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Old 12-20-2017, 10:03 PM   #21
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Originally Posted by Senator View Post
Many companies have already announced they are raising the wages of their employees as a result of the tax plan. It is a great thing for most working people and businesses.

The market is projected to 'roar'.

https://www.cnbc.com/2017/12/20/tax-...employees.html
I never see blanket raising pay as the working class coming out ahead. That just drives up costs, companies have to increase prices, inflation goes up, the raise in pay then just covers the cost of inflation - rinse and repeat.

I'm not against raising wages, but driver of higher pay should be improved skills - and therefore making investment in people to get them a better job, not just paying more for the same thing they do today.

Once wages go up it just gives business an incentive to find technology solution to replace workers with lower cost alternative and put those minimum wage / minimum skilled workers out of work.
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Old 12-20-2017, 10:05 PM   #22
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I liken it to getting a no-annual-fee, no-interest-payments due cash advance from a credit card except other very wealthy people also get a bigger cash advance from your same credit card. And the interest payments are just added to your balance until 2026 when the bill finally shows up.

So, yes, it is good for the jobs and economy ... at least for a while.

Historically, Reagan did something similar in the 1980s and gave every man, woman, and child in the US something like $3,000 to do as they pleased.
I guess I get to pay more now and pay more later. The SALT restriction and loss of HELOC deduction affects us. I think I missed the 3k from Reagan, somehow, but how is this similar?
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Old 12-20-2017, 10:14 PM   #23
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Once wages go up it just gives business an incentive to find technology solution to replace workers with lower cost alternative and put those minimum wage / minimum skilled workers out of work.
The last twenty years of my career were about machines replacing humans.

If it's more costly there's new opportunities to replace more folks.
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Old 12-20-2017, 10:58 PM   #24
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It'll be interesting to see how the revocation of the ACA insurance mandate plays out. Insurance premiums will certainly go up, but the pesky part of the ACA is that the IRS has to subsidize premiums to make them affordable. That will eat into federal tax revenue. How much depends on how many people stick with Obamacare.
I have always been near the upper MAGI limit to qualify for a subsidy. But in 2017, I will fall over the MAGI cliff and fail to qualify for the subsidy for the first time. As HI premiums rise, the cliff will become larger next year. My premiums will rise 16% in 2018, and I am looking at least 10% from the repeal of the individual mandate.

As for the effect on my income taxes, it mainly depends on how well I can avoid running up any large, unforeseen medical expenses. In the last few years, my itemized deduction is around the standard deduction. The new SD will rise to $12k, but it is only about $1,600 higher than the current SD+PE which is about $10,400. If med expenses are high enough to enable me to deduct under current law, but not high enough to enable me to deduct under the new law, I will come out behind slightly.

All or nearly all of my ordinary income is taxed at 10%, with my remaining income taxed at the unchanged QD/LTCG rates. This means I will not likely benefit from the reduction of the 15% rate to 12%.

At best, I will save a little bit on my taxes and be able to file using Form 1040A, a simpler form. At worst, I will pay a little more in taxes and more for health insurance.
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Old 12-21-2017, 01:22 AM   #25
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Several companies have already announced that they are giving bonuses to their employees, as well as increasing their wages. Also committing to spending lots of $$$$
growing their businesses.
I don't pay taxes myself (yet) but I think it's a very good thing.
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Old 12-21-2017, 05:20 AM   #26
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The hiring part is what confuses me. Who is going to get hired when the unemployment rate is already at a 16 year low? If it goes much lower, we're going to be at a 50 year low. Why wouldn't companies just do more off-shoring and create jobs in countries where the labor market is not so tight and taxes are also low (e.g. Ireland, China, India, Russia) instead of competing for the scarce labor here and potentially having to pay higher wages?

If the labor shortage does get worse, and companies do want to hire in the US for some reason, then that will push wages up and that really will be a boon for lower class workers.

I do think investors will benefit through increased dividends and higher stock prices as a result of buybacks.
Excellent point about hiring. I do believe there will be upward wage pressure, finally. Only time will tell though.

I also believe inflation will be returning.
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Old 12-21-2017, 05:49 AM   #27
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HCOL here is how it is changing my behavior:
1) Pre-paying property taxes
2) Paying off primary residence in January
3) Considering extending 1MY due to favorable pass through tax (nah just kidding)
4) Doing a happy dance about RE income treatment

This will suck up almost all my liquidity earning 0.01%.
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Old 12-21-2017, 05:59 AM   #28
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The hiring part is what confuses me. Who is going to get hired when the unemployment rate is already at a 16 year low? If it goes much lower, we're going to be at a 50 year low.
You have to look at the Workforce participation numbers. There are a lot of idle people that might go to work if the wages were high enough. It is very hard to go to work when not working pays so well.

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Once wages go up it just gives business an incentive to find technology solution to replace workers with lower cost alternative and put those minimum wage / minimum skilled workers out of work.
You are 100% correct, especially since the new american workforce will be mostly manual labor. Luckily, here in the USA, if someone is against working, they do not have to. All work (i.e. money) does is provide choices.

Quote:
Walmart's NYC-based innovation center is experimenting with a cashier-less store concept called Project Kepler, which "aims to reimagine the in-store shopping experience with the help of technologies like computer vision," Recode reports.

Project Kepler is in part aimed at creating a store that would feature no checkout lines or cashiers, but use computer vision to detect which products customers leave the store with and then charge their accounts accordingly.

Why it matters: Amazon is also experimenting without cashiers, while roughly 3.5 million Americans operate cash registers for a living.

Recode also reports that Walmart's new start-up subsidiary, called Code 8, is experimenting with "high personalised, one-to-one shopping experiences," that will be marketed to "busy NYC moms."

https://www.axios.com/walmart-planni...518925675.html
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Old 12-21-2017, 06:34 AM   #29
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For me, it means an additional 7k in my bank account. For DS2 (single, 22% bracket), it's about 1.5k. When I RE, everything will be in the 12% bracket.
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Old 12-21-2017, 07:10 AM   #30
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ACA >>>> that name needs to be changed unaffordable Care Act.
It's been absolutely spectacular for me. Every year since its introduction, the premium for DW and me has declined. Its biggest, flaw, IMO, has been the subsidy cliff.

Without the ACA, I'd be spending close to 30% of my MAGI on health insurance.
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Old 12-21-2017, 07:19 AM   #31
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Yes, I see the corporate tax reduction keeping the bull market alive and well for a long time.
+1. So we'll go from 15% to 12%, and happy for any relief we can get.

But I agree that the secret sauce in this tax smoothie is the corporate rate going down by 40%.

In preparation for take off, the pilot just turned on the fasten seat belt sign.
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Old 12-21-2017, 07:28 AM   #32
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I hope that it does what is being touted, GDP growth at 4-6%, increase in government receipts, job growth, more money in the pockets of the consumer class. The skeptical nature of my gut tells me different. A recent survey of CEOs say that priorities with any increase in revenue will result in stock buy backs, paying down debt, funding for M&As and CAPEX spending is fourth in the que. Time will tell though but I'm a wait and see guy before getting too excited. As far as for my own tax situation, it will change little if at all.
Agreed - it’s quite clear to me that job creation is unlikely to happen as this does nothing to increase demand, and companies will use extra cash to pay down debt (much issued to buy back stock) and buy back more stock like they have for the past many years, rewarding top executives and shareholders. Companies haven’t been investing more in their businesses or hiring for a while now, in spite of already improving economic conditions and super low interest rates. Borrowing has been used for stock buy backs rather than business investment. It’s a bit of a catch 22 - with low demand, there is no incentive to invest more in the business or hire more employees. More cash in hand does not create this incentive - and corporate overall tax rates were already way lower than the advertised high 35% rate, many businesses paying $0. Yet without companies investing in their business or hiring more people, no additional demand is created in the economy. This is where investing in revamping aging infrastructure might have been more effective as it would have created more demand and jobs. But where are funds going to come for this now as I think we just spent it on tax cuts?

With unemployment already at historical lows, companies clearly have no incentive to hire more folks. Focus seems to be more on continuing to streamline - maximizing the profits at current business levels rather than growing the business to capture more and compete. I don’t think more profits will change this. It’s just perhaps more rewards at the current business levels.

Our current slow growth and low inflation is also structural. It’s a combination of demographics and global slower growth due to low demand. 4 to 6%? Who is dreaming?

In terms of benefits to corporations and shareholders, the stock market has already anticipated highly favorable outcomes. I don’t think it will be stimulative to the economy. History shows that when the wealthiest get more income they tend to hoard it rather than spend more.

I think our taxes will be lower, but I’m more anxious about way overvalued markets and taking a big hit to net worth due to markets correcting.

We shall see. I’ll be watching the yield curve. If it continues to flatten then a slowdown/recession is getting closer - the inevitable end to a long expansion. If it reverses direction and starts to steepen then more inflation is showing up and perhaps more economic growth is happening.
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Old 12-21-2017, 07:35 AM   #33
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Either everyone is being very polite, or the mods are going bananas deleting posts. I haven't seen any no-no's yet, and don't plan to add any

That said, Lott's calculator doesn't yet distinguish between earned income (aka our pensions) and dividend/CGs. That's important for knowing whether we won, lost, or it's a wash (the calculator suggests it's a wash, which I see as an incentive to move to a low-SALT state).

At least the calculator now lets you input your own SALT deductions (The calculator estimates MD income tax, but not the county piggyback tax).

Finally - If the calculator doesn't say anything about AMT, does that mean it thinks we won't have to pay AMT?

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Old 12-21-2017, 07:49 AM   #34
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I think (maybe brainwashed by the media that I watch/read) that overall it will be very good for big business the economy and the market. Looking at my personal case, I don't see much "significant" change that I have discovered yet, but my tax situation is a little complicated/unusual and I'm just reading through all this "stuff".
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Old 12-21-2017, 07:51 AM   #35
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Agreed - itís quite clear to me that job creation is unlikely to happen as this does nothing to increase demand...
With more money in consumer pockets, consumers will spend more, increasing demand. Hopefully it can be demand for US products. Unless you think that consumers will save it all.

With less corporate taxes here in the USA, companies may invest here, rather than in China or some other lower taxed country.

Simply raising employee wages, without a corresponding increase in revenues or profits, eventually kills companies and jobs. Lowering corporate taxes helps profits and is already increasing wages.

This tax cut will definitely work for me, and most taxpayers. If you already had a 0% tax rate, it doesn't help as much.
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Old 12-21-2017, 07:56 AM   #36
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ACA >>>> that name needs to be changed unaffordable Care Act.

Some good points and it will be interesting to see what happens to HCI going down the road.
Clearly itís been way more affordable for folks under the cliff especially the lower income folks who get help with OOP costs as well. For those above the cliff, after an initial drop, prices have risen dramatically, perhaps to compensate for the affordability for the lower income folks, and not having nearly as many folks buy insurance as expected was a problem from day one and will just get worse. Prices are high and rising, and it would have happened anyway without ways to reduce outsized health care costs far higher in the US than elsewhere and fewer and fewer people buying insurance.
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Old 12-21-2017, 08:03 AM   #37
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Yes, I see the corporate tax reduction keeping the bull market alive and well for a long time.
I think this was already baked in. Who's to say which is right?

Keeping this on the economics side of things, I believe the AT&T and W-F announcements were a marketing/publicity stunt. They've got cash sitting around anyway and I believe they figured it was worth the commitment of cash to employees now to make the new corporate rate look good, thereby improving the public perception and perhaps defending the lower rate in the future. The future of this lower corporate rate is by no means assured for the long-term (or perhaps even a few years).

For the businesses of this country to be able to keep this windfall, the tax-paying individuals have to believe it really is good for them.
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Old 12-21-2017, 08:09 AM   #38
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No politics please but in a nut shell is this Tax bill good for us or not.
Who knows. And it depends on who "us" is imo.
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Old 12-21-2017, 08:11 AM   #39
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I think this was already baked in. Who's to say which is right?

Keeping this on the economics side of things, I believe the AT&T and W-F announcements were a marketing/publicity stunt. They've got cash sitting around anyway and I believe they figured it was worth the commitment of cash to employees now to make the new corporate rate look good, thereby improving the public perception and perhaps defending the lower rate in the future. The future of this lower corporate rate is by no means assured for the long-term (or perhaps even a few years).
Speaking of AT&T, not a bad statement to help win favor from the administration on your merger that is being opposed.
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Old 12-21-2017, 08:12 AM   #40
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In a nutshell ... like junk food.

Nice treat at first, but may pay for the immediate gratification later on.
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