$1.5 Trillion GOP Tax Cut Thread

[Antonio the Sixth]

Any chance swing-district Republicans get cold feet about this after yesterday's results?

[IceSpear]

Any chance swing-district Republicans get cold feet about this after yesterday's results?

They passed a healthcare bill with a 15% approval rating. Don't hold your breath.

[mvd10]

Any chance swing-district Republicans get cold feet about this after yesterday's results?

They passed a healthcare bill with a 15% approval rating. Don't hold your breath.

Weren't they pretty sure that it wouldn't have passed the senate anyway back then? Was there any moment when it looked like Obamacare repeal would actually pass both chambers?

[Tartarus Sauce]

If everyone ridicules you for what you say, perhaps you should consider that what you are saying is ridiculous.

You two are the only ones who ridicule my every post, and I think what you have to say is stupid, LOL ... so nope, I don't think I will.

You misunderstand, Santander is speaking from experience. His post was a soliloquy.

[#gravelgang #lessiglad]

I've been saying it for months now and now Chuck Schumer is hopping on board. Republicans killing SALT will accelerate the suburban move away from the Republican Party. The Virginia results offer sobering proof of that fact

[mvd10]

Not all suburbs are in high tax states. The suburbs are trending away from the Republicans because of their virulent anti-intellectualism and because of Trump's general incompetence (they probably know how Europe views Trump lol). If Roy Moore takes over the GOP they're f**ed in the surburbs. But I doubt this tax plan will cause much anger in suburbs outside of NY, CA and NJ. 88% and 87% of voters in the fourth and fifth quintile would see a tax cut under Trump's plan in 2019. By 2027 these numbers would have dropped, but they still would be 71% and 62%.

[jaichind]

It seems like the Senate version will completely remove real estate tax as a deduction as opposed to the House version of 10K cap.  Good.  I do not see why the federal tax code should favor one form of how a state or local government collect  taxes (be it income, sales of real estate).  All of them should just go as deductions.  Of course if they do this my neighbors will cry louder.  Hopefully they get rid of this mortgage interest  deduction as well although I doubt it.

[Gustaf]

Any chance swing-district Republicans get cold feet about this after yesterday's results?

LoBiondo has already decided against reelection.

[jaichind]

Any chance swing-district Republicans get cold feet about this after yesterday's results?

I suspect it will have the opposite affect. 2018 most likely will be a bad year and all things equal I think it will make it more likely for the GOP to come up with something to motivate their base to come out to try to mitigate the damage.  The logic has to be by going so far their already pretty much offended the same people that will vote anti-GOP in 2018 by passing the tax plan changes.  So might as well go ahead.  By no means do it mean the GOP House and Senate can cobble a compromise that gets 218 GOP House votes and 50 GOP Senate votes.  But the 2017 election results all things equal makes that somewhat more likely in my view.

[jaichind]

I've been saying it for months now and now Chuck Schumer is hopping on board. Republicans killing SALT will accelerate the suburban move away from the Republican Party. The Virginia results offer sobering proof of that fact

I totally agree this would be the case for certain high tax high income suburbs.  But in most of those places the trend toward Dem has been going on for a couple of decades.  Most high income voters (the same bunch that now gets killed by SALT removal)  in my neighborhood were almost 100% anti-Trump anyway in 2016.  Also a lot would depend on who becomes the face of the Dems.  If it is clone of Clinton/Cuomo then this trend will continue but if it is Bernie Sanders then a lot of them will run back to GOP (despite Trump and this SALT removal proposal.)

[jaichind]

I've been saying it for months now and now Chuck Schumer is hopping on board. Republicans killing SALT will accelerate the suburban move away from the Republican Party. The Virginia results offer sobering proof of that fact

Yup the suburban curb-stomping is comin in hot. Look at suburban Philly, NoVA, Bergen, Long Island, Westchester, Chesterfield county, Henrico County, and Virginia Beach. This is just a preview of the carnage

Well in  Westchester Astorino  got 43.4% of the vote which is actually a bit more than what he got in  Westchester 2014 (41.6% of the vote) when he ran against Cuomo for governor.  The results in  Westchester seems par for the course given Obama is no longer in office.  Also the vote on the NY State Constitutional convention drove up turnout which also helped Dems.  My initial looking at the  Westchester results by township seems to show a reversion to a pre-2008 partisanship patterns which is of course bad for the GOP but does not seem to show that this SALT deduction removal is making a huge difference.   

[jaichind]

The Senate version is considering keeping seven individual income-tax rates -- though the income thresholds that would apply to them aren’t clear.   I guess we will find out later today.

[#gravelgang #lessiglad]

I've been saying it for months now and now Chuck Schumer is hopping on board. Republicans killing SALT will accelerate the suburban move away from the Republican Party. The Virginia results offer sobering proof of that fact

I totally agree this would be the case for certain high tax high income suburbs.  But in most of those places the trend toward Dem has been going on for a couple of decades.  Most high income voters (the same bunch that now gets killed by SALT removal)  in my neighborhood were almost 100% anti-Trump anyway in 2016.  Also a lot would depend on who becomes the face of the Dems.  If it is clone of Clinton/Cuomo then this trend will continue but if it is Bernie Sanders then a lot of them will run back to GOP (despite Trump and this SALT removal proposal.)

We're on the same page. That's why I went with accelerate the move away from the R's. In my precinct in Illinois, the split was 45/55 R/D. If Republicans raise their taxes, which is an especially high likelihood if the Senate version without property tax deductions, the split will easily be the opposite in favor of D's, and my area is an area with high turnout.

On another note, it may make it easier for Bruce Rauner to hang on with a message of "the Feds raised your taxes through double taxation, JB Pritzker will make it worse."

Not all suburbs are in high tax states. The suburbs are trending away from the Republicans because of their virulent anti-intellectualism and because of Trump's general incompetence (they probably know how Europe views Trump lol). If Roy Moore takes over the GOP they're f**ed in the surburbs. But I doubt this tax plan will cause much anger in suburbs outside of NY, CA and NJ. 88% and 87% of voters in the fourth and fifth quintile would see a tax cut under Trump's plan in 2019. By 2027 these numbers would have dropped, but they still would be 71% and 62%.

Illinois voters will hate the Senate plan, which kills the property tax deduction; Texas suburbanites too. Minnesota has a high income tax as well and the growth of business in the MSP area could hit hard there too. Otherwise, good points

[jaichind]

It gives me every incentive to be reborn as a Rothschild or a Rockefeller. But what can you expect from a President who fits a Marxist stereotype of a capitalist pig?

Well, the reasonably wealthy will get a tax cut or tax increase depending on where they live and all things equal the gains made by low local income tax states are much less than the losses in high local income tax state. 

Of course we have this pass through entities "loophole."  But it is only for passive income that will be taxed at 25% and professionals that are actually earning money for labor (accountants, lawyers, financial professionals and other “consultants”) will still be taxed at ordinary income levels. There is a blended 30/70% split between capital/labor designation for people that can prove that they invested capital into a business.  The ability for the reasonably wealthy to take advantage of this are quite limited.   

I agree in theory the lower corporate tax rates will help equity owners which skew mainly toward the top but that is speculative and requires the UHNW taxpayer in question to risk their capital in the equity market to benefit from it.   Many UHNW investors might be heavy in fixed income where under this plan they take a slight hit instead of gains.  And there is no reason why any one middle class taxpayer cannot also take advantage of this by taking similar risks in the capital market instead of investing in CDs. 

https://www.bloomberg.com/view/articles/2017-11-09/what-if-taxes-could-make-divorce-even-more-painful

Pretty much is saying the same thing

" On the other hand, if the person paying the alimony is in a higher tax bracket than the person receiving it (frequently true), the deduction they’re getting is worth more than the taxes that their former spouse has to pay. This creates what’s known in the CPA biz as a “tax arbitrage opportunity”: by moving money from a highly taxed pocket to a lower-taxed one, the two halves of a former couple have reduced their total tax bill. So if you eliminate the arbitrage, the IRS will collect more revenue."

" divorce tends to fall during economic downturns. That’s because divorce is expensive -- not just in attorney’s fees, but in the greater need for child care and the higher cost of supporting two households rather than one. Divorce rebounds, of course, when the economy improves, "

[Orser67]

Though it's certainly not doomed, I'm starting to think that it's unlikely Republicans will pass a major tax reform bill in this session of Congress. Too many entrenched interests in opposition, too many Republican divisions, and not enough incentive for any Democrats to come onboard.

[All Along The Watchtower]

The thing to remember here is that cutting taxes for rich people and raising taxes on everyone else is only popular among rich people. Which granted, means that this bill could easily pass and become law, but that is no guarantee.

[Frodo]

I said this once in another thread, and I'll say it again here:  if this bill passes, it will be the albatross around the neck of the GOP that Obamacare was for Democrats for years to come, especially if we succeed in casting it primarily as a tax cut for the rich and multinational corporations at the expense of the middle class:

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Tribune News Service

It is delicious satisfaction to watch Republicans be given a taste of their own medicine.  

[Antonio the Sixth]

I don't care about the politicking around it. If this sh*tburger passes, it's going to be a disaster for the American people. It must be stopped at all costs.

[Attorney General & PPT Dwarven Dragon]

Honestly, the Senate Bill looks decent. The bottom tax bracket is kept at 10% instead of being raised, the existing 7 bracket system is kept with only slight rate reductions, and a bunch of worthwhile deductions that are eliminated in the house bill are kept in the Senate Bill. I also like the fact that the corporate reduction isn't in full effect until a year has passed. I would prefer that some of SALT is kept, but whatever. Really, my only major grievance with this is the deficit increase, and that's not enough on its own for me to oppose this.

[Southern Senator North Carolina Yankee]

Honestly, the Senate Bill looks decent. The bottom tax bracket is kept at 10% instead of being raised, the existing 7 bracket system is kept with only slight rate reductions, and a bunch of worthwhile deductions that are eliminated in the house bill are kept in the Senate Bill. I also like the fact that the corporate reduction isn't in full effect until a year has passed. I would prefer that some of SALT is kept, but whatever. Really, my only major grievance with this is the deficit increase, and that's not enough on its own for me to oppose this.

I mean what the hell is the point of even doing this if you are going to keep the same number of brackets.

[mvd10]

Honestly, the Senate Bill looks decent. The bottom tax bracket is kept at 10% instead of being raised, the existing 7 bracket system is kept with only slight rate reductions, and a bunch of worthwhile deductions that are eliminated in the house bill are kept in the Senate Bill. I also like the fact that the corporate reduction isn't in full effect until a year has passed. I would prefer that some of SALT is kept, but whatever. Really, my only major grievance with this is the deficit increase, and that's not enough on its own for me to oppose this.

Why does the bottom rate matter? The poorest voters won't even pay any income taxes because of the increased standard deduction, so whether the rate is 10% or 12% really doesn't matter.

Honestly, the Senate Bill looks decent. The bottom tax bracket is kept at 10% instead of being raised, the existing 7 bracket system is kept with only slight rate reductions, and a bunch of worthwhile deductions that are eliminated in the house bill are kept in the Senate Bill. I also like the fact that the corporate reduction isn't in full effect until a year has passed. I would prefer that some of SALT is kept, but whatever. Really, my only major grievance with this is the deficit increase, and that's not enough on its own for me to oppose this.

I mean what the hell is the point of even doing this if you are going to keep the same number of brackets.

The rates would be lower. And the number of brackets isn't what makes the tax system complex. It's the hundreds of tax credits and deductions.

[jaichind]

It seems in the Senate version the top bracket will be 38.5% instead of 39.6% with the same thresholds as House (500K for singles and $1 million for married) vs threshold of (426K for singles and 480K for married) today for 39.6%.  The Senate version also does not have the bubble tax clawback starting at $1 million for singles and $1.2 million. 

While we do now know the thresholds for the other 6 tax rates in the Senate version it seems from an individual tax rates point of view this plan is basically the same as the House plan with some tweaks.  It removes the marriage penalty for upper income tax payers and hits SALT deductions to lower rates which has the effect of transferring wealth from  Blue state high income taxpayers to Red State high income tax payers.

Overall I prefer the Senate plan mostly because they get rid of real estate tax deduction completely.  Too bad they are keeping the mortgage threshold deduction at $1 million instead of moving it down to $500K for the House.  I think they should get rid of it completely.  The Senate version also seems to keep the medical deduction which I think we should also get rid of but it is not that big of a deal.  Under the Obamacare legislation you can only take medical deduction for the amount over 10% of AGI so only few people are able to take advantage of it anyway.  I guess the same for the mortgage deduction, only a small % of mortgages (I think 6%) are above 500K anyway so it make very little difference on the long run.

[Shadows]

I don't know how the GOP can justify not giving people the SALT deduction which has been in the code for like a 100 years, almost since there was income tax.

One of the basic arguments will be to avoid double taxation. You are already paying state & local taxes, you should atleast be able to deduct that & not pay taxes on taxes already paid. The GOP argues about Death Tax for the Millionaire Estate Tax but would make people pay tax on tax.

[IceSpear]

Where are all the pundits who criticized Democrats for "not being bipartisan enough" from 2008-2016 now that the Republicans are doing everything in secret behind closed doors?

[Antonio the Sixth]

I assume the Senate plan also eliminates the Worthless Entitled Rich Kids Tax (the estate tax).