The new tax rates proposed by the Republican House will increase what a typical Eden Prairie homeowner pays in income taxes. Rep. Erik Paulsen is pitching this deficit-busting plan by saying it’s good for everyone. It’s not.
Fortunately, it’s not too hard to check the facts. The median household income for Eden Prairie is $97,600. The median Eden Prairie home value is $303,000. The typical property tax for this home value is about $4,000.
If one assumes a 240,000 at 4 percent interest for 30 years, the interest for one year is $9,500.
Given this data, I calculated the federal and state income tax for a family of three (two parents and one child under 17 years old) under the current tax rates and one using Trump Tax. Other assumptions made include $15,000 is used for 401k and health care expenses, so their taxable income is $82,600. They had $3,500 in Minnesota income tax withheld from their pay, $203 in license tabs fees, and $2,500 in charitable giving that were deductible (under the current plan).
Under the current tax plan this family has $31,853 in deductions and exemptions. With Trump Tax, that deduction is only $24,000. Under the current tax plan the family owed $5,681 Federal income tax after the $1,000 child tax credit and $3,198 in state income tax. The total income tax was $8,879. With Trump Tax, the family owed $5,432 Federal income tax after the $1,600 child tax credit and $3,505 in state income tax. The total income tax was $8,937. Thus the family will owe $58 more in income tax with the proposed plan.
If this same family has a taxable income of $65,000, they would pay $585 more with Trump Tax. If the family makes millions, they would owe significantly less in income tax. Clearly, the rich benefit from this plan, the Minnesota middle class homeowners do not. They will pay more than they do today.
If you haven’t found out how this plan affects you, run the numbers. The tax plan is 429 pages long but most of that details the many tax breaks for businesses. It doesn’t take as long to figure out how many of the deductions used by Minnesota homeowners are gone or substantially reduced.
Gary Simon, Eden Prairie
Eden Prairie News, November 16, 2017