The GOP Plan, Personalized

NPR has been especially good at providing charts and information about the contents of the enormous GOP tax plan. Although we don’t yet know what a reconciled bill might look like, I’ve used some of their information on the House and Senate proposals to guesstimate the effect on our household.

TAX BRACKET
There’s not a lot of change for us here. Under the House bill, we may stay the same. Under the Senate bill, we might go down a percentage point. If we made $50K more a year, we’d see a much bigger drop. (Note to self: Make more money.)

STANDARD DEDUCTION
We don’t take the standard deduction, so this is moot. I am self-employed and typically pay quarterly taxes and itemize. If we did take the standard deduction, our deduction would actually go down, from $25,450 for a family of three (with existing personal exemptions) to $24,000 (with such exemptions removed)—not the fabulous bargain the GOP has implied. Nevertheless, it may end up being a better deal than itemizing, now that so many other deductions are going away. We will have to see.

CHILD TAX CREDIT
From around $1000 now, this could go up to as much as $1600 to $2000 or so. We're no longer eligible, since our dependent is over 17. We might now get a temporary credit of $300 to $500 for a dependent who's not a child. And luckily for us, we don’t use child care anymore, because that deduction is gone.

SALT (State and Local Taxes)
This was a battle between Senate and House. Right now, with the Collins amendment, it looks like we’ll only be able to deduct up to $10K for state and local property taxes. That’s a sizable loss for us; our school taxes alone are over $12.5K. Deducting state and local taxes is a key reason for people in NYS and other high-tax states to itemize. Losing or lowering this is going to hurt. We'll get hurt, and so will local accountants!

TUITION WAIVERS
Our dependent is about to graduate from college and intends to join a national program that will help her earn graduate school tuition through work. It now looks likely that any GOP tax plan will attempt to tax the money she does not pay toward tuition as though it were earned income. Nor would she any longer be able to deduct $5,250 in employer-provided work-related education, should it be offered to her. Instead of seeing her launch her career debt-free and independent of us, it seems very likely that we will end up subsidizing her continuing education or helping her to find loans—whose interest, by the way, she will no longer be able to deduct.

EARNED BENEFITS
Marco Rubio let slip what most of us knew would happen once the tax bill became law—the GOP plans to go after Social Security and Medicare to make up some of the trillion-dollar burden on the deficit. Depending what that looks like, we have a relative who may need our assistance sooner rather than later. Not to mention that we ourselves are going to qualify for those benefits within the decade, if they still exist.

STATE EFFECTS
NYS will be hard-pressed to balance a state budget if upper income taxpayers can’t offset their property taxes with SALT and start leaving in droves. So what will the state do—cut services? One of us works for the state and could lose his budget or his job if that happens. Raise taxes to cover the losses? That will hurt, too. Your tax bill, and ours, is more than just one bill. Cut it in one place, and it may balloon somewhere else.

IN CONCLUSION
If the GOP plan is reconciled, our 2019 federal tax bill is likely to be higher than our 2017 tax bill. We will lose a lot in SALT. We might gain a little if we change tax brackets. And by 2025, only our millionaire friends (note to self: Make some millionaire friends) will be paying less than they do today; we will certainly be paying more than we would have if the tax structure stayed as it currently is. Even the breaks for small businesses in the GOP plan are designed to help the top 1 percent, not a small business like mine.

Let's consider, too, what those taxes will pay for. For example, this year's budget eliminates teacher training and cuts food in schools, coastal research programs, NIH training, affordable housing programs, senior-work programs, education at NASA, and 50 programs with the EPA. It increases the size of the Army, Navy, and Marine Corps while slicing back UN peacekeeping funds.

Add to that some of the hidden features of the GOP tax plan—allowing churches to endorse candidates without losing tax-exempt status! letting parents start 529 funds for the unborn or apply them to private K-12 education!—and you have a tax plan that is designed to support a right-wing agenda while ensuring that the rich get richer. I’m not surprised that the GOP didn’t reveal the Senate plan until half an hour before the vote. I’m a little surprised that they had the stones to let it be seen at all.

UPDATE: NPR reports that the 529 for fetuses may be out of the revised bill.
UPDATE 12/14: And now it looks like they're losing the awful tuition waiver plan.