Will new tax plan benefit private schools?

Mommyg8

Sun, Dec 03 2017, 11:07 pm

Jeanette wrote:

Who says the poor don't pay taxes? shock

We all pay payroll taxes. And now there is talk of cutting social programs to pay for the tax cut for billionaires. We will all pay for this in big and small ways.

Ok, I'll quality - 99% of the poor don't pay taxes. There is a standard deduction, and then an exemption. Then if there are children, there is either a child tax credit which is refundable, or they get earned income credit - which can be quite a nice amount of money, and not related to how much taxes they paid. Both the child tax credit and the earned income credit can be more than the federal taxes that were paid, so that the taxpayer will get a refund for more than was actually taken out of their check. For example, if they paid $2000 in federal taxes over the year, and they are eligible for an earned income credit of $8000, they will get $8000 back, not just the $2000 in federal taxes that was taken out of their check. So it would usually offset the other taxes as well.

Also, the poor get food stamps, medicaid, free phone, heap, and probably a few more programs which I'm not aware of.

The only ones that I can think of that really do pay taxes are the working poor - those without children who earn minimum wage and are no longer living at home. But this bill will lower their taxes slightly, so it's beneficial for them as well.

Jeanette

Sun, Dec 03 2017, 11:51 pm

Mommyg8 wrote:

Poor pay payroll taxes, they pay the same sales tax as everyone else as well as taxes on their phone, utilities, travel etc. What this bill does is take a bigger bite of their paycheck and slash entitlement spending, leaving them with less cash in their wallets. Economy shrinks but at least rich people get a tax break.

We established that this bill hurts large families disproportionately. Many frum families may not be "poor" in the sense of making minimum wage but have high expenses and rely on personal exemptions to make ends meet. This tax bill is devastating.

Mommyg8

Mon, Dec 04 2017, 12:09 am

Jeanette wrote:

But they mostly get their payroll taxes back, like I said earlier. But they do pay sales and phone tax, I agree, but this tax bill does not touch that.

How do you see that this bill will be devastating to frum families? The only thing I see that will hurt frum families is the removal of SALT, but maybe that will be an incentive for New York state and city to realize how much taxes they are actually charging. Also, SALT only helped those who owned houses, so it did not help the renters at all.

The personal exemptions are gone, which is not good, but the child tax credits are doubled, so it sort of evens out - if your children are under 18.

I'm not saying this is a good bill, as I think they changed it too much, but I do think there might be some benefits, as shyshira pointed out.

I still say that the poor don't really pay federal, state, or payroll taxes.

Also, when you say that this bill hurts large families disproportionately, it sounds like you are agreeing with me. I said earlier that this bill hurts the middle class the most.

shyshira

Mon, Dec 04 2017, 12:26 am

Mommyg8 wrote:

are "the poor" and "the frum" definitively two separate groups?

Removal of the SALT deduction will not be an incentive to New York to realize how much tax they are charging. They know.

and the SALT deduction was not only for those who own houses. You can take the SALT deduction for state income taxes paid.

Jeanette

Mon, Dec 04 2017, 12:40 am

Mommyg8 wrote:

A frum large family making a middle class income is poor by most standards because of tuition and other expenses. This bill hurts large families.

The child tax credit increase doesn't come close to making up for the loss of personal exemptions.

But what really makes me mad is that This bill makes us struggle for no purpose. Make life harder for people like us so people who are already rich can get richer?

Mommyg8

Mon, Dec 04 2017, 1:12 am

shyshira wrote:

You could take the SALT deduction even if you don't own a house, but only if the combined state and income taxes are more than the standard deduction - so we are hardly talking about the poor, or even the lower middle class.

And removing the SALT deduction may wake up the taxpayers as to how much taxes they are paying. It also stops the federal government from subsidizing rich states like New York and California; whether this will ultimately be beneficial or not is not something that can be seen at this point.

Mommyg8

Mon, Dec 04 2017, 1:18 am

Jeanette wrote:

whoa... A frum large family is poor? No, I don't think so. Not by any standards. They are middle class, I think.

The child tax credit DOES make up for personal exemptions - sort of. I just did the calculations - if your income is under $230,000, you will come out pretty even.

Also, if you own any stock - then you will also get the benefit of lower corporate tax (through your stock ownership), and as shyshira pointed out, if you are an incorporated small business owner you will benefit as well.

shyshira

Mon, Dec 04 2017, 1:20 am

Mommyg8 wrote:

I was just clarifying that SALT deduction was not just for home owners. Nothing about poor or middle class.

shyshira

Mon, Dec 04 2017, 1:26 am

Mommyg8 wrote:

All I said was the the 20% tax rate was for all corporations. I didn't say that lower corporate tax rate was going to increase dividends to shareholders.

Mommyg8

Mon, Dec 04 2017, 1:34 am

shyshira wrote:

All I said was the the 20% tax rate was for all corporations. I didn't say that lower corporate tax rate was going to increase dividends to shareholders.

If taxes are lower, corporations will show higher profits, so even if there are no dividends the value of the stock will go up.

leah233

Mon, Dec 04 2017, 9:57 am

Jeanette wrote:

The only payroll taxes poor people pay which they don't get back is social security and state taxes. There is no federal sales tax so this tax bill can not lower them.

Much as I oppose the bill the only people I can see paying more because of it are(1)major itemizers - who usually aren't poor and (2) people with a few dependent children over seventeen years old.

simcha2

Mon, Dec 04 2017, 10:08 am

I'm predicting that this bill, if passed, will significantly raise Yeshiva tuition. Right now teachers are frequently paid with a portion of their salary being "in-kind". Ie in reduced our free tuition for their children. That in kind salary is now subject to taxation.

So, a rebbe or teacher who makes $30,000 but receives tuition for their children worth another $30,000 will now be taxed on a salary of $60,000, increasing their tax bill by about $10,000 dollars (but with their take home remaining static). Schools are going to have to up their salaries to keep teachers, increasing tuition costs.

I honestly don't know how anyone with kids in Yeshiva can support this.

SixOfWands

Mon, Dec 04 2017, 10:13 am

Any immediate tax savings to the middle class are phased out over time. So the Senate bill will actually raise taxes for households making less than $75,000 by 2027, relative to current law. Even if you don’t count the bill’s changes to the ACA.

People ages 50 to 64 would face average health premium increases of up to $1,500 in 2019 as a result of the bill, the AARP study found. Not old? With fewer younger, healthier people obligated to pay for health insurance, average overall premiums in the individual market would rise about 10 percent annually “in most years” over the next decade, the CBO said.

The independent, non-partisan Tax Policy Center reached the conclusion: "...not only would the tax cuts continue to be regressive, but the vast majority of American households would actually be worse off, with the tax cuts plus the financing, than they would be if the tax cuts had not occurred."

And we're not even discussing the fact that the tax plan makes no bones about the fact that savings are coming from Social Security, Medicare and Medicaid.

Indeed, the poorest Americans will be paying MORE, and it gets worse over time.

The question is whether you really believe that increasing taxes on the poor, while decreasing taxes on those making over $1 million, will benefit the economy. Because that's what the plan is, and that's what it intends.

shyshira

Mon, Dec 04 2017, 10:24 am

simcha2 wrote:

Only the house bill got rid of IRC 117(d) (the section of the tax code the allows employers of teachers to 'pay' for tuition of teachers or their dependents tax free)

there is still hope.

Mommyg8

Mon, Dec 04 2017, 10:54 am

leah233 wrote:

The poor get earned income credit, which offsets the taxes you mentioned. Just clarifying.

Mommyg8

Mon, Dec 04 2017, 12:44 pm

octopus wrote:

This is why my taxes will go up. I have also heard that it doesn't matter how many dependents you have it is all based on income. So whether you have one dependent or ten it doesn't matter. Could be I heard wrong. I am not a financial person really.

The child tax credit is going to be doubled to $2000 a child - supposedly. Whether this will remain in the final bill - is something that we have yet to see.

If it does, then frum families with small children will probably not take as big a hit.

And SixOfWands, your chart is only an estimate. It's really hard to know in advance how this bill will hit anyone. It's especially dependent on what you had been itemizing in the past - I heard that they are trying to get rid of the mortgage interest deduction on second homes, for example, so anyone who has two homes will get hit. But they are lowering the threshold for medical deductions - so those people will benefit. It's completely an individual thing, and not necessarily dependent on income, specifically.

Anyway, it looks like, according to this chart, the average frum family will be gaining.

Mommyg8

Mon, Dec 04 2017, 1:27 pm

shyshira wrote:

not really. anyone can in theory evaluate their own position - all else remaining the same - under current law and the proposed changes.

Well, once the bill is in its final form, it will be easier to evaluate individual positions.

What's hard about the estimate is predicting how it will affect people in the aggregate - for example, how will it affect families making $100,000 to $150,000 a year - as this is a very broad average that would have to cover many different kinds of families who are currently taking many different kinds of deductions. It would depend a lot on what kind of deductions they are currently taking, and what kind of deductions they will be able to take (or not take) in the future, and even what they're salary will be over next year and the following years. And we also don't know which kind of loopholes will be found in the current tax law, that will make all these estimates moot. We don't know the future rate of inflation.

There are just so many variables in any kind of estimate, that any estimate that is more than a year in the future is purely speculation.