Trump's and Republicans Fiscal Dilema

[Pototan]

I believe the reason Trump wants to impose Tariffs at such a huge rate is to offset his tax package. In order to pass this package by a simple majority in the Senate, he needs offsets. No tax on tips, no tax on Social Security and no tax on overtime will pass easily in the House because those measures will have heavy Democratic support. Add to that the probable re-instatement of the SALT deduction from blue state Republicans (like Lawler) and the probable increase in loopholes for the wealthy that every Republican will vote for, and you can see his problem. Trump and the Republicans need an offset, and Tariffs will be needed to fill that hole to gain approval from the Congressional Budget Office that the tax bill is "revenue neutral".

Good luck pulling this off without a catastrophic result to the American economy.

[tetedur]

1. I'm confused about the no tax on Social Security.

SS is my only income. I declare that on my taxes with the little bit of interest I get from a savings account. I pay no taxes on Social Security. Someone please explain what he is talking about.

[Pototan]

2. I also collect Social Security

but I have pension income, annuity income and my wife's SS income, as we file jointly.

The combined income, even with a 15% deduction on our Social Security income, puts us in a bracket in which I need to pay some federal taxes.

If a person has only SS income the amount may be so small as it doesn't reach a payable bracket, so the "no tax on SS" is moot. In my case, if the brackets remain the same, I will pay no taxes on anything because by paying no taxes on our SS income it will place us below the payable amount

[tetedur]

4. Exactly. The "no tax on SS is moot" for most of us. Regardless, we have all paid more income tax than Trump

in certain years. Some years he paid $0. Some years he paid a whopping $750.

[lonely bird]

7. Are any federal taxes deducted from your deposit?

If so, then you are paying tax. You may get it all back with a refund but your spending power is impacted immediately.

[tetedur]

14. no

[Wiz Imp]

11. It's a talking point that sounds good to low info voters but would actually be disastrous.

[lonely bird]

15. Social Security is subject to federal tax based upon how much you get

https://www-origin.ssa.gov/benefits/retirement/planner/taxes.html

I am more than willing to bet there are far more people getting taxed on social security than some might think.

[Wiz Imp]

16. According to the Social Security Administration it is 40%

https://www-origin.ssa.gov/benefits/retirement/planner/taxes.html

About 40% of people who get Social Security must pay federal income taxes on their benefits. This usually happens if you have other substantial income in addition to your benefits. Substantial income includes wages, earnings from self-employment, interest, dividends, and other taxable income that must be reported on your tax return.

[lonely bird]

17. 40% is not insignificant.

Social Security was not taxed until 1984.

I am taxed on my social security. That is before any other income is added to it.

[duncang]

5. The first of many problems with the tariffs is

He says he wants them on day one. There’s no way a tax bill will make it through the Senate and House for a long time. So everyone will be getting hit double. And if/when it does I’m sure it will mainly help companies and millionaires. The last time the tax break was just a temporary dropping each year. I’d expect it to be at most a sugar high this time. How many people will be irreparably harmed from it in the first month or so. There’s too many people already living on the edge.

[karynnj]

9. Even ignoring the timing, the change from income tax to tariffs is regressive

Many lower income people will get no gain at all from the tax cuts. Everyone who consumes any product produced completely or partially in a country subject to tariffs will pay more. Tariffs are essentially a consumption tax for goods they are applied to.

When he says no tax on SS, this affects only those who earn above a certain level. As to no taxes on tips and overtime, again it helps only those who earn enough to pay income taxes. One question will be if they also don't have to pay FICA taxes on the tips. If you report tips or any other non W2 income now on your tax form, you will end up paying both the employer and employee portion of the FICA tax. However, not reporting it will lower the SS you ultimately qualify for.

I suspect that Trump's tariffs, not income tax is a version of having a consumption tax - like the VAT in some European countries. That will be a very regressive shift, especially as he has said it will be on everything imported from currently non specified countries. It is beyond strange that Canada was one of the first threatened.

[rampartd]

6. i dpn't think they see it as a dilemma, but as an "opportunity"

when they stop paying social secutity there will be no income to tax

the break on tips is also fun. sure, that little bit i leave my waitress or bartender is nice, but last year the supreme court ruled that "gratuities" to politicians and judges are legal so thomas doesn't have to claim gifts from his "friends."

[edhopper]

8. I don't think the Dems would or should back

no tax on tips, SS or overtime (why shouldn't that be taxed?) without raising taxes on the wealthy and corporations.

[Wiz Imp]

10. No way will No tax on tips, no tax on Social Security and no tax on overtime even be introduced

let alone pass.

[in2herbs]

12. It's possible that the "no tax on SS" is a diversion to give a hefty tax cut to the wealthy on Medicare. If you are

on Medicare but have an income figure above a certain level, the tax imposed on that income is paid via deductions from your SS check. Hence it looks like a tax on SS. For example, if this tax bracket was removed Medicare recipients that have an income above say $500,000/year would no longer have to pay tax on that. It's called an IRMAA penalty.

[recovering_democrat]

13. a preparer viewpoint

I actually do income tax preparation as a competent (trained and certified) person. I read all the comments here so far. The comments mostly reflect knowledge your current situation is accurate and well appreciated. Most of the crying and whining among the US are people who pay little attention to facts and buy into any "political" statement if it seems to help them personally with no attention to the government needs we usually support.

Anyway, the upcoming political Republican leadership are proposing a bunch of different issues that have both positive and negative actions that once it is settled and passed in the coming year, we will eventually know whether it will be good or bad depending on your own personal situation.

I wrote this comment with this one piece of advise: when you see political and news media info about upcoming tax legislation do NOT ignore it based on your political opinions. Ask your preparer if you use a professional or ask someone if you are not familiar with how the specific legislation will impact you, regardless of your current party position. The one thing I have learned in my years of this work: "most customers have been given an inaccurate opinion" from the political perspective. Just be careful!!!!