The Contraceptive Divorce Protectant

I mention it a lot in comments, and it occurs to me it’s worthy of a post, since I know a lot of not-contraceptive-using Christians IRL and online.  But essentially part of the fallout from the WHEEEEEEEEEEEEEEEEEEEE DIVORCE IS SO GREAT epidemic in the 1970s and even 1980s is that people who are 35-50 now were told by older people who’d been burnt that the problem wasn’t marrying young, it was not party animal-ing young together.  And with contraception, this was now on the table.

The belief among quite a few older folks is that marrying young and then jumping into “adulting”  and parenting all at once was the source of their or their divorced friends/neighbors/relatives’ woe.  For all the talk of how women/men are encouraged to live it up singly during their 20s, there is definitely a pro-marriage strain among evangelical and conservative-living secular people that living it up ~together~ and then settling down as older, financially solid boring types is the way to keep a marriage together past when the kids are 18, or even just school-aged.

It is something I didn’t really notice among secular types, although it was certainly there.  It started jumping out at me when we got married and started hanging around married Christians who did it before age 25 and seeing this play out over the years.  And then, of course, it’s not uncommon online either.

For both religious and health reasons we’re not really on Team Contraception, but I do think it’s important to know why people make use of it, because there are people still trying to live out the promises and claims that it would help marriages stay love matches and all that.

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Under the new tax plan, people pay more taxes and get more cash back.

It is extremely counterintuitive, but it is pretty much what they did.  You pay 10k or whatever in taxes instead of 8k or 9k, and after the new system of credits and revised deductions is applied, you end up with more money in your pocket.  This is primarily true for parents, married ones  with children under 18 more so than married with college aged kids (unless the 529 stuff is adopted) and those more so (due to higher income) than single parents.

The basic structure is less true for high-earning married couples without kids and high-earning singles in particular.

I was hoping to do a post or two of examples, but I am not likely to have time for that.  If I do get time, I will run through some typical examples.

https://www.marketwatch.com/graphics/2017/trump-tax-calculator

This calculator was just put up.  It overstates tax paid by EITC eligible people and also leaves out some common deductions and doesn’t apply the tax credits properly, but it’s a decent starting point and you can tweak the finished numbers from there.

Blogging the Tax Cuts and Jobs Act, Tax Reform for Individuals

I’ll be blogging through the Tax Cuts and Jobs Act using the PDF summary provided by the Ways and Means committee here.

Today we’ll start with the first and biggest piece, and the one most relevant to people discussing this bill.  My comments are in bold.

Title I – Tax Reform for Individuals
Subtitle A – Reform of Rates, Standard Deduction, and Exemptions

Sec. 1001. Reduction and simplification of individual income tax rates.

Reduces seven brackets to four of 12, 25, 35 and 39.6 percent.

The thresholds for married filing jointly would look like this:

  • 12%, for incomes ranging from $24,000 to $90,000
  • 25%, $90,000 to $260,000
  • 35%, $260,000 to $1 million
  • 39.6%, $1 million and up.

For singles (including heads of households) and married filing separately, the thresholds would be half those numbers (except singles get a break at 35% with that threshold being 200k).

Considering that the income ranges for married couples with under-18 children are ones where a substantial minority of couples have incomes in what are currently 28% or 33% brackets, this would be a legitimate tax cut for many married households with children. 260k is roughly the point at which you’ve covered most of the 200k+ households.  There are genuinely not many households, even among married people with kids at home, making more than 250k/yr.  It’s also generous to the lower end of the income band, particularly the single parents who were concerned about the potential loss of head of household status.

Sec. 1002. Enhancement of standard deduction.

The standard deduction would be:

  • 24k, married filing jointly
  • 12k, singles
  • 18k, single parents

Again, this doesn’t penalize heads of households, the vast majority of whom have one dependent.  Interestingly, it would reduce itemizing from about 1/3 of returns to under 10% of returns, according to the analysis of current returns.  This means that most households who itemize are only taking a few thousand over the standard anyway, which means the concern about deducting SALT is perhaps exaggerated.  

Sec. 1003. Repeal of deduction for personal exemptions.

The personal exemption goes away entirely, and the new family credits, increased child credits and standard deductions are expected to offset or benefit households who benefited from the current system, and the math says as much.   It is also very important to note that EITC thresholds are untouched and those benefits for (mostly) heads of household aren’t gone, merely added to the new system of credits and deductions.  

Sec. 1004. Maximum rate on business income of individuals.

This one is complex even in summary, but the takeaway is that service providers (law, accounting, consulting, engineering, financial services, or performing arts) don’t get many of its benefits , but a reasonably successful food truck owner would.  It also incentivizes cooperative and family business arrangements by lowering the tax rate slightly on the first 75k of income (9% instead of the 12%) for each owner/shareholder.  Yep, a little dab of subsidiarity in an unexpected place.

Sec. 1005. Conforming amendments related to simplification of individual income tax
rates.

The necessary canon welding.

Subtitle B – Simplification and Reform of Family and Individual Tax Credits

Sec. 1101. Enhancement of child tax credit and new family tax credit.

Child tax credit goes to $1600 from $1000, and $1000 is refundable, with indexing to inflation so that eventually the whole credit is refundable per child.  There are also $300 nonrefundable credits for each adult non-dependent or non-child dependent.  These credits offset much of the income shift for edge cases that have more taxable income at 12% or 25% because the credits are against owed taxes.  Restricting the refundable credits to people with an SSN rather than a TIN is very practical.  The best part, though, is that the thresholds for married filing jointly rise to 230k for these credits.  This is a total gift to the large number of married households with children who were cut out of the credit at 110k.  The HOH and single threshold rises from 75k to 115k, which is also good, rewarding high-earning single parents rather than penalizing them. 

Sec. 1102. Repeal of nonrefundable credits.

This repeals a credit for seniors retiring on disability that is made redundant by increased standard deductions and family credits.  It also repeals an obscure “mortgage credit certificate” provision. Lastly, it repeals a rather pointless (given their overall cost) deduction for electric cars.  Elon Musk fans hardest hit.

Sec. 1103-1105. Refundable credit program integrity; procedures to reduce improper
claims of earned income credit; certain income disallowed for purposes of the earned
income tax credit.

This is entirely about tightening up the rather loosey-goosey verification for EITC and some educational credits.  The IRS would be free to adjust returns that couldn’t provide legitimate SSNs.  

Subtitle C – Simplification and Reform of Education Incentives

There is a note here from the committee that, essentially “all these benefits are too complicated to be helpful, so streamlining will get more money to more people”.

Sec. 1201. American opportunity tax credit.

This combines three credits that have a mix of refundability and nonrefundability into one credit that is 20% refundable and the size of the largest of the three previous credits.  This is a useful streamline. 

Sec. 1202. Consolidation of education savings rules.

This one is the bomb diggity.  It takes rather crummy Coverdells, which have a 2k per child limit, and gets rid of them in favor of expanding 529s to encompass “elementary and secondary school expenses” to the tune of 10k per child per year.  It also expands 529 cash to cover apprenticeship programs.  This provision is a conversion of the 529 from a mediocre and limited college savings program to a full-fledged roll-your-own-pretax-block-grants for parents to use for their children.    This means that homeschoolers could use pretax dollars to pay for any of their homeschooling expenses.  It means that before care and after care or any activities/sports/lessons could be covered with pretax dollars that collect interest like an HSA.  It is not limited to tuition at private schools, as has been very misleadingly reported.  

Sec. 1203. Reforms to discharge of certain student loan indebtedness.

If you die with outstanding student loans or have such a profound disability that you cannot ever repay your student loans, they are excluded from taxable income with this reform.  This is a marginal provision, but it’s a desperately needed first step towards broader student loan reform.

Sec. 1204. Repeal of other provisions relating to education.

Repeals above the line deductions for education loans and tuition.  Also repeals savings bond interest exclusion when the interest is spent on educational expenses, repeals exclusion for tuition reduction, and the exclusion for employer-provided education assistance.

Here’s the thing.  The typical student loan burden is not large enough to kick off 2500/yr in interest for years on end.  This repeal is primarily going to hit, well, it’s not going to hit most married couples with young children.  It’s going to hit permastudents, singles with massively above-average student loan amounts and people who take jobs for the education benefits (including employees at universities).  This is not a very large group of people and they are, mostly, die-hard Hillary voters with a few Bernie voters sprinkled in.

College education was never meant to be a money tree trap and this is a step towards restoring the idea that college attendance is about securing a credential and/or completing a comprehensive liberal arts education. It’s also an attempt to rein in college costs by reducing factors that inflate the price.

Sec. 1205. Rollovers Between Qualified Tuition Programs and Qualified ABLE Programs
This continues the essential expansion of the 529 plan by allowing tax-free transfers between it and ABLE accounts set up for expenses for special needs children.  This is good news for parents of special needs children.  

Subtitle D – Simplification and Reform of Deductions

Sec. 1301. Repeal of overall limitation on itemized deductions.

What it says. No phaseout for itemized deductions.

Sec. 1302. Mortgage interest

The current system is a giveaway to coastal types who can work the angles and carry a high level of indebtedness.  You can currently deduct interest for up to 1 million dollars of mortgages between two homes, plus interest on up to 100k of home equity line of credit/loans.  The change is to limit deductions to 500k on one home and to eliminate the incentive to take out a large HELOC by removing the interest deduction.  Under the AMT, these rules are mostly already in place, so this is aligning things with the AMT’s ruleset.

Sec. 1303. Repeal of deduction for certain taxes not paid or accrued in a trade or business.
Ah, the sweet SALT deduction.  Under this provision, state and local income and sales taxes can’t be deducted anymore except in the course of a trade or business, but property taxes can still be deducted up to 10k.  This doesn’t kill SALT deduction, but it does give it a pretty massive body blow.  Most people were worried about losing property tax deduction, so this will keep them fairly chill.

Sec. 1304. Repeal of deduction for personal casualty losses.

You can’t deduct anymore for losses by fire/shipwreck and the like unless it’s due to natural disasters that warranted special legislation.  This is in fact mostly removing a tax break for very well off people while keeping deduction for those who get the brunt of a major hurricane, wildfire, flood, or the like.  Harvey losses are deductible, your yacht getting caught in a storm is not.

Sec. 1305. Limitation on wagering losses.

A reduction in the amount one can deduct for gambling.

Sec. 1306. Charitable contributions.

Small increase in the total amount deductible, from 50% of AGI to 60%.  Repeal of the “college sports tickets” exception.  Mileage for charity would be adjusted for inflation.  Donations over $250 wouldn’t require both donor and organization to provide information about the donation.  

Sec. 1307. Repeal of deduction for tax preparation expenses.

No more deducting tax prep software or a 200 dollar accountant visit for tax prep.  

Sec. 1308. Repeal of medical expense deduction.

What it says, no more deducting medical expenses above 10% of AGI. Repealing this is interesting, because it has a weird and complicated history as yet another wartime benefit that carried over, and over, and over.  It affects no more than 1 in 20 taxpayers, perhaps 10-15% of those who itemize. Those estimates are from several years ago, I couldn’t find current use numbers offhand. 

Sec. 1309. Repeal of deduction for alimony payments.

“The provision would eliminate what is effectively a “divorce subsidy” under current law, in that a divorced couple can often achieve a better tax result for payments between them than a married couple can.
The provision recognizes that the provision of spousal support as a consequence of a
divorce or separation should have the same tax treatment as the provision of spousal
support within the context of a married couple, as well as the provision of child support.”

Sec. 1310. Repeal of deduction for moving expenses.

Only military members would be able to use this deduction under the new provision.

Sec. 1311. Termination of deduction and exclusions for contributions to medical savings accounts.

Destroys favorable tax treatment for Archer MSAs, which are in practice identical to HSAs, so it lets people roll the Archer money over into HSAs and call it a day.  This is similar to the provision compressing three education credits into one credit.  

Sec. 1312. Denial of deduction for expenses attributable to the trade or business of being an employee.

This was framed as “omg punishing schoolteachers for buying supplies out of pocket!!!!”.  But anyone who gets reimbursement can still itemize this deduction, along with military reservists.  The deduction in question is wiped out even for a schoolteacher paying for supplies out of a 100k salary by the other favorable tax changes.  Most schoolteachers buying supplies out of pocket never took this deduction as it was.  This change, while politicized negatively, is a reasonable and practical streamlining, similar to losing the tax prep deduction. 

 
Subtitle E – Simplification and Reform of Exclusions and Taxable Compensation

Sec. 1401. Limitation on exclusion for employer-provided housing.

Limits employee housing exclusion to 50k for singles and 25k for marrieds filing jointly with a phaseout starting at the 120k income range. 

Sec. 1402. Exclusion of gain from sale of a principal residence.

Currently you can stay in a home for only two years of the past five to exclude 500k of gains (250k for singles) from selling it and you can invoke this every two years.  This is, of course, a boon for flippers and other profiteers.  The new provision is that you have to live in the home five out of eight years to exclude your 500k/250k in gains and you can only do it once every five years.  This provision is a small step towards keeping home prices from going runaway and towards creating incentives to keep highly compensated types from gypsying around the country, leaving lack of community and sky-high home prices in their wakes.  It’s a return to the nightmare known as 1978.

Sec. 1403. Repeal of exclusion, etc., for employee achievement awards.

Repeal of employee achievement awards being excluded from taxable income, along with repeal of employer restrictions on deduction.  This kind of achievement award isn’t very good at improving productivity and dumping it back into taxable income provides more flexibility for both sides of this equation.  

Sec. 1404. Sunset of exclusion for dependent care assistance programs.

What I like to call the ” at-work daycare incentive” is being sunsetted by 2022 here. Excluding this expense from taxable income will go away by then. 

Sec. 1405. Repeal of exclusion for qualified moving expense reimbursement.

What it says, no more freebies for Amazon and Google shipping people across the country.  Only military would get to exclude moving expenses from taxable income.

Sec. 1406. Repeal of exclusion for adoption assistance programs.

Also what it says, no more exclusion of adoption assistance cash from taxable income.  The amount involved has grown massively out of proportion to the current costs of adopting an American-born child above the age of 1 and particularly of adopting out of the foster system.  And if you think about it a little, the repeal of this exclusion is compensated for by the expansion of what you can spend 529 money on.    
Subtitle F – Simplification and Reform of Savings, Pensions, Retirement

Sec. 1501. Repeal of special rule permitting recharacterization of Roth IRA contributions as
traditional IRA contributions.

“This provision would prevent a taxpayer from gaming the system by, for
example, contributing or converting to a Roth IRA, investing aggressively and benefiting from any gains (which are never subject to tax), and then retroactively reversing the conversion if the taxpayer suffers a loss so as to avoid taxes on some or all of the converted amount.”

Sec. 1502. Reduction in minimum age for allowable in-service distributions.

Just making everyone be 59 1/2 before taking money out of a pension or 401k.  Current system has different ages and this consolidates to one age.

Sec. 1503. Modification of rules governing hardship distributions.

Removes the restriction on contributing to your retirement plan if you take a hardship distribution.  This will be very beneficial at the margin.

Sec. 1504. Modification of rules relating to hardship withdrawals from cash or deferred
arrangements.

Allows people to hardship withdraw earnings or employer contributions and not just employee contributions.  Also very beneficial in combination with not forbidding contributions to resume after the hardship is over.

Sec. 1505. Extended rollover period for the rollover of plan loan offset amounts in certain cases.

Gives people until tax time to transfer outstanding loans to an IRA instead of locking them into the 60 day limit.  Very helpful too.

Sec. 1506. Modification of nondiscrimination rules to protect older, longer service
participants.

What it says, modifying the rules on defined benefit plans to not penalize older workers. 

Subtitle G – Estate and Generation-skipping Transfer Taxes

Sec. 1601-1602. Increase in credit against estate, gift, and generation-skipping transfer tax;
Repeal of estate and generation-skipping transfer taxes.

“Under the provision, the basic exclusion amount is doubled from $5 million (as of
2011) to $10 million (as of 2011), which is indexed for inflation. This provision would apply to tax years beginning after 2017. Furthermore, for tax years beginning after 2024, the estate and generation-skipping taxes are repealed while maintaining a beneficiary’s stepped-up basis in estate property. The gift tax is lowered to a top rate of 35 percent and retains a basic exclusion amount of $10 million and an annual exclusion of $14,000 (as of 2017), also indexed for inflation.”

Anyway, that’s my summary of the summary for the individual tax reform.  The AMT is being repealed in the next section, which is why there are some tweaks to bring things into alignment with the AMT.

The next post about this will be examples using statistically likely people, and not weird edge cases, which is the norm with these kinds of tax plan analyses.

The new House-passed tax plan is natalism.txt

It’s full of provisions designed to favor married childbearing and staying in the same place for a decent chunk of time rather than bouncing around.  The specific tax bracket changes benefit nearly all parents, including single ones with head of household status.  The “losers” are pretty much the wage-earning part of the 1%.

This overview isn’t perfect, but it’s a decent starting point.  I hope I can blog through the bill before the Senate gives it either beautiful ice cream sprinkles or chunks of garbage in the final version.

 

 

Introducing five precepts of civic natalism

In no particular order.

  1. Your time is not fungible. With the corollary that DIY is anti-community.
  2. Aim for mother-friendly, not child-friendly because child-friendly really means “no siblings allowed”.
  3. Busy is selfish.
  4. Leisure isn’t lazy. It’s how people get the fun social and civilizational goods they claim to (often “traditionally”) support, after all.
  5. Service isn’t servile. Having (usually unrelated) people do things for you and giving them money to do so is not imposing servility on them.  It was a staple of even the very poor in pre-modern times.  The modern era is defined most sharply as the point where paying people to do things for you was utterly deprecated.  In America, this was actually the postwar era, but in the rest of the West, it was early Vietnam-era.

These precepts are just a beginning, a tiny seed of a bigger idea, and working the implications out is a longer term goal.

Repost: Domestic au pair and homemaking program

It could be more or less formalized, but training young women in the domestic, homemaking arts and giving them practical experience in childcare would be amazingly useful.

There are a number of avenues by which this could conceivably be enabled, not least as part of a general program of supporting women in their women’s work.

A model to start with would taking the system of the current international au pair program, and figuring out how to adapt it to the needs of young women who’d like to be keepers of hearth and home for their families and future husbands and families who could use the help of energetic girls in their late teens and early 20s.

 

Mom Bonus, less than 8 hours of tv achievement

Give yourself a mom bonus if your kid(s) watch less than 8 hours of tv a day (this includes streaming video on a computer/tablet/smartphone, video games and regular television, etc.)

That’s the current average for American children.  Teens bring it up by having an average of around 10 hours per day, but it’s not exactly low for non-school-age children either.