Trump Tax Reform and Home Prices

[peppy]

What does it mean they tax free tuition as ordinary income?  So if you have a scholarship, they determine what your tuition cost would have been and tax you on that amount?

If you have employer reimbursement you are taxed on the entire reimbursement as ordinary income as well?  Tried to google this but "tax free tuition" comes up with a bunch of non-related sites.

When you are in graduate school you get deferred waived tuition when you work as a teaching assistant or graduate student researcher. You get a stipend as well that is slightly above poverty levels. The tax plan includes a provision to treat the cost of tuition as income. It's especially bad if you are out-of-state (at least for the first year in CA until you can establish residency). You'd get taxed at a level of making $60K, whereas in reality you are only taking in ~$20K.

So?

Seriously, I get making education more expensive isn't good, but some one's cow is getting gored when balance the budget.

Or even when you don't balance the budget.

Same shit different day, just a different group of 0.01%ers getting bank from a different part of the 99.99%ers.

It's always been fine with California as long as it was the other guy.

You can use tax policy to encourage/discourage certain social behaviors. What's this is essentially doing, is making it more difficult to get a post-graduate degree and discouraging people for pursuing this (who already do it despite the 4-8 years of living close to poverty, the post-doc years that follow, etc). Generally speaking, over the lifespan of such a person the federal govt would get more than enough money to cover this subsidy from the taxes they'd pay once they gain employment with that post-grad degree in hand. From a cost point of view, it doesn't make much sense. From a policy point of view, it's a middle finger at those who get a post-grad degree. Add to that the loss of competitiveness of the USA in the global market due to a less educated workforce.

 

[the.irvine]

You guys have no idea how smart Trump is. He is doing this to cut student loans.

Shit is getting real!

 

[Jcl725]

Anyone have a link to a calculator where I can calculate the impact of the interest and property tax deduction changes? 

Was planning on selling next year, so I'm trying to assess how the changes would impact the pool of buyers for Irvine homes in the low $1M range.

Assumptions:
$1.0M mortgage
$20k property taxes

 

[the.irvine]

Anyone have a link to a calculator where I can calculate the impact of the interest and property tax deduction changes? 

Was planning on selling next year, so I'm trying to assess how the changes would impact the pool of buyers for Irvine homes in the low $1M range.

Assumptions:
$1.0M mortgage
$20k property taxes

Brand new homes above 1.2M will see an impact in my opinion. People won?t sell their homes until they really have to. I am very certain Irvine will see some impact, good or bad time will tell. I was going to, buy going to delay my next home purchase.

 

[DrTravel]

Anyone have a link to a calculator where I can calculate the impact of the interest and property tax deduction changes? 

Was planning on selling next year, so I'm trying to assess how the changes would impact the pool of buyers for Irvine homes in the low $1M range.

Assumptions:
$1.0M mortgage
$20k property taxes

Simple google search
https://www.calcxml.com/calculators/trump-tax-reform-calculatorhttps://www.marketwatch.com/story/the-new-trump-tax-calculator-what-do-you-owe-2017-10-26http://time.com/5015990/republican-tax-plan-calculator/

Many more choices out there

$1.0 M loan at 4.125% = $4,847 (approx $3,400 interest)
Of course you are limited to $500K loan for deduction

 

[rickr]

Interestingly I ran the marketwatch calculator and looks like it was a wash for me comparing to the current tax law. I was probably going to get hit with AMT this year.

The Child Tax Credit is my savior though.

 

[Liar Loan]

Only two Republicans in SoCal stood up for their constituents:

Rep Dana Rohrabacher, R-Costa Mesa

Rep Darrell Issa, R-Vista
http://www.ocregister.com/2017/11/1...-tax-reform-saying-it-will-hurt-californians/

Issa is in the fight for his life to save his seat.  Rohrabacher isn't in as much danger, but his constituent base is quickly changing, so he must be trying to appear more moderate before the tide rolls out.  (Get it?  He's the surfing Congressman.  ROFL!)

 

[OCLuvr]

Won't your mortgage, $1.0M, considered as "grandfather" option--no capping at $500k?

Anyone have a link to a calculator where I can calculate the impact of the interest and property tax deduction changes? 

Was planning on selling next year, so I'm trying to assess how the changes would impact the pool of buyers for Irvine homes in the low $1M range.

Assumptions:
$1.0M mortgage
$20k property taxes

Simple google search
https://www.calcxml.com/calculators/trump-tax-reform-calculatorhttps://www.marketwatch.com/story/the-new-trump-tax-calculator-what-do-you-owe-2017-10-26http://time.com/5015990/republican-tax-plan-calculator/

Many more choices out there

$1.0 M loan at 4.125% = $4,847 (approx $3,400 interest)
Of course you are limited to $500K loan for deduction

 

[aquabliss]

Interestingly I ran the marketwatch calculator and looks like it was a wash for me comparing to the current tax law. I was probably going to get hit with AMT this year.

The Child Tax Credit is my savior though.

You're not just comparing the 2 columns on market watch calculator are you?  Those aren't before and after, just comparing house and senate plan differences.

 

[Goriot]

Reduction or elimination of interest deduction might have an impact in the short-term, but in the long-run, I doubt it will have any impact as long as the demographics and jobs support it.  Millennials that will out number the baby boomers are either renting or living with their parents.  When they soon start the family formation cycle, you are going to see a housing shortage and boom in demand as they want to own rather then rent.  They will start jumping into entry level homes and then move up the chain as their kids get older and their income goes up. 

Most of other countries outside of U.S. does not have any mortgage interest deductions ($0 deduction).  Canada and Asian property prices seem to do just fine without any mortgage interest tax deduction.

Unless you are looking to make a shift in the short-run, don't worry about it.  There might be shortage of supplies with more people staying put for longer term.  I am staying in my place for next 15 years for sure=).

 

[rickr]

Interestingly I ran the marketwatch calculator and looks like it was a wash for me comparing to the current tax law. I was probably going to get hit with AMT this year.

The Child Tax Credit is my savior though.

You're not just comparing the 2 columns on market watch calculator are you?  Those aren't before and after, just comparing house and senate plan differences.

No, I realized that. I ran this and compared to TurboTax calculator which still uses the old tax law.

 

[eyephone]

?The new Senate tax bill will give those who own or lease private planes breaks on the amount they pay to companies for maintenance, storage, fueling and even when they want to hire pilots and a crew onboard.?
https://www.google.com/amp/www.news...s-private-plane-owners-tax-break-714381?amp=1

More and more this tax plan sounds like it favors the super rich.

 

[notTHEoc]

The tax cut is designed for large corporations, with the theory they will invest more and pay higher wages if their after-tax profits go up.

Problem is, large corporations have had 50-year record high profit margins as well as record low borrowing costs for the last several years (ie the perfect conditions to invest more). But capex, investments and wage growth have still all lagged. There?s no evidence to suggest a further increase to after-tax profits in an already hot economy is going to have the wished for effect. Remember Henry Ford - pay my own assembly line workers more so they can buy our own Ford cars (best way to stimulate investment would be from the demand side - give middle class more so they can buy more)

Combined with all the other provisions in the bill favoring the 0.1%, leaves you feeling like this is just a payoff to the mega donors who control the party.

 

[morekaos]

Grow the economy at 3-4% GDP and all these arguments go away, including the deficit.  That is what they are gambling on happening.

 

[irvinebullhousing]

The title of the GOP tax reform is complete misleading. The Job Acts is not a principles of things to occur but a gambles and a MAYBE.

 

[morekaos]

I think they have a good shot at delivering..

Staying blind to the economic boom
Why the left has been so wrong about the ?impossible? Trump economic revival

The U.S. economic revival has defied the predictions of almost every Donald Trump critic. I vividly remember on the campaign debating Hillary Clinton?s economic gurus who accused Mr. Trump and his advisers like me of ?lying? when we said pro-growth policies would speed up the economy to 3 to 4 percent growth.
Jason Furman, who chaired the Council of Economic Advisers under Mr. Obama, told reporters earlier this year that the chances of reaching 3 percent growth over a decade were about 1-in-25 ? which is what the political experts said was Mr. Trump?s chance of winning the election. Another Obama economist Alan Krueger called the 3 percent growth forecast ?extremely rosy.?
Larry Summers, who was the Treasury secretary under President Bill Clinton and a top economic adviser to Mr. Obama challenged the ?standards of integrity? of the Trump economic team forecast of 3 percent plus growth. ?I do not see how any examination of U.S. history could possibly support the Trump forecast as a reasonable expectation,? he wrote in The Washington Post.

Salon, another liberal publication parodied the Trump GDP forecast saying ?Trump?s Growth Forecasts Are the Budgetary Equivalent of Putting Your Fingers in Your Ears and Yelling, ?Na Na Na Na Na.??
Congress weighed in too. ?This budget relies on absurd economic projections and pretend revenues that no credible economist would validate,? Rep. Pramila Jayapal, Washington Democrat, announced at a House budget hearing.
Investment guru Bill Gross of Janus Capital declared earlier this year in response to the Trump growth forecast: ?High rates of growth, and the productivity that drives it, are likely distant memories from a bygone era.?
The sharp-penned Paul Krugman of The New York Times declared the 3 percent Trump growth forecast as an act of ?economic arrogance.? He mocked the Trump forecast saying that the productivity improvement necessary for faster growth was as likely as ?driverless flying cars arriving en masse.?
An L.A. Times business article from earlier this year was titled: ?If Trump thinks he can get more than 3 percent economic growth, he?s dreaming.?

Doubly ironic is that the same Obama-era economists ? Mr. Summers, Mr. Kruger and Mr. Furman ? who are trashing Mr. Trump?s increasingly realistic forecast of 3 percent growth ? are the ones who predicted 4 percent plus growth from the Obama budgets. Mr. Obama never came anywhere near 4 percent growth and at the end of his term growth was trickling down at a pitiful 1.6 percent.
So the same people who accused Mr. Trump?s team of ?low standards of integrity? for predicting 3 percent growth were the ones who forecast much faster growth from Mr. Obama ? while he was raising taxes. Amazing.
It?s very simple what is going on here. The Obama administration threw every page of its Keynesian economic playbook at the 2008-09 recession. Three tax hikes, zero interest rate monetary policies, $8 trillion of deficit spending, three minimum wage increases, stimulus spending plans, tax increases on the rich, Obamacare, tight financial regulations, a war against fossil fuels, and even more, were somehow going to get us to 4 percent growth.

One reason that economist Larry Kudlow and I and others assured Donald Trump that 3 to 4 percent growth is achievable was that Mr. Trump could capitalize on the underperformance of the Obama years. Business investment fell almost two-thirds below the long term trend line under Mr. Obama ? thanks to higher taxes on investment. Now, partly in anticipation of the tax cut, business spending keeps climbing.

https://www.washingtontimes.com/news/2017/nov/5/trump-economic-revival-mysterious-to-the-left/

 

[Liar Loan]

Combined with all the other provisions in the bill favoring the 0.1%, leaves you feeling like this is just a payoff to the mega donors who control the party.

The only provision that exclusively applies to the 0.1% would be repeal of the estate tax.  Everything else benefits the other 99.9% of voters to varying degrees.

Many people in Irvine work at and own shares in large corporations, so they will benefit.  The owners of corporations (the shareholders) still have to pay taxes on their earnings from owning the corporations.  Middle class people with tax-free or tax-deferred retirement accounts will benefit greatly from increases in company value and earnings without owing any immediate taxes on their gains.

 

[peppy]

Combined with all the other provisions in the bill favoring the 0.1%, leaves you feeling like this is just a payoff to the mega donors who control the party.

The only provision that exclusively applies to the 0.1% would be repeal of the estate tax.  Everything else benefits the other 99.9% of voters to varying degrees.

"benefit" is a loosely defined word for you, I guess. Of those 99.9% about 1/4 households will see an increase in taxes. Medicare will see a mandatory reduction of $25bn. Health Insurance premiums will spike for a large swatch of that group if the ACA mandate is repealed. The $1.5t deficit is a burden that is shared by all. Good luck getting sustained GDP of 4% over the next decade to patch that hole (especially since the recent market gains are basically deemed unsustainable).

I see big winners for those who have substantial pass-through income and are in a top bracket. Also, those that get a majority of income that used to get hit by the AMT. The corporate tax reduction would only impact the profitability of corporations possibly bumping up their share price (no job creation, as this is controlled primarily by demand). Basically, the "investor class" sees a good upside on this bill. Maybe somewhere in the top 5-10%.

 

[Loco_local]

Combined with all the other provisions in the bill favoring the 0.1%, leaves you feeling like this is just a payoff to the mega donors who control the party.

The only provision that exclusively applies to the 0.1% would be repeal of the estate tax.  Everything else benefits the other 99.9% of voters to varying degrees.

Many people in Irvine work at and own shares in large corporations, so they will benefit.  The owners of corporations (the shareholders) still have to pay taxes on their earnings from owning the corporations.  Middle class people with tax-free or tax-deferred retirement accounts will benefit greatly from increases in company value and earnings without owing any immediate taxes on their gains.

That's good in theory, but I am old enough to remember the last economic downturn when people were forced with the choice of cashing out their retirement or losing their house.

Back before the horrible nationalized health care scheme, people lost their insurance after they found out they weren't blessed with perfect health. The medical bills made them choose between their retirement savings, their house or a loved one's life.

 

[Liar Loan]

Of those 99.9% about 1/4 households will see an increase in taxes.

According to the Tax Policy Center only 7% of households would see an increase in the first year.  That means 93% would pay less or stay the same.

Medicare will see a mandatory reduction of $25bn.

So this raises taxes?  You're twisting the discussion now.  The mandatory reduction is due to another law called PayGo, not directly related to this tax bill.

Health Insurance premiums will spike for a large swatch of that group if the ACA mandate is repealed.

Health Insurance premiums will spike for a large swatch of that group if the ACA mandate isn't repealed.  The premiums are already going up by an average of 34% this year and sign ups were at record levels.

The $1.5t deficit is a burden that is shared by all.

Barack Obama - The national debt grew the most dollar-wise during President Obama's two terms. He added $7.917 trillion, a 68 percent increase, in seven years.

George W. Bush - President Bush added the second-greatest amount to the debt, at $5.849 trillion.

Ah, but now that it's Trump providing much needed tax reform everybody suddenly cares about the deficit.  The $1.5 trillion would be over 10 years and many things could be done to lower spending over that time.

Good luck getting sustained GDP of 4% over the next decade to patch that hole.

Trump is hitting 3% in his first year which everybody said was impossible.  Now the bar is being raised to 4%.