Tax Reform

[czvo]

we could find a giant asteroid headed towards earth, with 1 year to figure out how to stop it from killing everyone

A significant percentage of people wouldn't want us to do anything because someone might make money off of their tax dollars building a solution. Climate change is basically the same thing only the time scale is different.

Plus there's another group of people wouldn't want to do anything because, hey, the earth is flat and there are no such thing as asteroids.

Shit, man. Just look at the reaction my post.

 

[Randolphkeys]

I mentioned their opposition upthread. The thing they complained about is that people who can't afford a home yet will get a larger standard deduction. This should only help them more easilly save up the money needed to buy a home in the first place.

The change won't make you pay any more taxes after buying the home (unless you are getting a mortgage over $500k, which was separate from the reason they initially opposed the bill).

I believe the people with the most to gain will defend the tax bill and create reasons for those who stand to lose the most to accept it. I see that you mentioned the higher individual deduction. However, that's great for families without kids. Once my kids are factored in, it's almost a break even.

Let's start with I see how as a business owner this benefits you. The elimination of public education infrastructure doesn't benefit me, so it all starts at a deficit before we even begin. If he was just talking about the standard deduction without all the other measures he wants to put in that screw a middle class family that doesn't own a business, perhaps you got a point there. Now I might be in public education, but my wife is corporate. There's plenty of factors I'm looking at, I'm not trying to be difficult. I do see the multiple reasons realtors are against this, especially in a state with high property values, and it seems cut and dry worse than better. I see where you and @natedagg talked about coastal property getting screwed, and yes it would screw me over. Frankly, I see this as Trump throwing a bone to the reddest of red States, because the blue states want nothing to do with him and red States are starting to figure out they voted for the trust fund families to do well.

It would, at the very best for me personally, delay buying our house until the housing market is devalued by it's delayed damages to property value. That's a sad way to look at it, but it's where I'm left with this plan.

 

[Huber.]

I don't want to make this into a global warming debate and feel free to tell me I'm completely off base posting this, but I read an article not long ago, where air quality was tested before and after a car consumed the air. The car was an F-150 and the testing showed the air was actually cleaner coming out of the exhaust pipe than going into the intake. Essentially, catalytic converters are so good nowadays, and/or the air is so polluted already, that driving a giant truck actually cleaned the air.

The most shocking thing about this post is you called an F-150 a giant truck.

 

[KI4MVP]

We were debating using tax incentives to expedite the migration away from fossil fuels. Lets' move that part of the tax discussion here:

I would really love to see everyone who is in favor of eliminating the electric car tax credits response to this post.

http://realcavsfans.com/community/index.php?posts/2838380/

 

[col63onel]

Education wise, here's what seems to be in the bill:

- Taxing endowments of universities and grad school stipends
- Eliminating Coverdell ESA, which is a tax free college saving account for low-middle income families
- Extending 529, which is basically Coverdell but with no income restrictions, to cover high school tuition
- Eliminate deduction of student loan interest
- Lessens tax write offs for donations to colleges
- Allow families to start saving for their child's college before birth


I like the last one, but can't see how the rest of it does anything to help the average American. Extending the 529 to high schools seems like it only benefits the wealthy, while at the same time eliminating the Coverdell for lower-moderate income families.

Taxing grad student stipends just seems petty. Even though I don't love the specifics of taxing endowments, I get why that could/should be taxable. But grad students make shit for money and work a shit ton of hours.

 

[KI4MVP]

Education wise, here's what seems to be in the bill:

- Taxing endowments of universities and grad school stipends
- Eliminating Coverdell ESA, which is a tax free college saving account for low-middle income families
- Extending 529, which is basically Coverdell but with no income restrictions, to cover high school tuition
- Eliminate deduction of student loan interest
- Lessens tax write offs for donations to colleges
- Allow families to start saving for their child's college before birth


I like the last one, but can't see how the rest of it does anything to help the average American. Extending the 529 to high schools seems like it only benefits the wealthy, while at the same time eliminating the Coverdell for lower-moderate income families.

Taxing grad student stipends just seems petty. Even though I don't love the specifics of taxing endowments, I get why that could/should be taxable. But grad students make shit for money and work a shit ton of hours.

The way you described part of this is confusing. Does Extending 529 offset eliminating Coverdell ESA in any way?

 

[Vindicate2]

Education wise, here's what seems to be in the bill:

- Taxing endowments of universities and grad school stipends
- Eliminating Coverdell ESA, which is a tax free college saving account for low-middle income families
- Extending 529, which is basically Coverdell but with no income restrictions, to cover high school tuition
- Eliminate deduction of student loan interest
- Lessens tax write offs for donations to colleges
- Allow families to start saving for their child's college before birth


I like the last one, but can't see how the rest of it does anything to help the average American. Extending the 529 to high schools seems like it only benefits the wealthy, while at the same time eliminating the Coverdell for lower-moderate income families.

Taxing grad student stipends just seems petty. Even though I don't love the specifics of taxing endowments, I get why that could/should be taxable. But grad students make shit for money and work a shit ton of hours.

Thanks for putting the summary together .

I do want to mention that there is a way to do the last item on the list based on today’s current tax rules. I did this process for both of my kids before they were born to take advantage much compounding as possible:

Before your child is born you can open a 529 in either you or your spouse’s name as both the owner and the beneficacy. Once the baby arrives (and has a social security number) you can then change the beneficiary to your kid . You are allowed one beneficiary change per calendar year on a 529.

It is important that either you or your spouse still remain the owner so you still have control over the account.

 

[Vindicate2]

Has anyone seen the revenue projections for the changes? Is that something that will come out once the CBO reviews it? Sometime back when they were still working through the draft of the proposed reforms they seemed to be using a high rate of growth to offset any deficit from the proposed reform. I seeing some articles saying this could increase 2.0-2.5 trillion ... I have no idea if that number is reputable. I’m open to anyone who might be willing to share something they believe to computed in good faith.

Here is the deal, I support tax reform, it was one of my biggest issues next elimination short falls in Social Security and Medicare. I’m willing to talk about small shortfalls with the tax changes (although I would prefer it be balanced by offset expenses rather than growth assumptions). Trump is a double edge sword on this particular issue, while he is definitely pro-business which I think is helpful for the economy , his real estate business model takes a lot of debt and if the bottom falls out he just bankrupts the company and moves on. Really concerned this tax reforms ends up being a cash grab that anyone after the Boomer generation will have to pay back at some point.

 

[The Human Q-Tip]

we could find a giant asteroid headed towards earth, with 1 year to figure out how to stop it from killing everyone
A significant percentage of people wouldn't want us to do anything because someone might make money off of their tax dollars building a solution.

And apparently, a significant percentage of people would be content with handing billions to a private entity with a history of not fulfilling promises, and counting on that as the solution to the asteroid problem.

 

[The Human Q-Tip]

Switching gears a little, the National Association of Realtors oppose the tax bill. They cite the likelihood of the benefit of home ownership across the country decreasing. The lack of tax advantages decreasing also means fewer buyers, resulting in fewer offers made. That all ultimately ends in lowering home values for existing home owners.

Personal note, the wife and I are probably a year away from being financially able to buy... While I doubt this thing is going to pass, it's the most important purchase a family will make in their lifetimes and the timing can make or brake us financially for the next decade. If the bill passes, we may as well keep renting and keep our cash in trash bags.

Doesn't it really only effect very expensive homes?

In any case, there's kind of a double-edged sword in all this. Any tax reform that lowers the tax benefits of ownership is going to decrease the value of homes already owned, at least to the extent they are affected by the law in question. But, that also means that home prices will drop, which is good for buyers.

 

[col63onel]

The way you described part of this is confusing. Does Extending 529 offset eliminating Coverdell ESA in any way?

Not really. Sorry for the brief explanation earlier.

At present, Both Coverdell and 529 are for college savings. Coverdell is just for families whose income is below a certain threshold. 529 is for everyone. I don't know a ton about the specifics of each plan, other than the income cap for Coverdell.

New tax plan completely eliminates Coverdell, but everyone can still use 529 for college. I don't know how much "worse" 529 would be for a low/moderate income family without having to look deeper into the actual plans themselves. Might be a negligible difference.

However, under the new plan you can use 529 to start saving for high school tuition as well. So if you know you are going to send your kids to a private high school, you can start putting away money whenever you want and get some tax free money for it.

So low/moderate income families "lose" Coverdell for college, but "everyone" gains 529 for high school. But I think it's clear 529 for high schools will disproportionately help wealthier families.

 

[KI4MVP]

And apparently, a significant percentage of people would be content with handing billions to a private entity with a history of not fulfilling promises, and counting on that as the solution to the asteroid problem.

Since when was the tax credit targeted at a single company? Everyone keeps talking about Tesla when Chevy, Nissan, Ford, Toyota, VW, BMW, Mercedes, etc, are all building electric cars. The full list is here:

https://www.fueleconomy.gov/feg/taxevb.shtml

The fact is that even with the credit, electric cars are still considerably more expensive than traditional cars. This is true across all manufacturers. More cars need to sell to drive advancements that help lower the costs going forward. This can’t happen without sales.

The longer we delay transitioning to electric vechiles and renewable power, the more we destroy our planet.

 

[The Human Q-Tip]

More cars need to sell to drive advancements that help lower the costs going forward. This can’t happen without sales.

Sure it can. Rather than blowing huge amounts of money making vehicles lacking needed advancements, why not simply invest directly in the advancements themselves? "We need to figure out a way to make better batteries, so people need to buy these shitty ones until we do?"

That's inefficient as hell.

 

[KI4MVP]

Sure it can. Rather than blowing huge amounts of money making vehicles lacking needed advancements, why not simply invest directly in the advancements themselves? "We need to figure out a way to make better batteries, so people need to buy these shitty ones until we do?"

That's inefficient as hell.

it's called economies of scale, and that's how the computer industry evolved the way it has.

Part of the cost is simply building the massive factories needed to make the batteries. Who is going to do that without sales?

Part of the cost is building the infrastructure of charging stations. Who is going to do that without sales?

Things like this scale up over time, tax incentives can jump start the time frames. Money spent now can save many multiples of that amount over time.

 

[The Human Q-Tip]

it's called economies of scale, and that's how the computer industry evolved the way it has.

Part of the cost is simply building the massive factories needed to make the batteries.

Building which batteries?

You just said that advancements need to be made. Why build huge factories to make batteries that lack the advancements necessary for them to be economically viable?

Why not focus on the research end, improve the batteries to the point where they would be sufficiently advanced, and then build the production facility for large scale production? If this is a good enough idea, he should be able to get private investors willing to put up the money, which would be far less than the subsidies required to produce crappy vehicles.