2018 Tax Return

[RunInRed 16,407]

Interested to see how every one shakes out from 2018, the first full year the Trump tax code was in effect.

 

Millions of Americans could be stunned as their tax refunds shrink

Millions of Americans filling out their 2018 taxes will probably be surprised to learn that their refunds will be less than expected or that they owe money to the Internal Revenue Service after years of receiving refunds.

People have already taken to social media, using the hashtag #GOPTaxScam, to vent their anger. Many blame President Trump and the Republicans for shrinking refunds. Some on Twitter even said they wouldn’t vote for Trump again after seeing their refunds slashed.

The uproar follows the passage of a major overhaul to the tax code in December 2017, which was enacted with only Republican votes and is considered the biggest legislative achievement of Trump’s first year. While the vast majority of Americans received a tax cut in 2018, refunds are a different matter. Some refunds have decreased because of changes in the law, such as a new limit on property and local income tax deductions, and some have decreased because of how the IRS has altered withholding in paychecks.

John Prugh of Ewing Township, N.J., was irate when he completed his 2018 tax return this month and discovered his refund would be $3,000 less than what he received last year. Prugh considers himself “solidly middle class.”

The 39-year-old is a manager at a Barnes & Noble bookstore, and his wife works for the state government. They have two children. Prugh said he had no reason to believe their tax situation would change this year because he and his wife have lived in the same house for years while their incomes have remained stable.

“It totally feels like a scam,” said Prugh, who did not vote for Trump. “I did still get a small refund, but compared to what I was expecting from previous years, it was shock.”

The average tax refund check is down 8 percent ($170) this year compared to last, the IRS reported Friday, and the number of people receiving a refund so far has dropped by almost a quarter.

[channonc 466]

For me personally, the answer is a little more complicated. I lobbied on the tax law and did the math as the bill passed. I knew I was going to end up paying more, much more. So I went back and adjusted my withholding last February and made some drastic changes withholding much more than usual. I ended up with a higher refund this year, but only because of the drastic adjustments I made. When I compared my income and tax liabilities from 2017 vs. 2018, I owed considerable more in 2018 without a comparable income increase.

Other things to note, the IRS was instructed to tighten the withholding tables so that people weren't taking out as much. This was supposed to have the effect of instant gratification, but again, the tightened tables resulted in more people owing than usual. Additionally, W4s weren't mandatory last year if you were at the same job. So most people just took the IRS withholdings and didn't bother going through the new W4 worksheet themselves.

The biggest changes that caused people to owe this year rather than last: elimination of personal exemptions, mortgage deduction cap, student loan deduction cap, SALT cap. Add all those things together, and for some families, the doubling of the standard deduction doesn't help.

[AUDub 11,147]

My wife and I paid close attention to our withholdings, so we ended up getting a slightly larger refund. 

[ShocksMyBrain 9,364]

My wife was self-claiming quarterly taxes in 2017 based on how her job’s payroll was set up. She got salaried in 2018, so we actually have to pay some taxes this year because the IRS believes we made a lot more last year. Unfortunate because we were hoping a refund could go toward a down payment on a home. 

[Brad_ATX 13,654]

Haven't finished mine just yet but the estimate is that I will see about $1,000 less this year in returns than previous years.  No salary change.  My paychecks went up about $40 per week after the law took effect, so I know all in I'm bringing home more by about $1000 throughout the year.

[AU64 10,122]

JMO but the Poll question means nothing without an explanation.  My taxes will be more this year.....wow that sounds unfair huh?  ...but wait a second..... my income is about 10% higher and my deductions 10% lower......and my "refund" is about zero (I hope) since my quarterly payments are pretty much on target....I hope. 

Note that only about 25% or fewer taxpayers historically itemize like I do...and that percentage is falling.   But...if it pays to itemize your taxes, you can keep doing it like I will this year.   Or if you are better off taking the new standard deductions then file your taxes that way.    Nobody is forced to use the new standard deductions. Figure it both ways and do what is best for you.

From comments I've heard it is apparent that many people can't tell the difference between a refund and the actual taxes they pay.    Whether a refund is more or less from one year to the next is irrelevant...... unless you like to loan the government your money interest free.    In 2017 and 2018  the tax withholding tables changed to reduce the withholding rates and thus reduced the amount being withheld from paychecks for the vast majority of American workers.   Also, it seems in the process, the adjustments might have also gotten to the point where the amount being withheld is more representative of the actual taxes that will be due.... so refunds may be lower AND you are also likely to pay less income tax. . 

JMO but evaluating the reactions based on "refunds" is either deliberately misleading or is downright ignorant.    None of these interviewers ask the taxpayer how much they PAID in income tax last year and how much they will be paying this year.  So forget the "refund" comparison....it which means nothing unless you want the IRS to be your piggy bank.    

I've been of the view that somewhere on the refund statement the IRS should show "income tax paid for 2017" and "income tax paid for 2018".   At least taxpayers would have an opportunity to know the truth about their situation. 

 

[AUloggerhead 2,229]

9 hours ago, AU64 said:

JMO but the Poll question means nothing without an explanation.  My taxes will be more this year.....wow that sounds unfair huh?  ...but wait a second..... my income is about 10% higher and my deductions 10% lower......and my "refund" is about zero (I hope) since my quarterly payments are pretty much on target....I hope. 

Note that only about 25% or fewer taxpayers historically itemize like I do...and that percentage is falling.   But...if it pays to itemize your taxes, you can keep doing it like I will this year.   Or if you are better off taking the new standard deductions then file your taxes that way.    Nobody is forced to use the new standard deductions. Figure it both ways and do what is best for you.

From comments I've heard it is apparent that many people can't tell the difference between a refund and the actual taxes they pay.    Whether a refund is more or less from one year to the next is irrelevant...... unless you like to loan the government your money interest free.    In 2017 and 2018  the tax withholding tables changed to reduce the withholding rates and thus reduced the amount being withheld from paychecks for the vast majority of American workers.   Also, it seems in the process, the adjustments might have also gotten to the point where the amount being withheld is more representative of the actual taxes that will be due.... so refunds may be lower AND you are also likely to pay less income tax. . 

JMO but evaluating the reactions based on "refunds" is either deliberately misleading or is downright ignorant.    None of these interviewers ask the taxpayer how much they PAID in income tax last year and how much they will be paying this year.  So forget the "refund" comparison....it which means nothing unless you want the IRS to be your piggy bank.    

I've been of the view that somewhere on the refund statement the IRS should show "income tax paid for 2017" and "income tax paid for 2018".   At least taxpayers would have an opportunity to know the truth about their situation. 

 

Truth.  A refund just means the govt is returning your own money which was overpaid as taxes.  If you're getting a large refund every year then you're doing your taxes wrong -- make an adjustment to your witholding.

[TitanTiger 20,472]

1 hour ago, AUloggerhead said:

Truth.  A refund just means the govt is returning your own money which was overpaid as taxes.  If you're getting a large refund every year then you're doing your taxes wrong -- make an adjustment to your witholding.

I think the main thing people hate are surprises.  Some try to get as close to zero at tax time as possible - neither owing nor getting back much.  But like it or not, others prefer to have this "hidden interest-free savings" thing that happens during the year by paying more in taxes and getting a fat refund.  There's nothing wrong with it and in many cases it's better for them as they lack the discipline to save the same amount of money on their own if it was just coming in small amounts with each paycheck.  So when you keep your withholdings the same but suddenly instead of getting $1500 back you owe $500, or instead of getting $4000 back, you only get $700, that's going to annoy you.

[TitanTiger 20,472]

11 hours ago, AU64 said:

JMO but the Poll question means nothing without an explanation.  My taxes will be more this year.....wow that sounds unfair huh?  ...but wait a second..... my income is about 10% higher and my deductions 10% lower......and my "refund" is about zero (I hope) since my quarterly payments are pretty much on target....I hope. 

Note that only about 25% or fewer taxpayers historically itemize like I do...and that percentage is falling.   But...if it pays to itemize your taxes, you can keep doing it like I will this year.   Or if you are better off taking the new standard deductions then file your taxes that way.    Nobody is forced to use the new standard deductions. Figure it both ways and do what is best for you.

From comments I've heard it is apparent that many people can't tell the difference between a refund and the actual taxes they pay.    Whether a refund is more or less from one year to the next is irrelevant...... unless you like to loan the government your money interest free.    In 2017 and 2018  the tax withholding tables changed to reduce the withholding rates and thus reduced the amount being withheld from paychecks for the vast majority of American workers.   Also, it seems in the process, the adjustments might have also gotten to the point where the amount being withheld is more representative of the actual taxes that will be due.... so refunds may be lower AND you are also likely to pay less income tax. . 

JMO but evaluating the reactions based on "refunds" is either deliberately misleading or is downright ignorant.    None of these interviewers ask the taxpayer how much they PAID in income tax last year and how much they will be paying this year.  So forget the "refund" comparison....it which means nothing unless you want the IRS to be your piggy bank.    

I've been of the view that somewhere on the refund statement the IRS should show "income tax paid for 2017" and "income tax paid for 2018".   At least taxpayers would have an opportunity to know the truth about their situation. 

The interviewers (and the article linked above) aren't misleading or ignorant.  They said basically everything you just said if you'd read it:

 

Quote

 

Many Americans may confuse their meager refunds as a sign that they paid more in taxes as a result of the Tax Cuts and Jobs Act. Generally, that is not true.

According to the Tax Policy Center, 80 percent of filers received a tax cut, and about 5 percent wound up paying more in federal income taxes. The tax cuts showed up in fatter weekly or biweekly paychecks for most Americans, but few people noticed, according to polling.

“There’s a difference between taxes and your refund,” said Joseph Rosenberg, a senior research associate at the Urban-Brookings Tax Policy Center at the Urban Institute. “People generally got a piece of their tax cut last year gradually in the form of lower withholding on their paychecks.”

Many families received a tax cut, but their refunds are smaller this year because the IRS made major changes to the “withholding tables” — the amount the federal government recommends taking out of your paycheck for federal income taxes — in the new tax law.

The IRS attempted to set withholding levels so that more people would pay correct taxes, meaning they neither owe anything to the IRS at the end of the year nor receive a refund.

“Getting a tax refund means that you gave the government an interest-free loan because you overpaid your taxes,” said Nicole Kaeding, director of federal projects at the Tax Foundation, a right-leaning think tank.

 

 

[TitanTiger 20,472]

And I'm not sure how mine will pan out.  I owed a good bit last year so I adjusted my withholdings and significantly upped my 401(k) contributions to reduce taxable income.  But based on some very rough estimates, I think I still might owe money when I was hoping to actually get a few hundred bucks back this year.

I think adjusting the withholding tables was a bad move, at least without a lot of explicit warning to people ahead of time.

[AUloggerhead 2,229]

29 minutes ago, TitanTiger said:

I think the main thing people hate are surprises.  Some try to get as close to zero at tax time as possible - neither owing nor getting back much.  But like it or not, others prefer to have this "hidden interest-free savings" thing that happens during the year by paying more in taxes and getting a fat refund.  There's nothing wrong with it and in many cases it's better for them as they lack the discipline to save the same amount of money on their own if it was just coming in small amounts with each paycheck.  So when you keep your withholdings the same but suddenly instead of getting $1500 back you owe $500, or instead of getting $4000 back, you only get $700, that's going to annoy you.

Another way of looking at a refund (of any amount) is that you have loaned the govt interest-free with your own money.  Given the three possibilities:  get a refund, owe nothing, or owe some tax, I would prefer to owe some tax.  I'm not into self-delusion about a refund being a big "surprise."  

[AUcivE09 582]

11 hours ago, AU64 said:

JMO but the Poll question means nothing without an explanation.  My taxes will be more this year.....wow that sounds unfair huh?  ...but wait a second..... my income is about 10% higher and my deductions 10% lower......and my "refund" is about zero (I hope) since my quarterly payments are pretty much on target....I hope. 

Note that only about 25% or fewer taxpayers historically itemize like I do...and that percentage is falling.   But...if it pays to itemize your taxes, you can keep doing it like I will this year.   Or if you are better off taking the new standard deductions then file your taxes that way.    Nobody is forced to use the new standard deductions. Figure it both ways and do what is best for you.

From comments I've heard it is apparent that many people can't tell the difference between a refund and the actual taxes they pay.    Whether a refund is more or less from one year to the next is irrelevant...... unless you like to loan the government your money interest free.    In 2017 and 2018  the tax withholding tables changed to reduce the withholding rates and thus reduced the amount being withheld from paychecks for the vast majority of American workers.   Also, it seems in the process, the adjustments might have also gotten to the point where the amount being withheld is more representative of the actual taxes that will be due.... so refunds may be lower AND you are also likely to pay less income tax. . 

JMO but evaluating the reactions based on "refunds" is either deliberately misleading or is downright ignorant.    None of these interviewers ask the taxpayer how much they PAID in income tax last year and how much they will be paying this year.  So forget the "refund" comparison....it which means nothing unless you want the IRS to be your piggy bank.    

I've been of the view that somewhere on the refund statement the IRS should show "income tax paid for 2017" and "income tax paid for 2018".   At least taxpayers would have an opportunity to know the truth about their situation. 

 

This is about the same thing I was thinking. If you have to find a way to get people upset - then here you go. Sorry you are not getting back more of the money you already earned and loaned to the feds for a year.

I am actually getting more back thanks to the standard deduction and child/child care deductions. I have adjusted accordingly for this year already so that im not loaning out so much free of interest. Next year I hope to get less back.

 

[AU64 10,122]

9 minutes ago, TitanTiger said:

And I'm not sure how mine will pan out.  I owed a good bit last year so I adjusted my withholdings and significantly upped my 401(k) contributions to reduce taxable income.  But based on some very rough estimates, I think I still might owe money when I was hoping to actually get a few hundred bucks back this year.

I think adjusting the withholding tables was a bad move, at least without a lot of explicit warning to people ahead of time.

The adjustments were announced and explained and were made several months into the year.  If I recall, they were made retroactive to the first of the year (2017? ) The obvious reason for the adjustment was to give people more take home pay right away....looking for a little bump in the economy.....JMO but I thought it was reasonably well explained but I guess people hear what they want to hear and many of the dems were poo-pooing the tax cuts which created a negative impression of them.   Like now....where the headlines of articles ...al.com the other day for example, stressed lower 'refunds" as if that were significant. 

I'm in your situation I guess...have no idea what my owed taxes will be because of my irregular income and how my required distribution from my 401k impacts things and gain or loss on brokerage accounts.   I got dinged last year for not making my four quarterly payments....$40 but on the other hand I failed to loan the government nearly $2000 and the penalty was reasonable I guess.    Funny thing of course, if I had made those quarterly payments I would have gotten about $200  "refund" and would have taken my wife out someplace nice to celebrate our good fortune. 

[TitanTiger 20,472]

5 minutes ago, AUloggerhead said:

Another way of looking at a refund (of any amount) is that you have loaned the govt interest-free with your own money.  Given the three possibilities:  get a refund, owe nothing, or owe some tax, I would prefer to owe some tax.  I'm not into self-delusion about a refund being a big "surprise."  

Again, yes I understand the concept.  But when you don't make it clear to people what to expect because behind the scenes you change the withholding tables, you're going to piss people off.  Think about the person who'd gotten their withholdings just right and would owe maybe $100 or less or get back $100 or less.  They don't change anything, but don't notice the extra pay because it's direct deposit, and then find out they owe $1600.  You think that person is going to be happy about the way this was implemented?

[AUcivE09 582]

2 minutes ago, TitanTiger said:

Again, yes I understand the concept.  But when you don't make it clear to people what to expect because behind the scenes you change the withholding tables, you're going to piss people off.  Think about the person who'd gotten their withholdings just right and would owe maybe $100 or less or get back $100 or less.  They don't change anything, but don't notice the extra pay because it's direct deposit, and then find out they owe $1600.  You think that person is going to be happy about the way this was implemented?

I think the argument here would be that the vast majority who pay attention to their withholdings to get it "just right" are those like us who knew what to do and made sure to understand what was happening.  Those that are "surprised" are probably those who fill out a W-4, never think about it again, and consider the refund "free money". These people are unhappy because no one held their hand. 

 

If anything this is a great lesson in why balancing a checkbook (online account?), budgeting, and taxes should be a required course for graduating seniors in high school.

[TitanTiger 20,472]

5 minutes ago, AUcivE09 said:

I think the argument here would be that the vast majority who pay attention to their withholdings to get it "just right" are those like us who knew what to do and made sure to understand what was happening.  Those that are "surprised" are probably those who fill out a W-4, never think about it again, and consider the refund "free money". These people are unhappy because no one held their hand. 

That's hardly an watertight argument.  I'm not saying they micromanage it, they had just gotten the withholdings to more or less, on average, be close to what they owed and didn't mess with it.  It had been that way for a few years.  Yeah, maybe one year they got $350 back, but the next year they owed $80.  It wasn't enough of a difference to bother filling out a new W-4 so they let it ride year to year.  Then they get this tax bill.  Not happy.

 

 

[AUloggerhead 2,229]

1 hour ago, TitanTiger said:

Again, yes I understand the concept.  But when you don't make it clear to people what to expect because behind the scenes you change the withholding tables, you're going to piss people off.  Think about the person who'd gotten their withholdings just right and would owe maybe $100 or less or get back $100 or less.  They don't change anything, but don't notice the extra pay because it's direct deposit, and then find out they owe $1600.  You think that person is going to be happy about the way this was implemented?

Believe me, I am in no way "happy" with the US tax code.  Every year I'm fuming inside about how long it takes to wade through all the IRS publications just to comply with it all.  And I consider myself fortunate in that I have a sister-in-law that's a CPA who helps us out.  I forgot to add there's one more possibility:  owe some tax and pay a penalty.  That is, if you don't get your witholding right and pay too little tax, then you get to pay more -- essentially interest on what was owed.  In other words, the IRS won't pay you interest on your overpayment of taxes (your refund,) but they damn sure will demand interest (penalty) if you underpay.  

[AU64 10,122]

2 hours ago, TitanTiger said:

Again, yes I understand the concept.  But when you don't make it clear to people what to expect because behind the scenes you change the withholding tables, you're going to piss people off.  Think about the person who'd gotten their withholdings just right and would owe maybe $100 or less or get back $100 or less.  They don't change anything, but don't notice the extra pay because it's direct deposit, and then find out they owe $1600.  You think that person is going to be happy about the way this was implemented?

You can lead a horse to water and all that stuff...but the changed withholdings was in the news quite a bit.  On the other hand, the majority of taxpayers have money withheld from their paychecks and it's usually the employer who manages that process......and likely if your employer does not mention it...and you don't watch the news you might be surprised I guess.    I'm retired, have some knowledge of accounting and have the time so my goal is to owe nothing and get nothing back. Also I try to give my money to worthy causes (like Auburn)  rather than the government.  

But it still comes down (in my view) that a depressing number of people think that if their refund is smaller this year than last, that they are paying higher taxes. It's like they never look at their pay stubs or they don't connect their net income with a reduction in tax withholding. 

Saw a stat that 92% of tax returns were e-filed in 2017...up from less than 70% in 2010........and 50 million people e-filed their own returns....much higher than I would have expected. -

[TitanTiger 20,472]

13 minutes ago, AU64 said:

You can lead a horse to water and all that stuff...but the changed withholdings was in the news quite a bit.  On the other hand, the majority of taxpayers have money withheld from their paychecks and it's usually the employer who manages that process......and likely if your employer does not mention it...and you don't watch the news you might be surprised I guess.    I'm retired, have some knowledge of accounting and have the time so my goal is to owe nothing and get nothing back. Also I try to give my money to worthy causes (like Auburn)  rather than the government.  

But it still comes down (in my view) that a depressing number of people think that if their refund is smaller this year than last, that they are paying higher taxes. It's like they never look at their pay stubs or they don't connect their net income with a reduction in tax withholding. 

Saw a stat that 92% of tax returns were e-filed in 2017...up from less than 70% in 2010........and 50 million people e-filed their own returns....much higher than I would have expected. -

I think that some people may be confused and think they are paying more taxes.  I think most are just upset that they didn't understand just how drastic the withholding tables were being adjusted.  

[AU64 10,122]

5 minutes ago, TitanTiger said:

I think that some people may be confused and think they are paying more taxes.  I think most are just upset that they didn't understand just how drastic the withholding tables were being adjusted.  

I don't know how drastic they were or how many people were actually affected to a great extent.  Only takes a few people griping to make the news.   In practice, most employed people should have seen an increase in their net pay....but nobody mentioned that much and I guess people just went out and spent that money and never wondered how that got a raise...which mostly was a matter of letting people keep their own money.

One company we have a bit of stock in was very clear last year that the increase in income was due to the change in corporate tax rates...…and they were increasing their dividend ...which was nice.   

Back in the day, I'd have to play around with my W-4 to get the right number of exemptions to keep from over or underpaying but probably most people just counted their kids and spouse and wrote in those numbers.   I recall using an extra exemption (think that legal? ) but it cut down on my with holding and got it closer to my eventual tax bill.   

As for the withholding....the information has been readily out there.   The bookstore manager quoted in the OP should be ashamed...and scary that he is actually managing a business with employees....and likely sharing his ignorance with them rather than explaining the facts.    JMO. 

Meanwhile....I'm still waiting on Fidelity to prepare one of my 1099s so I can file which I will do the day before it's required. .   

[kd4au 1,145]

2 hours ago, TitanTiger said:

 you're going to piss people off.  

But look at who is trying to PO these people. It's the Trump hating media telling have truths or out right lies.

[TitanTiger 20,472]

12 minutes ago, kd4au said:

But look at who is trying to PO these people. It's the Trump hating media telling have truths or out right lies.

Save this kind of silliness for the smack forum.  I welcome your on topic comments.

[channonc 466]

Based on my direct experience and knowledge of the bill, regardless of whether you like the new tax plan or not, there are some things you should be aware of. First, the revenue needed to pay for the corporate tax breaks largely came from the individual side, illustrated perfectly by the fact that the individual "tax breaks" are temporary and not permanent. Most of the cuts on the individual side really were for the top brackets. So if you fall into a top bracket, you were likely to see a cut compared to last year's numbers. As a way to disguise this, and to make it appear as though individuals got an instant break, the IRS was instructed to readjust the withholding tables (they were going to have to anyway due to the new law) as close as possible. Meaning, not as much was going to be withheld. This was a way to politically help shore up some support-- as you recall, the tax bill is still underwater when you look at broad-based polling on the subject. While this was public knowledge, it wasn't widely reported unless you were following this issue closely.

Additionally, the law eliminated personal exemptions which means that the w4 was completely reworked. The regulations accompanying H.R. 1, eliminated the requirement for companies to issue the w4 to all employees at the beginning of the year (except to new hires). So unless you went to payroll or HR and specifically requested the forms last year, most companies didn't walk around and hand out the new forms/worksheets. So whatever you had opted for as far as additional withholding, etc. was generally just rolled over from 2017 to 2018. Again, I think had people seen that personal exemptions disappeared, several would have begun to dive more deeply into their tax liability for 2018 and found that they would not be faring quite as well as what they were being told.

This of course, does not mean no one benefited, it just means, not as many people benefited as I think many assumed. As I stated before, I knew my tax liabilities under this new bill would grow despite my income not growing to the same amount. I made sure to be extra conservative in trying to avoid any payments this year to the IRS and took out even more than I usually do to try to buffer that change. But when I compare what I paid the IRS in 2017 and what I paid in 2018, I paid more-- much more-- even though because of my careful planning I ended up with a bigger refund than in 2017.

 

[AU64 10,122]

1 hour ago, channonc said:

individual "tax breaks" are temporary and not permanent.

I believe they are for ten years…which is not what I would consider temporary.....and congress is likely to screw with the rates or other factors well before the ten years is up....in fact perhaps as soon as next year if the major dem leaders have their way.   

 

1 hour ago, channonc said:

Most of the cuts on the individual side really were for the top brackets

All the brackets were adjusted downward..to the  extent that a great number of people who had paid income tax, no longer had a tax obligation.  .keeping in mind the rates are marginal rates, not the rate you pay so with higher personal exemptions most people will pay less.

As for the wealthy benefitting....seems that most of the grousing I hear about SALT primarily affects higher income people in high tax states.  .

45% of American pay no federal income tax and 1% of taxpayers pay 43% of the individual tax revenue. 

[channonc 466]

1 hour ago, AU64 said:

I believe they are for ten years…which is not what I would consider temporary.....and congress is likely to screw with the rates or other factors well before the ten years is up....in fact perhaps as soon as next year if the major dem leaders have their way.   

They are temporary based on the definition of the word. They expire, the corporate breaks do not. As to whether Congress will do anything else, it's hard to say. It took nearly a decade for anything new, and in terms of major tax reform, nothing had really happened since the late 80s.

Quote

All the brackets were adjusted downward..to the  extent that a great number of people who had paid income tax, no longer had a tax obligation.  .keeping in mind the rates are marginal rates, not the rate you pay so with higher personal exemptions most people will pay less.

As for the wealthy benefitting....seems that most of the grousing I hear about SALT primarily affects higher income people in high tax states.  .

45% of American pay no federal income tax and 1% of taxpayers pay 43% of the individual tax revenue. 

I see what you are saying, but frankly our system is a progressive one, and is designed to tax those at the top the most. I'm taking your statistics as true, and if anything, that should show you how much of wealth gap there is in this country. Unfortunately, this bill had the opportunity to do that and instead only contributes more to that divide. Additionally, the elimination of SALT did not just affect upper income folks. In some areas, property taxes alone are much more than $10,000/year on even a modest home. That doesn't take into account local and state income taxes either. And frankly, I think taxing taxes is ridiculous, which is essentially what capping that deduction does.

 

Straight from the Center on Budget and Policy Priorities, who look at policies based on it's affect on working and lower income people (emphasis mine):

Law Does Relatively Little for Working- and Middle-Class Americans

Working families seemed largely an afterthought in congressional deliberations over the new tax law.  Key tax parameters that affect these families change significantly under the law, but often in offsetting ways.

Proponents of the law frequently highlight its rate cuts, increase in the standard deduction, and doubling of the Child Tax Credit (CTC) for some families (see below).  Yet other provisions raise taxes on families, such as the elimination of personal exemptions and the new inflation adjustment for key tax parameters, which will push more taxpayers into higher tax brackets over time.  The end result is only modest tax cuts overall for working- and middle-class families, which pale in comparison to the large net tax cuts for wealthy households and profitable corporations.  In addition, TPC analysis finds that an estimated 21 percent of households making under $200,000 will see no tax cut or even tax increases in 2018 under the new law.^[14]

Last-minute decisions typified the bill’s skewed priorities.  Negotiators lowered the top individual tax rate in the final bill to 37 percent — down from the Senate bill’s 38.5 percent and the House’s 39.6 percent — but rejected the effort by Senators Marco Rubio and Mike Lee to provide more than a token CTC increase for children in low-income working families.  While Rubio and Lee secured a more adequate CTC increase for moderate-income families, 10 million children under age 17 in low-income working families will receive no CTC increase or a token increase of $75 or less.^[15]  Another 14 million children will get a CTC increase of more than $75 but less than the full $1,000-per-child increase that families with higher incomes will receive.  Moreover, the law raises the income level at which the CTC begins phasing out from $110,000 to $400,000; as a result, a married couple with two children family making $400,000 will newly qualify for a $4,000 credit, while a single mother of two working full-time at the minimum wage will receive a $75 increase in her CTC.  (See Figure 2.)

Figure 2

 

 

The new tax law not only shortchanges many working-class families but actually harms a number of them.  Its repeal of the ACA’s individual mandate is expected to add millions to the ranks of the uninsured and raise premiums in the individual insurance market by about 10 percent, according to CBO.^[16]  This could also generate further instability in the individual health insurance market, especially in the near term, as falling enrollment, increased uncertainty, and growing confusion make it harder for insurers to forecast their costs.

The new tax law will also generate pressure to cut programs that millions of working- and middle-class families rely on.  The $1-$2 trillion ten-year cost of the tax cuts adds to deficits initially but will have to be paid for at some point, through some combination of tax increases and spending cuts.  In the end, it is likely that for millions of lower- and middle-income families, the budget cuts that the tax law will engender will reduce their incomes more than the tax cuts will increase them.

New Tax Law Ignores Critical Tool for Boosting Working-Class Incomes

Lawmakers drafting the new tax law appear not to have considered strengthening the Earned Income Tax Credit (EITC).  Stagnant working-class wages call for a strong policy response, and the EITC is well-designed to be at the forefront of addressing this challenge.  It already lifts millions out of poverty and supplements the wages of people who do needed jobs but receive relatively low pay, from truck drivers to cooks to home health aides.  It is well placed to do more.

 

 

Ambitious EITC proposals are on the table.  Senator Sherrod Brown and Rep. Ro Khanna, along with 55 House co-sponsors, have introduced a bill to substantially increase the EITC for childless workers and double it for workers with children, raising the incomes of 47 million households and lifting 8 million people out of poverty.^a  A median working-class family of three, which now makes $48,700, would receive a $2,800 EITC boost in 2018.^b Such a proposal could have been paid for with progressive base-broadening measures.  Those designing the new tax law also declined to make improvements to the small EITC for workers not raising minor children in their homes, thereby perpetrating features of the tax code under which more than 5 million such workers are literally taxed into — or deeper into — poverty by federal income and payroll taxes.^c

This chart, which compares the effects of the new tax law and the Brown-Khanna proposal, underscores the law’s missed opportunity to address stagnant wages and growing inequality through such means as strengthening the EITC.  Doing so should be part of future tax reform efforts to address the many problems that the new tax law creates.

^a Chuck Marr, Emily Horton, and Brendan Duke, “Brown-Khanna Proposal to Expand EITC Would Raise Incomes of 47 Million Working Households,” CBPP, October 10, 2017, https://www.cbpp.org/research/federal-tax/brown-khanna-proposal-to-expand-eitc-would-raise-incomes-of-47-million-working.

^b An alternative approach would have been a more ambitious CTC proposal.  A bill introduced by Senators Michael Bennet (D-CO) and Brown would increase the maximum CTC to $3,000 per child ($3,600 per child under age 6), make the credit fully refundable, and pay it out on a monthly basis.  Christopher Wimer and Sophie Collyer of Columbia University estimate that it would cut the child poverty rate nearly in half.  See Christopher Wimer and Sophie Collyer, “Expanding the Child Tax Credit would Cut Child Poverty Nearly in Half,” Poverty and Social Brief 1 (3) (2017): https://static1.squarespace.com/static/5743308460b5e922a25a6dc7/t/59f0dab890bccea6185a078d/1508956859468/Poverty+and+Social+Policy+Brief_CTC__1_3.pdf. 

^c CBPP analysis of March 2017 Current Population Survey data.

 

We estimate that the new law’s $400 tax cut for the bottom 60 percent of households would turn into a $1,200 (2.8 percent) reduction in their after-tax incomes if each household ultimately pays an equal dollar amount each year in program cuts to pay for the tax cuts.^[17]  The actual impact could be worse:  recent congressional Republican budgets have included large budget cuts that would fall harder, in dollar terms, on low- and moderate-income households than on more affluent ones.  For example, those budgets have consistently featured large cuts in Medicaid, which provides health and nursing home care to millions of these families.