Linking Tax reform and the Insurance mandate can only mean two things.
- Thread starter Rockport Zebra
- Start date
Realistically.....maybe some small margin of it, I'll increase my consumption. That's inevitable. But we already save/invest 30% of gross income. I guess that'll turn into consumption at some point...Or maybe allow my to quit full time working sooner.
If you really wanted to stimulate the economy (which isn't really needed, anyway) you'd cut FICA.
If you really wanted to do tax "reform"...you'd do it deficit neutral.
I don't hate the bill....there are a lot of good reforms that have been talked about forever. Doubling the standard deductions gets rid of a ton of the social engineering within the tax code for most of the country, for instance.
Corporate reforms, including territorial taxation, is a huge improvement over a very outdated current system.
Legislation is taking the good over the perfect. Overall this is a net positive for the nation, IMO...and that really has nothing to do with my personal benefit. I'd rather they give people like me $0 cut and make it deficit neutral (or even deficit positive).
I don't see the net positive. All I see is a big increase in the deficit and little to show for it beyond tax breaks for corporations and the already well off, with nothing but pie-in-the-sky benefits being promised to average and lower middle class folks.
While I support the concept of reforming the corporate tax code (I've said before I think the corporate tax rate should be zero), I can't see these proposals as net positives. By focusing on only half the issue, the GOP has crafted plans that increase the deficit and effect a transfer of wealth from the poor to the wealthy.
If they had the political will to do the whole package - i.e., lower corp taxes while also raising cap gains taxes and also tackling that carried interest loophole - I might support it. But as it stands, these proposals aren't just imperfect, they are affirmatively bad.
1) Carried interest is being changed significantly.
But beyond that...
The entire premise of the bill is reforming corporate tax. The rest is window dressing.
Corp tax is not a very sexy political animal, but all tax people realize that we are doing our companies a disservice in the global economy with the way things are currently structured. That's not a partisan issue.
But the politics of cutting the top line corp tax rate from 35% to 20% isn't something that is very palatable for the political side of the equation.
So then we get into the individual side of the code. And the ridiculous tax expenditures that are embedded...(things like mortgage interest, state/local tax, etc) that create very large embedded distortions in our economy.
SALT taxes are a huge hot button....but they should be debated. A high tax state can further raise taxes, knowing that it's actually the Federal Govt picking up 30% of the tax burden under the current structure (since their residents can 100% deduct those taxes, marginally). And that tax burden is actually then rebalanced against low tax states.
I could go on all night with the perverse incentives the current code creates (tax free muni bonds for stadiums (gone)).
Creating a much larger standard deduction, and eliminating itemizing for the vast majority of citizens is WONDERFUL....capital allocation across the economy will be based upon value....not tax avoidance/benefit. That's a very difficult thing to see....but as someone who's long thought tax reform should have been issue #1...I'm happy to see it moving along...and in a form a LOT better than I expected.
BTW....I've done a lot of modeling for different family's situations over the last few weeks.
There is no clear answer on if you will win or lose under these bills. It varies dramatically upon your situation. Looking at tax brackets themselves is rather pointless.....because exemptions are gone...child tax credits are raised, the phase out income levels are changed dramatically, the AMT is gone, but at the same time there are new levels for high tax brackets where you temporarily go to an even HIGHER marginal rate than current law due to some ACA taxes. There is no simple answer.
There is no clear answer on if you will win or lose under these bills. It varies dramatically upon your situation. Looking at tax brackets themselves is rather pointless.....because exemptions are gone...child tax credits are raised, the phase out income levels are changed dramatically, the AMT is gone, but at the same time there are new levels for high tax brackets where you temporarily go to an even HIGHER marginal rate than current law due to some ACA taxes. There is no simple answer.
I get what you're saying, but here's my problem with the singular focus on the corp rate. The two things I think need changed the most - the corp rate and the cap gains rate - are intricately related. A higher corp rate only makes sense with a lower cap gains rate, and vice versa. They must be attacked together. By only attacking half the issue, we effect a transfer of wealth from one class to another. Imagine if a Democratic congress tried to do it the other way. What would you say if they tried to tax all investment income as normal income, but didn't also lower the corp tax rate? I'd say the same thing I'm saying now: that's the wrong way to go about this. The two issues are entwined, and they need to be tackled together.
Ok. Transfer of wealth from one class to another? Not following that.
IMO these bills are raising taxes on high income individuals in high tax states (there is $4 TRILLION in new tax revenues) to reduce taxes on corps and individuals in low tax states ($5.5 T)
If I'm seeing it different, please let me know.
Perhaps I'm behind the times, but my understanding is that most analysis so far shows that the greatest benefits would disproportionately go to the wealthy, while any tax increases would disproportionately hit the working class. I'm assuming that includes an analysis of how the benefits of lower corp rates would be distributed throughout the economy. Even an analysis shared here by supporters of the cuts included the caveat that the plan appears targeted to the help the wealthy.
See: https://www.nytimes.com/2017/11/16/us/politics/senate-republican-tax-plan-poor.html
I don't think there's been a full CBO score on either plan, right? So we don't have a full picture yet.
Well this is so complex, it's hard to know where to start. The tossing in of the individual mandate for the ACA really makes it a convoluted structure.
There are many tax cuts in the bill that are set to sunset to meet the Byrd rule. Thinking that they would ever be allowed to expire in 2021/2024, etc....defies the history of Congress.
Historically tax rates and rules change all the time....often every 5 or so years. Keeps plenty of accountants in business. So there is no such thing as permanent vs temporary in my view, when it comes to individual rates.
But the corp reforms with territorial tax treatment, the reduction of corp rates....and the huge increase of the standard deduction (which neuters so many of the tax expenditures buried in the code) make this worth passing.
Dems can always win back control and change the tax brackets around as part of normal politics....but I guarantee they wouldn't ever mess with the corp rate or the raised standard deduction (which is a big tax break for middle income, not itemizers).
Again, I agree, but my point is that corp rates shouldn't be separated from cap gains rates. Those two issues should have been tackled together. By separating them and doing the corp rate first, the political will to deal with cap gains decreases.
I'll have to keep an eye on this. I want to stress, I have no problem with the fact that rich people enjoy the fruits of tax cuts. They pay most of the taxes, so of course they'll enjoy most of the benefits. But my understanding so far was that - primarily because of the focus on corp rates and fiddling with brackets - these plans appear to disproportionately shift the tax burden down the income ladder, and that's a problem for me. The whole tax code needs reformed, but if we are going to only reform part of it, doing it in a way that punishes the poor is just bad, bad policy.
I do not agree with those assessments. They are "factually" true...in that the current bill sunsets tax cuts to fit the Byrd rule. Because certain credits, etc expire....
I cannot believe we'd see a Congress allow a tax hike go into effect in out years for low/middle income folks in say 2021 or 2027. We haven't seen that, like.....ever.
I will tell you....running numbers for 2018....I cannot imagine anyone making less than $75k/yr would see a tax increase. They would all see a decrease to some extent.
When you get to over $100k-$200k....it really matters where you live and how much you deduct in SALT. Over $250k it gets incredibly complex because of phase outs, etc....
Now those that care about the deficit should be worried....like @crazed_hoosier2 and I think he has said he opposes this bill.
Well, I think you have a point on the political realities of sunsetting tax cuts, and I'll trust your math on this, so I'll stop worrying about the wealth distribution angle so much. That still doesn't address my policy concern. I get that "good" is better than "bad" when "perfect" is unavailable, but I'm still really bothered by attacking corp rates singularly, because I really think they are intricately tied to how we deal with investment income. I'll slow my roll and mull this one over some more, though.
I'll only add...that the only good things that get done in the Fed Gov't come by the way of divided govt. It's why I ended up voting for Clinton in the last election...as I knew that the GOP would hold Congress.
Others care about partisanship. I don't whatsoever. I lean gently right (less so as years progress)....and I prefer market solutions over govt ones. I realize this makes me a growing minority in the modern day GOP that is based upon populism and nationalism.
But I personally believe our political parties are inherently dysfunctional, and can only operate in a system where they are naturally constrained by the requirement to work with the opposition.
Others care about partisanship. I don't whatsoever. I lean gently right (less so as years progress)....and I prefer market solutions over govt ones. I realize this makes me a growing minority in the modern day GOP that is based upon populism and nationalism.
But I personally believe our political parties are inherently dysfunctional, and can only operate in a system where they are naturally constrained by the requirement to work with the opposition.
I know this has become a partisan issue.....and I wish it wasn't.
The meat and bones of this bill is God honest good tax reform.
You guys may hate Paul Ryan and his comrades. If Ryan had his way, he would have done the border tax adjustment, and this would have been a deficit neutral bill.....and would have moved us to a more VAT style tax system that much of Europe has...where its a combo or consumption + income to properly balance the system.
I hate how political Ryan had to become because he took the job that he did. He never wanted this job....he wanted to have Brady's job writing this thing.
I'm just an old establishment Republican, back when Paul Ryan was considered the right wing ideologue.
Deficit or debt? I'm not going to dig into details like you have so I'm also trusting your numbers. So how is this not just a huge pushing of wealth into the hands of the rich (including companies) at the expense of government debt, on the faint hope that the new wealth will be invested back into the economy?
How will a $T infrastructure bill ever get added on top of this? If not, who will ever pay for the needed infrastructure? Will we just gradually come to have third world infrastructure? What am I missing?
