State of the Union

[StrangeSox]

Who cares about Christie.

 

This coming election is coming down to our US Monarchy: Hillary Clinton vs Jeb Bush. Book it.

[StrangeSox]

Did you just try to compare IL to IN when it comes to politics?

 

Leave this thread.

Illinois occasionally elects Republicans to state-wide offices, it's not some sign-of-the-times when a Republican wins. Before Obama won in 2006, a Republican held his US Senate seat and now Mark Kirk holds it again. Illinois is still going to overwhelmingly vote (D) for President come 2016 (barring some unforeseen major events).

[Y2HH]

Illinois occasionally elects Republicans to state-wide offices, it's not some sign-of-the-times when a Republican wins. Before Obama won in 2006, a Republican held his US Senate seat and now Mark Kirk holds it again. Illinois is still going to overwhelmingly vote (D) for President come 2016 (barring some unforeseen major events).

 

IL is pretty soundly democratic, mostly because of Chicago.

[pettie4sox]

Y2HH,

 

Rauner winning has no bearing on the DNP. It has a bearing on Quinn being a complete schumuck. If Rauner sucks, he'll get ousted for the next Democrat.

[EvilMonkey]

Christie hasn't got a shot these days. He's gone off the deep end with his cronyism. He hasn't lost weight. His national poll numbers are pretty terrible.

 

What does it say about your party that you can't get a decent candidate?

Yeah, because Rubio, Walker, Martinez, all trash. No chance.

 

How good will Hillary look when it comes out that Bill was schtooping underage hookers on Jeffrey Epstein’s sex island? All you will have left then is Elizabeth 'I AM Indian, honest!' Warren.

 

[StrangeSox]

IL is pretty soundly democratic, mostly because of Chicago.

 

For Presidential races and the State house, yes. For US Senate seats and governorship, more Democrats than Republicans but far from a solid lock. New York and California have also both had Republican governors within the last decade. Montana is consistently Republican for Presidents (every time since 1952 except '64/Goldwater and '92) but still sent Max Baucus to the Senate for three decades and has had a Democratic governor for a long time. Presidential and state or even other federal level voting patterns don't always line up, so it's sort of silly to look at a particularly strong midterm for the Republicans as indicative of their Presidential chances like jenk's NRO link did.

[Chisoxfn]

I looked into this when we started him in our daycare, but isn't the catch that you can't then also claim the child care credit?

http://www.kiplinger.com/article/business/...are-credit.html

 

Depends on the circumstances, but I know in my circumstances the use of the FSA account is preferred (although you can still use the dependent care credit after...you just have to have seperate qualifying expenses (so you can't have 5K in spendings and apply it to both...you'd take whatever you had to the first and than any remaining would be applied to the 2nd benefit). However, technically if you spend enough on child care, you could actually get the benefit from the 5K (FSA) and the dependent care credit.

[Chisoxfn]

I would hope the earnings in a 529 plan for 15-18 years is more than a $2,500 tax credit!

Well earnings would have to be like $10,000 to generate that amount of a tax credit (e.g., you generated $10,000 and had an effective rate of 25%, you would get the 2500). That said I think they already have the 2500 so not sure how it all shifts and even than I think that 2500 credit has its own exemptions, etc. All of this crap is complicated as can be and I would think a lot of the use depends on (A) whether a family can set aside money for college and (B) whether they have the financial knowledge (or have an adviser) who knows about such options. I think the reality is the wealthy tend to be more likely to have the extra cash (but plenty of middle class people can and should...its just a matter of what / where you spend your money and how thorough of a plan there is...once of course you get to a solid "middle-class" income) but I bet the wealthy also tend to be more financially educated (Or likely to have advisers) who help them take advantage of this.

 

I don't know if the avg middle class person uses a 529 but the average middle class person probably could (if they adjusted their priorities from a spending perspective). That said, every unique family and household has their own things they feel are important. I can't tell you how many people I see that piss money away on phones or tech when they don't take care of more basic necessities / needs and I don't get it, but to each their own. I'm a tight ass accountant who works in FP&A so planning and being cheap is what I do for a living and its how I live my life (and my wife is an accountant as well and stingier than me, haha).

[LittleHurt05]

To this day I am still shocked that you are only allowed to deduct $3,000 per child ($600 refund). Are you kidding me? In Chicago, the $3,000 doesn't cover two months of full-time child care.

[Chisoxfn]

Off topic but if you looking at a college saving plan I would suggest the College Illinois plan. It gives you the current tuition price for when they go to college. You pay over 10 years and it's a great benefit. We paid 43,000 over 10 years for my daughter and she will go to an out of state school and they are paying 19,000 a year for her during this year.

Presume this portion of the benefit is for Illinois residents only. I'm surprised that it works for out of state schools. Of course I'd have to do the math to see what the actual returns are from this sort of policy. Given the insane increases in tuition, you'd think this would be a pretty positive as it provides you with really insurance that you know the cost is covered (vs. estimating what is necessary). Flip side is, its less transparent right, since where your kids ultimately go to school can vary significantly in price so you might prepay and end up paying more and they go to a less expensive school vs. the more expensive so if you just put the money aside, you'd have more that you could roll over to a grand kid or another child (if it went unused).

[Chisoxfn]

To this day I am still shocked that you are only allowed to deduct $3,000 per child ($600 refund). Are you kidding me? In Chicago, the $3,000 doesn't cover two months of full-time child care.

Yeah, it is absurd how little benefit you get for something as expensive as day care, especially in an era where so many people are dual income (and to be frank have to be).

[Jenksismyhero]

Well earnings would have to be like $10,000 to generate that amount of a tax credit (e.g., you generated $10,000 and had an effective rate of 25%, you would get the 2500). That said I think they already have the 2500 so not sure how it all shifts and even than I think that 2500 credit has its own exemptions, etc. All of this crap is complicated as can be and I would think a lot of the use depends on (A) whether a family can set aside money for college and (B) whether they have the financial knowledge (or have an adviser) who knows about such options. I think the reality is the wealthy tend to be more likely to have the extra cash (but plenty of middle class people can and should...its just a matter of what / where you spend your money and how thorough of a plan there is...once of course you get to a solid "middle-class" income) but I bet the wealthy also tend to be more financially educated (Or likely to have advisers) who help them take advantage of this.

 

I don't know if the avg middle class person uses a 529 but the average middle class person probably could (if they adjusted their priorities from a spending perspective). That said, every unique family and household has their own things they feel are important. I can't tell you how many people I see that piss money away on phones or tech when they don't take care of more basic necessities / needs and I don't get it, but to each their own. I'm a tight ass accountant who works in FP&A so planning and being cheap is what I do for a living and its how I live my life (and my wife is an accountant as well and stingier than me, haha).

 

Those purchases are necessities, not wants. You cannot live in 2015 without a smartphone and date plan no less than 1 year old.

 

This, by the way, is why it infuriates me when liberals want to cut things that benefit people with money but not those without. In reality it COULD benefit a ton more people, they just don't take advantage of it. Let's penalize people for being smart and successful. That'll show em.

[Jenksismyhero]

Yeah, it is absurd how little benefit you get for something as expensive as day care, especially in an era where so many people are dual income (and to be frank have to be).

 

Child credits/deductions only benefit people with money who can afford to pay those expenses. Let's end those programs.

[Chisoxfn]

The FSA essentially IS the Child Care Credit. Same 5k amount, it's just that with using an FSA, you don't have to wait for tax time.

 

Many businesses do this automatically, my wife's does and we use it (mine does too but you only use one). She just submits receipts up to 5k worth (which doesn't take long, lol), and they reimburse every two weeks like a paycheck to our checking account. It's fantastic.

 

Though I do with it was per child, instead of 5k total.

They are actually different. One is a maximum 5K (FSA) (1 child or 5 children, its 5K maximum total) and since it is pre-employer, you actually save on your medicare / social security taxes as well so the total tax savings is greater. The other is 3K per child and capped at 6 K total. However, the total savings is between 20 & 35% and depends on your income levels (and is also non-refundable...meaning you have to actually pay taxes to get the benefit).

[bmags]

Those purchases are necessities, not wants. You cannot live in 2015 without a smartphone and date plan no less than 1 year old.

 

This, by the way, is why it infuriates me when liberals want to cut things that benefit people with money but not those without. In reality it COULD benefit a ton more people, they just don't take advantage of it. Let's penalize people for being smart and successful. That'll show em.

 

If this plan isn't working as well as others, why wouldn't you cut back on it and extend the others. This is just "oh but it SOUNDS bad"

[StrangeSox]

Child credits/deductions only benefit people with money who can afford to pay those expenses. Let's end those programs.

You seem to be shifting from wanting to help the middle class to calling for more deductions and tax credits for the upper-middle/upper class.

 

edit: or at least preserving those tax credits instead of re-purposing them for a program that could help a broader range of people. It also always strikes me as really weird to view a reduction or removal of preferential tax treatment as "punishment."

Edited January 23, 2015 by StrangeSox

[Jenksismyhero]

You seem to be shifting from wanting to help the middle class to calling for more deductions and tax credits for the upper-middle/upper class.

 

I said earlier do both - it makes little sense to get rid of something just because it helps people with money. For some situations, i'm sure tax free benefits of a 529 plan may be preferred over a 2,500 credit (middle class kid going to a private school, for example).

 

And it's not adding MORE deductions/credits, it's not taking away one that already exists.

[Jenksismyhero]

If this plan isn't working as well as others, why wouldn't you cut back on it and extend the others. This is just "oh but it SOUNDS bad"

 

It is working, just not for the people Obama wants it to work for. It's not as if this program is designed ONLY for people who are rich. It would greatly benefit the middle class. They just have to use it.

[Chisoxfn]

Matt / Jenks (and anyone else), I'll try to break down my understanding of the two based upon a hypothetical scenario. I'm not in all the details of this as I haven't yet had to do a tax return based upon all these, but I'll outline it as I understand it and how you can get the general benefits. Clearly there are nuances depending on your individual income levels but I'm going to use a hypothetical scenario of a married couple filing jointly with a household income of $75K.

 

Income = 75K

Children = 2

Eligible Child Care Expenses = 12,000

Tax Rate = 25%

 

Dependent FSA: Contributed maximum of $5,000 and you used these accounts to pay for 5000 of your 12,000 in expenses. On this $5K, this money was taken off the top (similar to an IRA) and you did not pay federal income taxes on it nor did you pay social security tax or medicare taxes. That represents a 7.65% savings plus your effective tax rate of 25%, thus you have ultimately saved 32.65% (or $1632.50).

 

Now because you have spent more than just 5,000, but have an income of $75K, you are entitled to a 20% deduction of your remaining medical expenses (capped at $6K in expenses; because you have 1 child). This means that now your child care expenses from 5,001 - 6,000 will be eligible for a 20% tax deduction / benefit, which equates to an extra $200 in savings.

 

The remaining 4,000 in child care expenses will be fully based upon after tax income.

 

Total tax savings using the two programs = 1832.50 (on 6,000).

[Jenksismyhero]

You seem to be shifting from wanting to help the middle class to calling for more deductions and tax credits for the upper-middle/upper class.

 

edit: or at least preserving those tax credits instead of re-purposing them for a program that could help a broader range of people. It also always strikes me as really weird to view a reduction or removal of preferential tax treatment as "punishment."

 

Why? It is. Obama is literally looking at this program (which wasn't designed for the rich, it was designed for the middle class) and saying "too many rich people are using this and it's benefiting them so i'm going to take it away."

 

 

 

[StrangeSox]

I said earlier do both - it makes little sense to get rid of something just because it helps people with money. For some situations, i'm sure tax free benefits of a 529 plan may be preferred over a 2,500 credit (middle class kid going to a private school, for example).

 

And it's not adding MORE deductions/credits, it's not taking away one that already exists.

 

The federal government doesn't have unlimited funds, though. If they want to expand that AO credit, they have to get it from somewhere. If your goal isn't to give tax breaks to the better-to-well off for education but is instead to make education more attainable for lower and middle class groups, it makes sense to shift expenditures from a program that overwhelmingly benefits the well-off to programs that benefit more lower and middle class groups. What greater policy goal is served with a $2B/year 529 program with $1.6B of those expenditures going to families earning over $150k a year?

 

Money explains:

529 investors tend to be wealthy. Families with 529s earned a median annual income of $142,400 and reported a median of $413,500 in financial assets, according to the GAO.

 

And, in part because high earners typically owe higher taxes, the wealthy reaped large tax breaks from using 529s. In 2012, the GAO found that Americans who made less than $100,000 withdrew a median $7,491 from their 529s, saving just $561 on their taxes. But Americans who earned more than $150,000 withdrew a median $18,039, saving $3,132 in taxes. [Money, 1/22/15]

 

So the $2.5k tax credit is a far, far better deal for most Americans, especially if its expanded to more than that. If your underlying policy goal is college for families making less than $100k, why wouldn't you support an expanded AO over 529's?

[Balta1701]

Why? It is. Obama is literally looking at this program (which wasn't designed for the rich, it was designed for the middle class) and saying "too many rich people are using this and it's benefiting them so i'm going to take it away."

You realize that "government gives out a tax credit to a group" = "you pay higher taxes to cover that tax credit", right?

[bmags]

It is working, just not for the people Obama wants it to work for. It's not as if this program is designed ONLY for people who are rich. It would greatly benefit the middle class. They just have to use it.

 

If the goal is to make college more attainable, than this program isn't really serving as anything more than a tax credit.

[Chisoxfn]

You seem to be shifting from wanting to help the middle class to calling for more deductions and tax credits for the upper-middle/upper class.

 

edit: or at least preserving those tax credits instead of re-purposing them for a program that could help a broader range of people. It also always strikes me as really weird to view a reduction or removal of preferential tax treatment as "punishment."

Technically providing benefits to the lower end buckets when it comes to education is probably a moot point because they already get significant benefits in financial aid / scholarships / grants or at least I presume they would (I'm not sure) so the goal of all of these programs should be to provide benefits for people in the middle class buckets, but in general, make it to where more people can go to school without being completely and utterly broke (but also being responsible for things...I think getting school for free is not necessarily a bad thing because it means a lot less people will be motivated and quality might denigrate; one of the things I liked a bout college was I paid to be their and I knew it and I made sure I took full advantage of the opportunities provided to me and I think that a lot of people I was around had similar attitudes and it increased the overall long-term job benefits of college for me personally).

 

I'd also argue that at some point, all of these people going to college are actually adults and are now responsible for themselves so to base a lot on who their parents are, might actually be an unfair system in and of itself. I knew people who were far wealthier than my parents who never got a dime for college (and had to do it on their own) and people whose families made far less than my parents (my parents are / were middle class) who never had to pay a thing and got free rides. I was lucky that my college was cheap so it wasn't that big of a deal to work and pay for school, but their are some in-equality from that perspective as well, and school is a heck of a lot more expensive today than it was when I went in the beginning of the century. .

[StrangeSox]

Why? It is.

 

It's a very weird mindset, to me anyway, to see loss of privileged status as punishment.

 

Obama is literally looking at this program (which wasn't designed for the rich, it was designed for the middle class)

 

Are we sure about that? And even if so, it's overwhelmingly benefited the wealthy from the start, so it's a very poorly designed program if that wasn't the goal.

 

and saying "too many rich people are using this and it's benefiting them so i'm going to take it away."

 

The 529 changes and the AOTC expansion are part of a much broader reform proposal. Either way, that's a completely dishonest reading of what is going on here. 529 plans ostensibly exist to help the middle class, but they really don't. An expansion of the AOTC could help them much more, and we can end preferential tax treatment that the well-off don't need to fund education. If you want to keep 529's around just as another tax break for the well-off, okay, but be honest about it. It doesn't really help lower/middle class Americans pay for college, at least not nearly as much as alternative programs could.

 

It would be more honest to say "this program is supposed to help the middle class pay for college, but it's primarily just a tax break for the wealthy. Let's instead use those expenditures to actually help the middle class."