In a nut shell Tax cut/Job act passed

[street]

No politics please but in a nut shell is this Tax bill good for us or not. The more I read the more confused I get. I can't imagine having a stronger economy what it is going to do for the markets. One worry I see is growing to fast with a great economy now.

 

[LOL!]

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.

 

[Release The Hounds]

It was designed as a bit of a time bomb due to the temporary nature of the individual cuts...somewhat nice for some people in the interim with a reversion to the "as before" in 10 years.

I think there will be a lot of tax-lawyer gamesmanship going on that will undercut the expected tax revenues, as people take advantage of the pass-through provisions.

And I personally do not foresee the corporate tax cuts leading to anywhere near the growth to make up for the lost tax revenue, but I guess we'll find out in about 10 years.

 

[Travelwanted]

Generally a good thing unless you live in a high tax state as it caps your state and local tax deductions (SALT).

Wealthier will gain more benefit but that is because the wealthy pay most of the taxes.

The middle class should benefit from a lower tax rate.

Further, the reduction in corporate taxes should increase hiring and profitibility. This indirectly affects the middle class through more jobs and an increase in investment gains.

 

[Fermion]

We no longer pay any federal tax so I didn't really care about that part. I do like the cut in corporate tax rate as that should help some of my stocks that have sheltered massive amounts of money overseas.

I used to care.

Oh, Merry Christmas!

 

[frayne]

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.

 

[street]

Generally a good thing unless you live in a high tax state as it caps your state and local tax deductions (SALT).

Wealthier will gain more benefit but that is because the wealthy pay most of the taxes.

The middle class should benefit from a lower tax rate.

Further, the reduction in corporate taxes should increase hiring and profitibility. This indirectly affects the middle class through more jobs and an increase in investment gains.

Yep that is what I get out of the bill also. I really can't see in the near future that it will hurt me in any way. I see it as a win and all good things don't last forever and if they try to please everyone it would fail.

 

[cathy63]

Further, the reduction in corporate taxes should increase hiring and profitibility. This indirectly affects the middle class through more jobs and an increase in investment gains.

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.

 

[GrayHare]

Goosing the economy by reducing taxes was needed more in 2009 than now. What bullets will be used when the inevitable next economic downturn arrives?

 

[Ready]

The nice thing about not earning any income is not having to worry about big changes in the tax law. This was my last year of w*rk, and I did pay a lot of CA taxes. But next year I'll just have a small amount of interest, dividends and capital gains, so I don't see the tax bill making much of a difference either way.

I would think the lowering of corporate taxes to 21% would have a positive effect on the stock market, which will of course benefit all of us who are invested in equities.

 

[Dog]

We are retired and will end up in the 12% bracket and get a bit of a tax break .
Hopefully the tax cuts for businesses will continue the growth in jobs and help push wages higher considering they have been stagnant for so long. This should help the working class.

 

[pb4uski]

I think it will be good for investors.

 

[RobbieB]

Yes, I see the corporate tax reduction keeping the bull market alive and well for a long time.

 

[jonat]

<mod edit>

I think for most of us here, the effects will be minimal, other than changing the way deductions work. More people will be able to take the standard deduction.

 

[JDARNELL]

While unemployment is low look at the labor force participation rate. Still a lot of people on the sidelines that aren't willing to work or underemployed at the current pay rate. Eventually some of these people will be pulled off the sidelines back into the labor market. Of course if labor prices gets too high (which I think we have a ways to go) the transition to automation will progress faster than projected.

 

[Senator]

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'.

AT&T is paying bonuses of $1,000 to more than 200,000 U.S. employees.
AT&T's CEO said it was in response to tax reform.

https://www.cnbc.com/2017/12/20/tax-reform-reaction-att-is-giving-bonuses-to-200000-employees.html

Wells Fargo, Fifth Third Bancorp unveil minimum wage hikes after tax bill passage
Fifth Third and AT&T are paying employees special bonuses after getting tax cuts under the Republican tax plan.
Wells Fargo said Wednesday that it would boost minimum wages for employees to $15 an hour, following Fifth Third's similar announcement.

https://www.cnbc.com/2017/12/20/fif...minimum-wage-hike-after-tax-bill-passage.html

 

[Another Reader]

Based on all the wage hikes and bonuses announced this afternoon plus the capital investments, maybe what's going to pop out of the nutshell is inflation. That 2 percent CD might not be as appealing six months from now.

 

[travelover]

I just want to get my post in before Porky shows up.

 

[Mr._Graybeard]

DW and I have a chunk of change in tax-deferred plans. We'll try to use the rate cuts to our advantage, converting to Roth accounts

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.

 

[street]

DW and I have a chunk of change in tax-deferred plans. We'll try to use the rate cuts to our advantage, converting to Roth accounts

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.

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.

 

[bobandsherry]

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-reform-reaction-att-is-giving-bonuses-to-200000-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.

 

[jazz4cash]

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?

 

[MRG]

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.

 

[scrabbler1]

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.

 

[SheitlQueen]

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.