Trump tax law chickens coming home to roost

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This topic contains 5 replies, has 4 voices, and was last updated by  lastday 1 week, 1 day ago.

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  • #40882

    Vitalogy
    Participant

    Now that people are seeing the actual effect on their taxes, it looks like the new tax law will hurt a lot of working class people.

    https://www.nbcnews.com/news/amp/ncna969366

    #40883

    Andrew
    Participant

    Looks like part of the problem is that they changed withholding limits after the tax changes took effect. So people had less taken out of their paychecks but either didn’t realize it or forgot. And the reduced withholding may have given them more money in advance but either reduced their refunds or caused them to owe something.

    This may have been intentional on the part of the Trump admin. The less you withhold, the more money goes into the economy…the higher the stimulus effect, the more economic activity. More for Trump to brag about, in the short term. Not going to continue this year, though.

    Trump will probably be gone before the big deficit increases due to these tax cuts will become obvious (except to the deluded, who will just blame them on the next Democratic president, like they blamed Obama for the big deficits he inherited.)

    #40913

    Chris_Taylor
    Participant
    #40914

    Vitalogy
    Participant

    Running that kind of deficit during a good economy is pretty troubling, but not surprising. Tax cuts always lead to higher deficits.

    Getting back to the tax issue, the bottom line is people need to compare their “effective tax rate” from 2017 to 2018 returns. This will be the first year we can actually see the results. Whether your return shrinks or not doesn’t mean you pay more taxes. However, with the elimination of a lot of deductions and exemptions average households have relied upon for years will likely lead to a lot of people seeing their effective tax rate higher than before. This is especially true for people who are self employed and may have more than one gig going on.

    #40943

    Chris_Taylor
    Participant

    I’m putting our taxes together. A combination of W2s and 1099s. We had a better year last year than the previous 2 years. I’m deducting what I usually deduct, but it will be interesting to see how much that changes. We’ve been paying quarterly taxes for years, which helps at this time of year. But even then, we typically owe. But it’s usually reasonable. We will find out soon enough.

    #40945

    lastday
    Participant

    This is the first time in a very long time that my itemized deductions didn’t exceed the new higher standard deduction, $13,300 in my case.

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