Companies will spend more of their windfall from the tax cut on buybacks than on workers.

This is no surprise.  Many people predicted it.  Corporate executives work for their shareholders, not their employees.  So who do you think they would give the money to?

Income Tax Withholding

I get a monthly Civil Service pension.  The federal tax deduction was lowered effective with the February payment.  The new rate is only 83% of the old one.  I doubt my actual taxes will be lowered that much.  They may not be lowered at all since I live in one of the blue states Republicans want to punish.  I changed it back to the old withholding rate.

The whole thing seems like a scam.  Lower the rates now so people think they have more money and are more likely to vote for Republicans in the 2018 elections.  Then, when they file their returns in 2019, they will see that the real tax decrease was not that low and they may even owe money.  Sad!

New tax tables

The Trump administration is pushing businesses to withhold less in taxes by February.   Democrats want to make sure that 2018 tax tables for the new law are accurate and don’t show artificially low rates.  That would cause people to think they got a bigger tax cut than they did and they won’t know the truth until 2019 when they file their 2018 returns.  I wouldn’t put it past the Trump administration to do this.

This article has a table with estimated tax deduction changes.

Workers will have to rely on an online tool to determine if the revised tax deductions made by their employers are correct.

Sad!

The tax law and charitable donations

Charities may get fewer donations under the new tax law.    A study estimated donations could drop by 4.5% or $13 billion.  Under the new law, the higher standard deduction will mean that many middle-class taxpayers will not qualify for the charity deduction.  It is not expected to affect donations from the wealthy.  The article notes that wealthy people donate more to museums and universities while donors of smaller amounts are more likely to donate to social service or religious organizations.

This article discusses tax-related strategies for donating under the new law.

Trump and farmers

Trump has sought support from farmers but this New York Times article says that his tax law could hurt farmers.

The article states “New analyses of the tax law by economists at the Department of Agriculture suggest it could actually lower farm output in the years to come and effectively raise taxes on the lowest-earning farm households, while delivering large gains for the richest farmers.”

Trump had lied earlier and said the estate tax was a burden on farmers.  However, only 153 out of 38,328 farm estates paid any estate tax in 2016.

When Trump spoke to farmers in Nashville on Monday, January 8, he said that taxes had been reduced by $5.5 trillion when the actual reduction is $1.5 trillion.

Sad!