GOP tax bill War on Alimony
Bit by bit were getting analysis of some of the more peculiar parts of the Republican tax bill. For example, whats up with eliminating the tax deduction for alimony payments? This one is so minuscule (about $1 billion per year) that you cant even say its because Republicans were scrounging for nickels under the cushions to pay for their corporate tax cuts. In a $5 trillion tax bill, this is more like scrounging for cigarette butts: its just not worth it no matter how hard up you are. So whats going on?
First off, lets explain what this is all about. Under current law, you write an alimony check and then both you and your spouse pay taxes on your respective net incomes. Under the Republican proposal, you pay taxes on your entire income and then write an alimony check from what remains. To see how this plays out, heres an example using the new tax brackets in the Republican plan. Suppose you make $100,000 and a judge orders you to pay alimony of $40,000. Heres the stylized arithmetic, not counting any kind of deductions or exemptions:
Current law: Your net income is $60,000 so you pay taxes of $9,150. Your spouse has income of $40,000 and pays taxes of $4,800. Total taxes paid = $13,950.
New Republican proposal: You pay taxes on $100,000 of your income and then send out the alimony check. Total taxes paid = $19,150.
http://www.motherjones.com/kevin-drum/2017/11/the-peculiar-story-of-the-republican-war-on-alimony/?utm_campaign=socialflow&utm_source=Twitter&utm_medium=social