House Speaker Paul Ryan’s new tax law will save less than $9 a week for most working Americans, and many may receive cuts as little as $2.70. Meanwhile, a $1 million filer will gain $628 a week. The GOP plan smells like a few peanuts for the middle class and the elephant’s share of the tax cut designated for the very rich.
Current law now taxes a married couple for every dollar earned that exceeds $24,000 a year. Last year’s tax floor was $20,800, or a difference of $3,200.
Anyone earning exactly $24,000 in 2018 will save income tax of 10% of that $3,200, or $6.15 a week, versus last year.
What do you do with this $6.15 tax cut? If you are taking Xarelto for heart problems, as millions do, your tax bonanza won’t cover that drug’s $80 a month increase, or offset higher gas prices, or, or…
But what would have happened if candidate Donald Trump’s original tax plan had been adopted?
The Ryan 2018 Income Tax on a married couple earning $50,000 is calculated this way:
- $50,000 income minus $24,000 standard deduction (no personal exemptions allowed anymore) = $26,000 remaining taxable income.
- First $19,050 of that remaining $26,000 is taxed 10%, or $1,905 tax due.
- Final remaining $6,950 is taxed at 12%, or $834 tax due.
- Tax due from steps 2 and 3: $1,905 + $834 = total $2,739 tax due under current 2018 Ryan law.
On the campaign trail Mr. Trump promised that no one who earned less then $50,000 a year would have to pay income tax. He even suggested we could just send in a card saying “no tax due!”
If Trump had kept his word our married couple with $50,000 income would calculate their income tax this way:
- $50,000 income minus $50,000 standard deduction = $0.
- Tax due $0.
Tax cut would be $2,739, or $52.67 a week more than the Ryan law.
You ask yourself: what happened between the Trump promise and the Ryan reality?
The answer is that Trump was either forced, or secretly wanted, to be surrounded by the denizens of the political swamp – including his Vice President Mike Pence, a Tea Party leader.
To understand the near-establishment Trump of today, all you need do is examine the positions of Mike Pence:
- Supported President Bush’s 2005 plan to privatize Social Security.
- In Congress he voted for every trade agreement, including NAFTA and CAFTA.
- Voted against the act that created Medicare Part D prescription relief for seniors.
- Proposed ending the progressive income tax to replace it with a flat tax.
- Voted against raising the minimum wage to $7.25.
- Praised Hillary Clinton and President Obama for their war policy in Libya.
- Supported Citizens United unlimited campaign spending decision.
- A friend of lobbyists, David Koch has given more money to Mike Pence than any other candidate.
Others on the selection committee included: Rebekah Mercer, major Republican donor; Reince Priebus, chairman of the Republican National Committee; Peter Thiel, a founder of PayPal; Attorney General Pam Bondi of Florida; Steven Mnuchin, a former Goldman Sachs executive; and Anthony Scaramucci, a hedge fund manager.