To The Daily Sun,
I watch the ads on TV where those against tax reform are pushing the narrative that it’s a tax break for the rich, tax increase for the middle class and will increase the national debt. I say show me the numbers.
I pulled out my last year's tax return and went to the internet to see how it would affect my wife and I personally. I used www.businessinsider.com/trump-gop-tax-reform-plan-bill-text-details-rate-2017-10, which isn’t the final bill but shows the main points being debated and all have been put out and looking like they will stay in the final version. I was shocked to see that my wife and I would have paid over $4,500 less if this tax reform was enacted last year and I don’t consider us to be wealthy (less than $150K joint taxable income). I thought that couldn’t be right so I did it again and this time paid attention to where the reductions were coming from. The biggest one was that the first $90,000 would have been taxed at 12 percent which came to $10,800 instead of the graduated amount which we did pay that came to $13,978. The savings would have been $3,178 for just the first $90,000. Next was with the standard deduction for a married couple increasing from $12,700 to $24,000. Our “taxable income” dropped by over $6,000 and since that was taxed at 25 percent that came to another $1,500. I encourage everyone to do the numbers for themselves.
That got me wondering how much someone with a taxable income of $1,000,000 would save, so I went through the same process and under the current tax code they would pay $341,666. Under the new system they would pay $312,300 for the same taxable income for a reduction of $29,366. Sounds like a tax break for the rich, right? Well actually not. What has not been taken into account are deductions. The belief that someone making a $1,000,000 is using the standard $12,700 deduction most people use is unrealistic. To put this into perspective if the taxpayer lived in California they would no longer be able to deduct the 13.3 percent state income tax, which in this case would amount to $133,000. They do still get the standard deduction of $24,000 so their federal income tax would increase by ($133,000-$24,000) X .396 (i.e. 39.6 percnt tax rate) — $43,164. So, actually they would pay $43,164 - $29,366 = $13,798 more than they are now and another $43,164 more for every $1,000,000 they make after that. This is just one of the deductions being phased out. Another for the rich that is going away is the interest deduction on home loans over $500,000. I can see why high tax states are opposed but the rich from low tax rate states are certainly not going to be seeing a windfall with the tax reform either. I’m not expecting to see much of a drop-in revenue going to the government next year for two reasons. The tax reforms will increase the work force participation rate and with the stock market on the rise people will be cashing in some of their investments, both of which will be taxed.
I wrote this letter before the Senate passed its version of the tax reform bill and after reading this article from Forbes (https://www.forbes.com/sites/anthonynitti/2017/11/10/senate-releases-its-tax-bill-how-does-it-compare-to-current-law-and-the-house-proposal/#6ba8f32f4425) it became clear to me that the fight in the Senate is over who of the rich is going to pay more to offset the reductions to everyone making under $50,000, if single, and $100,000, if married, which make up 83.2 percent of tax filers in this country. They are the “forgotten” men and women. They are the waiters, waitresses, carpenters, plumbers, electricians, truck drivers, dispatchers, retail clerks, cashiers, barbers, beauticians, factory workers, technicians, engineers, firemen, police, farmers, sheppard’s, cowboys, etc. that don’t have the time to go to rallies to have their voices heard. The reason I care and spend time writing letters to the editor is because that was me and my wife raising a family of four in California and struggling for decades. It was hard. As I said above, my wife and I now jointly make over $100,000, our kids are grown and have families of their own and we live comfortably. We actually don’t need the $4,500 reduction that will result if the tax reform is passed but I don’t want to stop the reform because it is designed to help those that need it most.
I try not to be political but have to point out that my personal view is the Democrats uniformly pushed through Obamacare on March 23, 2010 on a promise that it would reduce health care costs to the average family by $2,400 and are now saying that the tax reform will raise taxes on the middle class. They provided no verifiable data back then to support the previous claim and time has proven that was completely false. They now have provided no verifiable data to support the latter. We have a Senate that is just at the balance. There are 52 Republicans and 48 Democrats. The Obamacare repeal and replace failed to pass by one vote. Tax reform could be sunk by the same margin. This bill is “good” for almost 100 percent of N.H. residents that work since we don’t have an income tax. Don’t take my word, just do the numbers yourself. If you agree please call or write Maggie Hassen and Jeanne Shaheen and ask that they vote yes on the final tax reform bill when it comes up. After all they were elected by us not the DNC and should represent N.H. not the DNC in the Senate.