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Open Discussion Discuss Accountants: Trump plan would result in higher taxes for some families at the General Forum; Originally Posted by AZRWinger Currently only about 30% of Federal tax returns itemize deductions. Under the proposed plan this is ...

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Old 11-13-2017, 02:21 PM
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Default Re: Accountants: Trump plan would result in higher taxes for some families

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Originally Posted by AZRWinger View Post
Currently only about 30% of Federal tax returns itemize deductions. Under the proposed plan this is expected to drop to 10% of returns. The filers benefiting from itemized deductions including state and local tax deductions are typically higher income. But the Democrats who claim to be the defenders of the middle class fight to protect their rich donors.

Instead of forcing filers from low tax state's to pay more in Federal taxes the tax reform would equalize more of the burden. Naturally politicians from liberal run high tax state's want to keep their advantage.
If they are able to get this reform passed, that will put the burden of the higher tax states to re-examine their tax policies. If their residents are ok with maintaining their high tax rate, that is on them. However, the rest of the country should not be held back for their sake.
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Old 11-15-2017, 11:25 AM
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Default Re: Accountants: Trump plan would result in higher taxes for some families

AZRW is correct, as usual.

https://www.washingtontimes.com/news...tm_medium=push

Quote:
Democrats cry foul about loss of deduction to muddle tax bill’s real benefits to middle class

By S.A. Miller - The Washington Times - Tuesday, November 14, 2017

Even after losing the state and local income tax deduction, taxpayers in New York and other high-tax blue states would still end up ahead under the Republican tax reform bill, analysts say.

But that message is having a tough time breaking through the din in Washington.

Democrats have seized on the state and local tax deduction, or SALT, as their chief argument against the tax code overhaul, warning of an electoral backlash from middle-class suburbanites against Republicans if the plan is approved.

There is one problem: SALT is not a middle-class tax break. The benefit of the write-off goes overwhelmingly to high-income earners in high-tax blue states, several economists said.

“SALT is a classic tax preference for the rich that Democrats should be opposing,” said Brian Riedl, an economist at the conservative-leaning Manhattan Institute who has been studying the tax reform plans.

“The Democrats’ complaints are overheated,” he said. “Half of the benefits go to the richest 5 percent of earners, and nearly all families who would see their SALT deduction limited would receive bigger tax cuts elsewhere.”

An analysis of the Senate bill, which eliminates SALT, would deliver higher after-tax income by the end of the decade in high-tax states such as California, New York and New Jersey.

Middle-class families would have an estimated gain in after-tax income of $3,013 in New Jersey, $2,932 in California, $2,703 in New York and $2,701 in Illinois, according to a study by the nonpartisan Tax Foundation.

Nicole M. Kaeding, one of the economists behind the Tax Foundation analysis, stressed that 90 percent of those claiming SALT deductions make more than $100,000 a year.

“These individuals are not middle-class individuals. They are in the top 20 percent of all income earners. Even in New York City, median household income is $78,000, according to the U.S. Census Bureau,” she said.

The White House and Republican leaders argue that the nearly doubling of the standard deduction to $12,000 for individuals and $24,000 for married couples filing jointly would help offset the loss of SALT and other popular deductions.

Proponents of nixing the deduction for state and local taxes also say the current system subsidizes high-tax states such as California, New York and New Jersey. Eliminating SALT deductions would force those states to cut taxes, they say.

The House Republicans’ Tax Cuts and Jobs Act is scheduled for a floor vote Thursday. It includes a compromise to stop short of nixing the SALT deductions by allowing a write-off of local property taxes capped at $10,000.

Democrats and other critics on the left argue that getting rid of SALT, which has been in the tax code in one form or another since the federal income tax was imposed in 1913, would subject citizens to double taxation.

They say Americans shouldn’t have to pay federal taxes on what is essentially nondisposable income because it gets gobbled up by state and local government.

Democrats also point to studies showing rising taxes over time in those high-tax blue states, where residents earning more than $100,000 a year can be considered middle class.

An analysis by the Institute on Taxation and Economic Policy, a left-leaning think tank, found long-term tax decrees in every state except four high-tax states: California, New York, Maryland and New Jersey.

To discern the tax increases, the study looked at the impact of tax reforms in 2027 after some credits sunset. If no changes are made, then Californians would face $12.1 billion in added taxes, New Yorkers would pay $4 billion more, Marylanders would pay $430 million more and New Jerseyans would fork over an extra $137 million.

The other 46 states would still reap more than $101 billion in tax cuts in 2027 under the House bill, according to think tank.

House Minority Leader Nancy Pelosi, California Democrat, said the study underscored the choice Republicans from her state must make on Thursday.

“This week, the 14 California Republicans will decide whether to hit California’s families with the largest net tax hike of any state in America,” she said. “Fourteen California Republicans will decide whether to inflict a devastating tax hike on their own constituents. And after their deafening silence, any California Republican who votes for the GOP tax scam will be forced to answer why they care so little for their constituents.”

Armed with statistics of SALT deductions broken down by congressional districts, Senate Minority Leader Charles E. Schumer, New York Democrat, went after blue state Republicans in an effort to peel away support of the tax bill in the lower chamber.

He singled out Rep. Edward R. Royce, a California Republican from the affluent Los Angeles suburbs where 33 percent of taxpayers take the SALT deduction for an average savings of $15,000.

“He’d be committing political suicide” by voting for the House GOP tax reform bill, Mr. Schumer told reporters at the Capitol.

He also pointed to Rep. Barbara Comstock’s Virginia district, where 49 percent of residents use the SALT deduction for an average $13,000 savings; Rep. Erik Paulsen’s Minnesota district, where 40 percent of residents use it for an average $15,000 savings; and Peter J. Roskam’s Illinois district, where 38 percent of residents use it for an average $14,000 savings.

House Republican leaders expect to lose about eight votes from their party when the bill hits the floor Thursday, but that is not enough to put it in jeopardy.

Rep. Darrell E. Issa, a California Republican who won re-election last year by a razor-thin margin in his northern San Diego County district, has declared himself a no vote on the SALT issue.

“I didn’t come to Washington to raise the taxes on anybody. I’ve never voted for a tax increase, and I don’t want to start now,” he said on Fox Business Network.

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Old 11-15-2017, 09:37 PM
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Default Re: Accountants: Trump plan would result in higher taxes for some families

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Originally Posted by CindyB View Post

"Trump’s tax-reform plan could ding Nevada residents"

<WASHINGTON — President Donald Trump’s tax reform proposal calls for tax cuts across the board, but would also eliminate a deduction that could ding Silver State pocketbooks.>

<The proposal would eliminate the state, local and sales tax deductions on federal tax forms.>

Taxpayers in Nevada, which does not have a state income tax, are allowed to deduct sales taxes when filing to the Internal Revenue Service.
That amounted to $443 million in deductions in Nevada in 2014, according to the IRS.

<Individually, it would mean a loss of $1,197 in annual deductions for the average Clark County taxpayer who itemizes on federal tax forms, according to the Tax Foundation, an independent nonprofit policy group.>

<“It is important that any federal tax reform keeps in place the ability to deduct state sales tax,” said Rep. Dina Titus, D-Nev.>

In 2014, the deduction benefitted about 260,000 Nevada taxpayers “and helped level the playing field with residents of other states with deductible income taxes,” Titus said.

<Also opposed to eliminating state, local and sales tax deductions are the National Governors Association, whose vice chairman is Nevada Gov. Brian Sandoval, the National Association of Counties, the National League of Cities, the U.S. Conference of Mayors, the National Conference of State Legislatures and the Council of State Governments.>

<Those groups issued a joint statement in opposition, saying eliminating the state, local and sales tax deductions would represent double taxation, as these taxes are mandatory payments for all taxpayers.
“We fundamentally believe that American’s income, property, and purchases should not be taxed twice,” the statement said.>

<Treasury Secretary Steve Mnuchin said the Trump tax plan, a wish list that will be sent to the tax-writing House Ways and Means Committee, preserves charitable deductions and doubles the standard deduction for a couple filing jointly to $24,000.>

It also keeps intact the deduction for mortgage interest, one of the largest tax breaks homeowners receive when filing federal income tax returns.
Those popular items would be kept and offset by the loss of state, local and sales tax deductions.

<Nevada is one of nine states that do not tax income on individuals, and one of six which does not tax income on corporations, according to the U.S. Census Bureau. Nevada generates revenue mainly through property and sales taxes.>


Annual local tax deduction in populous Nevada counties per filing:
Clark County, $1,197

Douglas County, $2,825

Lincoln County, $773

https://www.reviewjournal.com/news/p...ada-residents/
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Old 11-16-2017, 07:15 AM
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Default Re: Accountants: Trump plan would result in higher taxes for some families

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Originally Posted by treedancer View Post
"Trump’s tax-reform plan could ding Nevada residents"

<WASHINGTON — President Donald Trump’s tax reform proposal calls for tax cuts across the board, but would also eliminate a deduction that could ding Silver State pocketbooks.>

<The proposal would eliminate the state, local and sales tax deductions on federal tax forms.>

Taxpayers in Nevada, which does not have a state income tax, are allowed to deduct sales taxes when filing to the Internal Revenue Service.
That amounted to $443 million in deductions in Nevada in 2014, according to the IRS.

<Individually, it would mean a loss of $1,197 in annual deductions for the average Clark County taxpayer who itemizes on federal tax forms, according to the Tax Foundation, an independent nonprofit policy group.>

<“It is important that any federal tax reform keeps in place the ability to deduct state sales tax,” said Rep. Dina Titus, D-Nev.>

In 2014, the deduction benefitted about 260,000 Nevada taxpayers “and helped level the playing field with residents of other states with deductible income taxes,” Titus said.

<Also opposed to eliminating state, local and sales tax deductions are the National Governors Association, whose vice chairman is Nevada Gov. Brian Sandoval, the National Association of Counties, the National League of Cities, the U.S. Conference of Mayors, the National Conference of State Legislatures and the Council of State Governments.>

<Those groups issued a joint statement in opposition, saying eliminating the state, local and sales tax deductions would represent double taxation, as these taxes are mandatory payments for all taxpayers.
“We fundamentally believe that American’s income, property, and purchases should not be taxed twice,” the statement said.>

<Treasury Secretary Steve Mnuchin said the Trump tax plan, a wish list that will be sent to the tax-writing House Ways and Means Committee, preserves charitable deductions and doubles the standard deduction for a couple filing jointly to $24,000.>

It also keeps intact the deduction for mortgage interest, one of the largest tax breaks homeowners receive when filing federal income tax returns.
Those popular items would be kept and offset by the loss of state, local and sales tax deductions.

<Nevada is one of nine states that do not tax income on individuals, and one of six which does not tax income on corporations, according to the U.S. Census Bureau. Nevada generates revenue mainly through property and sales taxes.>


Annual local tax deduction in populous Nevada counties per filing:
Clark County, $1,197

Douglas County, $2,825

Lincoln County, $773

https://www.reviewjournal.com/news/p...ada-residents/
See post #11
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Old 11-16-2017, 10:58 AM
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Default Re: Accountants: Trump plan would result in higher taxes for some families

Quote:
Originally Posted by treedancer View Post
"Trump’s tax-reform plan could ding Nevada residents"

<WASHINGTON — President Donald Trump’s tax reform proposal calls for tax cuts across the board, but would also eliminate a deduction that could ding Silver State pocketbooks.>

<The proposal would eliminate the state, local and sales tax deductions on federal tax forms.>

Taxpayers in Nevada, which does not have a state income tax, are allowed to deduct sales taxes when filing to the Internal Revenue Service.
That amounted to $443 million in deductions in Nevada in 2014, according to the IRS.

<Individually, it would mean a loss of $1,197 in annual deductions for the average Clark County taxpayer who itemizes on federal tax forms, according to the Tax Foundation, an independent nonprofit policy group.>

<“It is important that any federal tax reform keeps in place the ability to deduct state sales tax,” said Rep. Dina Titus, D-Nev.>

In 2014, the deduction benefitted about 260,000 Nevada taxpayers “and helped level the playing field with residents of other states with deductible income taxes,” Titus said.

<Also opposed to eliminating state, local and sales tax deductions are the National Governors Association, whose vice chairman is Nevada Gov. Brian Sandoval, the National Association of Counties, the National League of Cities, the U.S. Conference of Mayors, the National Conference of State Legislatures and the Council of State Governments.>

<Those groups issued a joint statement in opposition, saying eliminating the state, local and sales tax deductions would represent double taxation, as these taxes are mandatory payments for all taxpayers.
“We fundamentally believe that American’s income, property, and purchases should not be taxed twice,” the statement said.>

<Treasury Secretary Steve Mnuchin said the Trump tax plan, a wish list that will be sent to the tax-writing House Ways and Means Committee, preserves charitable deductions and doubles the standard deduction for a couple filing jointly to $24,000.>

It also keeps intact the deduction for mortgage interest, one of the largest tax breaks homeowners receive when filing federal income tax returns.
Those popular items would be kept and offset by the loss of state, local and sales tax deductions.

<Nevada is one of nine states that do not tax income on individuals, and one of six which does not tax income on corporations, according to the U.S. Census Bureau. Nevada generates revenue mainly through property and sales taxes.>


Annual local tax deduction in populous Nevada counties per filing:
Clark County, $1,197

Douglas County, $2,825

Lincoln County, $773

https://www.reviewjournal.com/news/p...ada-residents/
Yes, it looks like the plan so far is not working out for the middle class. My wife is a conservative accountant and tax pro, she and her CPA friends have read through everything they could get their hands on, and have found that the middle and upper middle will be paying more unless all the stars and deductions line up perfectly. I wish I was able to explain it, but I can't.
We were really hoping for the best.
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Old 11-16-2017, 11:46 AM
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Default Re: Accountants: Trump plan would result in higher taxes for some families

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Yes, it looks like the plan so far is not working out for the middle class. My wife is a conservative accountant and tax pro, she and her CPA friends have read through everything they could get their hands on, and have found that the middle and upper middle will be paying more unless all the stars and deductions line up perfectly. I wish I was able to explain it, but I can't.
We were really hoping for the best.
Hmm... Stars and deductions lining up.

It is difficult to discuss such vagaries. We know that only about 30% of filers itemize deductions in the current tax environment. It stands to reason doubling the standard deduction will reduce this.

Under the current tax code 45% of tax filers don't have any net Federal income tax liability. Doubling the standard deduction in the proposed reform isn't going to impact them negatively.

There could be a small number of upper middle class filers who end up paying more with the reform but to date I haven't seen any credible analysis indicating this is the case.
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Old 11-16-2017, 12:27 PM
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Default Re: Accountants: Trump plan would result in higher taxes for some families

I'm assuming the referenced groups would also like to apply the double-taxation statement to the inheritance tax....

And the State of KY, who taxes local taxes as income for businesses.

And.....

Quote:
<Those groups issued a joint statement in opposition, saying eliminating the state, local and sales tax deductions would represent double taxation, as these taxes are mandatory payments for all taxpayers.
“We fundamentally believe that American’s income, property, and purchases should not be taxed twice,” the statement said.>
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Old 11-16-2017, 01:11 PM
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Default Re: Accountants: Trump plan would result in higher taxes for some families

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Originally Posted by GottaGo View Post
I'm assuming the referenced groups would also like to apply the double-taxation statement to the inheritance tax....

And the State of KY, who taxes local taxes as income for businesses.

And.....
Then those states should change the way they tax their citizens and businesses.
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Old 11-16-2017, 02:25 PM
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Default Re: Accountants: Trump plan would result in higher taxes for some families

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Then those states should change the way they tax their citizens and businesses.
No argument. Even our accountant can't see the legality in it, but we have it in writing from the state...

Oh, and word has it the Tax Reform Bill was passed by the House.
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Old 11-16-2017, 03:15 PM
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Default Re: Accountants: Trump plan would result in higher taxes for some families

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Hmm... Stars and deductions lining up.

It is difficult to discuss such vagaries. We know that only about 30% of filers itemize deductions in the current tax environment. It stands to reason doubling the standard deduction will reduce this.

Under the current tax code 45% of tax filers don't have any net Federal income tax liability. Doubling the standard deduction in the proposed reform isn't going to impact them negatively.

There could be a small number of upper middle class filers who end up paying more with the reform but to date I haven't seen any credible analysis indicating this is the case.
They didn't think that middle and upper middle would be payer more in taxes, but that with the changes it would definitely not be a break, and it will be more complicated than they saying. I think as long as the markets are good with it, I will still make good returns on investments, but I was hoping for some tax relief also.
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