$1.5 Trillion GOP Tax Cut Thread

[Kingpoleon]

Upper middle class is 90k-250k

Ok. Well if that were the case then for sure I would agree that this tax plan does lower taxes for this group.  My point about wealth transfers were mostly for people in the 500K levels and above between metropole and non-metropole regions.

Of course if you ask people in my neighborhood they will define upper middle class at 750K but I get different regions have different views on this.

Wow! In Arkansas, the top 1% is something like $200,000+. If you make >$90,000, you're in the richest 5%. So yeah, this "hurts" rich states like New York and Oregon.


That said, I think the current tax rates are appropriate. I agree with Senator Lankford absolutely here: let's stop cutting at taxes and raising military spending until we can close that deficit. Even a 5% value-added tax should close it absolutely.

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?

Just to be clear, millionaires and billionaires are not getting a tax cut.

[jaichind]

It also discourages divorce by making alimony payments after tax versus the receiver of alimony pay tax.

If you really think alimony is a significant factor in whether to get a divorce, or even in the behavior that leads to alimony being granted, I pity you.

I am sorry if I come of making that claim.  I totally agree that causes of divorce, even if it is for financial reasons most likely have deeper causes elsewhere.  I am just stating that at the margins this plan does encourage marriage and discourage divorce.   The by-product of the marriage penalty at certain income ranges is the divorce premium where the total taxes paid by a couple goes down after a divorce and especially after the alimony gets taxed at the lower tax bracket of the alimony receiver.       

[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. 

[Southern Senator North Carolina Yankee]

Upper middle class is 90k-250k

Ok. Well if that were the case then for sure I would agree that this tax plan does lower taxes for this group.  My point about wealth transfers were mostly for people in the 500K levels and above between metropole and non-metropole regions.

Of course if you ask people in my neighborhood they will define upper middle class at 750K but I get different regions have different views on this.

Wow! In Arkansas, the top 1% is something like $200,000+. If you make >$90,000, you're in the richest 5%. So yeah, this "hurts" rich states like New York and Oregon.


That said, I think the current tax rates are appropriate. I agree with Senator Lankford absolutely here: let's stop cutting at taxes and raising military spending until we can close that deficit. Even a 5% value-added tax should close it absolutely.

Whatever the current rates are, is meaningless. We need "reform" in many areas, especially in the corporate area, and to bring the corporate tax rate down to a competitive range

As for the tax code generally and the reason why I like parts of this bill is while yes we shouldn't be cutting our taxes to get to paradise, we should definitely try to eliminate as many deductions, exemptions and credits as possible. America spends $500 billion a year in "tax code compliance", which is in and of itself a regressive tax that shuts out the small firms and encourages big business, consolidation and even too big to fail (Which cost us Trillions of dollars over the past decade).

I have long said that most all of them should be eliminated with the EITC being kept and substantially increased/expanded. I would also add keeping and expanding the Standard Deduction along with that.

This is perhaps one of the few areas I agree with Libertarians on, that we should get away from trying to encourage behavior via the tax code. I would much rather rout money through the Social Services offices to help the poor, then through the damn IRS. Republicans historically have loved to use tax credits and such to do things like Healthcare because it gives them cover. "I am not subsidizing the poor, I am just giving people their hard earned dollars back". That political cover is leading to the further metastasizing of the IRS, which should be the one government agency all "conservatives" should be able to unify around downsizing and eliminating.

And yes that means rich New Yorkers won't be getting tax subsidized on their first, second and third million dollar homes. Which frankly I find completely galling when so many people cannot find housing or are priced out of owning their first home.

[Attorney General & PPT Dwarven Dragon]

The house bill would eliminate the job-creating "Historical Tax Credit":

https://secure2.convio.net/nthp/site/Advocacy?cmd=display&page=UserAction&id=1244

At this point, I have decided to officially oppose this version of tax reform. Hopefully the Senate can do a better job.

[Southern Senator North Carolina Yankee]

This is why the tax code remains a completely corrupt mess. Everyone wants to keep their special provisions and special breaks, and uses their influence, lobbyists and pressure groups to preserve them. Which means they all get together and everyone get's their breaks maintained, and the sum total is that tax code compliance cost I mentioned above. Special interests thus win out of over the general welfare.

Clearly the tax code is never going to be reformed, until these groups are de-clawed by getting money out of politics.

[Kingpoleon]

The vast majority of deductions are special interests at work, with a handful of exceptions. However, cutting the income tax rates is fiscally insane, and raising them is politically suicidal.  Cutting at deductions would be fine, though. That said, we really, really need to find a new way of raising money.

[Southern Senator North Carolina Yankee]

The vast majority of deductions are special interests at work, with a handful of exceptions. However, cutting the income tax rates is fiscally insane, and raising them is politically suicidal.  Cutting at deductions would be fine, though. That said, we really, really need to find a new way of raising money.

We really should be cutting the corporate rate though. But it is insane to not cut the taxes on small business at the same time and it is political suicide to cut business taxes and not poor people and the middle class.

So rates end up coming down for most of the individual brackets by necessity.

[Adam Griffin]

Upper middle class is 90k-250k

LMAO. Half of Americans make less than $30k per year; 71% less than $50k per year. To be in the literal Top 1%, all you need to do is earn $250k per year.

Your "upper middle class" figure basically applies to the top 10% of income earners minus the wealthiest 1%. There's nothing "middle" (and certainly not "median") about being in the top 10%.

[Southern Senator North Carolina Yankee]

Upper middle class is 90k-250k

LMAO. Half of Americans make less than $30k per year; 71% less than $50k per year. To be in the literal Top 1%, all you need to do is earn $250k per year.

Your "upper middle class" figure basically applies to the top 10% of income earners minus the wealthiest 1%. There's nothing "middle" (and certainly not "median") about being in the top 10%.

And anybody who has a $500,000 house is f@%king rich, much less one million.

[mvd10]

Upper middle class is 90k-250k

LMAO. Half of Americans make less than $30k per year; 71% less than $50k per year. To be in the literal Top 1%, all you need to do is earn $250k per year.

Your "upper middle class" figure basically applies to the top 10% of income earners minus the wealthiest 1%. There's nothing "middle" (and certainly not "median") about being in the top 10%.

I think he's referring to households instead of single persons. 50k is the median household income in the US. 34% of 2016 voters had household incomes of over 100k (but wealthy voters have higher turnout rates than poorer voters so the actual number is lower).

But yeah, America's broad definition is middle-class is ... interesting. I think this is one of the reasons that socialism never really got a foothold in the US. Class war isn't going to work when everyone with household incomes ranging from $30k to $250k considers themselves part of the same class.

[jaichind]

https://www.bloomberg.com/news/articles/2017-11-06/carried-interest-tax-break-may-be-changed-house-tax-chief-says

Carried Interest Tax Break May Be Changed, House Tax Chief Says

This idea would create a 2 year holding period to carried interest. 

[Hindsight was 2020]

I don't see how this is on Trump's desk by Christmas and the last thing they want is a carry over into 2018 were dems will have a policy issue to beat them over the head with

[SoLongAtlas]

Upper middle class is 90k-250k

LMAO. Half of Americans make less than $30k per year; 71% less than $50k per year. To be in the literal Top 1%, all you need to do is earn $250k per year.

Your "upper middle class" figure basically applies to the top 10% of income earners minus the wealthiest 1%. There's nothing "middle" (and certainly not "median") about being in the top 10%.

And anybody who has a $500,000 house is f@%king rich, much less one million.

Inaccurate. Many homes in NoVA or even in southern VA cost this much for a small house. Also, I know folks who had like a 2 bedroom in SD and 500K would barely get you that out there. Home value, although somewhat indicative of overall income, is a wildly misleading indicator depending on the area of the country being discussed.

[Tintrlvr]

This is why the tax code remains a completely corrupt mess. Everyone wants to keep their special provisions and special breaks, and uses their influence, lobbyists and pressure groups to preserve them. Which means they all get together and everyone get's their breaks maintained, and the sum total is that tax code compliance cost I mentioned above. Special interests thus win out of over the general welfare.

Clearly the tax code is never going to be reformed, until these groups are de-clawed by getting money out of politics.

Compliance costs could be cut dramatically with automatic filing even without removing the complicated deductions themselves. I fundamentally agree that the behavior-manipulating tax deductions and credits are a bad thing, but the issue of compliance costs is not really the same as the issue of tax code complexity, and eliminating deductions does not necessarily decrease compliance costs.

https://www.bloomberg.com/news/articles/2017-11-06/carried-interest-tax-break-may-be-changed-house-tax-chief-says

Carried Interest Tax Break May Be Changed, House Tax Chief Says

This idea would create a 2 year holding period to carried interest.  

This change in carried interest (as someone who actually works in a relevant industry), is comical window-dressing. It is very rare to take carried interest on assets held for less than two years, and it will just tweak the behavior of the small number of (mostly hedge) fund managers who do so. Presumably this change is primarily designed to allow them to make rosy assumptions about its fiscal impact and use that to cut (or restore deductions) elsewhere.

[#gravelgang #lessiglad]

The vast majority of deductions are special interests at work, with a handful of exceptions. However, cutting the income tax rates is fiscally insane, and raising them is politically suicidal.  Cutting at deductions would be fine, though. That said, we really, really need to find a new way of raising money.

We really should be cutting the corporate rate though. But it is insane to not cut the taxes on small business at the same time and it is political suicide to cut business taxes and not poor people and the middle class.

So rates end up coming down for most of the individual brackets by necessity.

I'm not sure if this is simply a terminology difference, but there isn't a special "small business" rate, other than corporate rates progressively increasing based on an enterprise's income.

Any current business is plenty capable of paying $150 to incorporate in Delaware and availing itself of any lower corporate rate, whether the business has gross receipts of $100K or $100M.

The general political calculation seems reasonable and makes sense to me, but I'm just not sure where this idea that cutting the rate on partnerships = small business cut when that really just isn't the case. Any semi-savvy operator would just incorporate the business and take advantage of those rates.

Which is why I really think that the end result of this tax package exercise will be a moderate rate cut across the board (think down to 29% corporate rate, similar cuts for individuals) with a few revenue raisers to help neutralize any talking points about benefits accruing to the top 1%.

[Tintrlvr]

It kills federal student loan interest deductions http://money.cnn.com/2017/11/02/pf/college/house-tax-bill-student-loan-interest-deduction/index.html

I, along with 40 million others, claim this each year. Terrible idea. They do allow states to continue deductions for student loan interest, however.

The student loan interest deduction is capped at 2,500 dollars a year .


Your standard deduction will go up from 12k to 24k so no people who are struggling to pay back loans will not get hit .

Depends whether they are entitled to other deductions, such as mortgage deductions (or deductions that aren't surviving, like medical expenses). And the increase in the standard deduction is a smokescreen; because they're eliminating the personal exemption, it's barely a change overall for lower- and middle-income singles (and actually hurts single people with more than one dependent, or married people with lots of dependents, in some cases).

[GeorgiaModerate]

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[Beet]

More bad news for affordable housing in, plan

[#gravelgang #lessiglad]

Something to watch that hasn't gotten much play: a proposed excise tax of 20% on gross payments from a US multinational to a wholly owned foreign subsidiary (https://www.politico.com/story/2017/11/06/house-gop-reform-corporate-tax-avoidance-244591).

It's a revenue raiser of $155Bn over 10 years, but is being fought by, among others, Koch-backed AFP. If it's successfully killed, the bill loses the ability to pass through reconciliation, assuming there aren't any other revenue raisers added to make up for the lost revenue.

[Beet]

Something to watch that hasn't gotten much play: a proposed excise tax of 20% on gross payments from a US multinational to a wholly owned foreign subsidiary (https://www.politico.com/story/2017/11/06/house-gop-reform-corporate-tax-avoidance-244591).

It's a revenue raiser of $155Bn over 10 years, but is being fought by, among others, Koch-backed AFP. If it's successfully killed, the bill loses the ability to pass through reconciliation, assuming there aren't any other revenue raisers added to make up for the lost revenue.

Ironically, this was one of Hillary Clinton's biggest pet causes.

[jaichind]

https://www.bloomberg.com/news/articles/2017-11-06/carried-interest-tax-break-may-be-changed-house-tax-chief-says

Carried Interest Tax Break May Be Changed, House Tax Chief Says

This idea would create a 2 year holding period to carried interest.  

This change in carried interest (as someone who actually works in a relevant industry), is comical window-dressing. It is very rare to take carried interest on assets held for less than two years, and it will just tweak the behavior of the small number of (mostly hedge) fund managers who do so. Presumably this change is primarily designed to allow them to make rosy assumptions about its fiscal impact and use that to cut (or restore deductions) elsewhere.

Totally agree with you.  I doubt this idea even on the surface will generate much revenue.  I think this is more about saying they kept Trump's campaign promise to get rid of carried interest "loophole".

[#gravelgang #lessiglad]

Something to watch that hasn't gotten much play: a proposed excise tax of 20% on gross payments from a US multinational to a wholly owned foreign subsidiary (https://www.politico.com/story/2017/11/06/house-gop-reform-corporate-tax-avoidance-244591).

It's a revenue raiser of $155Bn over 10 years, but is being fought by, among others, Koch-backed AFP. If it's successfully killed, the bill loses the ability to pass through reconciliation, assuming there aren't any other revenue raisers added to make up for the lost revenue.

Ironically, this was one of Hillary Clinton's biggest pet causes.

Eh, the excise tax isn't exactly aimed at inversions. It's more of a base-broadening provision that'd make international planning strategies (e.g., using creative transfer pricing, loan interest payments, etc. to shift profits to low tax jurisdictions such as Luxembourg, Ireland and the Netherlands) less lucrative.

In the current Code, base shifting to the point where no country has claim to a particular income strain is the problem that this provision is intended to correct. For some more background, the NYT has a great article out today about Apple's international tax strategies over the past decade, particularly incorporating in the small channel island of Jersey (https://nyti.ms/2hMV2Gw)

Inversions have already become a less lucrative strategy with the negative publicity and IRC 7874's passage.

[mvd10]

Something to watch that hasn't gotten much play: a proposed excise tax of 20% on gross payments from a US multinational to a wholly owned foreign subsidiary (https://www.politico.com/story/2017/11/06/house-gop-reform-corporate-tax-avoidance-244591).

It's a revenue raiser of $155Bn over 10 years, but is being fought by, among others, Koch-backed AFP. If it's successfully killed, the bill loses the ability to pass through reconciliation, assuming there aren't any other revenue raisers added to make up for the lost revenue.

Ironically, this was one of Hillary Clinton's biggest pet causes.

Eh, the excise tax isn't exactly aimed at inversions. It's more of a base-broadening provision that'd make international planning strategies (e.g., using creative transfer pricing, loan interest payments, etc. to shift profits to low tax jurisdictions such as Luxembourg, Ireland and the Netherlands) less lucrative.

In the current Code, base shifting to the point where no country has claim to a particular income strain is the problem that this provision is intended to correct. For some more background, the NYT has a great article out today about Apple's international tax strategies over the past decade, particularly incorporating in the small channel island of Jersey (https://nyti.ms/2hMV2Gw)

Inversions have already become a less lucrative strategy with the negative publicity and IRC 7874's passage.

<33333

Our corporate tax actually isn't that low (25%, will be cut to 21% in a couple of years), but we have some very weird corporate tax gimmicks. Some of these loopholes will be closed in the next couple of years, but this will be combined with other tax measures to make the Netherlands more competitive (reducing the corporate tax and repealing dividend taxation).

(sorry, I couldn't resist to post about the Netherlands in a completely random topic)

Anyway, if the excise tax fails I'm pretty sure they could raise another $150 billion from the corporate interest tax deduction. Most Republican candidates proposed fully repealing it, but the GOP tax bill only symbolically limits it for the largest corporations.

[GeorgiaModerate]

Tax Policy Center analysis

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