We now have the final details of the federal income tax bill published about 10 hours ago1. It seems natural for a tax geek like me to immediately calculate the effect the tax bill has on my family. My family is clearly in the ‘middle of the middle class’ by any measurement we may choose to use for comparison. We file married and have one dependent in college. We struggle with education costs, medical costs and the shrinking of our disposable income just like many other U.S. households. We have one professional income, one part-time income and a young side business that currently generates a tax loss. In short, I think that my family is a lot like a lot of other folks.
Under the new tax bill our taxable income goes up primarily from the elimination of the personal exemption. This increase is partly offset by an increase in the standard deduction and lower tax rate but the overall effect is slightly unfavorable.
By my calculation our federal income tax bill will increase by $192 in 2018 compared to 2017. This assumes that our income remains the same next year and there are no other tax changes. So, just as most accountants have been saying for months, this is not a tax bill that benefits ordinary folks like us. I am annoyed every time I hear a politician promise how “HUGE” this tax cut is for us. It feels like these rich politicians just pulled off the biggest heist on the American people in our lifetime. They win big. We pay the bill.
So, in the end, my family is getting hit with a small increase in our federal income taxes while the upper income people get a huge tax cut of more than a trillion dollars. I understand that that tax windfall comes at the expense of a huge increase in the national debt that will be a burden on younger Americans for years to come. I understand that super-rich people and corporations will pay a lower portion of the cost to run our nation than at any earlier time in our lives. I understand that the ruling upper class believe that the best way to handle this huge national debt they created is to cut services like Medicare, Medicaid and Social Security and making it easier for the rich to exploit our nation’s natural resources. I’m pissed. I think you should be also.
1 This blog post was based on the conference report issue Fecember 15, 2017 and published by ABC News at http://abcnews.go.com/Politics/gop-tax-plan-shaky-ground-rubio-announces-hes/story?id=51798723. For this blog post I only read and referred to the sections apparently controlling the topics mentioned. This is not meant to be a complete analysis of the law.
I’ve already received one impolite email expressing disbelief of these results. It’s not appropriate to publish additional details on my finances or my wife and children but it might be better to use other anonymous examples in the near future to illustrate the effects.