full time slots, only for something to happen and the company enacts a hiring freeze. If I had a dime for every time someone asked why I wasn't full time, I'd be Bill Gates. Life has not been kind to me and my family unfortunately, but we have made the most of it. We've been out of the country on vacation a few times, because we would rather work to live than live to work... you kind of get used to it...


                            Me too. When my wife and I had our boys, the very week they were born we budgeted $40 a week to go into the "school" fund. Every 3 months the accumulated $ would go into an investment vehicle. We also socked away all the gifts the boys got until they were old enough to have an "allowance" in a separate fund. When they were old enough to have an allowance, we required them to "budget" their allowance into the "four Ss: savings, school, spend, and share (charity). The "school" (50% of their allowance or any gift)) went into that separate fund. By the time the boys were 18, our pot for college was at around $85K and their pot was around $15K.

                            The rule for college is simple. They have to pay for their college out of "their pot." However, at the end of the semester they can bring me their report card, and I will reimburse them 100% for every A, 75% for every B, and 50% for every C - nothing for D or F. So if they get good grades, they finish college with little/no debt. Indeed, if they get straight As, at the end of college they get their initial investment back and walk away with their "pot." If they get lower grades, the pot will be less or gone. If they run out of money...they'll need to figure it out.

                            So far - so good!
                            My wife's parents have put away about $25K for each one of them for school, but because the girls weren't straight A students, they didn't qualify for very many scholarships. So, the $25K went pretty fast for the girls. The boy starts in August, but he's eligible for scholarships and grants because he has autism and is in NHS and the other honor societies. Hopefully it won't get too much worse with him.
                            That's what
                            - She

                            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

                            Comment


                            • #15
                              Originally posted by Bill the Cat View Post
                              Cool!

                              For years, I was struggling in helpdesk jobs. I actually got told once by an interviewer for a security job that I didn't meet their demographics needs. I've been a contractor for years, had companies I worked for just up and close, lost jobs on an hour's notice because contracts changed hands, and been generally underpaid as a result. I FINALLY got someone to take a chance on me, and I received a $50K raise to put us where we are now, but only after years and years of crippling debt and just plain bad timing. I can't tell you how many times I have moved to a contract where they were transitioning people to full time slots, only for something to happen and the company enacts a hiring freeze. If I had a dime for every time someone asked why I wasn't full time, I'd be Bill Gates. Life has not been kind to me and my family unfortunately, but we have made the most of it. We've been out of the country on vacation a few times, because we would rather work to live than live to work... you kind of get used to it...
                              That's a tough road to hoe. I'm curious - do you think any of this experience colors your visceral response to so many of the issues we've discussed?

                              Originally posted by Bill the Cat View Post
                              My wife's parents have put away about $25K for each one of them for school, but because the girls weren't straight A students, they didn't qualify for very many scholarships. So, the $25K went pretty fast for the girls. The boy starts in August, but he's eligible for scholarships and grants because he has autism and is in NHS and the other honor societies. Hopefully it won't get too much worse with him.
                              Kids are the blessing and bane of our existence... Sometimes more the former - sometimes more the latter....
                              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

                              Comment

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