Tax Reform Under Trump 2017


#2354

I think some of the worst are the humanities majors who go into law school. They take on debt for the undergrad and then take on major debt for law school, and there seems to be a glut of lawyers and more and more legal solutions are being offered by software.

Not saying we don’t need lawyers because we do. We need a way for people to attempt to redress a wrong, dissolve or create partnerships, etc. But a lot of lawyers seem to be struggling.


#2355

A lot of what you said has truth to it. Yet, at the same time, the salary for associates at the top firms just jumped last year. We’re now at $205K for a starting 1st year and $425 for a 7th year associate, when you include the essentially guaranteed bonuses.

The legal industry is a world of the haves and have-nots.


#2356

Yeah but what about not top firms? Just because Google, Facebook, etc… all pay $200-300k (total compensation) doesn’t mean that most software engineers are getting anywhere near that.


#2357

Just need to be born into the correct family so you can easily attend the correct schools and you’re all set.


#2358

The ABA tracks all this. Sample median incomes for first-year lawyers in 2018:

  • Legal Services: $48k
  • Public Interest Orgs: $50k
  • Prosecutors: $56k
  • Public Defenders: $58k
  • Small Firms (<50 lawyers): $90k
  • Med Firms (51 - 100 lawyers): $115k
  • Large Firms: $180 - 190k

Source:


#2359

So what do the guys who hang out a shingle and do think like fix traffic tickets typically make?


#2360

I was under the impression if you don’t go to one of the top 10 (or so) law schools, that there’s no way you will get one of those high paying associate jobs at the big firms. Granted, there are a lot of legal jobs around besides those, but the implication was that if you go to an expensive law school that isn’t in the top tier, you’d end up with a bucket of debt and a middling salary.


#2361

Yeah - I think there’s some statistic about lawyers that literally no one makes the average pay (which is low 6 digits) because the industry is top and bottom heavy (i.e. you’re either making 200k+ or under 70k)


#2362

That’s correct. The pay curve is not normally distributed. It’s bimodal, and unevenly so. The big law firms are filled mostly with students from the top 14-ish schools or the top 5-10 percent of the schools in top 50 or so.


#2363

Yep, and even within the top 14, there’s a big gap between the top 3 (Stanford, Harvard, and Yale), where pretty much every graduate who wants a big firm job can get one, and the rest, where the placement rate is more in the ~30% range.

I actually did a semester at one of those schools before deciding it was too much of a gamble and going into software instead.


#2364

There’s also room for lawyers to branch off into teaching. Professors make pretty good money though obviously the job market is a bit smaller than the usual legal work.


#2365

Law firms also use a lot of paralegals today. Maybe it’s because I know my lawyer personally but when I have used his services they have involved a paralegal billing most the hours with the guy I know (a partner in the firm) only billing hours as needed. We have used him for estate work and corporate work.


#2366

Maybe Law profs make decent money. Humanities and foreign language ones, not so much. I know because my late dad was one. The only thing that made it worth it was tuition-free rides for his kids at a small private 4-year liberal arts college (Lewis and Clark).


#2367

Filed my taxes - did fine on Federal - have to pay more than expected on state.

I actually probably benefited under the new tax laws this year - overall. Fairly normal tax return. 1 W-2 - a handful of small 1099’s. While in 2017, I would have had enough itemized deductions to exceed the $12,000 standard deduction - in 2018, we sold our house, moved cities, and have been renting for the whole year. So my current “itemized deductions” in 2018 are around $6,000. I’m getting a decent refund thanks to the 12k standard deduction (filing single - no kids). There were a few annoyances - like noting that our moving expenses don’t qualify and I can’t take advantage of the home office deduction. However, on the flip side, apparently several of my small real estate investments qualify for the Sec 199A deduction (20% deduction on income coming from non C-Corps) which was a surprise for me and ended up being slightly beneficial

As for state, I didn’t realize until it was too late that Virginia forces you to use the standard deduction for state if you use it for federal - which kind of blew up my return as the VA state standard deduction is only $3,000. I buy state land preservation tax credits in lieu of withholding state taxes on my paychecks, so I shot myself in the foot there. A lot more Virginians are going to fall into that trap I think.


#2368

I mean, I’d say things are working as intended by the law’s designers then, man ;-)

(Just ribbing ya, but I would daresay the class of folks who can refer to several of their smaller real estate investments casually mid-sentence were, in fact, the target audience of the law!)


#2369

To be fair, these are dividends from REITs that I invest in outside my 401k, a couple hundred dollars each, but I recognize your point. Many people don’t get the chance to invest at all.

I had to laugh though when many of these smaller miscellaneous tax deductions have been removed (moving expenses and home office deduction I mentioned above which have broader use to many people across many income ranges), while people who are exposed to pass through income get a straight 20% deduction. Sure, I recognize the benefit to the small business owners of the world, and there are all sorts of caps in place, but still. I’m sure many people are just now discovering these differences as they are filing their taxes.

I have a feeling my parents are going to be screwed and I dread doing their tax return. I don’t think I’m going to be able to get their itemized deductions above the joint threshold, and they may have to go with the much reduced VA standard deduction. I know there is a bunch of outcry in VA to change/align the tax law, but the state is looking forward to their tax windfall this year. I think it’s probably too late for 2018 at this point anyways.


#2370

Another report on the situation with returns being low this year. Not much new info but a mention that:

The number of people getting a refund has dropped by almost 25%? That’s going to end up being a lot of pissed off people if that number holds out over the full timeline for filing.


#2371

I keep seeing this story, and I can’t help but be amazed at how bad people are at math. The evidence has been right there in their paystubs…less taxes withheld, so you won’t get as much back at tax time.

I know, I know, most people aren’t math nerds like me and don’t pay as much attention to the numbers. And they don’t make the connection between the withholding and refund. And they listen to lying politicians that promise big middle class tax cuts.

I know the reasons, they’re just foreign to me. Hard for me to wrap my mind around people being so ignorant of their own finances.


#2372

Well, I was one of those 25% that didn’t get a refund but the math was a little complicated by the fact that I got a bump in salary last year as well and they both took effect at the same time. So the withholdings went up, but apparently not up enough. There were other changes outside of the withholding rate that left me with fewer deductions than I was able to claim last year.

Our tax system is pretty damn convoluted and confusing, with thousands of exemptions and deductions and everything else. That’s how they’re able to pull off this kind of chicanery, because they can say “Hey, we cut taxes!” while simultaneously changing or eliminating exemptions and deductions you could previously claim which results in a higher tax bill. It’s not just people being idiots.

Also, people obviously saw that their withholdings were less and their paychecks were bigger. That’s what was advertised, as they were told they were getting a TAX CUT. It was supposed to be less. What wasn’t supposed to happen is that they had to backfill all of that at tax time.


#2373

Yeah, that’s the thing. It’s not really a tax cut if you just shift the numbers around. Pay more now, less later becomes pay less now, more later. That’s not a tax cut.