A Legislative Column by Assemblyman Will Barclay
There seems to be a substantial amount of confusion as to what effect the newly enacted Federal Tax bill will have on residents of New York state.
The confusion stems from the fact that (i) taxes are complicated, (ii) what people pay in taxes depends on individual circumstances, and (iii) the political rhetoric about the tax bill and its effects has been misleading and in certain cases inaccurate.
In order to understand the effects the federal tax legislation will have on New Yorkers, there needs to be a general understanding of how the federal income tax system works.
Accordingly, in this column I attempt to provide a simple primer on federal tax law and set forth some of the changes that were enacted at the end of last year.
In future columns I will tackle the effects the new tax law will have on New York state as best as can be predicted.
Finally, in the future I also plan to discuss proposals being made in Albany in reaction to the new federal tax legislation.
First, it should be noted that individual income taxes are the federal government’s biggest revenue source accounting for more than $1.6 trillion dollars or 48% of all federal revenue.
Corporate income tax by way of comparison account for approximately 9% of total federal revenue.
The remainder of federal government revenue comes from sources such as payroll taxes, excise fees, and estate taxes.
Second, in our country we have a progressive income tax system – that is, those who have higher incomes pay at higher tax rates.
The IRS taxes income at different rates at different levels.
The rates are set forth in seven different income brackets.
For example, under the old law, for someone filing taxes as a single person, their first $9,275 of income was taxed at 10%, earnings more than $9,526 up to $37,650 were taxed at 15%, earnings more than $37,651 up to $91,150 were taxed at 25% and so on.
Earnings more than $415,050 were the top income bracket and that income was taxed at a rate of 39.6%.
Because of the progressiveness of the tax code, the top 20% of American households pay almost 70% of federal taxes.
Interestingly, in 1979 the top 20% shouldered 56% of the federal tax burden – so over the last almost 30 years our income tax system has become more progressive.
On the flipside, those on the lower end of the income scale pay little or no income tax.
In fact, two-thirds of the almost 66 million tax returns filed by people in the lowest income tier pay no income tax at all.
However, they do contribute to federal revenue when you factor in payroll taxes and excise taxes.
Against this backdrop, the new federal tax bill continues to be progressive.
It retains the seven income brackets but reduces rates for almost every level of income.
While it has been misrepresented by those who oppose the tax bill, under the new law, people with the highest incomes will continue to pay the highest income taxes.
If this progressive income tax system was all there was to the federal tax code, we would have a relatively simply system.
However, as anyone who pays taxes knows, it is much more complicated because the government has tinkered with the system over the years to encourage certain behaviors from taxpayers.
For instance, because the federal government deems home ownership important, it allows taxpayers to deduct mortgage expenses from their federal taxes.
Because it believes taxpayers should contribute to charity, it allows for charitable deductions.
Under the old law, a taxpayer could either itemize these deductions or take a standard deduction which was $6,500 for a single filer and $13,000 for a joint filer.
The new law also allows taxpayers to either itemize or take a standard deduction, but it increases the amount of the standard deduction for a single filer to $12,000 and $24,000 for joint filers.
While most Americans take the standard deduction (approximately 70% of taxpayers), high-income taxpayer under the old law tended to itemize their deductions.
In one of the most talked about provisions of the new law, the amount of a deduction that taxpayers can take for state and local taxes is capped at $10,000 (under the old law, there was no cap).
This provision will likely negatively affect high income earners the most because they are the most likely to itemize their deductions and generally pay the most in state and local taxes.
The new tax bill also increases the child tax credit from $1,000 to $2,000, cuts the corporate tax rate from approximately 35% to 21%, doubles the estate tax exemption in 2018 and eliminates the individual mandate penalty that had been imposed as part of Obamacare.
All of these changes will impact individual taxpayers differently based on individual circumstances.
And if that doesn’t complicate matters enough, because states tax their citizens in different ways, these changes will have a different effect on citizens of different states.
I will discuss that in next week’s column.
If you have any questions or comments on this or any other state issue, or if you would like to be added to my mailing list or receive my newsletter, please contact my office.
My office can be reached by mail at 200 N. Second St., Fulton, NY 13069, by e-mail at [email protected] or by calling (315) 598-5185.
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this piece is typical misleading right-wing obfuscation …
one would think, “oh golly, look how progressive the tax system is …”
first of all the corporate tax: corporate taxes in the 1950’s used to account for between 1/4 and 1/3 of federal revenue (now just 9% as Barclay admits and going down with the massive corporate tax cut) … so the most profitable corporations in human history are paying significantly less in taxes …
the payroll tax is a regressive tax which disproportionately taxes lower-income people … so when right-wingers throw out the line about “half the people pay no income tax …,” one must bear in mind that that same half pays a disproportionately higher share in payroll taxes.
Barclay’s contention that the top 20% pay more now than in 1979 … that’s misleading because income inequality is so much greater now than it was a generation ago … so the top 20% have way more than they used to … and the top 1% have astronomically more than they did in 1979 … furthermore, we know through loopholes and other chicanery, the wealthy are able to avoid paying what they should …
In the end, the bill that was passed was ridiculous … the rich and corporations have never been richer and more profitable … they have accumulated obscene wealth that should be going into national healthcare, national infrastructure, education, and so forth. Taxes on the rich and on corporate profits should be radically increased, not cut.
Barclay’s own status as a member of the 1% (achieved through inherited wealth) is one reason he attempts to justify this massive giveaway to the already ultra-rich and to large corporations. Nobody should be fooled by this. He doesn’t mention the so-called cuts for middle/working-class Americans expire while those for the wealthy and corporations do not. In the long-run, the tax bill redistributes wealth upward, devastates the federal budget by depriving the government of revenue, and keeps America firmly on the path of oligarchy and inequality.
Re: Anonymous
oligarchy, inequality, blah blah blah
Tax cuts are proven to work for everyone.
What individuals do with their money, is for them to decide, not a bunch of corrupt individuals from a state known for corruption.
Thank you Rep. Barclay, and thank you Rep. Katko
and a big thanks to President Trump!!
Happy New Year Anonymous!! Choose to be bitter, or get on the economic boom bandwagon brother!
1979 was a long time ago. Almost anyone who wisely invested their money into any number of things that could yield a profitable return is inherently wealthier today than compared to back then.
Whether it’s the stock market, real estate, personal savings and so forth, that’s just how money works. In the banking world, it’s called “compound interest”. In the stock market, it’s called “taking a risk”. In the real estate market, “it’s all about location, and having one piece of property pay for another.” Almost everything is more expensive today than back then. What used to be a dime is now 50 cents…like postage stamps.
Now, some of it is higher wealth accrued through these means. However, some of it is simply a “reflection of inflation”, where it appears they are making more than before, but in todays value of a dollar, perhaps they actually aren’t. The minimum wage would be a good example of that…in 1979 it was around $4.50 an hr., about half what it is today in some areas. They aren’t any wealthier, (yet had more disposable income back then), but in actual dollars on paper, they are making more than in 1979. See how that works?
For example, In 1960 you were considered fairly well off if you were making $20,000 per year. Not so much today. That’s my point…most everyone is making more, and paying higher taxes based on both the higher dollar figure of income they are making now, as well as more various taxes (or taxation) in general.
As for where “personal wealth” should go (or be directed), IMO the government didn’t make it, so by them having a claim to it is almost ludicrous in instances such as “the Death, or Estate tax”.
“National this” and “National that” is all you hear from poster Annonymous. Yet, ironically, that’s a Socialist/Communist economic viewpoint, not based on Capitalism by which our system in America was designed.
societies produce wealth … societies should benefit from the wealth produced … the ultra-rich have rigged America’s economic system for their own benefit … they have corrupted American politics … capitalism is a failed economic system: all the capitalist activity over the past couple of hundred years has produced a climate crisis which threatens human survival and a crisis of inequality which allows small numbers of individuals … Donald Trump for example … to accumulate excessive wealth while ordinary people struggle to eke out an existence …
the word ‘capitalism’ does not appear in the U.S. Constitution … we the living are not beholden to a failed economic system just because conservatives can’t let it go … no matter how obviously unjust and destructive capitalism becomes.
Yes, societies do produce wealth, but “someone” or “something” usually has to initially provide them with employment. If not, then they are forced to be one of the two, either “self-reliant” or,… “dependant”.
In the case of capitalism, the Industrial Revolution largely created that wealth and opportunity in the form of employment, by people who had the ABILITY to provide it. Also, by individules who were “self reliant” upon their own skills, by creating small busines’s of their own. Other countries, (like China), were far behind the curve 50 years ago, (let alone 200), under communist rule. And N. Korea even today is a prime example of a “failed system” under communist/facist control, along with Cuba, Venezula, Vietnam, (just to name a few) without even getting into the Middle East where life is just “oh so wonderful”.
As for dependency, there’s a reason why they left England to form a new government, and had the Revoltuionary War.
Furthermore, the Industrial Revolution also paved the way and provided the means by which further technology would eventually be created, such as the Auto Industry, Aviation, computers, medical advancement and so forth. You have to take the good with the bad… you can’t just throw the baby out with the bathwater.
Socialism, on the other hand, is largely dependant upon taxation as a means to produce wealth. People who aren’t self-reliant often tend to prefer this type of system, and therefore rely more heavily upon government, “as dependants”. The problem with this system is that eventually over-taxation makes “the wealthy well” run dry, and it too becomes a “failed economic system”, much like Greece. Take your pick.
Definition of Capitalism……You have 4 cows…2 for yourself, one for your neighbor, and one for the government.
Definition of Socialism…..you have 4 cows…1 for yourself, one for your neighbor, and 2 for the government.
Definition of Communism….You have 4 cows….1 for yourself, and 3 for the government.
Definition of Facism….You have 0 cows. The government has all four of them.
In the beginning, the United States had two competing socioeconomic systems: slavery and early capitalism. The Civil War decided which system America would have: industrial capitalism, or wage-slavery.
Wage-slavery is a freer system than chattel slavery. Karl Marx was firmly on the side of the North in the American Civil War and hailed Abraham Lincoln as a champion of the working-class.
But freer though it is, wage-slavery is still slavery. The same basic relationship we’ve seen all through history: master and slave, lord and serf, king and subject, owner and worker.
Now for whatever reason, Wizard and millions of other American so-called conservatives choose to worship the “job creators,” the owners. But the conservatives who do this are themselves workers, not owners (usually). Conservative American workers are actively supporting the opposing side in a class conflict: the conflict between American owners and American workers (American wage-slaves ).
We should be thankful to owners for imposing a system of wage-slavery upon us? A system which has concentrated great wealth and power in the hands of a few billionaires? We should thank owners for shipping jobs overseas in pursuit of profits? Thank them for crashing the economy in 2008? Thanks for the foreclosures?
It’s not an argument we can take seriously any longer.
The definitions above are cute but inaccurate and facile. Socialism has not had fertile ground to establish itself with the post WWII global superpower violently and vehemently opposed to it. The American capitalist project imposed on planet Earth has, once again, led humanity to the edge of climate catastrophe and to oligarchy. Capitalism is not a sustainable system given the limitations of planet Earth. Can’t have billions of humans told to be as selfish and greedy as possible, to value corporate profit above all else, and sustain the human species for very long.
Capitalism has been a stage on the road of human development. It should not be the last stage.
“They’re rapists”, Mexico will pay for the wall”,” He’s not a war hero”, “If you count the millions who voted illegally”, “How low has President Obama gone to tapp my phones during the very sacred election process. This is Nixon/Watergate. Bad (or sick) guy!”, “Grab them by the pussy”, “Covfefe”, “I need your loyalty.”“Why do we want all these people from Africa here? Why do we want all these people from shithole countries?” “We should have people from places like Norway.”
Sorry, but I don’t see how “getting paid for doing a work” is slavery, because you are free to quit at anytime and go to work for someone else, or become self employed, or choose to not work at all. In most cases, employment can be terminated “at will” by either the employer or employee at any time. Sorrry, that’s not slavery.
As for basic relationships, how about “Teacher and Student”, or “Parent and Child”? How does a child receive an allowance? HE WORKS FOR IT. How does a teacher get paid? THROUGH TAXPAYER MONEY. (Although in my case, I do it for you as “a public service”).
By the way, you forgot to include the “Queen Bee and the Worker bees”. It’s simply nature.
Not much difference between selling yourself (slavery) and renting yourself (capitalism/wage-slavery).
These should help clarify things for you Wizard:
https://www.youtube.com/watch?v=oztdRo9GLLk
https://www.youtube.com/watch?v=Fd6u2iH96uU
Ha! LOL…..OMG, is that where you get your radical info from? A bunch of “elite globalist’s” pandering to the French? Talk about a twisted, warped view of reality….it’s almost comical watching them preach from a podium to the rest of us. It makes me wonder what they think about the workers who “actually built the microphones” for these idiots to speak into, and everyone else they depend on to spread their radical viewpoint….you know, like “the wage- slaves” on You Tube, and at Oswego County Today!
What are people supposed to do all day long to pay bills for services rendered, have money to spend on recreational activities, purchase housing, and every other expense they incure in life? Are they just supposed to sit around and smoke dope all day long like the 1960’s Hippie’s who failed at their attempt to achieve cummunal living due to the fact that “some worked harder than others” within their own communities?
And how about all these enviromentalists and researchers who need ships and other high tech equiptment to do research underwater, and all the computer satellite gagetry needed to explore the universe? Who’s supposed to make those things, and what should they receive for compensation for doing so?
A system of “compensation for work” dates all the way back to the Barter system, long before America was founded. The need for coinage existed thousands of years ago. There is no free lunch in the real world.
I’d love one day for one of the “conservatives” to actually define what they mean by “globalist.”
What should human beings who live on a globe be? Not globalists? Narrow-minded provincials? Nationalists instead of internationalists?
I get that American conservatives generally despise the rest of the human species, the 96 percent of humanity who are not citizens of the United States, but the rest of us would prefer to live in a world based on peace, cooperation, and mutual respect.
The United States, particularly under Republican rule, is pursuing an agenda that is leading all of humanity to destruction. As Noam Chomsky said in the video, if you treat the world as an infinite garbage can (in order to make profits), you’re eventually going to destroy the conditions necessary to sustain human life.
There’s no reason human beings can’t end inequality, end capitalism, and build a global community that is peaceful, sustainable, and prosperous FOR ALL.
The major bloc of people opposing that are American Republicans … people who deny scientific reality in service to their fanatical corporate capitalist ideology.
As far as “compensation for work” … no problem, compensate people with a living wage, with universal medical care, with lifelong economic security, with peace, justice, etc. That’s not what we have. We have a corporate capitalist system run amok, a system that has concentrated wealth and power in the hands of a few. That’s called oligarchy. Average workers have seen their living standards stagnate and decline while the richest individuals and corporations accumulate record wealth, power, and profits.
Now you can sit there and applaud the way powerful interests have rigged the economy, bought the government, and polluted the Earth, but you shouldn’t be surprised that the rest of us don’t.
[Sitting around and smoking dope would be a big improvement over the current human project to put so much carbon into the atmosphere that humans might not be able to survive long into the future … is it better to smoke dope or drill for oil in the Gulf of Mexico? better to smoke dope or engage in fracking? better to smoke dope or invade and occupy Iraq? There’s a lot worse that humans could do, and do do, rather than smoking dope. Humans living peacefully and simply in harmony with nature might not be good for Wall Street, ExxonMobil’s bottom line, or the failed capitalist system, but it is exactly what is necessary to save us from climate catastrophe, from nuclear war, from all manner of injustice.]
Well Anonymous, a “globalist” is someone who wants to live as you stated,… in a global community, obviously controlled by a group of UN objectors who basically hate America to begin with and want to see it fail. Obama was a classic example of such, and just look how that all turned out. Most of the same countries that hated us before, still hate us now. War’s didn’t end all over the planet, people are still living in poverty in most of the same countries, and wages didn’t increase when he was running the show either.
Now, (for some insane reason), you seem to think that someone like Bernie Sanders or Noam Chomsky is going to somehow make all of that happen? By what…Executive Order?
Now, 1967…”the Summer of Love” didn’t last long. Despite any good intentions, for a number of reasons, it too failed. If things were so wonderful, what happened? How come the rest of humanity didn’t see the vision? And what about Timothy Leary? Even The Beatles singing “All You Need is Love” on a worldwide telecast that year couldn’t change the world, and they were almost as popular as Jesus at the time, according to John.
Sure, there’s far worse things in the world than smoking dope,… like paying taxes for example, or trying to carry on a rational argument with an irrational person. That’s not really the point. The question is, if you don’t want to be a “wage slave”, why do you have expectations of lifelong economic security? Are you saying that if they paid you more and provided you with more that/that would be acceptable? How is that any different than being a wage slave? Isn’t that simply selling yourself to the highest bidder?
When you say “hate America,” what you mean is ‘hate injustice, hate inequality, hate oligarchy, hate militaristic empire.”
The United States was the most instrumental nation in creating the United Nations and the entire apparatus of international law.
If you look at Earth from Space, there are no borders … all the nationalism in your mind is a man-made fiction. Human beings are human beings whether they’re from the United States or Iran, Ghana or Norway, Haiti or China … one human species, one planet … global peace and cooperation should be a universal value.
People around the world, and even within the United States, understand that American empire threatens global peace, that American capitalism threatens human survival via climate change, that American unilateralism on myriad issues undermines international law and international peace. The United States is the only country on the face of the Earth to oppose the Paris Climate Accord … that’s the action of a rogue state.
As long as wage-slavery is the dominant form of economic life, people should struggle for living wages, benefits, retirement, healthcare, etc. to make the slave system as palatable to decent human existence as possible. Advocating for those things does not make one a supporter of wage-slavery … it makes one a progressive, a person who believes life can in fact get better through popular struggle against injustice.
Do you not understand why there is so much hatred for America? Haitians know the history of U.S. imperialism in their country (even if Americans don’t). People understand that the United States cruelly punished the people of Vietnam with chemical weapons, mass killing, etc. People see the United States invade and occupy Iraq, smash up an entire region, support absolute monarchy in Saudi Arabia and other Persian gulf monarchies, support military dictatorship in Egypt, support Israeli expansion and ethnic cleansing in Palestine … in short, people see all the injustice America is responsible for and it makes them dislike the American ruling class.
We the people of America should also have figured out by now that our ruling corporate oligarchy is bad for us, bad for humanity, bad for the planet … and it’s up to us to change it.
Bernie 2020.
Question for Anonymous….How is working for a large company/corporation in Silicon Valley, Hollywood, Major League sports, the Music industry, or a large news organization (to name a very few) not make you a wage slave? Aren’t these people also needing and demanding higher wages in order to live the extravagant lifestyles they lead? Are they not living beyond the simple life that you profess to be required in order for the world to live in perfect harmony, with equality, peace, and everything else? What’s the difference?
“The United States was the most instrumental nation in creating the United Nations and the entire apparatus of international law”–quote from “Anonymous”.
If that’s true, how come Woodrow Wilson didn’t join the “League of Nations” prior to that? Wouldn’t that also mean that international law was established before the formation of the UN, and initially failed?
Now, if it wasn’t for America, you would probably be speaking German for starters. And gee, wasn’t it the Japanese that attacked Pearl Harbor? What about that early 60’s Cuban missile threat? All that happened before Vietnam and Iraq, so it must be much more than that.
As for being enviromentaly bad for the planet, it seems to me that China is worse…and they don’t even have an EPA. They aren’t exactly a Capitalist society either,but I guess you want to somehow blame America for bringing them into the 20th century back in 1971?
Global peace…What’s the UN going to do when N.Korea launches and hits the U.S., Japan, (or someplace else) either intentionally or accidently? If they aren’t going to use military force, tell them to pay their electric bill or their power will be turned off? Same with Iran, eventually.
I think you must have watched too many episodes of “Star Trek” as a child. Funny thing is, even Captain Kirk knew when to use force and when not to, and when to disobey Star Fleet Command regulations. I guess you could call that “looking at Earth from space”…or looking at my TV from my recliner. Try again.