This morning, I read a column in the Hearst Connecticut local papers headlined "What Does Senate Tax Bill Mean For State." It was written by a reporter named Dan Haar. He's not a household name, but it's worth using his column to illustrate just how poor and dishonest the media coverage of the tax bill really is.
The column starts with the usual complaint of the Democrats and the mainstream media against the tax bill: in Haar's words it is "a tax reform bill that offers deep cuts for corporations, business owners and the rich." Got that? The bill is a gift to the corporations and the rich.
So then the column goes on to look at how the bill will affect Connecticut, especially Fairfield County, Connecticut. For those who don't know, Fairfield County is the richest county in the state, and one of the richest in the country. According to Haar, results in Fairfield County will be "mixed" but the rich will do fine with the burden on the poor.
Then Haar gets to specifics. He says, "The deepest worry for many taxpayers locally is the loss of deductions for the big-three payments that add up to hefty tax savings for upper-middle-class and wealthy families, heavily in Fairfield County: the state income tax, the property tax and mortgage interest."
Did he miss something? No more deductions for state income tax, and reductions in deductions for property taxes and mortgage interest hits those who are well off, the "rich" who Haar said are getting all the benefits. Isn't that the exact opposite of what he first told us? It is indeed. The reality is that Most people in the lower part of the income distribution won't even notice that change because of the huge increase in the standard deduction. Here's an example: A married couple with a child who have an income of $60,000 per year and who live in a house that cost $300,000 in Connecticut would pay around $4,000 in state income tax and maybe another $5000 in property taxes. Their mortgage interest would be $5000. Under the present law, that couple gets to deduct $14,000. The new law reduces that deductible amount to $10,000, but the couple has the alternative of deducting $24,000 under the standard deduction. In addition, the couple will get a $2000 child care tax credit and there will be lower rates on the taxable income that is left, so this couple will pay substantially lower taxes. Here's another example: a married couple with one child that earns $300,000. They live in a house that cost $1,600,000. They would pay roughly $20,000 in state income taxes, another $25,000 in property taxes and $45,000 in mortgage interest. Under current law, they could deduct all that for a total deduction of $90,000. Under the new law, these rich people would have a deduction of $55,000 only. The standard deduction has no effect on them since their total deductions are too high to use the standard one. They do get a rate reduction which should save them roughly $4000 by itself, but the extra taxes paid due to the loss of deductions is more like $8500. That means that the rich people are paying an extra $4500 per year.
The point is that the tax bill gives its tax breaks to the middle and lower income groups and to businesses. It's not a big gift to the wealthy.
Haar goes on to grudgingly admit that taxes will be cut for lower income families but adds the following:
But some of those benefits disappear after a few years, as lawmakers added a sunset provision to some personal tax rates because the massive business cuts create a deficit of $1 trillion in 10 years, even with some economic growth.
This is another of those idiotic points the media is so fond of. Yes, the personal income tax changes will "sunset" after ten years. Under the Senate rules regarding this type of bill, they have to. In ten years, the law will go back to the current version. In other words, the people who lament the changes are condemning those changes because we will go back to the current system in ten years. If the current system is so much better that the new plan must be rejected, why lament that there's an automatic return to the current system in 10 years? They can't have it both ways.
Despite what Haar says, the tax plan is not a gift to the rich. It is, rather, an attempt to get the economy moving and growing faster. Saying no doesn't accomplish that. Saying no and stomping one's feet at the same time doesn't accomplish that. Saying no, stomping one's feet and lying about what the new system would do also doesn't accomplish that.
The reality is that the tax plan in the Senate bill will produce winners and losers. Any change in tax law does that. The people who get most benefit from the parts that are removed are the losers. The people who get the most benefit from the parts that are added are the winners. The real point here is that there will be many more winners than losers and the country as a whole will benefit.
The column starts with the usual complaint of the Democrats and the mainstream media against the tax bill: in Haar's words it is "a tax reform bill that offers deep cuts for corporations, business owners and the rich." Got that? The bill is a gift to the corporations and the rich.
So then the column goes on to look at how the bill will affect Connecticut, especially Fairfield County, Connecticut. For those who don't know, Fairfield County is the richest county in the state, and one of the richest in the country. According to Haar, results in Fairfield County will be "mixed" but the rich will do fine with the burden on the poor.
Then Haar gets to specifics. He says, "The deepest worry for many taxpayers locally is the loss of deductions for the big-three payments that add up to hefty tax savings for upper-middle-class and wealthy families, heavily in Fairfield County: the state income tax, the property tax and mortgage interest."
Did he miss something? No more deductions for state income tax, and reductions in deductions for property taxes and mortgage interest hits those who are well off, the "rich" who Haar said are getting all the benefits. Isn't that the exact opposite of what he first told us? It is indeed. The reality is that Most people in the lower part of the income distribution won't even notice that change because of the huge increase in the standard deduction. Here's an example: A married couple with a child who have an income of $60,000 per year and who live in a house that cost $300,000 in Connecticut would pay around $4,000 in state income tax and maybe another $5000 in property taxes. Their mortgage interest would be $5000. Under the present law, that couple gets to deduct $14,000. The new law reduces that deductible amount to $10,000, but the couple has the alternative of deducting $24,000 under the standard deduction. In addition, the couple will get a $2000 child care tax credit and there will be lower rates on the taxable income that is left, so this couple will pay substantially lower taxes. Here's another example: a married couple with one child that earns $300,000. They live in a house that cost $1,600,000. They would pay roughly $20,000 in state income taxes, another $25,000 in property taxes and $45,000 in mortgage interest. Under current law, they could deduct all that for a total deduction of $90,000. Under the new law, these rich people would have a deduction of $55,000 only. The standard deduction has no effect on them since their total deductions are too high to use the standard one. They do get a rate reduction which should save them roughly $4000 by itself, but the extra taxes paid due to the loss of deductions is more like $8500. That means that the rich people are paying an extra $4500 per year.
The point is that the tax bill gives its tax breaks to the middle and lower income groups and to businesses. It's not a big gift to the wealthy.
Haar goes on to grudgingly admit that taxes will be cut for lower income families but adds the following:
But some of those benefits disappear after a few years, as lawmakers added a sunset provision to some personal tax rates because the massive business cuts create a deficit of $1 trillion in 10 years, even with some economic growth.
This is another of those idiotic points the media is so fond of. Yes, the personal income tax changes will "sunset" after ten years. Under the Senate rules regarding this type of bill, they have to. In ten years, the law will go back to the current version. In other words, the people who lament the changes are condemning those changes because we will go back to the current system in ten years. If the current system is so much better that the new plan must be rejected, why lament that there's an automatic return to the current system in 10 years? They can't have it both ways.
Despite what Haar says, the tax plan is not a gift to the rich. It is, rather, an attempt to get the economy moving and growing faster. Saying no doesn't accomplish that. Saying no and stomping one's feet at the same time doesn't accomplish that. Saying no, stomping one's feet and lying about what the new system would do also doesn't accomplish that.
The reality is that the tax plan in the Senate bill will produce winners and losers. Any change in tax law does that. The people who get most benefit from the parts that are removed are the losers. The people who get the most benefit from the parts that are added are the winners. The real point here is that there will be many more winners than losers and the country as a whole will benefit.
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