The tax code punishes you for making more. You make more, and it takes more. Don't get so hung up on a word. If I run 5 miles further today than I normally do and it's 10 degrees hotter than I'm used to, I'm punishing my body. My point is fewer people are going to care about the plight of 150k households than should. It's that simple.
I get that there is a 10K swing, but didn't they still make 4K? They got 10, they paid 6... 10-6=4 In other scenario, they didn't get 10, but they got paid back 4, thus made 4. Equals.
Well in this case they are just reducing what they give back after taking it from you when you make more. Actual tax liability doesn’t increase because of bill - just relative tax liability to someone among 10k less than you if you make 160k.
A family of five would be 5100 of stimulus they wouldn’t receive. Also I think their excess CTC will begin to phase out but that would be less of an impact because I don’t think they tightened the phase out window for that. Also you’d pay federal tax on that 10k, so about 2,200 at that income level. Also 145 of Medicare tax. No incremental change to Social Security tax. So the person who made 150k doesn’t pay the 2345 you paid for making 10k more and they get a stimulus of 7100. So they end up with 7100 more due to the tax Bill amd you end up with 7655 more due to your earnings but no help from the tax bill. Not counting any impacts to CTC phase out, which would put them at having more money in their pocket at the end of the year than you I think. So again it’s a relative thing.
Gotcha. I care out of principle. Tax is always going to be unpopular and sensitive, but this would be egregiously unjust for those affected. Reasonable people disagree on what fair is, but 104% for a random slice of earners is probably as close to universally unfair as we will find.
It's not relative when you net. If anything, the person who got the bonus won, because they get the benefit of having a pleased boss, which leads to more things. The other person got a government stimulus that doesn't net them anything in the future.
Welp, 2 months and 5 days into 2021 the Senate has decided that the first 10,200 of unemployment benefits for 2020 will be considered nontaxable. I have a feeling when this report finishes running and I see how many returns I've put out the door that have UI benefits, I will cry.
Net tax liability goes from 4,145 ay 150K refund to owing 6,275 at 160K. Where are you getting this? They are losing money in the grand scheme.
The person who "made" 160k didn't start at 160k. Which means they started at 150k and ended up at 154k, that's making 4k on the year.
It's still a net. They started at X, they ended at Y. The difference is positive. That's an improvement on the year. Both net. Both net pretty equally. One person did so due to the benefit of their boss. The other only because of government. I'll take pleasing the boss over the one off government. If I can make an additional $4k that I didn't plan when I started the year, and please the boss. 100% take that over making $4k because the government.
I agree it’s not a lasting benefit so take the raise. But without the tax bill or with the tax Bill the higher income person ends up with about the same. Lower income person ends up with more with the tax Bill than without. So my point was the higher income person isn’t losing anything because of the Bill they’re just making less relative to the other person because they went up.
Yes, but they both end up with more. So take the one that has more future. They are the winner. Not the loser. Because everyone would take that way to a $4k increase, than the other way.
Ok, but practically, this is a benefit for everyone. I don't see the problem with a policy that benefits everyone.
