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New taxes for me, Al Franken
I decided to investigate how the new tax plans would affect me, Al Frankin.* I did not double-check my math, let alone my assumptions, so take the following with a huge grain of salt. (For a brief summary, scroll down to the [second] boldfaced part.)
I consider myself rich by normal standards (I make enough money to happily live on and have no dependents; by another measure, my income taxes are positive). But I do not consider myself rich by top 1% standards. So, would my taxes go up or down? (Suspense!)
With the current system it is best for me to bunch my deductions. That means that in alternate years, I shouldn't pay my property taxes until January; in other years, pay them in December. Thus, every other calendar year I would pay two years worth of property taxes. If I also save up the bulk of my charitable donations for those years, my itemized deductions are rather huge. Then in the other years I can take the standard deduction.
Under the current rules, my taxes would be about $850 for itemized years and $1125 edited to add: this number is way too low** for the standard years. That's an average of just under $1000. (I know! Tiny! But my pension is only $27K/year.)
Under the proposed tax plans, itemizing is not as profitable because the standard deduction is doubled (or nearly doubled in the House version) and there is no personal exemption. If I nevertheless bunched deductions, I could pay about $1320 (House version) or $1500 (Senate version). In the standard deduction years, my taxes would be about $1750 (House version) or $1850 (Senate version). That is an average of just under $1500 (House version) or $1675 (Senate version).
In conclusion, would the new tax plan reduce my taxes? No, it would increase them by 50%-70%. Edited to add: no, more like 7%** Yikes. I wouldn't mind an increase of 10% - 20% to finance important things, and admittedly 50% - 70% of my cute, tiny taxes isn't all that much, but I am not pleased. I had hoped that my conclusion to this post would be that although my own taxes would be better, I would still oppose the new proposals for all the damage it would do to other people. But no, I get to oppose the proposals for personal reasons as well.
Would the new tax plan at least simplify my taxes? No, I would still save money bunching my deductions. And I would still look up my taxes in a table or multiply by 12%. Well, I wouldn't have to look up my estimated sales tax in a table during the itemization years, so that would save me several seconds in alternate years.
*This is from an old "Saturday Night Live" skit format where Al Franken would discuss how various current events affected him personally, as if anyone else cared.
**Sorry, bad math. See my revised calculations.
I consider myself rich by normal standards (I make enough money to happily live on and have no dependents; by another measure, my income taxes are positive). But I do not consider myself rich by top 1% standards. So, would my taxes go up or down? (Suspense!)
With the current system it is best for me to bunch my deductions. That means that in alternate years, I shouldn't pay my property taxes until January; in other years, pay them in December. Thus, every other calendar year I would pay two years worth of property taxes. If I also save up the bulk of my charitable donations for those years, my itemized deductions are rather huge. Then in the other years I can take the standard deduction.
Under the current rules, my taxes would be about $850 for itemized years and $1125 edited to add: this number is way too low** for the standard years. That's an average of just under $1000. (I know! Tiny! But my pension is only $27K/year.)
Under the proposed tax plans, itemizing is not as profitable because the standard deduction is doubled (or nearly doubled in the House version) and there is no personal exemption. If I nevertheless bunched deductions, I could pay about $1320 (House version) or $1500 (Senate version). In the standard deduction years, my taxes would be about $1750 (House version) or $1850 (Senate version). That is an average of just under $1500 (House version) or $1675 (Senate version).
In conclusion, would the new tax plan reduce my taxes? No, it would increase them by 50%-70%. Edited to add: no, more like 7%** Yikes. I wouldn't mind an increase of 10% - 20% to finance important things, and admittedly 50% - 70% of my cute, tiny taxes isn't all that much, but I am not pleased. I had hoped that my conclusion to this post would be that although my own taxes would be better, I would still oppose the new proposals for all the damage it would do to other people. But no, I get to oppose the proposals for personal reasons as well.
Would the new tax plan at least simplify my taxes? No, I would still save money bunching my deductions. And I would still look up my taxes in a table or multiply by 12%. Well, I wouldn't have to look up my estimated sales tax in a table during the itemization years, so that would save me several seconds in alternate years.
*This is from an old "Saturday Night Live" skit format where Al Franken would discuss how various current events affected him personally, as if anyone else cared.
**Sorry, bad math. See my revised calculations.
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(Anonymous) 2017-12-06 05:16 pm (UTC)(link):-)
-Cat
p.s. I'm so glad I can comment again. Thanks for changing that setting!
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[They can't just let the House vote on the Senate version because when they added back the corporate alternative minimum tax, they forgot to lower it, so now the starting tax rate (20%) matches the alternative minimum (20%) and the big companies don't want that. Ha ha (in a mean-spirited sort of way)!]
I also don't know what additional changes would affect the self-employed. It does seem like if you have any deductible expenses, you should try to make them this year while we still have a personal exemption to add to it and while our marginal tax rates are probably higher and while you still know it's deductible. I haven't noticed any news of changes in what counts as a business expense.
I am also super glad you can comment again! Yay!