$1.5 Trillion GOP Tax Cut Thread

[Frodo]

If there is to be an economic downturn (or even another crisis) sometime within the next few years, I'd rather it happen with these tax cuts already in place.  It would be all the more easier to discredit supply-side economics that way. 

[IceSpear]

If there is to be an economic downturn (or even another crisis) sometime within the next few years, I'd rather it happen with these tax cuts already in place.  It would be all the more easier to discredit supply-side economics that way. 

The 2008 collapse was supposed to do that, and then Republicans came back with a vengeance a year later anyway.

[windjammer]

Dear god, it will seriously increase deficit

[Southern Senator North Carolina Yankee]

If there is to be an economic downturn (or even another crisis) sometime within the next few years, I'd rather it happen with these tax cuts already in place.  It would be all the more easier to discredit supply-side economics that way. 

The 2008 collapse was supposed to do that, and then Republicans came back with a vengeance a year later anyway.

The 2008 collapse was the product of regulatory changes passed in the 1990's, not the Bush tax cuts.

[Person Man]

If there is to be an economic downturn (or even another crisis) sometime within the next few years, I'd rather it happen with these tax cuts already in place.  It would be all the more easier to discredit supply-side economics that way. 

The 2008 collapse was supposed to do that, and then Republicans came back with a vengeance a year later anyway.

The 2008 collapse was the product of regulatory changes passed in the 1990's, not the Bush tax cuts.

They were still neoliberal in nature but were designed as bi-partisan anti-poverty measures. Still has a Neoliberal stench. And this could be the long term problem that Democrats might encounter if they compromise too much to be competitive in national elections.

[IceSpear]

If there is to be an economic downturn (or even another crisis) sometime within the next few years, I'd rather it happen with these tax cuts already in place.  It would be all the more easier to discredit supply-side economics that way. 

The 2008 collapse was supposed to do that, and then Republicans came back with a vengeance a year later anyway.

The 2008 collapse was the product of regulatory changes passed in the 1990's, not the Bush tax cuts.

That doesn't matter. Perception is reality. The public blamed Bush and the Republicans in the 2008 polls. They forgot a year later and saw the Republicans as their new saviors.

[Southern Senator North Carolina Yankee]

If there is to be an economic downturn (or even another crisis) sometime within the next few years, I'd rather it happen with these tax cuts already in place.  It would be all the more easier to discredit supply-side economics that way.  

The 2008 collapse was supposed to do that, and then Republicans came back with a vengeance a year later anyway.

The 2008 collapse was the product of regulatory changes passed in the 1990's, not the Bush tax cuts.

That doesn't matter. Perception is reality. The public blamed Bush and the Republicans in the 2008 polls. They forgot a year later and saw the Republicans as their new saviors.

Isn't that the point? He said the 2008 recession was suppose to do that, and you said "perception is reality and for once brief moment the public blamed people based on this "perceived narrative" but quickly forgot.

Perhaps that says something about the narrative and the presence of alternative mediums. Both Parties were responsible for the laws that set the stage for the Recession, but the Democrats hoped and planned for the Republicans getting destroyed by it and them being able to cash in on it to create decades of political dominance. That didn't happen obviously and largely because the narrative itself doesn't stand up and the diversification of medium means you had Republicans thinking Obama and Clinton were at fault, while Dems blamed Bush.

It also didn't help that Bush and McCain were very ineffective at controlling the narrative and it is no accident that the next Republican President is someone who counter punches too much. Everyone Republican back in 2005 onward was frustrated beyond belief that Bush wouldn't defend himself and beat back false narratives.

[Shadows]

If there is a big recession, it will be a problem with these tax cuts & will tie the hands of the next President & will probably make him fail. Deficits will cross 1-1.5T $ if the economy goes south & you can't raise corporate taxes from 20% because there will be monthly job losses & you can't push small businesses.

But you will require a massive stimulus & infra package to get the economy back in order. That will increase the deficit & debt by so much. And the GOP will keep hammering the Democrat. And the Democrat has to cut spending or raise taxes big to make up for that after stabilizing the economy.

[jaichind]

Latest news is that under the GOP plan charities, mortgage interest and real estate taxes will stay as deductions but state and local income taxes will not.  401K deductions not clear.  The plan might raise the cap on how much one can contribute but lower the amount that one use to lower the taxable income.

[#gravelgang #lessiglad]

Latest news is that under the GOP plan charities, mortgage interest and real estate taxes will stay as deductions but state and local income taxes will not.  401K deductions not clear.  The plan might raise the cap on how much one can contribute but lower the amount that one use to lower the taxable income.

But that's literally lowering the cap... The whole point of 401(k)s are to lower one's taxable income. Putting money in after tax is just a Roth IRA.

Also, no SALT is probably a deal breaker for at least 15 GOP members, not to mention keeping property tax deduction while ditching the deduction for income taxes inserts the heavy hand of the federal government into local financing decisions, pushing localities to favor a property tax instead of an income tax, which as illinois can attest, can have catastrophic impacts on the finances of a state in the event of another housing bubble / collapse in values.

[jaichind]

Latest news is that under the GOP plan charities, mortgage interest and real estate taxes will stay as deductions but state and local income taxes will not.  401K deductions not clear.  The plan might raise the cap on how much one can contribute but lower the amount that one use to lower the taxable income.

But that's literally lowering the cap... The whole point of 401(k)s are to lower one's taxable income. Putting money in after tax is just a Roth IRA.

Also, no SALT is probably a deal breaker for at least 15 GOP members, not to mention keeping property tax deduction while ditching the deduction for income taxes inserts the heavy hand of the federal government into local financing decisions, pushing localities to favor a property tax instead of an income tax, which as illinois can attest, can have catastrophic impacts on the finances of a state in the event of another housing bubble / collapse in values.

Agree with you on 401k.  What seems to be proposed is lowering the 401k limit and de facto expansion of Roth IRA limits.  In many ways this new system rewards those that can defer spending until later in their life since under Roth one gets taxes first then lets your investment growth increase tax free while 401k defers taxes allows one investment growth continue tax free but one withdraw the entire amount gets taxed.  Frankly I think we should have neither but if I had to pick one Roth is superior as it rewards savings versus bribing  someone up front to save.

[jaichind]

As much as I do not like the estate tax there is one problem with getting rid of it.  It is the issue of bureaucracy of the inheritor having to now keep track of the original cost of said asset.  Under the estate tax, the entire estate is taxed and then the capital gains cost is set to the value of the asset at the time of inheritance.  Now if we get rid of the estate tax then the inheritor has to keep track of the cost asset in question which could be decades ago in order to figure out what to pay in terms of capital gains.  In fact now this bureaucratic cost will be imposed on people who otherwise would not even have to worry about this as the estate they will inherit is below the estate tax threshold.

For me the real solution is to get rid of the estate tax and capital gains tax which would finally restore sanity and order to the situation.   If this is not possible I would still keep the estate tax around but lower the tax rate and increase the threshold.

[#gravelgang #lessiglad]

Latest news is that under the GOP plan charities, mortgage interest and real estate taxes will stay as deductions but state and local income taxes will not.  401K deductions not clear.  The plan might raise the cap on how much one can contribute but lower the amount that one use to lower the taxable income.

But that's literally lowering the cap... The whole point of 401(k)s are to lower one's taxable income. Putting money in after tax is just a Roth IRA.

Also, no SALT is probably a deal breaker for at least 15 GOP members, not to mention keeping property tax deduction while ditching the deduction for income taxes inserts the heavy hand of the federal government into local financing decisions, pushing localities to favor a property tax instead of an income tax, which as illinois can attest, can have catastrophic impacts on the finances of a state in the event of another housing bubble / collapse in values.

Agree with you on 401k.  What seems to be proposed is lowering the 401k limit and de facto expansion of Roth IRA limits.  In many ways this new system rewards those that can defer spending until later in their life since under Roth one gets taxes first then lets your investment growth increase tax free while 401k defers taxes allows one investment growth continue tax free but one withdraw the entire amount gets taxed.  Frankly I think we should have neither but if I had to pick one Roth is superior as it rewards savings versus bribing  someone up front to save.

I agree on reasoning, but probably disagree on policy. A lot of behavioural economists seem to believe that shifting people into Roths would discourage savings, since psychologically the benefits aren't as immediate or prominent (401(k)s have the dual advantage of being pretax money and generally companies are better about offering direct deposit for 401(k)s than Roths, in my experience).

 Not to mention that for most people, the tax benefits of immediate pre-tax contributions into 401(k) accounts are more substantial than the after tax benefits from a Roth (consider one's income at expected times of contribution - generally in the prime of one's career, one's earnings are higher than in retirement; as a result, one's tax benefit from a pre-tax retirement savings account such as a 401(k) is likely to be higher than the Roth's status as not taxed upon withdrawal/appreciation in value).

The thought goes that by the government forgoing the 401(k) revenue in the short run, they're saving on welfare expenditures for those who didn't save adequately in the long term.

[riceowl]

Latest news is that under the GOP plan charities, mortgage interest and real estate taxes will stay as deductions but state and local income taxes will not.  401K deductions not clear.  The plan might raise the cap on how much one can contribute but lower the amount that one use to lower the taxable income.

But that's literally lowering the cap... The whole point of 401(k)s are to lower one's taxable income. Putting money in after tax is just a Roth IRA.

Also, no SALT is probably a deal breaker for at least 15 GOP members, not to mention keeping property tax deduction while ditching the deduction for income taxes inserts the heavy hand of the federal government into local financing decisions, pushing localities to favor a property tax instead of an income tax, which as illinois can attest, can have catastrophic impacts on the finances of a state in the event of another housing bubble / collapse in values.

Eh, it's what Texas has.

Anyway, I'm satisfied now selfishly. I'd like to see this reform favor the poor, but we all know that's not going to happen so!

[#gravelgang #lessiglad]

Latest news is that under the GOP plan charities, mortgage interest and real estate taxes will stay as deductions but state and local income taxes will not.  401K deductions not clear.  The plan might raise the cap on how much one can contribute but lower the amount that one use to lower the taxable income.

But that's literally lowering the cap... The whole point of 401(k)s are to lower one's taxable income. Putting money in after tax is just a Roth IRA.

Also, no SALT is probably a deal breaker for at least 15 GOP members, not to mention keeping property tax deduction while ditching the deduction for income taxes inserts the heavy hand of the federal government into local financing decisions, pushing localities to favor a property tax instead of an income tax, which as illinois can attest, can have catastrophic impacts on the finances of a state in the event of another housing bubble / collapse in values.

Eh, it's what Texas has.

Anyway, I'm satisfied now selfishly. I'd like to see this reform favor the poor, but we all know that's not going to happen so!

Texas also imposes a franchise tax on entities operating in Texas, which to my recollection is a fairly significant revenue raiser for the state. I mean, don't get me wrong, I'm also selfishly quite happy they're keeping the prop tax deduction, as a homeowner in Illinois.

But from an administrative and policy standpoint, it really doesn't make sense to push local governments into certain revenue decisions. Realistically, the deduction would be a nebulous "state and local taxes" deduction, where the taxpayer deducts any state/local tax, whether that be an income tax, property tax, sales tax or any other tax paid.

 The feds should be encouraging a diverse mix of state revenue raising in order to mitigate to the best extent possible the risk of an economic downtown harming long term fiscal health of a state.

[jaichind]

(Bloomberg) -- House Ways and Means Chairman Kevin Brady says he doesn’t plan to reduce the pretax contributions American workers can make to 401(k) retirement plans -- “unless there’s broad agreement” among investment advisers that a different system would lead workers to save more.
“It will either be strengthened or enlarged or left pretty much as is,” Brady told reporters Tuesday afternoon.

[jaichind]

House Ways and Means Chair Kevin Brady also indicated that SALT deductions will be gone except for real estate taxes. 

So it seems the plan at the broad level seems clear.  State and local income tax deductions are out and real estate tax deduction stays.  401K limits will not be touched.  Consolidation of tax rates to 10 25 35 with a possibility of 39.6 for taxable income above $1 million.

[Kingpoleon]

If there is a big recession, it will be a problem with these tax cuts & will tie the hands of the next President & will probably make him fail. Deficits will cross 1-1.5T $ if the economy goes south & you can't raise corporate taxes from 20% because there will be monthly job losses & you can't push small businesses.

But you will require a massive stimulus & infra package to get the economy back in order. That will increase the deficit & debt by so much. And the GOP will keep hammering the Democrat. And the Democrat has to cut spending or raise taxes big to make up for that after stabilizing the economy.

Cutting taxes and raising spending help during a recession, as does cutting interest rates...

[#gravelgang #lessiglad]

Tax plan delayed at least a day.

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[Doimper]

lol

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[Attorney General & PPT Dwarven Dragon]

I assure the republican congress that the name of the bill will not affect the opinion of the populace regarding the bill.

[Hindsight was 2020]

They are going to botch this too aren't they?

[Dr. Arch]

Something that has surfaced recently:

https://petitions.whitehouse.gov/petition/opposition-taxation-graduate-student-tuition-waivers-and-remissions

The new tax plan aims to tax graduate students' tuition remissions as income, effectively increasing their tax rates anywhere between 100-1,000% on "income" they never see.

The repercussions would be astronomically destructive for higher education and for the upwards mobility of future generations of professionals in the United States.

More info here: http://cgsnet.org/ckfinder/userfiles/files/CGS_Tax_Reform_Scenarios%281%29.pdf


"Example #2: Jose, a doctoral degree student at a public institution had a $14,500 fellowship and was also credited with $9,500 as a tuition/fee waiver.

Under the current law: In 2012, Jose’s tax liability would have been $8,550 and he would have paid $847.50 in federal income tax.

If tuition waivers are considered as taxable income and LLTC is not available: Jose’s tax liability would increase to $18,050, despite the fact he would still take home the same amount of money, and he would have to pay $2,272.50 in federal income tax, or 16% of his fellowship.

Effectively, Jose’s federal income tax would increase by 168%, or $1,425."

-Council of Graduate Schools

[Attorney General & PPT Dwarven Dragon]

They are going to botch this too aren't they?

Don't get your hopes up. I wouldn't be surprised if McConnell and/or Ryan threaten to kick people off committees if they don't vote for this.

[Hindsight was 2020]

Something that has surfaced recently:

https://petitions.whitehouse.gov/petition/opposition-taxation-graduate-student-tuition-waivers-and-remissions

The new tax plan aims to tax graduate students' tuition remissions as income, effectively increasing their tax rates anywhere between 100-1,000% on "income" they never see.

The repercussions would be astronomically destructive for higher education and for the upwards mobility of future generations of professionals in the United States.

More info here: http://cgsnet.org/ckfinder/userfiles/files/CGS_Tax_Reform_Scenarios%281%29.pdf


"Example #2: Jose, a doctoral degree student at a public institution had a $14,500 fellowship and was also credited with $9,500 as a tuition/fee waiver.

Under the current law: In 2012, Jose’s tax liability would have been $8,550 and he would have paid $847.50 in federal income tax.

If tuition waivers are considered as taxable income and LLTC is not available: Jose’s tax liability would increase to $18,050, despite the fact he would still take home the same amount of money, and he would have to pay $2,272.50 in federal income tax, or 16% of his fellowship.

Effectively, Jose’s federal income tax would increase by 168%, or $1,425."

-Council of Graduate Schools

F**king crooks