Taxes

[Pakuni]

OK gang, back to taxes.

If there is ever living proof that the media collectively is a group of financial idiots, the recent coverage on tax reform is People's Exhibit Number 1.

In every report I've seen, the story has been about fools complaining that they are not getting as much of a refund as in past years. As if somehow that's a consequence of a tax policy that "screws" the middle class.

What it probably is -- and we'll never know because the financial idiots covering the story did not explore withholding and earnings with their sources -- is that withholding changed with the effective date of the tax law. Said source didn't bother to check his or her withholding and so there's no big refund. Said financial idiot reporter didn't bother to ask about deductions, gross income, and total tax bill against last year.

How do you know what questions the reporter asked or didn't ask?
Or are you just assuming?

[Babybluejeans]

We are receiving a slightly larger refund.

Sure, Cheekz, just like you said the new tax law was successfully giving you larger take home pay...before someone pointed out the law hadn't yet gone into effect.

[dgies9156]

How do you know what questions the reporter asked or didn't ask?
Or are you just assuming?

Because it was on television!

[rocket surgeon]

And yet, GE just can't stay above the 10-dollar mark.

you can thank jeff imelt for that, the dude should be scrubbin jailhose johns on his hands and knees

[Cheeks]

Sure, Cheekz, just like you said the new tax law was successfully giving you larger take home pay...before someone pointed out the law hadn't yet gone into effect.

I haven’t even done my taxes yet, but let’s call everyone me...ehh? 

[WarriorDad]

Sure, Cheekz, just like you said the new tax law was successfully giving you larger take home pay...before someone pointed out the law hadn't yet gone into effect.

That someone was shown to be incorrect.  Do you not remember? 

https://www.muscoop.com/index.php?topic=55598.msg989776#msg989776

[Benny B]

How do you know what questions the reporter asked or didn't ask?
Or are you just assuming?

Perhaps the questions were asked, but the answers didn't contribute to the story.

Nobody is going to click on an article that says "Americans Receive Smaller Refund Due to Reduced Withholding"... but people are going to click on "Americans Receive Smaller Refund."



Not that you did, but in case you ever need a reason to unequivocally prove that the average American is an idiot, look no further than the tendency of Americans to gauge their tax burden not by the "Total Tax" line on their 1040 but by the "Refund Due" line at the bottom.

[The Hippie Satan of Hyperbole]

I'm not sure it means they're an "idiot."  I think what it means is that taxes are complex.  Most people likely set their withholding awhile ago and didn't think much of the results.  So when the law change, and the withholding amounts with it, they probably didn't think much of it because it has worked out for them in the past.

I also think the process by which withholdings are calculated is unnecessarily difficult.  Instead of a complicated formula, have it be a declaration of a certain percentage of gross pay.  So if I declare 1, 1% of my gross pay is withheld.  Those are fairly easy numbers to calculate versus how they are calculated now.

[StillAWarrior]

Not that you did, but in case you ever need a reason to unequivocally prove that the average American is an idiot, look no further than the tendency of Americans to gauge their tax burden not by the "Total Tax" line on their 1040 but by the "Refund Due" line at the bottom.

^^^^^
He's right, you know.

I actually had a conversation with someone about taxes once, and asked how much tax he paid the prior year.  The response:  "I don't pay taxes.  I got money back."  While I know that this is true for some, this person had paid a significant amount of federal taxes...but he got money back in the spring, so he thought he hadn't payed.

[dgies9156]

Not that you did, but in case you ever need a reason to unequivocally prove that the average American is an idiot, look no further than the tendency of Americans to gauge their tax burden not by the "Total Tax" line on their 1040 but by the "Refund Due" line at the bottom.

Brother Benny, you're spot on!!!!!!!!!!!

[mu03eng]

^^^^^
He's right, you know.

I actually had a conversation with someone about taxes once, and asked how much tax he paid the prior year.  The response:  "I don't pay taxes.  I got money back."  While I know that this is true for some, this person had paid a significant amount of federal taxes...but he got money back in the spring, so he thought he hadn't payed.

Insert joke of someone looking at their pay check and asking the f%$& FICA is.

[mu03eng]

I'm not sure it means they're an "idiot."  I think what it means is that taxes are complex.  Most people likely set their withholding awhile ago and didn't think much of the results.  So when the law change, and the withholding amounts with it, they probably didn't think much of it because it has worked out for them in the past.

I also think the process by which withholdings are calculated is unnecessarily difficult.  Instead of a complicated formula, have it be a declaration of a certain percentage of gross pay.  So if I declare 1, 1% of my gross pay is withheld.  Those are fairly easy numbers to calculate versus how they are calculated now.

The calculation of taxes is complex, but the concept of taxes and whether smaller refund is good or bad is pretty basic. The fact that news organizations are reporting on refunds being down this year as a bad thing indicates that clicks are more important than facts/context for them

[Cheeks]

^^^^^
He's right, you know.

I actually had a conversation with someone about taxes once, and asked how much tax he paid the prior year.  The response:  "I don't pay taxes.  I got money back."  While I know that this is true for some, this person had paid a significant amount of federal taxes...but he got money back in the spring, so he thought he hadn't payed.

Yup....heard same logic on radio just the other day.  Shaking my damn head.  People are detached from reality that impacts them every day.

[forgetful]

Not that you did, but in case you ever need a reason to unequivocally prove that the average American is an idiot, look no further than the tendency of Americans to gauge their tax burden not by the "Total Tax" line on their 1040 but by the "Refund Due" line at the bottom.

There are some good reasons for this though. Many Americans do their taxes using online software. Last year, that software would tell people how big their refund would be under the new tax law. It didn't take into consideration changes to withholding.

Many Americans do not understand the aspects of withholding. So they were expecting a refund of the size the software told them about last year. That didn't happen, because they already got that money.

So now they are pissed, because they were counting on that additional money now.

That is why growth from the tax cuts will be stagnated this year. It was largely driven by increases in consumer spending, who spent the extra money in their paychecks. They now have to cut back, because the "refund money" didn't come. On top of that, there are no additional changes to spur year over year growth. So we got a bolus of growth last year that will return to average year over year growths or stagnate.

[Pakuni]

Because it was on television!

Oh ... and you think the entirety of the interview and reporting appears in the 30-second news clip?
Got it.

[SERocks]

The other interesting thing about the new tax law and whether or not you got a benefit or owed more in taxes is that you cannot just look at the numbers on the 2018 tax return to know.  All those numbers will tell you is your Federal liability for 2018, your Federal WH for 2018 and whether or not you got a refund or owed money for 2018. 

To really compare your number, you must take 2018's numbers and run them under the 2017 tax law.  This is really the only way to know if your tax liability was higher or lower under the new law....unless for some very odd reason all of your numbers from 2017 (income and deductions) are identical to 2018.  (No, I have never seen a case like that where the taxpayer actually had a tax liability).

I did this for my son and his girlfriend.  Both single.  One earned income (w2s) of $16,888 and the other $54,266.  They had no other income or deductions.  The one earning $16,888 had a lower tax liability in 2018 by $161, over what it would have been in 2017 under 2017 law.  The one earning $54,266 had a lower tax liability in 2018 by $1,476, over what it would have been in 2017 under 2017 law.

[Cheeks]

There are some good reasons for this though. Many Americans do their taxes using online software. Last year, that software would tell people how big their refund would be under the new tax law. It didn't take into consideration changes to withholding.

Many Americans do not understand the aspects of withholding. So they were expecting a refund of the size the software told them about last year. That didn't happen, because they already got that money.

So now they are pissed, because they were counting on that additional money now.

That is why growth from the tax cuts will be stagnated this year. It was largely driven by increases in consumer spending, who spent the extra money in their paychecks. They now have to cut back, because the "refund money" didn't come. On top of that, there are no additional changes to spur year over year growth. So we got a bolus of growth last year that will return to average year over year growths or stagnate.

Maybe so, but it still points to their ignorance. In the summary of those tax programs it shows the total amount of TAXES PAID, for over 80% of the country it will be lower than they paid a few years ago.  If people cannot process that, we're already sunk.  Refund or not, that's the key number and a lot of Americans apparently cannot comprehend this.  Media articles aren't helping. 

[buckchuckler]

The calculation of taxes is complex, but the concept of taxes and whether smaller refund is good or bad is pretty basic. The fact that news organizations are reporting on refunds being down this year as a bad thing indicates that clicks are more important than facts/context for them

Isn't this kind of a "duh" statement?  Doesn't make it any less pathetic though. 

[Jockey]

While many points made are correct, I have a hard time with the snobbish comments here.

Does it make you guys feel good to attack people for not fully understanding taxes and tax law? I expect guys like Bennie to call people idiots, but that seems to be the general opinion here.

There are tens of millions of people in this country with a high school education or less. There are a myriad of reasons why this is the case. For you college educated snobs to belittle them or call them names is, quite frankly, disgusting.

Decency is never out of season.

[mu03eng]

While many points made are correct, I have a hard time with the snobbish comments here.

Does it make you guys feel good to attack people for not fully understanding taxes and tax law? I expect guys like Bennie to call people idiots, but that seems to be the general opinion here.

There are tens of millions of people in this country with a high school education or less. There are a myriad of reasons why this is the case. For you college educated snobs to belittle them or call them names is, quite frankly, disgusting.

Decency is never out of season.

I don't expect someone to understand tax law or tax mechanisms but I do expect someone to know whether they took home more or less money this year compared to last year....uts basic budgeting

[Jockey]

I don't expect someone to understand tax law or tax mechanisms but I do expect someone to know whether they took home more or less money this year compared to last year....uts basic budgeting

I hope you know that you aren’t one of those that I was criticizing.

[StillAWarrior]

While many points made are correct, I have a hard time with the snobbish comments here.

Does it make you guys feel good to attack people for not fully understanding taxes and tax law? I expect guys like Bennie to call people idiots, but that seems to be the general opinion here.

There are tens of millions of people in this country with a high school education or less. There are a myriad of reasons why this is the case. For you college educated snobs to belittle them or call them names is, quite frankly, disgusting.

Decency is never out of season.

Truth be told, I honestly believe that lower income (and potentially lower educated) people are probably far more acutely aware of their taxes. In the example I was referencing, that person was a professional, payed a fairly five-figure federal tax bill, but thought he hadn’t paid taxes because he got a $7000 refund in the spring. Absolutely nothing to do with lack of education. To the contrary, I’d expect that particular brand of ignorance to be far more prevalent with people who are earning enough money to not really be paying much attention around the margins. People who haven’t looked at their pay stubs and agonized over where every penny was going every two weeks. In short, I was talking about exactly the opposite kind of person than you suggest.

[Jay Bee]

Truth be told, I honestly believe that lower income (and potentially lower educated) people are probably far more acutely aware of their taxes. In the example I was referencing, that person was a professional, payed a fairly five-figure federal tax bill, but thought he hadn’t paid taxes because he got a $7000 refund in the spring. Absolutely nothing to do with lack of education. To the contrary, I’d expect that particular brand of ignorance to be far more prevalent with people who are earning enough money to not really be paying much attention around the margins. People who haven’t looked at their pay stubs and agonized over where every penny was going every two weeks. In short, I was talking about exactly the opposite kind of person than you suggest.

*paid

I agree there are those not overly concerned with taxes because they choose not to and aren't worried about money. I disagree that the poors who pay little to no income tax are "more acutely aware" of their taxes than others.

But, people all over the board from all walks of life have had a mindset of, "oh, I'm getting a refund, I should spend it on something for doing such a great job" instead of, "oh crap. I'm an idiot who let the gov't borrow my money for no interest. Finally I got it back. Need to do better."

[dgies9156]

I hope you know that you aren’t one of those that I was criticizing.

I suspect I was and, yes, I expect that you don't need an MA in Taxation to figure out that your refund is less important that measuring how much you paid against how much you made.

And yes, Brother Pakuni, with the Ken and Barbies on TV now, I do think what you see is what you get. TV and newspapers are shallow and most reporters don't get basic economics.

[rocket surgeon]

If the high schools would get back to teaching our kids “stuff” they NEED to know in order to have a productive life, such as how taxation works, would be a start.  Maybe if we allowed them to receive their full pay and they would be responsible(no pun intended) to write their with holdings check from that and send it in to our gubment, the true effect of taxes would then be appreciated.  I have a funny feeling that might drive our point home a little better