Saturday, January 6, 2018

How to Get the Most Out of YOUR Tax Break

This is a lot of money.  Odds are you'll get about $60 or less from the republican tax reform legislation.
How much is a trillion dollars?  
The Mountain was asking itself that question.  It's not as simple as you might think.  In the context of the recent republican effort to pay their donors back in the form of a $1.5 Trillion tax cut , I was trying to figure out how much we might get in tax relief.

Experts have said that 85% of this $1.5 trillion (or $1.275 trillion) goes to the richest 1% of Americans.   There are 122 million "tax paying units" in this country.  And I was thinking how nice it would be to divide $1.275 trillion among "regular" Americans.  If our government is going to blow a $1.5 trillion hole in the deficit , wouldn't it be nice if "the forgotten men" of America got the gravy instead of the crumbs?

To understand this impact and what our government is doing, let's start out small.

One thousand thousands equals one Million.  One thousand Millions equals one Billion.  And one thousand Billions equals one Trillion.  A Trillion can also be thought of as a Million Millions.  So if you divide $1.275 trillion evenly among all tax paying units in America, every one of us would be getting a $1 million tax break.  The Mountain says very little work would get done around here if that was going to happen.  But that's not what's going to happen.

Under this plan, President Donald Trump is going to make an estimated $1 Billion (one thousand millions).  So all this republican bluster I've heard about the national debt and deficit is plainly shown for what it is: pure 100% American Bullshit.  We (us, U.S. all of us) are not bailing out big banks this time.  We're being bilked up front.  The debt plane is being crashed again to benefit the very same people who destroyed the world economy under George W. Bush and handed us the bill.

And you know, I'm getting tired of republicans ripping us off at every turn.  According to Gary Dorrien in his book "The Obama Question: A Progressive Perspective," it's the republicans who wipe out the economy over and over again and it's the democrats who get stuck cleaning up the mess.  Read along with Gary for a few paragraphs...

"Reagan led the Republican Party into temptation by persuading it that deficits don't matter because tax cuts pay for themselves, especially at the upper end.  When Reagan took office in 1981, the national debt was $907 billion, approximately 26 percent of gross domestic product.  Eight years later the debt stood at $2.7 trillion, representing 40% of GDP.  In eight years Reagan tripled the country's accumulated debt by cutting the marginal tax rate from 70% to 28% and cutting the top rate on capital gains from 49 to 20% -- social engineering on a staggering scale that fueled a huge inequality surge.  George H.W. Bush, vowing to maintain Reagan's winning approach, let the debt escalate to $3.9 trillion, which scared him enough to break his vow, raise the marginal rate to 35%, demoralize his party and lose a second term."

"The only break in America's post-1980 record of escalating the debt was the Clinton administration.  The national debt crossed the $4 trillion mark during Clinton's first year in office, 1993.  Clinton raised the marginal rate to 39.6%, which republicans warned would destroy the economy.  At the end of Clinton's presidency, the debt was $5,674,000,000 and heading downward as Clinton rang up budget surpluses of $70 billion in 1998, $124 billion in 1999 and $237 billion in 2000.  According to the Congressional Budget Office, had the United States stuck with Clinton's fiscal policy, the cumulative budget surplus would have reached $5.6 trillion by 2011, wiping out the national debt."

"All of that was quickly squandered by George W. Bush's tax cuts and ramped up military expenditures, plus a prescription benefit lacking a pay-for.  Bush's tax cuts blew a $2 trillion hole in the deficit.  He was the first president in American history not to raise taxes to pay for an expensive war.  Official expenses for the two wars that Bush charged exceeded $1 trillion with long term costs that will triple that figure.  He added a $1 trillion Medicare prescription drug benefit without paying for it either, a windfall for the pharmaceutical industry, creating the first entitlement in American history lacking a revenue source.  Then the casino economy that Bush deregulated crashed.  In eight years the Bush administration piled up new debt and new accrued obligations of $10.35 trillion and it doubled the national debt from $5.7 trillion to $11.3 trillion, not counting the $5.4 trillion of debt inherited from the federal takeovers of Fanny Mae and Freddie Mac.  Bush amassed more debt in eight years than America's previous 42 presidents combined, breaking the record of the previous debt champion, Ronald Reagan, and the record keeps growing as three quarters of the debt amassed on Obama's watch is the outgrowth of Bush's unpaid tax cuts, unpaid wars, and unpaid drug benefit, and much of the rest is cleanup for the financial crash."

"Obama inherited a deflating economy teetering on an outright depression, a skyrocketing debt, the structural legacy of thirty years of politically engineered inequality, and two wars.  When he took office in January of 2009 the U.S. economy was losing 741,000 jobs per month and the Congressional Budget Office projected a $1.2 trillion deficit for 2009.  The economy had lost $13 trillion of net worth over the past 18 months and 2.6 million jobs over the past 12 months.  The government had pledged $9 trillion in loans, investments and guarantees to fill the chasm.  And the economy was shrinking by nearly 6% annually.  Had these losses continued the United States would have been in a depression by September.  Instead, by January 2010 the job loss figure had been cut to 20,000 and the economy was growing at nearly 6% annually."

Remember:  THIS time, the tax cut is good for us.  It's not good for Donald Trump.  Take his word for it.

Enjoy your chump change (or should we call it "Trump change"?) because in a couple years your tax bill, Joe Average, is going to go UP while the rich retain their benefits FOREVER. 

So I wanted to get to the bottom of how you can get the biggest bang for your tax cut dollar.  I'm not sure my tax plan is particularly well laid out, but here goes.  

I'd say invest in makeup and disguise items first.  Then look around and see if you can locate someone who owns a politician.  Owning a politician takes disgusting amounts of wealth.  Disguise yourself as that person and go to that person's house and, in a flattering way, ask for an autograph.   While having the person sign your autograph book, gently take him hostage and bind him, gently now, in the closet and wait for his tax return to come.  Use the autograph to forge the check and sign it over to yourself.

Because that's the only way regular people are going to get dick out of this deal.  Because while Donald Trump is getting a billion dollars, you can maybe afford to buy some hot dogs down at Sheetz while you wait for the republicans to come after your Social Security and Medicare when suddenly - Surprise! - there's not enough money left to go around.  Enjoy your lunch.

By Shawn K. Inlow
1.6.18

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Thanks for stopping by, dear reader.  You can comment below, just remember that your comments mean a lot more when you actually sign your name to them.  In the meantime, I'll see you down at Sheetz where you can get two death-dogs with everything for under $1!  Until next time, Enjoy!




 

4 comments:

  1. And to offer a more positive take…

    Here is the best calculator I found. Most people should get more than two Sheetz dogs from the tax cut! It helps to be looking at your most recent returns when you fill this out…
    http://taxplancalculator.com/

    The bill isn’t all bad. In fact, coming from a Republican congress and White House, it’s much more progressive than I would have expected!

    The income tax rate cuts are pretty level and across the board. The doubling of the standard deduction is progressive, expanding the number of tax payers in the 0% income tax bracket. The doubling of the child tax credit is progressive and making more of it refundable is extremely progressive. This increases the number of people in the negative income tax bracket. That’s all good – helps the people who need it most.

    And they paid for it by limiting deductions for the wealthy! Not very Republican! The $10k limit on state and local tax is VERY progressive. And the $750k limit on mortgage deduction is also a progressive change. All of the revenue-raising changes were extremely progressive. Again, not very Republican! Democrats are complaining about the state and local tax change, but I find it hard to believe they’ll get in power and vote to give rich people more deductions! Why are they complaining about this?!? It’s the best part of the bill!

    Sure, it’s not all positive. The Republicans gave us some of what you’d expect from Republicans. Doubling the estate tax exemption from $11M per couple to $22M per couple. (This tax break expires, so let’s hope it is short-lived.) And while both parties wanted to reduce the corporate income tax, they should/could have coupled the corporate rate reduction with an increase in capital gains and dividends. But it’s a start – and there was bipartisan agreement for the corporate rate cut.

    Overall, the bill is “Eh.” But I’m optimistic that when Democrats get power again, they’ll keep the rate cuts for the poor and middle class and they’ll keep the limit on deductions on the rich (though they’re complaining about them now?!?). They’ll keep the corporate rate cut, but probably tweak deductions and capital gains. There’s reason to be optimistic.

    Bush cut rates across the board, and when Democrats came to power, they kept all of the cuts except for the top bracket. (Clinton had 39.6%, Bush cut to 35%, Obama raised to 39.6%, now Trump cut to 37%.) I expect the same here. Republicans cut rates for everyone. Democrats will increase that top bracket when they’re in power again.
    There’s a constant tug-of-war on the rates for the wealthy, going up and down… but the cuts to the poor and middle class have always been one direction.

    So there’s reason to be optimistic! Especially considering this came from Republicans!

    ReplyDelete
  2. Jim.

    I'm glad you figured out how to comment. I enjoy your thoughtful responses and I like to be tested by opposing viewpoints. I'm going to take down your above argument point by point starting with this article explaining why your third paragraph doesn't hold up:

    Quoting: "The income tax rate cuts are pretty level and across the board. The doubling of the standard deduction is progressive, expanding the number of tax payers in the 0% income tax bracket. The doubling of the child tax credit is progressive and making more of it refundable is extremely progressive. This increases the number of people in the negative income tax bracket. That’s all good – helps the people who need it most."

    Check out this Business Insider reporting in its entirety here:
    http://www.businessinsider.com/trump-tax-plan-doubled-standard-deduction-2017-9

    Upshot from the article: "Currently, you get to take the personal exemption even if you also itemize deductions, but you get to take the standard deduction only if you forego itemized deductions. Combining these provisions into a single, standard deduction would mean itemizers lose their personal exemption and get nothing back — meaning they'll typically pay tax on an extra $4,050 of income if they're single, or $8,100 if they're married."

    That's just point #1, but I'll be back tomorrow to pick up the rest of your assertions. Got some other fish to fry today.

    Again, Jim, thank you for your post. I really appreciate you giving voice to a perspective not my own.

    And until Oprah kicks Mike Pence's ass in the next presidential cycle... Enjoy!

    si

    ReplyDelete
  3. I love the discussion... and we don't disagree on everything… probably agree on more than we disagree. I'm just not as anti-Trump as many friends on the left. (And I’m not as anti-Obama as many friends on the right.)

    To start at the bottom first... I'd love to see Oprah in there! Oprah-Trump would be real-life reality TV. Too good to pass up! If Trump isn’t running for the GOP, she’d probably take it in a landslide. I’ve noticed that people with big personalities tend to do well. ��

    That article is the worst form of journalism – factually true AND purposefully misleading. I can’t stand this stuff, and it’s a bipartisan problem. In this case, I think the guy was trying to scare the wealthy, but you read it as an anti-poor message. Regardless, it’s purposefully misleading. (Or perhaps I shouldn’t blast him too much since this article was written before the final passage.)

    He ends the article with the sentence you quoted: “…they'll typically pay tax on an extra $4,050 of income if they're single, or $8,100 if they're married.” Factually true. A couple who itemizes more than $24k of deductions will pay tax on an extra $4000 or $8000 of income. What he doesn’t mention? THEY STILL PAY FEWER TAXES!!! They still get a tax cut!

    AND, don’t forget… we’re talking about people who itemize over $24k of deductions. To itemize $24k of income you’d need something like $150k of income and live in a $350k house with a $300k mortgage, as an example. But that doesn’t even matter since they still get a tax cut even though “they'll typically pay tax on an extra $4,050 [or $8100] of income.”

    ReplyDelete
  4. Thinking more about this, I do think he was trying to scare the wealthy, talking to itemizers.

    The child tax credit wasn’t finalized when he wrote this article, but now that we know it, it’s progressive! They took away a $4000 exemption and replaced it with an additional $1000 credit. If you’re married and making $75k, you get an extra $1000 credit. As he says, you pay tax on an extra $4000 of income… at 12%. So you pay an extra $480 and receive an extra $1000. Good deal! (Married and making over $77k, and you’re in the 22% bracket, so you’re paying an extra $880 and receiving an extra $1000. Still better! And if you’re making between $110k and $400k, the tax credit phases out. But you saved enough in the rate reduction that you’re not worse off.

    ReplyDelete

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