The Median Mormon Family and the Tax Plan

Plenty of people are wondering how the GOP tax bill will affect them personally. Although pretty much everybody has been wondering, the Washington Post recently spotlighted a Mormon family with those questions. So I decided to take a look.

A quick disclaimer first: the answer is, it totally depends on your personal situation. And because of that, I’ve decided to construct an average (or sometimes median) Mormon family. I’ve constructed them with their Mormonism in mind where I could find specific Mormon stuff; where I couldn’t, I used Utah data. And I totally get that that’s not 100% accurate. Most Mormons aren’t in Utah, and a significant percentage of Utahns aren’t Mormon.

Still, it’s good enough to give a rough, blog-worthy estimate. So, without further ado, meet the Nephi family! 

Brother and Sister Nephi are married and file a joint return. In 2018 they will have three children who are younger than 17 and live at home.[fn1] Brother and Sister Nephi will collectively earn $62,912 in wages. They own a home, and will pay $2,311 in mortgage interest. They will pay $1,351 in property taxes, and $2,386 in state income tax.[fn2] Finally, the Nephis will pay $6,300 in tithing.[fn3]

Current Law

Under current law, the Nephis have $62,912 in gross income. They have $12,348 in itemized deductions. In 2018, though, the standard deduction will be $13,000. Because a taxpayer must choose between itemized deductions and the standard deduction, the Nephis will choose the standard deduction. In addition, they get to deduct five personal exemptions of $4,150 each (for a total of $20,750).

Subtracting those two deductions from their gross income, the Nephis are left with taxable income of $29,162. That puts them in the 15% tax bracket; their initial tax liability will be $3,421.80.

But we’re not done yet: the current tax law also provides for a child tax credit of $1,000 per qualifying child. Credits reduce tax liability on a dollar-for-dollar basis; the Nephis, then, will be left with a federal income tax liability of $421.80.[fn4]

The Tax Bill

The tax bill makes a number of changes. For our purposes, there are three important changes: it doubles the standard deduction, eliminates personal exemptions, and increases the child tax credit. So how does that play out?

The Nephis will still not itemize. Instead, they will get a standard deduction of $24,000, leaving them with taxable income of $38,912 (because remember, personal exemptions are gone). That will put them in the 12% tax bracket, and they will have a tentative tax liability of $4,288.44.

The new child tax credit is $2,000 per child; the Nephis will thus have a credit of $6,000. Of that, up to $1,400 per child (or $4,200 total) is refundable. This means that the Nephis will not owe any income tax; in fact, they will get a refund[fn5] of $1,711.56.

But Wait! That’s Not All!

So the new tax bill reduces the Nephis’ income tax liability by a little more than $2,000. In 2018. But note that all of these things revert back to current law as of 2026. I’ve heard people argue that it’s just because of procedural Senate rules, and nobody will let things revert, but in today’s political climate, frankly, who knows.

So the Median Mormon Family Is Better Off Under This Bill, Right?

That’s not clear. The Nephi family pays less in taxes in 2018 under this bill than they would under current law, but better off is up in the air.

And why is that? A bunch of reasons. Perhaps most notably, the child tax credit—the thing that substantially lowers their tax bill—may not help them much longer. Remember, the expanded child tax credit is largely meant to replace personal exemptions, which go away under the bill. For purposes of the personal exemption, though, a “qualifying child” is a child up to 18, or, if your child is a full-time student, up to 23. For the child tax credit, though, a “qualifying child” cannot be older than 16. So once the Nephi’s oldest child turns 17, they’ve lost the $2,000 child tax credit, and they don’t have a deduction for personal exemptions.[fn6]

What does that mean? It means that if the Nephis were a slightly older family—say with a 17-, 19-, and 22-year-old (with the older two being college students)—under current law, they would pay $3,421.80 in federal income taxes (because they lose the $3,000 of child tax credits).[fn7] Under the new bill, though, they’ll owe $4,288.44. So for the older version of the Nephi family (the Laman family, I guess?), the tax bill represents a tax increase, even in year one.[fn8]

In addition, while most of these benefits go away in 2026, inflation adjustments move to chained CPI. Chained CPI grows more slowly than the CPI calculation the tax law currently uses, meaning the standard deduction and the brackets will grow slower. Essentially, that creates a stealth tax increase—in 2026, the Nephis will pay more in taxes than they would have under current law, even though the tax law will have reverted to current law.

Finally, the tax bill is set to raise deficits by about $1.5 trillion. With the increased deficit, the government may cut government spending, and, depending on where it makes those cuts, the cuts may affect the Nephi family. Alternatively, it could raise taxes in the future, which also may affect the Nephi family. (My point here is that tax cuts are only one side of a complex equation; simply saying that the Nephis will pay less in taxes, without taking into account government spending, doesn’t really answer the question of whether this is good or bad.)

So the tax bill: it will affect the Nephi family (and the rest of us), and it’s important to keep in mind that the ultimate effects of the bill will be complicated and will depend on our own personal circumstances. But it is clear that some not-insignificant portion of median Mormon families will see their taxes fall, while another not-insignificant portion will see them rise.


[fn1] Okay, trouble already. Pew said that Mormon women ages 40-59 had had, on average, 3.4 children. I can’t do fractions of children for tax purposes. Moreover, since some significant portion of Mormon families are younger than 40, presumably the median family size is smaller. So just for the heck of it, I’m choosing three kids.

[fn2] I have no idea how accurate the state income tax is; I used this calculator, put in the wages, married, 5 personal exemptions, and $8,611 in itemized deductions.

[fn3] Just FYI: I’ve chosen these numbers based on Google searches. I haven’t adjusted them in light of anything in the tax law—as of when I’m typing this, I have no idea what the tax consequences will be, either under current law or under the tax bills.

[fn4] You’ll owe a lot more than that in payroll taxes, but I’m not interested in payroll taxes for these purposes.

[fn5] Actually, they probably won’t—instead, the refundable credit will probably reduce their payroll taxes which, remember, they still owe.

[fn6] Okay, so I lied just a little bit. I didn’t adjust any of the numbers after the fact, but I did ensure that the children were young enough that they all qualified for the child tax credit. In my original draft, they were all younger than 18.

[fn7] For a little more explanation of this, you can take a look at my post on the Surly Subgroup. Note that u

[fn8] And maybe this is the right answer. Older people tend to be wealthier and have higher incomes than younger people, so maybe we want the tax cut to target young families. On the other hand, the fact that the older family has the same income as the younger family—and, given the expenses of older children, perhaps more expenses—suggests that achieving that result by cutting off the child tax credit is an imperfect mechanism to achieve this goal.

Comments

  1. Huh. This was very enlightening. I was expecting it to be revealed that the tax bill was nothing but lies about lower taxes for people around the 70K per year mark. I’m somewhat happy that I’m wrong, at least in part?

  2. Yep. Honestly, you can construct a family that will see its taxes go up, and construct a family that will see its taxes go down. I didn’t want to put a thumb on the scale, so I (mostly, other than children’s ages) picked my numbers before determining how they’d come out.

  3. Does the average family have any student loan debt that has to be considered?

  4. Frank, you’re making things harder for me. So maybe? (There are 500 pages of the bill, and another 500 of explanation; there are almost certainly other issues that would affect tax liability, but for these purposes, let’s pretend the Nephi family doesn’t have any student loan debt.)

  5. Wow, those are some amazing child subsidies—no wonder Americans have so many kids!

  6. Aaron Brown says:

    What is this family of 4 are all hedge fund managers who live in the U.S. Virgin Islands and also own golf courses ?

    Aaron B

  7. Paul Ritchey says:

    Excellently done.

    What’s the political calculus for reducing the tax benefits of older children? One would expect the opposite, given Republican demographics.

  8. So the family’s taxes go up once the children are of age for college or missions.

  9. Sam, you don’t need to construct a family for whom taxes will go up. My real family’s taxes will go up. Which means I’m in the middle class. If I were wealthy, my taxes would drop like a rock tossed into the Grand Canyon.

  10. That’s a lot of foot notes, Sam. [fn1]

    [fn1] FTR, I actually enjoy reading your footnotes. Honestly, I just enjoy reading your posts on taxes. You make taxes seem so, well…exciting and all that. :-)

  11. This is key: after elimination of the personal exemption for dependents and under the new child tax credit, once your child is over 16, you get neither a personal exemption for the child nor a child tax credit refund at the end of the year. So, this makes many Mormon families much worse off. Any family with one or more kids older than 16. Many families are in this situation, including mine.

  12. Eric Russell says:

    I’m not so sure that a “not-insignificant portion will see them rise.” I’ve been trying to devise scenarios in which people’s taxes actually go up, and my guess is about 1% of the population.

    It takes a fairly unusual set of circumstances to make your taxes go up. People with kids between 17 and 24 (but none that are any younger) as shown here, is one of them. Also people who are really heavily hit with SALT. Maybe some upper middle class people in California with a big mortgage in a county with heavy property taxes. Generally speaking though, the drop in the overall income tax rate should cover the difference for most people.

  13. Eric, the wealthy get a major tax break. The middle class gets a reshuffle that for some might slightly drop taxes in the first five years. For large families with many kids, including one or more above 16, and that donate between 10% and 20% to “charities” (such as churches), I think this falls out more negatively, especially on the 5 to 10 year horizon.

  14. Eric, it’s too early for me to find decent modeling of the conference bill, but under the House and the Senate versions, you had a sizeable number of taxpayers (generally between 15 and 30 percent) would see taxes go up. The New York Times has a model (for the Senate bill) that shows increases and decreases here, and the Tax Policy Center constructed examples of increases and decreases (under the House and Senate bills) here.

    Also, fwiw, at some point in the future, I’ll have three kids (and not a child more!) between the ages of 17 and 24, possibly for more than one year. It’s a small margin of time, but it is, nonetheless, a period through which many of us who have three children will pass.

    And again, I didn’t construct the family to show a tax increase or decrease (and yet I got to show both!); I tried to put together what some kind of representative Mormon family might look like, if it were constructed from Google searches.

  15. Eric Russell says:

    Don’t worry, John. My comment wasn’t an argument in regards to the merits of the tax bill overall. I only intended to communicate that which I actually said.

  16. I’d like to issue a warning to middle-class people who actually think the GOP tax bill will be helpful to them. (It’s a given that this tax bill greatly benefits the rich — those with assets valued at more than $11 million for sure but also pettier millionaires with less than that.)

    From a painfully practical perspective (i.e. moving away from ideological support for the tax bill just because it’s being served up with rhetoric about “lower taxes”), unless the IRS substantially changes the W-4, this will mean each of your paychecks will decrease even if you see lower taxes at the end of the year! This is in particular true for Mormon families.

    People don’t know how much they pay in taxes but here’s what they do know: the amount of each biweekly paycheck down to the penny. If you make $3,000 every two weeks after tax withholding based on selecting x number of exemptions on your W-4, if you take away four or five exemptions (a family with four or five kids), the tax your employer is required to withhold from each paycheck will increase (potentially substantially). So this family’s biweekly paycheck, which was $3,000 after applying the current slate of exemptions (including the five for children), now is reduced to $2,659 (just picking a random figure). Will Eric Russell still be able to pay his tithing, fast offerings, mortgage payment and home insurance, car payments, car insurance, HSA payments and insurance premiums, retirement savings, school fees and payments, groceries, etc. on $2,659/paycheck rather than $3,000/paycheck, or does his budget require his current paycheck? Can receiving a slightly larger tax refund check at the end of the year based on the voodoo economics of this tax bill help with the weekly financial obligations throughout the year?

  17. Noted, Eric — I wrote my comment before seeing your follow-up but I’ll let it stand with reference to you in the hypothetical.

  18. it's a series of tubes says:

    Will Eric Russell still be able to pay his tithing, fast offerings, mortgage payment and home insurance, car payments, car insurance, HSA payments and insurance premiums, retirement savings, school fees and payments, groceries, etc. on $2,659/paycheck rather than $3,000/paycheck?

    Fair question. Potential solution: if a significant amount of your cash flow goes to the government, and then you get a massive tax refund in April, perhaps the financially prudent member would elect not to pay tithing in many small amounts throughout the year, but instead pay the bulk of the tithing (or all of it) when the government returns the money? Many business owners and service professionals pay tithing this way, and not just for cash flow reasons. Often, it’s not until the books are closed and the tax return for the prior year is completed that someone can make a fair assessment of what their income was for that year.

  19. Yes, in my opinion that is an acceptable approach. Whether that would be enough to help the family survive a decreased paycheck is uncertain. My made-up figures make it look like it would make up the difference because I randomly wrote a figure $300 less than the normal monthly paycheck but that was only for the sake of writing a hypo in a blog comment and not tied at all to real numbers. My gut feeling is the decrease in each paycheck would be more than a $341 difference each time.

  20. Sam, I’m seeing stats floating around twitter that by 2027, two-thirds of middle-class families will see a tax increase from this tax bill and that 83% of the “tax cut” by 2027 goes to the top 1%.

    These strike me as accurate based on charts and coverage I’ve been following in the WSJ and NYT, but I haven’t seen the source on these particular figures.

  21. Last Lemming says:

    Count me among those who would probably have an immediate tax increase, and it has nothing to do with child credits. I would continue to itemize because my tithing and mortgage interest exceed $24,000, so the increased standard deduction does me no good. Instead, I lose my personal exemptions and a portion of my SALT deduction. That is offset by my dropping into the 22% bracket, but I haven’t done the math to see if it is enough to give me a net tax cut. It would not have been under the Senate bill, but the expansion of the SALT deduction in the conference agreement might do the trick.

    The latest from the Tax Policy Center can be found here:

    http://www.taxpolicycenter.org/taxvox/tcja-would-cut-taxes-average-1600-2018-most-benefits-going-those-making-300000-plus

    They show that only about 5% of households would pay more next year, but that about half would experience a tax increase in 2027. By that time, virtually all of the benefits would go to the top 1%.

  22. This is where the stats are coming from that by 2027 two-thirds of middle class families have a tax increase under this tax bill whereas by 2027, 83% of tax cut goes to the top 1% and 60% goes to the top 0.1%: http://www.taxpolicycenter.org/publications/distributional-analysis-conference-agreement-tax-cuts-and-jobs-act/full

    Amazing.

  23. LL, this what people who describe themselves as conservatives don’t seem to be getting about the bill: it treats tithe-paying religious people unfairly by eliminating personal exemptions if they still itemize because their generous giving exceeds the new standard deduction. Mormon families are affected negatively on the basis of both tithing and having many kids — no more personal exemption for dependents and the child tax credit, which is after the fact, does not make up for the difference, especially if you have one or more kids above 16.

    It stands to reason that middle class families with many kids and that donate heavily to charities should get a tax benefit before the ultra rich for whom the marginal value of percentages of income is less (even if the sum is more).

  24. When paying taxes, the “wealthy” (or top 1%, or however you want to define/label them) pay the lion’s share of the taxes, and they should. So it would be expected that they would benefit the most from a tax cut, no? This should also be the case. I don’t understand the bemoaning that those who are paying the most, also benefit the most when taxes are cut. That is how percentages function.

  25. Nunya Bidniss says:

    What about the 44% of American’s that pay no Federal income tax at all (after EITC, etc)! Shouldn’t they get a break, too? How come the average 3-4% reduction is going to the .01% – 1% of people who are paying the majority the taxes?

    Booo! Tax cuts for non-tax-payers and low-to-no-tax-payers! Eat the rich!
    [sarcasm off]

  26. Paul Ritchey says:

    Any tax accountants out there? Can’t you claim as many W-4 allowances as you want, regardless of the number of personal exemptions? I have a hard time believing the bill will do away with dependent-dependent (see what I did there?) witholding calculation. If so, that’s the real reason to oppose it.

  27. According to the calculator over at CNN, a married couple filing jointly with two kids with $125,000 income will see a 3.4% tax cut, a married couple with two kids with $59,000 income will see a 4.6% cut, and a single person with no kids making $35,000 will see a 6.8% tax cut. That means the poor single guy gets double the cut of the wealthier family, and the poorer family gets a larger cut than the wealthy family too. That totally refutes the argument that the wealthy get the biggest break, because the percentages seem to say otherwise. Those percentages obviously represent more actual $$ for wealthier people, but they pay more so that is expected. If you just click around on that calculator for different states/kids/income, you can see the percentages kind of bounce around without too much pattern… they don’t necessarily get higher with more income, nor do they get higher with lower income. Sometimes more income means higher percentage of break, and sometimes it doesn’t. It kind of affects everyone differently, but the biggest take away I got from looking at it is that EVERYONE gets a good cut up until 2026.

  28. Paul, I’ve always filled in the number of allowances that corresponded to my exemptions+deductions (1 per 4k). So yes, you can put the number in that fits your taxes, if that was your question.

  29. Thanks, Last Lemming. The question does become harder once you factor in people who already itemize, as well as limitations on various deductions. This post is just one (or two) data points.

    Jax, whether the richest taxpayers benefit most from tax cuts is purely a policy and design decision. I could design tax cuts where all of the benefit went to the top 1 percent, and I could design tax cuts where the top 1 percent got no cut at all. As for tax calculators, I’d be careful. Every taxpayer’s situation is slightly different—at (pretty much) every income level, there will be winners and losers immediately, and winners and losers in the future, too.

    Nunya, it’s true that some portion of Americans pay no federal income tax. And the ranks of the non-income tax-payers grows under the tax bill—remember, the Nephis—a household with higher-than-median income nationally—end up with a negative tax liability under the tax bill.

    By and large, non-income tax-payers are in that position by Congressional design. The EITC was designed as a social safety net program that would encourage people to work; part of the way it does that is by providing a refundable credit. In fact, of the non-income tax-payers, the vast majority have either relatively low income. Also, while about 44% of Americans didn’t pay income tax in 2016. According to the Tax Policy Center, about 60% of people who don’t pay income tax work and owe some amount of payroll tax. Of the other 40%, the majority are retirees with income too low to owe any income tax. And of those who pay payroll taxes but not income taxes, only about 9% have tax credits that offset their payroll taxes entirely. [Source.] So, whether your sarcasm is on or off, I’m not sure what your point is.

  30. Our taxes will go up by quite a bit, primarily due to the loss of deductions for property tax and state income tax. Is it the case that mortgage interest deduction will be preserved for mortgages already entered into?

  31. Cynthia, that’s right. As long as you borrowed before December 15, the $1 million limitation is grandfathered in, and the new provision doesn’t apply to you. (If you have home equity indebtedness—that is, up to $100,000 in debt secured by your house in excess of that $1 million, or that you used to do something other than buy or improve your house, though, it looks to me like you don’t get to deduct the interest on that part.)

  32. lastlemming says:

    According to the NY TImes, you can continue to deduct interest on the first $1,000,000 of a mortgage if you bought the house before December 15. After that, you can only deduct interest on the first $750,000.

    Whatever your personal situation, the combination of the lower cap on the mortgage interest deduction and the larger standard deduction will dramatically lower the incentive to use debt to buy a house. Coupled with the limits on the deductibility of business interest, you could see significant deleveraging of the economy in the future. That won’t necessarily lead to more growth, but it would lowers the risks in a downturn.

  33. Jax, a couple with children making 125,000 falls squarely into the middle class – probably the upper end of it, but it depends on regional cost of living. Certainly this is true of Utah and much of the intermountain West.

    To really check the arguments about the wealthy benefiting more, you’d want to check the tax benefits on a family making an order of magnitude greater than that, or even higher. The arguments are focused on the taxes paid by the top 1% or 0.1% of the income distribution, which is significantly higher than the 125,000/year you cited.

    All of which is to say – I see no reason to dispute the numbers you cited. I just am not sure that they actually counter the argument you want to counter with them.

  34. What happens to the Nephis if they form their own business? (So instead of working as plumbers for a company, they form their own LLC and do contract work for that same company.) Can they obtain an additional break by doing this? What if Nephis made 300K or 900K instead of 60K? Then would they be better off forming their own business? Generally, how much of the way businesses and employees are organized will change in response to this bill? Will we all be forming our own businesses? I am kind of glad standard deduction is going up and that fewer people will be itemizing (because it saves a lot of people the hassle of collecting receipts, wasting a couple days compiling them for their tax software, etc.) But if many of us are going to be forming our own businesses now, will this lead to a lot of additional paperwork? Or is this pretty straightforward?

    Also, how will the way states tax their citizens change in response to this bill? Will CA and NY have a strong incentive to rely less on taxing wealthy individuals and more on taxing businesses (perhaps those owned by or catering to wealthy individuals) given that businesses get to deduct SALT in ways that individuals do not? Do the incentives encourage a general shift by states toward getting a higher percentage of their revenue from businesses rather than individuals (kind of a mirror image of what the federal government is doing)?

  35. What would happen to the Nephi family if their children over 16 got jobs and filed their own taxes?

  36. Jax, unless something has changed in the most recent conference version, the operative figure for the wealthy getting a massive break compared to everyone else is $11 million for married couples ($10.98 million in the Senate bill, to be more precise). Whereas the “tax cut” becomes a tax increase for that $125,000 family you mentioned in 2027 or earlier, it is permanent for that top 1%er.

  37. A moral voice speaking on the GOP tax bill: https://twitter.com/repjohnlewis/status/943172729905254401

  38. This is exactly why you pay tithing on your net income. You are paying on money received. If your taxes go up, you pay less tithing. This way you can afford to pay your bills.

  39. Okay, so let me see if I understand this right (I think my family might be screwed):

    Two working parents, four kids under 17, all living in a CA. 2016 Numbers are:
    $150K Income
    $24K Exemptions
    $35K Deductions

    Under current (simplified) understanding of the new tax plan, we’d loose the personal exemptions of $24K entirely, but as we’d continue to itemize, our deductions should rise another $4K ($1K per each kid). Am I understanding that right? It looks to me like we will be paying ~$5K more annually in taxes under the new plan.

  40. ReTx, I don’t know if your taxes will go up or down. With $150K income, you’re probably in the 25% tax bracket. Under the new tax plan, you’ll be in the 22% tax bracket. You lose your 24K in personal exemptions, which would reduce your taxes by $6,000. Unlike deductions, which reduce your tax bill by the amount of the deduction times your marginal tax rate, the child tax credit reduces your tax liability on a dollar-for-dollar basis (which means the additional $1,000 per kid reduces your taxes by $1,000). Otoh, since you’re in California, there’s at least a reasonable chance that you pay more than $10,000 in state income and property taxes, but you’ll be limited to deducting $10,000.

    Which is to say, while on average, tax bills are going down, each household will be different.

  41. Thanks Sam. That makes sense. I can see I didn’t think the child tax credit through correctly. We’ll probably get hit on the $10K state/property limit as well. Grrr…

  42. it's a series of tubes says:

    It will be interesting to see how this shakes out, but it looks like a significant tax win for my family, primarily due to the increased child tax credit and higher threshold before phase-out.

  43. Any expansion of the child tax credit means more money for lower to middle class families with children. I employ 35 people. Most with children. Tax time is great for them.

  44. As far as I’m concerned, taxes don’t have to be low. I pay a 42% marginal rate where I live and don’t mind too much because public spending contributes noticeably to the quality of life in this country. That said, the overall thrust of this bill to lower corporate taxes and income taxes on the wealthiest Americans is an affront to anyone in lower tax brackets who has to pay a cent more as a result of this brash hoodwinking of Main Street.

  45. Jenny Harrison says:

    My biggest concern is not for myself. I worry about my neighbor who has 8 children and his stay at home wife. If the personal deduction is gone, and the child tax credit is only $1,000, then I think he is in trouble. I believe its a tax on families.

  46. Jane Smith says:

    I think this plan will benefit most. Some of the kinks were worked out and even tithe paying Mormons should mostly “win.” The increase in the child tax credit helps offset the loss of personal exemptions and most will not be phased out by income limits which used to be &110000 and it is now good until age 18. College aged children are eligible for a $500 credit. Thanks to Rubio, $1400 of the child tax credit is refundable, meaning you will get it even if you don’t ‘owe’ that much in taxes. Your neighbor with 8 kids will do very well with this plan.

  47. Jane Smith says:

    Forgot to link to the tax calculator http://taxplancalculator.com/ I just hope they renew the tax cut for individuals in 2025.

  48. it's a series of tubes says:

    Jenny, under this bill, the child tax credit has been doubled to $2000, and $1400 of that is refundable. As Jane mentioned, it is very likely (but not guaranteed), that your neighbor will be significantly better off under this plan.

  49. Jenny Harrison says:

    Thank you for the tax calculator and the hopeful words for my neighbor of 8!

  50. Yes, thank you for the link to the tax calculator. This may work in my family’s favor after all. (although I’m not sure that’s a good thing within the bigger picture of the country’s finances…)

  51. Greg Jakubowski says:

    We can trust them to do the right thing for the lower and middle class in 2025. Why wouldn’t they?

  52. Geoff - Aus says:

    Doesn’t this also reduce health insurance?

  53. Russ Frandsen says:

    Sam,
    The effect of the tax bill will be felt not just in taxes paid, but in the effect on the economy, which will likely affect salary. Most analyses use the “static model”, which assumes no effect on the economy and compensation.

    I expect that many LDS have retirement plans either through their employment or 401(k). the very robust increase in the stock market benefits those whose retirement is based on or in part on the performance of the market. I am in the category that I will likely see my taxes go up: nine living children, youngest 22, living in La Canada Flintridge, CA, high SALT, some reduction in tax rate in my tax bracket (under the new law, I am certainly not in the top bracket), but I have not yet taken the time to see the exact impact. however, looking at the increase in the value of the stock market, my overall financial situation will be improved by a substantial margin over the likely tax increase.

    I did not vote for trump nor did I vote for Clinton. I am in the never trump category, but I am also not blind to (general) conventional republican/conservative policies under trump (in contrast to his rhetoric). I have no motivation to defend trump. Notwithstanding, I expect the tax bill will have a substantial salutary and beneficial impact on most LDS.
    Russ

  54. Several comments focused on payroll withholding issues. Those problems should all be addressed by February, according to a statement by the IRS at https://www.irs.gov/newsroom/irs-statement-withholding-for-2018, which appears to suggest that the immediate effects of a family’s tax reduction will take place soon, resulting in higher paychecks for those whose taxes will be lower.

    “The IRS is working to develop withholding guidance to implement the tax reform bill signed into law on December 22. We anticipate issuing the initial withholding guidance in January, and employers and payroll service providers will be encouraged to implement the changes in February. The IRS emphasizes this information will be designed to work with the existing Forms W-4 that employees have already filed, and no further action by taxpayers is needed at this time.

    Use of the new 2018 withholding guidelines will allow taxpayers to begin seeing the changes in their paychecks as early as February.”

    In addition, as always, everybody is free to do their tax liability projections and adjust your W-4 exemptions accordingly so that the correct amount is being withheld. It is not rocket science. Those who choose to give the United States Treasury an interest-free loan until tax return filing deadline the following Spring are perhaps not making the most economically prudent decision.