Primer on House and Senate versions of proposed tax bill.

[scrabbler1]

The Federal Government will collect $1.5 trillion less revenue over the next 10 years.

The CBO says $1.7 trillion.

There are no corresponding spending cuts - well maybe $1B (1000 times less).

If you want to see a breakdown of where the cuts are going, here is one: Tax Cuts and Jobs Act Will Cost $1.5 Trillion | Committee for a Responsible Federal Budget

CRFB is a great source for getting unbiased data. Whenever I see its president, Maya MacGuineas, on TV, I always pay attention to what she says.

How I would do would depend a lot on 2 things: (1) if I have any large, unexpected medical expenses in a given year, and (2) if I have any large, unexpected cap gain distributions in a given year.

As I wrote in another thread, I will be getting a large cap gain distribution at the end of the year, according to Fido's recently released estimates. This does 2 things - it pushes me over the ACA subsidy cliff, and it reduces my deductible medical expenses so I'll be taking the standard, not itemized deduction.

But large medical expenses, which can include rising HI premiums beyond what the SLCSP is in my locality, can keep me itemizing my deductions. So, losing that deduction will likely offset any small savings from the increased standard deduction. The SD may double, but losing the personal exemption nearly cancels out the higher SD. For single filers like me, the two combined for 2017 is $10,400, not much less than the ~$12,000 under the proposals. It takes only an extra ~$1,600 in itemized deductions, typically from med expenses, to make the proposal worse for me.

Losing the state income tax deduction would eliminate the bunching I have done a few times over the years. My best way to bunch is to put two 4th quarter state estimated income tax payments into a single calendar year. Not being able to take the state income tax deduction would put an end to that practice.

In the linked CRFB chart, I found it interesting that the value of the tax cuts from increasing the SD and increased child credit (1.56T) is roughly the same as the tax increase from repealing the personal exemption (1.6T). Doing only those three things and nothing else would be revenue-neutral and achieve tax simplification. hmmmmmm.........

 

[Senator]

CBO says it's going to add $1.7T. The bill writers are trying to keep it under $1.5T so that it can be passed under the reconciliation rules which only require a simple majority.

My life is not impacted at all by any government debt amounts. None whatsoever. Tax bill or no tax bill.

Maybe I am missing the direct impact? Has anyone here ever experienced a direct correlation of the debt amounts to their personal life, either positive or negative?

My birthdays still occur and Christmas still arrives on December 25.

 

[audreyh1]

My life is not impacted at all by any government debt amounts. None whatsoever. Tax bill or no tax bill.

Maybe I am missing the direct impact? Has anyone here ever experienced a direct correlation of the debt amounts to their personal life, either positive or negative?

My birthdays still occur and Christmas still arrives on December 25.

Oh, everything is rosy until spending cuts come into the picture.

 

[rodi]

Thanks for the interesting discussion.