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The people on tax cuts – KISS.

November 13, 2017

Forget all the bird goo about filing on a postcard or writing off property or local taxes. Those things are political talking points and while important to some, don’t seem to reflect everyone’s judgments of the tax cut bill.

Most people seem to be looking for a significant rise in their spendable take-home pay.

When you boil it all down to the bare essentials, if anyone in the so-called middle class doesn’t see an immediate benefit, this is all going to go down as a failure even if it does result in more jobs and better Federal revenues.

As one man put it “I’ve already got a job, so more jobs isn’t the first thing I think about when I hear ‘tax cut’ .”

We still don’t know how all this political maneuvering will affect withholding taxes, and we won’t until something actually gets signed by the President, since the regulatory changes always have to follow any new law.

That creates uncertainty in both the business and worker community.

For instance, will the W-4 as we know it will be a thing of the past? With the loss of the personal allowances, maybe employers don’t need to know how many people there are in your family.

Right now, it is unknown whether the withholding tables will tax you according to your estimated net or gross pay.  If you are single and currently earning say, $45K a year, will the withholding not kick in until you have earned more than $12,000, or will it apply to all your wages, creating an automatic refund at the end of the year?

Those are just a few of the questions being asked by the people who are actually going to be affected by these changes, and so far there aren’t many answers out there.

For instance, the days when you could juggle your take-home pay by claiming more or fewer dependents might be gone.

It’s possible that the days of using over-withholding of your taxes to create a humongous annual refund check will end. Responsibility for saving may now fall on taxpayers shoulders.

That’s not to say no one cares about being able to itemize deductions at the end of the year, but for even more of us than at present, it won’t be possible to do so.

That means that all the benefit has to show up every payday and if you are filing on $25K or less, that’s currently estimated to be about $5.00 a week under both the House and Senate versions.

With all of the competing claims as to the amount it will save on taxes, the public is expecting to see that theoretical extra $1200 a year in spendable cash and $5 a week isn’t going to cut it.

Other, more affluent (but not wealthy) taxpayers point to the fact that the President’s economic advisers are Democrats as a reason for the highly unpopular SALT provisions and the Senate’s insistence on retaining seven tax brackets. They see it as a left-wing “stick-it-to-rich”  strategy masquerading as tax reform.

As for the Senate version, the decision to put off the corporate tax cuts for a year seems to make the shaky assumption that Republicans will retain their majorities in both Houses. That almost never happens in the first mid-term after a Presidential election.

Almost no one who has talked to Musings believes this is directly about the middle class, and most of them don’t trust big business or Congress enough to believe that everyone will suddenly have their pick of good-paying jobs as result of this legislation.

There are pockets where competition for some employee classifications is raising wages, but the effect is spotty. There are still plenty of employers advertising for office help or shelf stockers or delivery drivers at $8.00 an hour.

The rush to an all online economy on the other hand is actually costing local entry level jobs, and that effect is only forecast to increase in the next ten years and beyond.

The Obamacare mandates are still there, making it difficult for small businesses to grow.

The insurance subsidies also take a large bite out of the Federal budget, while failing to provide affordable healthcare for most of the people in the middle class.

Retirees are often seeing large increases in their Medicare Part B and D premiums,  as well as no to miniscule spendable increases in their Social Security income.

Most of all, the whole tax cut issue has turned into strictly a series of political talking points.

If the polls are right and President Trump’s favorable numbers are actually falling as much as reported, these are the issues that are costing him.

For all of the feverish rhetoric on both sides of the aisle, all issues for voters are of the personal kind, and that’s something Washington doesn’t now, has never, and will never understand.

From → op-ed

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