After the first of this year I contacted an old friend at the Tax Foundation, Executive Vice President Joe Henchman, a Californian who I’ve known to be a tax fighter since I first met him at age 16. I suggested that his well-respected nonprofit prepare an online federal income tax calculator.
What was needed — and the Tax Foundation subsequently built — was a website calculator for people to be able to input their own tax return numbers. Then the website would grind out the resulting federal income tax for 2017 AND 2018 — side by side. Of course, 2018 shows the effect of the remarkable federal income tax reform.
The MSM continues to claim that the tax reform doesn’t help “the little guy.” TOTAL BS, but a bogus assertion that is widely accepted by the public as fact. Granted, not EVERYONE benefits. But the OVERWHELMING majority — probably 90% or more — do end up better off in 2018 compared to 2017. The people who get hurt by this reform are the rich who live in batshit-crazy progressive strongholds — which usually have high state income tax rates.
California is the worst with its 13.3% top income tax rate. But also hurt are the well-to-do residing in Hawaii, Iowa, Minnesota, New Jersey, New York (especially NY City), Oregon and Vermont. Illinois and Connecticut also are moving into this toxic high tax climate.
The only significant “error” I noted in the calculator is that it does not treat long term capital gains properly. Granted, it IS a messy calculation for this level of comparison. Fortunately one can sort’a adjust one’s capital gains figure to reflect the lower rate, using the capital gains tax rates found in this article:
But for most, this capital gains factor is not a serious consideration. Give the calculator a try. And note the other prepackaged examples reflecting common situations.
For instance, look at the 2017 and 2018 tax bills for a retired couple with $48,000 income compared to a rich couple with $2,000,000 income. The retired couple pays 24.3% less taxes in 2018, while the rich couple pays only 3.5% less taxes.
Granted, the rich couple saves far more in tax DOLLARS, but that’s because the retired couple pays little tax to start with. The 2017 federal income tax for the retired couple constitutes only 2.3% of their income, while the rich couple pays a whopping 33.0% of their 2017 income in federal taxes.
“Share” this post. Let people see for themselves how the tax reform will affect their financial situation.