usmbguest5318
Gold Member
...the assertion that the recently passed GOP tax bill is for the middle class....
What's gone?
What's gone?
- Personal exemptions -- keep in mind that one got them for each dependent, and no, the doubled standard deduction does not make up for thee lost exemptions (oneself, one's spouse and two kids) at ~$4K each.
- Before-AGI deductions (i.e., deductions one can take regardless of whether one itemizes)
- Moving expense
- Student loan interest
- Tuition and fee deduction
- Part of the primary home mortgage interest deduction
- Part of the primary home mortgage interest deduction, but no part of rent is deductible, so if you aren't well off enough to buy a house, the tax code isn't about helping you become so by allowing you to deduct all or part of your rent.
- Second home mortgage interest deduction.
- Deduction for the interest on a loan to buy a boat
- Definition of what income is aka the carried interest preference -- I realize most folks have no idea what this means. The reason they don't is, no slight intended, because they aren't wealthy enough to know about it. Here's a "back of the napkin" discussion on what it is and how it works.
Imagine two men living in the same town. Joe owns an oil exploration corporation. Pete, a geologist, works for Joe. Pete finds oil, billions of dollars worth, and when he does, Joe gives him a $1 million bonus.
Pete pays income taxes on $1 million and keeps looking for oil. Joe, the boss is now a billionaire. Although he has not sold any oil yet, the bank lends him money against the find and he builds a mansion, buys a nice car and lives it up. Even though Joe has become richer by billions of dollars, he pays no income tax. Why? He has no income.
This simple example illustrates an important point: The biggest income tax loophole is the definition of income. For most people, what counts as income is simple to see—it’s their salary, and maybe, if they’re lucky, a bonus. Yet for the very wealthy, salary is trivial—if they earn one at all. That’s not where their riches come from. Instead, their money comes from “carried interest” (which we’ll explain more fully below) and from the appreciation of their ownership interests in stock, real estate and other assets. Every year, Forbes and other magazines show how the wealth of hundreds of individuals increases by hundreds of millions from one year to the next. As long as this increase is not defined as income, no income tax is due.
And, surprise, surprise: all these things are effectively taxed, if at all, at a much lower rate than the income tax rates that apply to simple salaries and bonuses. It gets even better: increases in the value of shares of stock, and of real estate, aren’t taxed until sold and if never sold, may never be taxed. What about estate tax, you say? After all, it used to be said, “The only things that are certain are death, and taxes.” But now, with good ”advice,” that’s no longer true. Stick with us and we’ll explain how.
- Tax preference for offshoring jobs
- Deferral of tax on asset appreciation
- Charitable trust loophole
- The "why a Ritz Carlton and high-end office complexes are attached to or across the street from a shopping mall" loophole -- This is the deduction that lets me deduct the cost of a limo ride, but far less well off folks cannot deduct the cost of the used jalopy they bought to get to and from work, and buy their groceries, and take their kids wherever, etc.
- The "try it and see" loophole