Many rich fretting about SALT didn't get that tax break anyway...

[VacationForever]

https://www.accountingtoday.com/art...ng-about-salt-didnt-get-that-tax-break-anyway
Politicians in mostly Democratic high-tax areas say the new federal cap on state and local tax deductions hurts their residents. Yet the vast majority of those taxpayers never actually got the break in the first place, undermining a key criticism of the Trump tax overhaul.

About three-quarters of people who in past years paid more than $10,000 in state and local taxes had been required to take the alternative minimum tax, meaning they couldn’t have written off the SALT levies anyway, according to IRS data analyzed by Bloomberg. And because the AMT has been scaled back as well, those top earners in fact get a new tax break by now being able to write off up to $10,000 of their SALT payments.

Bloomberg analyzed IRS data from 10 of the wealthiest counties in the U.S. — including New York’s Westchester, New Jersey’s Somerset, Connecticut’s Fairfield and California’s Marin counties.

......

 

[davidvel]

https://www.accountingtoday.com/art...ng-about-salt-didnt-get-that-tax-break-anyway
Politicians in mostly Democratic high-tax areas say the new federal cap on state and local tax deductions hurts their residents. Yet the vast majority of those taxpayers never actually got the break in the first place, undermining a key criticism of the Trump tax overhaul.

About three-quarters of people who in past years paid more than $10,000 in state and local taxes had been required to take the alternative minimum tax, meaning they couldn’t have written off the SALT levies anyway, according to IRS data analyzed by Bloomberg. And because the AMT has been scaled back as well, those top earners in fact get a new tax break by now being able to write off up to $10,000 of their SALT payments.

Bloomberg analyzed IRS data from 10 of the wealthiest counties in the U.S. — including New York’s Westchester, New Jersey’s Somerset, Connecticut’s Fairfield and California’s Marin counties.

......

Sounds like that may be a reason for even more criticism... but I predict this thread will be shut down shortly.

 

[VacationForever]

It is about people who whine about the SALT 10K limit but likely to be the same people who never got SALT deduction in the past due to AMT.

 

[LisaH]

What does SALT stand for?

 

[djohn06]

https://www.accountingtoday.com/art...ng-about-salt-didnt-get-that-tax-break-anyway
Politicians in mostly Democratic high-tax areas say the new federal cap on state and local tax deductions hurts their residents. Yet the vast majority of those taxpayers never actually got the break in the first place, undermining a key criticism of the Trump tax overhaul.

About three-quarters of people who in past years paid more than $10,000 in state and local taxes had been required to take the alternative minimum tax, meaning they couldn’t have written off the SALT levies anyway, according to IRS data analyzed by Bloomberg. And because the AMT has been scaled back as well, those top earners in fact get a new tax break by now being able to write off up to $10,000 of their SALT payments.

Bloomberg analyzed IRS data from 10 of the wealthiest counties in the U.S. — including New York’s Westchester, New Jersey’s Somerset, Connecticut’s Fairfield and California’s Marin counties.

......

Article is super narrow. Only about 2.7 percent of Americans paid AMT in 2010.

So you found a stat showing that 2.7 percent getting richer due to the tax cut. We knew that was the case.

If you read the rest of the article it gives an example of someone making 200k, not subject to AMT getting screwed by the tax law change due to the 10k SALT limit. A lot more people fall into this category as opposed to paying AMT.

 

[VacationForever]

Most of the people who paid AMT are in the "rich" states. The people who benefit from scaled back AMT are the same people who now benefit from the 10K SALT deduction. The argument does not hold that they lose under the 10K SALT deduction and in fact they benefit from the scaled back AMT.

 

[djohn06]

Well Trump is from a rich state and AMT is a tax on the rich. Did anyone really think that Trump would increase taxes on the rich? I didn't. I knew their taxes would decrease.

But, those higher earners not subject to the AMT tax are the ones hit the hardest.

Furthermore, you don't have to be in a rich state. I'm in the Midwest I and never paid AMT, but my SALT is over 10k and I'm paying more in taxes this year than last year.

There are more people like me than folks paying AMT.

 

[klpca]

It is about people who whine about the SALT 10K limit but likely to be the same people who never got SALT deduction in the past due to AMT.

This always cracked me up. Almost all two earners in high income states were in the AMT which was almost never adjusted for inflation since it was enacted in the 1980's. So no one was getting any benefit anyways. (FYI - AMT is an alternative tax calculation that never allowed a deduction for state and local taxes).

Personally, at this point I would just be happy if they had simplified the tax laws but no, it's just as complicated as ever.

 

[VacationForever]

We were subject to AMT forever before we retired. We are glad that AMT is rachet back to affect much fewer people. There are always winners and losers no matter how tax laws are changed. The latest bill that has been proposed in CA, which will be subject to voters in Nov, is to have estate duties on amount that were exempted under the new Federal law and phased out when it reaches the new Federal limit. I think it is another push for retirees to move out of CA, for the comfortable but not really rich folks.

 

[klpca]

We were subject to AMT forever before we retired. We are glad that AMT is rachet back to affect much fewer people. There are always winners and losers no matter how tax laws are changed. The latest bill that has been proposed in CA, which will be subject to voters in Nov, is to have estate duties on amount that were exempted under the new Federal law and phased on when it reaches the new Federal limit. I think it is another push for retirees to move out of CA, for the comfortable but not really rich folks.

Not a fan.

 

[bbodb1]

What does SALT stand for?

State and local taxes.

Though I started to use the other response ......Strategic Arms Limitation Talks...

 

[MULTIZ321]

How Does the Alternative Minimum Tax (AMT) Work? - https://www.nerdwallet.com/blog/taxes/alternative-minimum-tax-amt/

IRS Topic No. 556 - Alternative Minimum Tax - https://www.irs.gov/taxtopics/tc556

The Impact of Eliminating the State and Local Tax (SALT) Deduction - from Government Finance Officers Association
http://www.gfoa.org/salt


Richard

 

[joestein]

Lets not kid ourselves, NO ONE should be complaining about income taxes. They are WAY TOO LOW for everybody.

Just an example. I have a guy who works under me. He makes around $110K and has a wife and 4 kids. He is the only income provider.

Lets look at his taxes. He takes the standard deduction bringing his taxable income to $86K. Tax on that amount is $10,844 ($19,050 X 10%, $58,350 X 12% and $8,600 X 22%). However he gets a $2K credit for each kid which brings his taxes down to $2,844 or an effective tax rate of 2.58%. He is also complaining that he is getting a smaller refund than last year.

Even my situation, where the income of my wife and I is considerably more than employee, my effective tax rate went from 20.3% in 2017 to 17.8% in 2018.

I went back and took a look at the first married tax return we filed back in 1995. My wife and I earned a combined massive $60K (hey... we were only a couple of years outta college). However we paid around $9,000 in income tax. Here were the brackets for that year:

Tax Bracket Tax Rate
$23,350.00+ 28%
$56,550.00+ 31%
$117,950.00+ 36%
$256,500.00+ 39.6%


This is why we have $20 trillion in debt and massive deficits. We have lowered our taxes so much that we cant afford to pay the bills anymore. Back in the 90s we eliminated our deficeit and had a surplus. Until this year, there was no real changes to the individual tax code other than rates since the 80s. We really need to get back to reasonable tax rates and to repair our countries fiscal problems.

Joe

 

[bbodb1]

Lets not kid ourselves, NO ONE should be complaining about income taxes. They are WAY TOO LOW for everybody.

Joe

Joe,

While I see your point, when you use a blanket statement such the bolded one, you will lose support for your point.

Is / are the tax rates fair? Fair is a subjective concept.
Can people be taxed or are they (in some cases) like businesses and able to pass that tax load off to others? There is ample evidence to support this point.
And let's remember that deficit and debt are not the same thing - we have NOT paid off the debt since any of us have been alive. Therefore, we really did NOT have an overall surplus but we may have enjoyed a surplus for a fiscal year.

I think the underlying issue is one you address with your last point - but it too begs the question of whether our country has every had reasonable tax rates (and, by the way, what is reasonable?) and in our life times have we ever addressed our nation's fiscal issues.

I submit where you and I would find some agreement is a redesign of our current income tax structure and mechanisms.
There has to be a better way.

 

[Brett]

Joe,

While I see your point, when you use a blanket statement such the bolded one, you will lose support for your point.

Is / are the tax rates fair? Fair is a subjective concept.
Can people be taxed or are they (in some cases) like businesses and able to pass that tax load off to others? There is ample evidence to support this point.
And let's remember that deficit and debt are not the same thing - we have NOT paid off the debt since any of us have been alive. Therefore, we really did NOT have an overall surplus but we may have enjoyed a surplus for a fiscal year.

I think the underlying issue is one you address with your last point - but it too begs the question of whether our country has every had reasonable tax rates (and, by the way, what is reasonable?) and in our life times have we ever addressed our nation's fiscal issues.

I submit where you and I would find some agreement is a redesign of our current income tax structure and mechanisms.
There has to be a better way.

The national federal government debt and 'deficit' has increased every year especially these past couple of years, both in total and as a % of GDP.
Sure, there has to be a better way .....

 

[Makai Guy]

Pulling the plug. Y'all know political discussions are not allowed here, but political stuff gets posted just to see if you can get away with it, like a bunch of kids testing their parents. Maybe we should start having some time-outs, then ...