The Gang Tries Fixing the Tax Code

[Devout Centrist]

https://www.nytimes.com/2017/04/26/us/politics/trump-tax-cut-plan.html?_r=0

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This will end well.

[Devout Centrist]

Just look at how professional this proposal is!

[Technocracy Timmy]

Just look at how professional this proposal is!

Should have just been this:

[OSR stands with Israel]

The individual reform seems great

[Blue3]

Watching the press briefing, it looks like the Trump Tax Plan is to:

 1. eliminate all deductions except mortgage interest and charitable giving... and double the standard deduction ($6300 to $12600 for individuals, $12600 to $24000 for married couples filing jointly)

 2. cut corporate tax to 15% (from 35%)... and onetime tax on dollars held overseas, and a new territorial tax system

 3. eliminate the estate tax, the AMT, and the 3% Obamcare tax on businesses

 4. cut the top tax rate from 39.6% to 35%... the other tax bracket rates would decrease to 25% or 10% (cutting the number of brackets from 7 to 3)

[riceowl]

Doubling the standard deduction is a real slap in the face to homeowners.

[mvd10]

Meh. There are some good things in it (15% corporate tax rate, getting rid of a lot of deductions) but it looks like it will blow up the deficit in the end. And it's a shame they won't just get rid of the mortgage interest deduction. Special interests always win.

It's funny how there is nothing about full expensing (letting businesses immediately deduct their capital investments) in the plan. Literally every Republican tax plan called for full expensing (except Trump's first plan). Full expensing also would mean getting rid of the interest deduction for businesses and that would hit real estate really hard.

[OSR stands with Israel]

Doubling the standard deduction is a real slap in the face to homeowners.

why the average family now wont get taxed on their first 24,000 dollars in joint income.

[mvd10]

Doubling the standard deduction is a real slap in the face to homeowners.

why the average family now wont get taxed on their first 24,000 dollars in joint income.

It would make the mortgage interest deduction less attractive (more people opt for the standard deduction instead of itemized deductions) so less people will end up buying homes and homeowners wouldn't really benefit from expanding the standard deduction because they continue to itemize their deductions. But I wouldn't really call it a slap in the face. It's funny how raising the standard deductions mainly benefits middle-class families (Democrats should love that) but if Trump does it it is ''a real slap in the face to homeowners''.

[Grumpier Than Uncle Joe]

This business owner will take whatever tax cut he can get.

[The Other Castro]

Corporate tax cut wayyyy too drastic to have a chance of passing.

[RI]

The vast majority of the benefit of this proposal goes straight to the rich. smh

[ApatheticAustrian]

contradictions galore,

[Attorney General, LGC Speaker, and Former PPT Dwarven Dragon]

That corporate tax drop is far more than we can afford at this point. As for the individual reform/simplification, Let's see the formal bill and the CBO score. If it doesn't increase the deficit, I don't see why I couldn't support it.

[RI]

That corporate tax drop is far more than we can afford at this point.

Corporate tax reduction is probably among the less egregious things in this proposal, actually.

[The_Doctor]

Actually I am undecided on this tax proposal. There are a lot of things to like and dislike in the plan. I wish Trump would leave the top bracket alone as well as the estate tax repeal as well as the index the alternative minimum to inflation.

I do like the corporate tax reduction, I do like the doubling of the standard deduction. I like that it shifts the United States to a territorial tax system.

[ApatheticAustrian]

i may be incorrect but those changes seem to be...

1) deficit-increasing

2) helping "the rich" far more than anything else.

[Sprouts Farmers Market ✘]

Doubling the standard deduction is a real slap in the face to homeowners.

Homeowners are not a demographic that needs to be catered to even more. These people certainly get more benefits than warranted.

[Blue3]

What exactly does it mean to have
-a one-time tax on dollars overseas
-a territorial tax system
??



And yeah, of course the biggest issue with this tax plan overall is that it increases the deficit. But honestly, that's probably the only issue with it, so that's pretty good. (Though I do wish they tried to get rid of the mortgage tax deduction too).

[Antonio the Sixth]

The vast majority of the benefit of this proposal goes straight to the rich. smh

Shocking.

[mvd10]

Anyway, a quick calcution based on this: https://files.taxfoundation.org/20170130145208/TF_Options_for_Reforming_Americas_Tax_Code.pdf

Cutting the corporate tax rate to 15 percent costs $2.2 trillion over a decade
Cutting income tax rates to 10, 25 and 35 percent costs $3.1 trillion over a decade
Couldn't find anything about cutting the top rate on pass-through businesses to 15 percent, but I suppose it's something like $1.5 trillion since cutting it to 25 percent costs $800 billion
Doubling the standard deduction costs $1.3 trillion over a decade
Repealing the AMT costs $400 billion over a decade
Repealing the Obamacare investment income tax costs $600 billion over a decade
Repealing the estate tax costs $200 billion over a decade

Repealing all itemized deductions except the ones for mortgage interest and charitable contributions raises $2.4 trillion over a decade
Repealing (almost) all tax credits and deductions for businesses raises $900 billion over a decade

If you add everything up you get a $6.0 trillion dollar tax cut. Now, I know it doesn't work exactly like that since repealing deductions while tax rates are low (under Trump's plan)doesn't raise as much revenue as repealing deductions with higher tax rates (current situation) and doubling the standard deduction will cost more if less people itemize their deductions (which happens when you repeal most itemized deductions) but you can make a decent estimation with the info Trump released. And the US really can't afford a $6 trillion tax cut unless it's combined with massive spending cuts (and I have a feeling Trump won't do that).

[publicunofficial]

Getting rid of itemized deductions is a great way to screw over people with student loan debt. Or medical debt for that matter.

[riceowl]

Also you've pointed out mortgage interest deduction - what about property tax deduction? The memo says "protect home ownership...deductions". Removing the property tax deduction would be a huge tax hike.

[Virginiá]

That corporate tax drop is far more than we can afford at this point. As for the individual reform/simplification, Let's see the formal bill and the CBO score. If it doesn't increase the deficit, I don't see why I couldn't support it.

Well, you see, Republicans are in charge now, so that means that rascally debt issue is no longer an actual issue. We'll have to wait for a Democrat to become president again for the debt/deficit to once more become the #1 issue among Republicans.

[Attorney General, LGC Speaker, and Former PPT Dwarven Dragon]

Anyway, a quick calcution based on this: https://files.taxfoundation.org/20170130145208/TF_Options_for_Reforming_Americas_Tax_Code.pdf

Cutting the corporate tax rate to 15 percent costs $2.2 trillion over a decade
Cutting income tax rates to 10, 25 and 35 percent costs $3.1 trillion over a decade
Couldn't find anything about cutting the top rate on pass-through businesses to 15 percent, but I suppose it's something like $1.5 trillion since cutting it to 25 percent costs $800 billion
Doubling the standard deduction costs $1.3 trillion over a decade
Repealing the AMT costs $400 billion over a decade
Repealing the Obamacare investment income tax costs $600 billion over a decade
Repealing the estate tax costs $200 billion over a decade

Repealing all itemized deductions except the ones for mortgage interest and charitable contributions raises $2.4 trillion over a decade
Repealing (almost) all tax credits and deductions for businesses raises $900 billion over a decade

If you add everything up you get a $6.0 trillion dollar tax cut. Now, I know it doesn't work exactly like that since repealing deductions while tax rates are low (under Trump's plan)doesn't raise as much revenue as repealing deductions with higher tax rates (current situation) and doubling the standard deduction will cost more if less people itemize their deductions (which happens when you repeal most itemized deductions) but you can make a decent estimation with the info Trump released. And the US really can't afford a $6 trillion tax cut unless it's combined with massive spending cuts (and I have a feeling Trump won't do that).

There are also economic growth considerations - with a corporate tax rate of only 15%, many, many companies who moved production overseas would return production to the US. Tax cuts for the middle class could raise consumer spending and thus grow the economy overtime. Furthermore, we have to consider the amount of money that is raised from the one time overseas tax, which could end up being quite a bit.

In the end, it probably raises the deficit, and thus I likely  can't​ support it - but I will wait for the CBO estimate here.