Politics New Tax Plan

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Denny Crane said:
Exactly what I wrote :)
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Facepalm.

You were arguing with your chart for them to take the standard when the itemized was larger and would decrease their taxes more.

Which shows your calculation to be silly.
 
JFizzleRaider said:
Facepalm.

You were arguing with your chart for them to take the standard when the itemized was larger and would decrease their taxes more.

Which shows your calculation to be silly.
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I was not. I posted that someone making $250K has their tax go up. And asked if that level of income is middle class.

The $150K example, including state income tax of 10%:

upload_2017-9-29_10-15-25.png
 
BTW, I didn't fully explain the sales tax idea.

Not only would there be a flat tax (income or sales, preferably sales), there would also be a negative income tax, or flat refund of $4K (or something like that) per person.

$4K for an individual
$8K for a married couple
$12K for a married couple with one child
etc.

In 2017, the government spent $12,485 per capita. The refunds would leave it $8,485 per capita to spend still. Obviously a number of government programs that also write checks to people would be obsolete.

$4K to someone scraping by is BIG money.
$4K to bill gates is chump change.

But it's fair - everyone gets the same.
 
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Denny Crane said:
I was not. I posted that someone making $250K has their tax go up. And asked if that level of income is middle class.

The $150K example, including state income tax of 10%:

View attachment 16367
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Lol. Agi and taxable income arent the same thing. Which again shows your chart is stupid.

Someone with taxable income at 108,000 would not have an effective tax rate at 25%.

Effective tax rate is the average rate someone is taxed at.

You're missing the 10% at 18,500, and 15% from 18,501 through 74,900 etc.

If we are gonna go ahead and say AGI is taxable income, someone with 108,000 would pay like 18,500.

10,452 plus 25% excess of $75,900 income.
$32,000 times 25% is $8,000.

18,500ish.

17% effective tax rate.
 
The point is it depends on what the effective tax rate is, before and after.

Here's your 17.5%


upload_2017-9-29_10-32-1.png
 
I'm using the same kind of assumptions your 2nd link does.

Obviously people have all kinds of other deductions under current law. Schedule C, Schedule A, etc.

I'm overstating the state income tax at 10%, FWIW.
 
Denny Crane said:
I'm using the same kind of assumptions your 2nd link does.

Obviously people have all kinds of other deductions under current law. Schedule C, Schedule A, etc.

I'm overstating the state income tax at 10%, FWIW.
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No you're not. You're assumptions don't even make sense. You're adjusting the effective tax rate willy nilly.

The effective rate on the right would be 17%ish based on the hypothetical brackets you listed.

$75,000 times 12% is $9,000 tax.

Remaining $51,000 times 25% tax is $12,750 tax.

Total tax of $21,750.

Schedule A is the itemized deductions form bro.

And Schedule C would already be included in your AGI.
 
I didn't list any schedule C items, or any other schedule A (like charitable contributions). They obviously affect the tax scenario. The column on the right gets the C income/loss but doesn't get the A ones (other than charity and mortgage interest).

They haven't made the tax bracket cutoffs known. In order for the $150K married couple to pay less in tax, the effective tax rate has to be less.

Your calculations ($75K x ...) are the effective tax calculation for the left column. We don't know the brackets for the right column, but we do know the intent is to lower tax rates and effective tax.

That's what we need to watch for when congress debates the bill and works out the details.
 
Denny Crane said:
I didn't list any schedule C items, or any other schedule A (like charitable contributions). They obviously affect the tax scenario. The column on the right gets the C income/loss but doesn't get the A ones (other than charity and mortgage interest).

They haven't made the tax bracket cutoffs known. In order for the $150K married couple to pay less in tax, the effective tax rate has to be less.

That's what we need to watch for when congress debates the bill and works out the details.
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Since they havent made the tax brackets known, that means you are admitting your charts are useless.

Stop adjusting the effective tax rate willy nilly. Your spreadsheet was off.

It didnt have to list schedule c items. It would have already been included in coming to your AGI bro.

And more schedule a deductions is better for the middle class person today than it would be for whatever is on the right side of your spreadsheet.
 
JFizzleRaider said:
Since they havent made the tax brackets known, that means you are admitting your charts are useless.

Stop adjusting the effective tax rate willy nilly. Your spreadsheet was off.

It didnt have to list schedule c items. It would have already been included in coming to your AGI bro.

And more schedule a deductions is better for the middle class person today than it would be for whatever is on the right side of your spreadsheet.
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How are they useless? They show that the effective tax rate needs to be something like 15% for the $150K married couple to pay lower taxes.

Schedule C matters because the pass through rules will change, too. But they're likely to stay the same, so fine. If they're taxed at 25%, it's a hike.

I already stipulated that the schedule a deductions favor the left column. Bigly.

upload_2017-9-29_10-55-57.png
 
Denny Crane said:
How are they useless? They show that the effective tax rate needs to be something like 15% for the $150K married couple to pay lower taxes.

Schedule C matters because the pass through rules will change, too. But they're likely to stay the same, so fine. If they're taxed at 25%, it's a hike.

I already stipulated that the schedule a deductions favor the left column. Bigly.

View attachment 16372
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Schedule c income is not taxed at a different rate. Neither are s corps or partnerships. They are taxed at the individuals rates. Again. They both would be included in the AGI number so are irrelevant to whatever you're arguing.
You straight up listed the effective tax rate at 15% in your spreadsheet when they would not have been 15% based on the same tax brackets.
 
JFizzleRaider said:
Schedule c income is not taxed at a different rate. Neither are s corps or partnerships. They are taxed at the individuals rates. Again. They both would be included in the AGI number so are irrelevant to whatever you're arguing.
You straight up listed the effective tax rate at 15% in your spreadsheet when they would not have been 15% based on the same tax brackets.
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Trump's tax plan proposes to change the pass through (schedule C income) from LLC and the like to a max of 25% tax rate. It remains to be seen what the final rule is.

I don't see the issue about "same tax brackets" when the proposal is all about new and different ones.
 
JFizzleRaider said:
LOL! So you made up an effective tax rate on your right column to try to get your point accross?

A LLC means nothing. Its not a tax entity. A LLC has to file as a schedule c, s corp, partnership or c corp.

The business tax rates for c corps would change if he lowered corporate tax rates for sure. I have only seen speculation on what he meant by "all businesses"
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The guy in your 2nd link made up his own effective tax rate. I wanted to see what it would take for the new proposed rules to save a similar couple money.

https://www.bloomberg.com/view/articles/2017-09-28/the-trump-tax-reform-s-pass-through-boondoggle

The framework limits the maximum tax rate applied to the business income of small and family-owned businesses conducted as sole proprietorships, partnerships and S corporations to 25%. The framework contemplates that the committees will adopt measures to prevent the recharacterization of personal income into business income to prevent wealthy individuals from avoiding the top personal tax rate.
​
I assume the LLCs are treated the same as S corps.

Again, it remains to be seen what the final rule is. Trump's May proposal was a cap at 15%, which would mean someone paying your calculated 17.5% effective tax rate would be paying 15% on some of it that otherwise would be taxed at 25%.
 
JFizzleRaider said:
I used the tax rates from your graphs to show your spreadsheets were false which are the brackets going around the internet currently.

Huh? A LLC can be any of the business entities. Today, a LLC is not treated the same as a s corp unless it is a s corp. A LLC basically means nothing in the tax world.

Many small businesses are taxed at the 10% or 15% rate right now on the individuals return.

It will be interesting to see what ends up happening.

I think it's fools gold though.
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By "my" chart, the taxes do go up about $2K for the $150K family, though the effective tax rate goes down by < 1%.

Again, the ultimate brackets aren't known.

These are what Trump wants:

upload_2017-9-29_11-43-58.png

https://assets.donaldjtrump.com/trump-tax-reform.pdf

The brackets may end up closer to those.
 
My use of LLC fits this definition:

http://www.investopedia.com/terms/l/llc.asp

What is a 'Limited Liability Company - LLC'
A limited liability company (LLC) is a corporate structure whereby the members of the company cannot be held personally liable for the company's debts or liabilities. Limited liability companies are essentially hybrid entities that combine the characteristics of a corporation and a partnership or sole proprietorship. While the limited liability feature is similar to that of a corporation, the availability of flow-through taxation to the members of an LLC is a feature of partnerships.

BREAKING DOWN 'Limited Liability Company - LLC'
Although LLCs have some attractive features, they also have a number of disadvantages, especially in relation to the structure of a corporation. A LLC has to be dissolved upon the death or bankruptcy of a member, unlike a corporation, which can exist in perpetuity. Also, a LLC may not be a suitable option when the objective of the founder is to eventually become a publicly listed company.

Protections of a Corporation
The primary reason an LLC is selected as an ownership structure is to limit the principals' personal liability. An LLC is often thought of as a blend of a partnership, which is a simple business formation of two or more owners under an agreement, and a corporation which is afforded certain liability protections. An LLC is a more formal partnership arrangement requiring articles of organization to be filed with the state. An LLC is much easier to set up than a corporation, and it provides more flexibility along with the protection. However, creditors may be able to pierce the corporate veil of an LLC in cases of fraud or when legal and reporting requirements haven’t been met.

Flexibility of a Partnership
The primary difference between a partnership and an LLC is that an LLC is designed to separate the business assets of the company from the personal assets of the owner, which has the effect of insulating the owners from the LLC's debts and liabilities. An LLC functions similar to a partnership in that the profits of the company pass through to owners’ tax return. Losses can be used to offset other income, but only up to the amount invested. The LLC only files an informational tax return.

In terms of the sale or transfer of the business, a business continuation agreement is the only way to ensure the smooth transfer of interests when one of the owners leaves or dies. Absent a business continuation agreement, an LLC must be dissolved in the event of a bankruptcy or the death of a partner.
 
JFizzleRaider said:
How do we know that? 12%, 25% and 35% is what everyone is reporting.

I agree we don't know for sure, but based on your charts and what is being discussed the middle class in most situations (almost all when they own a house, because with no SALT or property tax deductions, they wouldn't be able to itemize) would be fucked.

If he makes the 12% rate go up substially higher than a taxable income of 75k, we can hash this back out.

Don't see that happening though.

If the poor and rich both end up paying less.....who gets screwed?
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What these people are reporting aren't in the written plan.
 
More from the above link:

The majority of Americans do not itemize tax deductions.
According to the most recent IRS analysis of individual tax returns, 70.4% of taxpayers claimed the standard deduction on their tax return.

Americans who do claim the standard deduction will be able to reduce their taxable income further under Trump's tax plan, in turn reducing their tax bill. Single filers would deduct $12,000, slightly higher than the current combined $10,400 deduction, which includes the standard deduction and one personal exemption. Joint filers would deduct $24,000, up from the current $20,800, which includes the standard deduction and two personal exemptions.

But, Trump's tax plan would do away with many deductions, which could increase federal taxes for Americans who itemize their deductions. Among those who do, the average claimed for 2014 was $27,447.
 
JFizzleRaider said:
Trump said it himself, he wants three brackets of 12%, 25% and 35%. That is what is in the Republican framework of tax reform.
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12% up to $100,000,000? Yeah, I'm being extreme to make the point.

That's what's not specified in Trump's current proposal.

It does not specify the income ranges for the proposed tax brackets.

I've written that several times now, and all the reports you're reading or citing can't possibly know yet.
 
JFizzleRaider said:
I've also said that. And i've agreed with that point. When that gets released i will be more than willing to discuss how it will affect the middle class.
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Hence my spreadsheet trying to figure out the EFFECTIVE tax rate required to not raise taxes on the middle class. It suggests some range of values for the income ranges for the brackets that work.
 
Denny Crane said:
Hence my spreadsheet trying to figure out the EFFECTIVE tax rate required to not raise taxes on the middle class. It suggests some range of values for the income ranges for the brackets that work.
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And i used your cute little graph to proof based on those numbers, middle class people who itemize end up paying more.
 
JFizzleRaider said:
And i used your cute little graph to proof based on those numbers, middle class people who itemize end up paying more.
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Based upon income ranges that nobody knows.

Hardly a "proof." More like a contrived case, as I admit my own is as well.
 
Denny Crane said:
Based upon income ranges that nobody knows.

Hardly a "proof." More like a contrived case, as I admit my own is as well.
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You were the one pushing it. I showed it was false. What more do you want?

When the actual tax brackets come out, if they are the same as your graph, it's been proven.

If it's different, i would glady have this discussion with you again. And gladly would admit it wouldn't hurt middle class if it doesn't.
 
I think I showed your link in post 2 is unproven.

And that's that.
 
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