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posted by janrinok on Thursday June 21 2018, @09:52PM   Printer-friendly
from the all-governments-tell-lies dept.

AlterNet reports

When Republicans in Congress passed a big, fat tax break bill in December, they insisted it meant American workers would be singing "Happy Days Are Here Again" all the way to the bank. The payoff from the tax cut would be raises totaling $4,000 to $9,000, the President's Council of Economic Advisers assured workers. But something bad happened to workers on their way to the repository. They never got that money.

In fact, their real wages declined because of higher inflation. At the same time, the amount workers had to pay in interest on loans for cars and credit cards increased. And, to top it off, Republicans threatened to make workers pay for the tax break with cuts to Social Security, Medicare and Medicaid. So now, workers across America are wondering, "Where's that raise?". It's nowhere to be found.

The U.S. Bureau of Labor Statistics reported this week that wages for production and nonsupervisory workers decreased by 0.1 percent from May 2017 to May 2018 when inflation is factored in. The compensation for all workers together, including supervisors, rose an underwhelming 0.1 percent from April 2018 to May 2018.

That's not what congressional Republicans promised workers. They said corporations, which got the biggest, fattest tax cuts of all, would use that extra money to increase wages. Some workers got one-time bonuses and an even smaller number received raises. But not many. The group Americans for Tax Fairness estimates it's 4.3 percent of all U.S. workers.

The New York Times story about this record breaker describes the phenomena this way: "Companies buy back their shares when they believe they have nothing better to do with their money than to return capital to shareholders." So despite promises from the GOP and the President's Council of Economic Advisers, corporations believed further enriching their own executives and shareholders was a much better way to use the money than increasing workers' wages--wages that have been stagnant for decades.


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  • (Score: 3, Insightful) by slinches on Thursday June 21 2018, @11:02PM (20 children)

    by slinches (5049) on Thursday June 21 2018, @11:02PM (#696447)

    I calculated my net tax liability with the updated tax brackets and deductions and the reductions in withholding match that quite well. I suspect that's the case for most people, like me, who take the standard deduction or had itemized deductions that were close to it. So, I don't think the "bigger paychecks" are deceptive at all for most people.

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  • (Score: 5, Informative) by NewNic on Thursday June 21 2018, @11:06PM (19 children)

    by NewNic (6420) on Thursday June 21 2018, @11:06PM (#696452) Journal

    That depends a lot on which state you live in. In high state income tax states such as CA, a lot more people (myself included) will pay more in Federal tax.

    The tax "cut" was cynically designed to benefit:
    1. Very wealthy people by a large amount
    2. Ordinary people in red states by a small amount.

    --
    lib·er·tar·i·an·ism ˌlibərˈterēənizəm/ noun: Magical thinking that useful idiots mistake for serious political theory
    • (Score: 2) by slinches on Thursday June 21 2018, @11:43PM (6 children)

      by slinches (5049) on Thursday June 21 2018, @11:43PM (#696471)

      While I don't doubt that the impact of capping the SALT deduction wipes out any benefit for well off people in high-tax states. I think you're underestimating the benefit to most ordinary people in low tax states. For people who have incomes that fall into the middle class range and take the standard deduction, their tax liability was cut by 20-30%. That seems like a pretty large benefit to me.

      • (Score: 2) by NewNic on Friday June 22 2018, @12:11AM (4 children)

        by NewNic (6420) on Friday June 22 2018, @12:11AM (#696483) Journal

        30% of what, though?

        --
        lib·er·tar·i·an·ism ˌlibərˈterēənizəm/ noun: Magical thinking that useful idiots mistake for serious political theory
        • (Score: 2) by slinches on Friday June 22 2018, @12:16AM (3 children)

          by slinches (5049) on Friday June 22 2018, @12:16AM (#696485)

          30% of their 2017 tax liability assuming their gross income didn't change.

          So those who paid 10k in taxes in 2017 are paying 7k this year.

          • (Score: 2) by Whoever on Friday June 22 2018, @02:27AM (2 children)

            by Whoever (4524) on Friday June 22 2018, @02:27AM (#696544) Journal

            And people who paid $1k last year are getting a $300 tax cut.

            Percentage alone tells you nothing.

            • (Score: 2) by slinches on Friday June 22 2018, @05:03AM (1 child)

              by slinches (5049) on Friday June 22 2018, @05:03AM (#696594)

              Someone only paying $1k in taxes last year is probably at a much higher percentage. I'd have to re-run the calcs for that case, but they might not be paying any tax at all this year with the same income.

              Although, with unemployment down, maybe they will end up paying more because they found a much better paying job.

              • (Score: 3, Interesting) by slinches on Friday June 22 2018, @04:41PM

                by slinches (5049) on Friday June 22 2018, @04:41PM (#696818)

                Just re-ran those calcs. If someone filed single last year and paid $1k in taxes, they would pay about $440 this year and would owe no taxes if they joint filed.

      • (Score: 2) by slinches on Friday June 22 2018, @12:30AM

        by slinches (5049) on Friday June 22 2018, @12:30AM (#696488)

        Just to add to this. From what I can find, recent history indicates that people in the situation I was describing represent ~70% of the taxpayers (i.e. ~30% of filers choose to itemize)

    • (Score: 2) by digitalaudiorock on Thursday June 21 2018, @11:44PM

      by digitalaudiorock (688) on Thursday June 21 2018, @11:44PM (#696472) Journal

      That depends a lot on which state you live in. In high state income tax states such as CA, a lot more people (myself included) will pay more in Federal tax.

      Exactly...same here in New Jersey, where working class home owners' biggest expense can be their property tax. They get screwed in this one for sure.

    • (Score: 3, Interesting) by bobthecimmerian on Friday June 22 2018, @01:39AM (10 children)

      by bobthecimmerian (6834) on Friday June 22 2018, @01:39AM (#696521)

      My wife and I have four kids, so the axe on exemptions hurts. Even with the new larger standard deduction and new lower tax bracket percentages my tax liability went up. I caught the ugly end of the income curve, if our gross household income was $50k lower we would be ahead a few thousand per year and if it was $50k higher we would be ahead more than five thousand per year. But as it is, nope.

      • (Score: 0) by Anonymous Coward on Friday June 22 2018, @11:27PM

        by Anonymous Coward on Friday June 22 2018, @11:27PM (#697019)

        My wife and I have four kids, so the axe on exemptions hurts.

        You know, I think they can reverse vasectomies these days.

      • (Score: 2) by JoeMerchant on Saturday June 23 2018, @01:37PM (7 children)

        by JoeMerchant (3937) on Saturday June 23 2018, @01:37PM (#697189)

        Welcome to the shrinking middle - which side will you be leaving on? If you're like the majority, it won't be the high side (as you might have guessed by your increased tax bill...)

        --
        🌻🌻 [google.com]
        • (Score: 2) by bobthecimmerian on Sunday June 24 2018, @04:27PM (6 children)

          by bobthecimmerian (6834) on Sunday June 24 2018, @04:27PM (#697615)

          I misread the terms of the 2018 tax changes. I do have my tax liability drop substantially. I wrote about it here: https://soylentnews.org/comments.pl?noupdate=1&sid=26245&page=1&cid=697595#commentwrap [soylentnews.org] I apologize for the misinformation.

          • (Score: 2) by JoeMerchant on Sunday June 24 2018, @06:32PM (5 children)

            by JoeMerchant (3937) on Sunday June 24 2018, @06:32PM (#697648)

            Care to share how much?

            I'm curious about effective tax rate pre-post changes.

            My tax situation changes enough year to year that it's hard to tell what is from the law change and what is from our personal circumstances.

            --
            🌻🌻 [google.com]
            • (Score: 2) by bobthecimmerian on Monday June 25 2018, @02:19AM (4 children)

              by bobthecimmerian (6834) on Monday June 25 2018, @02:19AM (#697906)

              So with your taxes, there are two different things to look at. You probably know this, but I want to be clear to any reader. Your gross income is the household income. Your taxable income is the portion of your gross income that will be taxed. There are deductions and exemptions, which lower your taxable income. And there are , which lower the amount of tax you owe. So say you have $100,000 in gross income, $15,000 in deductions and $3,000 in credits. Then the tax you owe would be calculated based on an taxable income of $100,000 - $15,000 = $85,000. Let's say that tax number came out to $11,000. You would subtract the $3,000 in credits, and you would actually owe $8,000.

              My wife and I have jobs and we have four kids under the age of 18.

              Under 2017 law our taxable income was gross household income - (itemized deductions or standard deduction) - (personal exemptions). The standard deduction for married filing jointly was $12,700 and our itemized deductions were $18,000, so we used itemized deductions. The personal exemption are $4,050 per person in the family, so $24,300. So our taxable income was gross income - $42,300. The child tax credit is $1,000 per child, but if your taxable income exceeds $110,000 the child tax credit is reduced. So we didn't get a $4,000 tax credit for our four kids, we got a lot less.

              Under 2018 law our taxable income will be gross household income - (itemized deductions or standard deduction). Personal exemptions are gone. The standard deduction for married filing jointly was raised to $24,000. This year our itemized deductions won't exceed $24,000. So we'll pay tax on gross income - $24,000. Even with the new lower tax rates, our total tax liability goes up slightly because of the $18,300 in deductions and exemptions we lost. The extra income tax will be roughly $1,000.

              But I missed that part of the 2018 tax changes are that the child tax credit doubles to $2,000 per child and the threshold for having the child tax credit reduced was raised from $110,000 to $400,000. So instead of getting some fraction of $4,000 as a tax credit in 2017, in 2018 we will get all $8,000 in credit. So our 2018 tax liability will go down more than $5,000. That doesn't count any raises I get this year or anything else that changes our income, of course.

              • (Score: 2) by JoeMerchant on Monday June 25 2018, @10:44AM (3 children)

                by JoeMerchant (3937) on Monday June 25 2018, @10:44AM (#698064)

                the child tax credit doubles to $2,000 per child and the threshold for having the child tax credit reduced was raised from $110,000 to $400,000.

                So, we're increasing the reward for children, (weakly) encouraging people to increase the population, as if we don't have enough people on the planet already.

                We've got two kids and fall in that 110-400 range, so I'm guessing we get a net benefit, too - even though we're on standard deduction instead of itemized. Turbotax will tell all...

                --
                🌻🌻 [google.com]
                • (Score: 2) by bobthecimmerian on Monday June 25 2018, @01:28PM (2 children)

                  by bobthecimmerian (6834) on Monday June 25 2018, @01:28PM (#698107)

                  My annual expenses for each child grossly outweigh a $2,000 per child tax credit, so I think at best we're making parenthood a hair less brutally expensive. That's not much of an encouragement.

                  Of course, we could solve two problems at once by dumping the child tax credits in the tax code and allowing more legal immigration. Then you get population growth without adding to the world population. But this is the US, and it appears that 40+ % of the voters only want immigrants from central, northern, and western Europe.

                  • (Score: 2) by JoeMerchant on Monday June 25 2018, @02:13PM (1 child)

                    by JoeMerchant (3937) on Monday June 25 2018, @02:13PM (#698127)

                    My annual expenses for each child grossly outweigh a $2,000 per child tax credit, so I think at best we're making parenthood a hair less brutally expensive. That's not much of an encouragement.

                    Kids are as expensive as you let them be, and I doubt that many people factor in the child tax credit when they decide to use protection or not... but still, I'd rather remove all direct "parenthood benefits" paid to anyone who can claim dependents and instead reduce the costs of doing a good job raising your children directly, starting with reducing the cost of a good education and healthcare. Take that $36,000 per head and put it straight into free university for kids with acceptable GPAs, and other meaningful life-skills programs for kids without acceptable GPAs. Oh, right, I'm behind the times: $30K per head ($7500 per year) was the cost of a BS degree when I entered university in 1984, by 1988 that same university had hiked tuition to $60K.

                    But this is the US, and it appears that 40+ % of the voters only want immigrants from central, northern, and western Europe.

                    Haters of different skin colors are still legion, we need another couple of generations of social adjustment to reduce that to non-significant levels, and at present I think we're doing a little backsliding on the issue.

                    --
                    🌻🌻 [google.com]
      • (Score: 2) by bobthecimmerian on Sunday June 24 2018, @03:55PM

        by bobthecimmerian (6834) on Sunday June 24 2018, @03:55PM (#697595)

        GODDAMNIT! I posted bad information. I didn't realize the threshold for the high-income phaseout of the Child Tax Credit changed with the tax code changes. I'm wrong, we do save big with the tax cuts because in 2017 our > 110k gross household income cut the $1,000 tax credit per child down to $300 total. In 2018 the $2,000 tax credit per child doesn't get reduced until the gross household income is above $400k. That's not an income level I'm lucky enough to have, so even though our gross tax liability goes up $500, once you factor in the additional $7700 in child car tax credits our net tax liability is down $7200.

        I hate spreading misinformation, I wish I had a way to annotate the previous post as withdrawn/incorrect. I apologize.