Economics Blog Post
New Year, New taxes.
New Year, New Taxes.
On December 22, 2017, President Donald Trump signed the GOPs tax bill into law. One of the biggest new tax credits is the child tax credits. A tax credit is different than a tax deductable, a deductible is a dollar-for-dollar reduction to your tax bill.The tax credit is designed to help parents with an income boost (SmartAsset). So how much is the tax credit? Well this year the tax credit had doubled! The tax credit is going from 1,000 dollars to 2,000 dollars. Therefore families with 1 child will have a $2,000 tax credit, a family of 2 will have a $4,000 tax credit and so on.
An important part of taxes is knowing the difference between refundable and nonrefundable credits. A nonrefundable tax credit can bring the taxpayers bill down to zero dollars. And if you have refundable credit then you can end up with a refund. If your bill is 1,000 dollars and you have 1,500 dollars refundable tax credits then you will have 500 dollars back (The Motley Fool). The $2,000 tax credit is $1,400 refundable for each child. In order to get the credit the dependent must be under 17 years old. They must have a relationship with the taxpayer such as parent, grandparent, adopted child, and so on. Also if you have a child that is over 17 or another dependent, like elderly relatives, then there will be a $500 tax credit.
However the trade-off for the increased tax credit is that the personal exemption (up to $4,050), is being removed. The personal exemption was $4,050 and could have been used for you, your spouse, and your dependents, (Up to a certain amount of course.) The child tax credit is supposed to help with the removal of the personal exemption, now the GOP is not able to take the personal exemption off all the way but instead is suspended until 2025. Taking away the personal exemption could have negative benefits for families with three or more children. The child tax credit is an idea of scarcity, families can only have so much money taken away from them to pay to the government and the government needs more money to run the government for the next year. The government will then take this tax money and decide if they should use it for guns or butter, meaning that the country will decide if they should use the money for military good or produce consumer goods. In the table below, you will see the new tax brackets and new tax rates for the 2018 tax year.
In conclusion there are many different tax changes for the 2018 tax year, one of the highlighted ones is the new child tax credits and the removal of the personal exemption for spouses, dependents, and taxpayers themselves. These changes will not be included for the taxes that are due this year in April, as it will affect the taxes that are due next year in April.
How taxes will change depending on a person's income.
Works Cited
Adamczyk, Alicia. “The Basics of the GOP Tax Plan, Explained.” Two Cents, Twocents.lifehacker.com, 27 Dec. 2017, twocents.lifehacker.com/the-basics-of-the-gop-tax-plan-explained-1821583174.
Adamczyk, Alicia. “The Basics of the GOP Tax Plan, Explained.” Two Cents, Twocents.lifehacker.com, 27 Dec. 2017, twocents.lifehacker.com/the-basics-of-the-gop-tax-plan-explained-1821583174.
Frankel, Matthew. “The 2018 Child Tax Credit Changes: What You Need to Know.” The Motley Fool, The Motley Fool, 9 Jan. 2018, www.fool.com/taxes/2018/01/09/the-2018-child-tax-credit-changes-what-you-need-to.asp.
Josephson, Amelia. “Child Tax Credit Guide (2018): How Much Are You Eligible For?” SmartAsset, SmartAsset, 12 Jan. 2018, smartasset.com/taxes/all-about-child-tax-credits.
Your post hits on the important and standout parts of the new child tax law, however it doesn’t expand on the negatives. Yes, it is good that the Child Tax credit is increasing, yet taxpayers are losing the personal exemption that has previously been available for each taxpayer and their dependents and that that is a key change in the new Child Tax law.
ReplyDeleteI agree that the new child tax credit will be highly beneficial to families across America. With prices for goods and services being relatively expensive in the past few years, the extra money will help families be more stable when providing for their loved ones. It can also be viewed that the tax credit can help parents save for their child’s education, especially with a family of multiple kids.
ReplyDeleteAfter reading your blog post I am glad to hear that trump is doing something to bring more tax money into families that have children, I remember a couple of years ago my family was disappointed that they would not get much money back on there taxes and now to hear that Trump is raising the money you get back when having a kid is great. In the middle of your piece about second paragraph you did bring up what the difference of refundable and nonrefundable credits and I really enjoyed how you said the difference between them because it made all of your following statements easy to follow. Your 3rd paragraph you were talking about the trade off the government had to make to get the money back for having a kid hired and you said they had to remove ”personal exemption” Witch sucks for anyone not planning to have a kid right away because they wont get more personal money anymore because they removed it.
ReplyDeleteThe things that i was intrested in was that the taxes are gonna change for the next year that people might lose more money.
ReplyDeleteI thought it was very interesting to hear about new tax plans, because it is not something that I usually concern myself with. This could also be related to our project in class on US Economic Performance in terms of economic security, as the new child tax credits helps to benefit families with children and provide some security. Since the credit is increasing from last year, it would boost the rating in this category.
ReplyDeleteThe Gop tax plan as told in the blog-post is controversial topic that has a massive influence on federal taxation, and could cause massive drawbacks / increasing the weight that large families have to deal with. The American people need to evaluate the role of the government, and how the plan will inline with those desires. Lastly, the new regulations will rise the total budget of the federal government but how will they use these new acquired funds for “Guns or Butter”. Judging from the recent events with North-Korea, and the state of the mid-east, I’m predicting that they’ll spend it on guns, and more specifically nuclear weaponry because the president address this in his state of the union.
ReplyDeleteTaxes are still a concept that I have a hard time fully understanding, and it mostly just has stressed me out because it just adds to the cost of things. With the many tax changes that are occurring, and seeing that they could have negative benefits to families is quite concerning and I think that there will always be debate and issues involved with the way governments handle taxes.
ReplyDeleteThis is very interesting to hear about how the tax changes will help and hurt different types of people and industries. For example, Apple is moving their over seas locations to the United States now that they have a tax break. However, this can unfair to small businesses who struggle to make payments. Overall, the tax changes will help large companies overseas move back to the United States and create more jobs.
ReplyDeleteStill being a young adult I struggle with the idea of taxes and when it is on the news about a change in taxes generally it causes worry. You did a very good job of explaining this difficult topic to a group of teenagers in a way that is more easy to understand.
ReplyDeleteThe main source of concern regarding the new tax plan are government deficits that may expand with the new tax code. Cutting taxes, but not cutting programs is a recipe for disaster. Moreover, an armed conflict would cost more money to be spent by the government, further enlarging America's government debt.
ReplyDeleteGrace; after reading your blog I find it very interesting about all the new tax plans coming into effect. The new child tax credits is very interesting and I find it very beneficial especially for people with multiple kids. This extra money they are receiving in return they can buy goods for their kids with a little extra money in return for raising kids which is very expensive. Although I agree with you that the personal exemption could have its negative trade-offs for people with bigger families and more children. I feel they are taking too much money away from the working class people that work very hard to provide for their kids and family and whoever else they may be providing for. Too then in return have a hefty tax take a toll of them. Like you said the money will go to the government to spend on military or consumer goods. I feel that we should find a happy medium for everyone so that the government can still function and working class families are not getting hefty taxes and are getting the refunds that they deserve. Although I do feel this will be beneficial to big businesses that can make the payments but really hurt the small local family run businesses that essentially will not be able to make the payments.
ReplyDelete