Tax reform is moving ahead. Republicans propose huge middle class tax increase

www.businessinsider.com...

So basically, they're trying the "base broadening" strategy of Reagan where they lower the top marginal rates, and make up the difference by making those at lower incomes pay more.

Base broadening in this particular case is in capping the amount of money that employees can put into an IRA, and removing employer match incentives. Down from $6500 in a tax deferred account to just $2400 in a tax deferred account. This difference will raise the taxable income of those who use IRA's by $4100 per year, which at a 25% bracket works out to about $1000/year in additional taxes.

But there's more to this. This is being done as part of CBO scoring, and relates to the current budget. Traditional IRA's are generally better for retirement funds beacuse they'll be taxed in the future at your lower retirement income rate rather than your current working income rate. This change, will force retirement accounts to Roths where the money is taxed up front, which is generally advantageous for the wealthy who don't see a retirement income dropoff, but a poor choice for the working class. How this relates to the budget, is that they need it to be deficit neutral after 10 years, so with this change they can tax retirement accounts that are 20, 30, or 40 years out and apply it to the current deficit. This will in turn create a bigger shortfall and higher taxes in the future.

It's literally taking ours and our childrens retirement accounts, and taxing them now, in order to give the Kochs and their financial peers more money.

a reply to: Aazadan


Ahhh the repubs. The only thing worse was the dems and the ACA.

Thanks for this. You clearly explained it and I appreciate it! Nicely done.

When are we going to get rid of these assholes? And all of those other assholes for that matter.

a reply to: Aazadan

originally posted by: Woodcarver
When are we going to get rid of these assholes? And all of those other assholes for that matter.

a reply to: Aazadan

To be fair, I don't actually mind tax increases. I think taxes need to go up. I do however have a problem with tax reform where we cut taxes on the wealthy, try to pay for them with tax increases on the middle class (when the middle class don't have substantial assets to tax), and then use such a shady technique to make it appear deficit neutral, when it's anything but... and will only force even more tax increases on the middle class in the future.

If this plan goes through, what you're going to see in 2027, is some President being faced with not renewing these tax cuts, and it being framed as President X is going to raise taxes! Just like they did with Obama and the Bush tax cuts.

originally posted by: Aazadan
www.businessinsider.com...

So basically, they're trying the "base broadening" strategy of Reagan where they lower the top marginal rates, and make up the difference by making those at lower incomes pay more.

Base broadening in this particular case is in capping the amount of money that employees can put into an IRA, and removing employer match incentives. Down from $6500 in a tax deferred account to just $2400 in a tax deferred account. This difference will raise the taxable income of those who use IRA's by $4100 per year, which at a 25% bracket works out to about $1000/year in additional taxes.

But there's more to this. This is being done as part of CBO scoring, and relates to the current budget. Traditional IRA's are generally better for retirement funds beacuse they'll be taxed in the future at your lower retirement income rate rather than your current working income rate. This change, will force retirement accounts to Roths where the money is taxed up front, which is generally advantageous for the wealthy who don't see a retirement income dropoff, but a poor choice for the working class. How this relates to the budget, is that they need it to be deficit neutral after 10 years, so with this change they can tax retirement accounts that are 20, 30, or 40 years out and apply it to the current deficit. This will in turn create a bigger shortfall and higher taxes in the future.

It's literally taking ours and our childrens retirement accounts, and taxing them now, in order to give the Kochs and their financial peers more money.

Yes Roth IRA's are post tax but say you make 1k a week, and put 10% (roughly the amount to currently max a Roth account annually) you have been taxed say 30% on the so that would be 30 dollars paid in taxes on the 100 put into the account. Now with a 10% rate of return over 30 years puts you at 1744.94 after 30 years so you got taxed 30 dollars instead of $523 on that amount of money. Roths in the long term work out in your favor.

a reply to: Aazadan

Wats amazing about all the retirement investing, stock, savings, IRA, Social Security thing is all the money remains in their pockets, with a promise to pay 'later on', always later on.

Keep paying them your money back.

originally posted by: Chromium51

originally posted by: Aazadan
www.businessinsider.com...

So basically, they're trying the "base broadening" strategy of Reagan where they lower the top marginal rates, and make up the difference by making those at lower incomes pay more.

Base broadening in this particular case is in capping the amount of money that employees can put into an IRA, and removing employer match incentives. Down from $6500 in a tax deferred account to just $2400 in a tax deferred account. This difference will raise the taxable income of those who use IRA's by $4100 per year, which at a 25% bracket works out to about $1000/year in additional taxes.

But there's more to this. This is being done as part of CBO scoring, and relates to the current budget. Traditional IRA's are generally better for retirement funds beacuse they'll be taxed in the future at your lower retirement income rate rather than your current working income rate. This change, will force retirement accounts to Roths where the money is taxed up front, which is generally advantageous for the wealthy who don't see a retirement income dropoff, but a poor choice for the working class. How this relates to the budget, is that they need it to be deficit neutral after 10 years, so with this change they can tax retirement accounts that are 20, 30, or 40 years out and apply it to the current deficit. This will in turn create a bigger shortfall and higher taxes in the future.

It's literally taking ours and our childrens retirement accounts, and taxing them now, in order to give the Kochs and their financial peers more money.

Yes Roth IRA's are post tax but say you make 1k a week, and put 10% (roughly the amount to currently max a Roth account annually) you have been taxed say 30% on the so that would be 30 dollars paid in taxes on the 100 put into the account. Now with a 10% rate of return over 30 years puts you at 1744.94 after 30 years so you got taxed 30 dollars instead of $523 on that amount of money. Roths in the long term work out in your favor.

Ah - somebody who does the math - thank you!!!

You are as confused by that as you were the military in the other thread.
Did you read the words "tax deferred retirement accounts" ?
Did you read the word "considering" ?
Did you read the words "House Ways and Means Committee" ? (hint : any committee in Congress is made up of a mix of Parties . Yes , Democrat AND Republican)
Stick around and keep posting.

a reply to: Woodcarver

As soon as people wake up and vote them out of office . I am 63 and am sure to be dead before this happens . I do try and vote for better people . unfortunately they don't stand a chance

a reply to: Gothmog

As we saw with the Dem's ACA and then the repubs after 8 years not having a plan. It is a universal truth that the R's and D's are not working for you (and me) they work for the highest bidder.

$1.5 TRILLION deficit increase over ten years.

So, they're not even going to pay for the tax cuts for the wealthy. The middle and lower classes get screwed so the 1% can make a few million more per year.

I'm sure the TEA Partiers are just giddy with liberal tears at this point.

a reply to: links234

I think the idea is that instead of “paying for the tax cut” they’re simply going to start cutting spending.

Ugh. Just ugh, again and again.

originally posted by: Chromium51
Yes Roth IRA's are post tax but say you make 1k a week, and put 10% (roughly the amount to currently max a Roth account annually) you have been taxed say 30% on the so that would be 30 dollars paid in taxes on the 100 put into the account. Now with a 10% rate of return over 30 years puts you at 1744.94 after 30 years so you got taxed 30 dollars instead of $523 on that amount of money. Roths in the long term work out in your favor.

It doesn't matter, you either pay say 10% on the input or 10% on the output, it works out the same. What does matter is that because for most people retirement income is less than working income so in retirement you're in a lower tax bracket. If you're working, you could be avoiding paying a 28% rate as it goes in, while in retirement when you withdraw you would instead be paying a 20% rate.

originally posted by: projectvxn
a reply to: links234

I think the idea is that instead of “paying for the tax cut” they’re simply going to start cutting spending.

Yeah, when they say they're going to "cut spending" that means they're going to stop funding for a bunch of public services which are primarily used by poor and middle class people. Once again taking from the poor and middle class in favor of the wealthy.

The problem isn't Government spending when that spending is going to the people. That's in our favor. That's what the Government should be doing with the money they collect. Spending it on public projects and services for us to enjoy.

What they're doing however is continuing to limit the public spending calling it "spending cuts", then continuing to spend only in the area's of special interests. They don't cut spending in the area's where they've been lobbied to spend their money, that keeps getting funding, just the public goods get cut.

This allows them to then cut Taxes, again for the wealthy, by eliminating those public spending areas. So the poor and middle class get a double punch. We loose what public spending was being done on one hand while getting screwed in taxes as well. While the wealthy private interests get the best of both sides. Lower taxes and continued spending on their projects.

originally posted by: seasonal
a reply to: Gothmog

As we saw with the Dem's ACA and then the repubs after 8 years not having a plan. It is a universal truth that the R's and D's are not working for you (and me) they work for the highest bidder.

this


why do people refuse to see this and defend their parties crap at any cost. Or how can they not find it embarrassing to even attempt it?

originally posted by: Gothmog
You are as confused by that as you were the military in the other thread.
Did you read the words "tax deferred retirement accounts" ?
Did you read the word "considering" ?
Did you read the words "House Ways and Means Committee" ? (hint : any committee in Congress is made up of a mix of Parties . Yes , Democrat AND Republican)
Stick around and keep posting.

Both parties vote on bills, one party proposes them.

originally posted by: Aazadan

originally posted by: Chromium51
Yes Roth IRA's are post tax but say you make 1k a week, and put 10% (roughly the amount to currently max a Roth account annually) you have been taxed say 30% on the so that would be 30 dollars paid in taxes on the 100 put into the account. Now with a 10% rate of return over 30 years puts you at 1744.94 after 30 years so you got taxed 30 dollars instead of $523 on that amount of money. Roths in the long term work out in your favor.

It doesn't matter, you either pay say 10% on the input or 10% on the output, it works out the same. What does matter is that because for most people retirement income is less than working income so in retirement you're in a lower tax bracket. If you're working, you could be avoiding paying a 28% rate as it goes in, while in retirement when you withdraw you would instead be paying a 20% rate.

It doesn't work out the same lol

a reply to: mOjOm

Oh don’t get me wrong I know spending won’t be cut.

I also know we aren’t getting a tax cut.