Tax Cut - Corporation Stock Buyback

[imoldernu]

A recent NYT article covering the $1.5T tax cuts that included corporation taxes going from a high of 35% to 21%. It suggested that workers received a relatively small percent of the savings, and that Goldman Sachs was predicting corporation stock buybacks of $1T this year.

Question is, how much did you receive of the tax cut?

https://www.nytimes.com/2018/12/27/us/politics/trump-tax-cuts-jobs-act.html?emc=edit_ne_20181227&nl=evening-briefing&nlid=5466126520181227&te=1

 

[Release The Hounds]

I do not own a home and do not itemize, so for me the increase in the Standard Deduction to $12,000 and the lowering of my rate from 25% to 22% will save me about $1000/year in Federal taxes.

 

[scrabbler1]

The new tax law will cost me about $80, thanks to the elimination of the personal exemption. Raising the Standard Deduction saves me less than losing the PE and not being able to itemize any more. Lower tax rates on the small portion of my income subject to those tax rates (as opposed to the lower tax rates on QD and LTCG) save me a negligible amount. And the repeal of the ACA's individual mandate costs me more in health insurance premiums which I can't recover via ACA premium subsidy because I went over the cliff last week.

 

[cathy63]

-$4000. That's due to losing $8K in exemptions and $10K in deductions, causing an increase of taxable income by $18K, even though there were no changes to gross income.

 

[VanWinkle]

I likely saved 200 bucks due to higher standard deduction. I also will save a bunch of time as I volunteer to do taxes for the low income/elderly through AARP. We get some higher income people also, but there will be less long form tax returns due to the generous standard deduction.

 

[Cobra9777]

-$4000. That's due to losing $8K in exemptions and $10K in deductions, causing an increase of taxable income by $18K, even though there were no changes to gross income.

No offset due to lower rates?

We benefited from lower rates on ordinary income (2 pensions and Roth conversions). Also from the QBI deduction on our rental income (assuming I don't chicken out before tax day). On the negative side, the new standard deduction is lower than the sum of our prior deductions plus personal exemptions. Previously, we bunched deductions every other year, mainly property tax. With the SALT limitation, bunching no longer makes sense, so it's highly unlikely that we will ever itemize again. Since we Roth convert to the top of the 12% bracket, there was no actual change in taxable income as a result of the SALT limitation. But obviously, our conversions are lower, which will ultimately result in a larger tax torpedo at 70. Counting that impact now, the overall net impact is still ~$1500 favorable, mainly due to lower rates.

 

[Alan]

We have benefitted quite a bit since we don’t itemise plus have been doing Roth conversations to the top of the 25% bracket. I converted ~$120k in 2018 and in 2019 it will be a little less and that will then have me 100% Roth. I’ve been so aggressive because my pensions already have me in the UK 40% bracket so RMDs would be taxed at that level.

DW is still in the UK 0% bracket so I won’t be so aggressive with her Roth conversions starting 2020.

 

[target2019]

Our effective tax rate may be .5% lower this year.
Several new factors this year, and can't present an exact figure yet.

 

[ERD50]

....

Question is, how much did you receive of the tax cut?
...

But that's a narrow view of "the tax cut".

You would also need to look at any people who benefited from the lower unemployment rates, and any raises/bonuses that were received by workers, and any effect the tax cut had on the market, for people who are invested.

I'm not going to try to put numbers on any of that, or home much/any can be tied to "the tax cut", but I'll stand by my view that looking at individuals is a narrow view.

NYT only gives a few views a month w/o a subscription, so I won't bother to click. History says much of it would be predictable class warfare stuff.

-ERD50

 

[cathy63]

No offset due to lower rates?

Yes, it's included. If they'd just eliminated the exemptions and deductions I believe we'd owe about $5700 more. Changing the tax brackets as well reduces the increase to only $4000.