Correct. But in actuality, without reconciliation, the tax reform bill would never even come to an official vote in the Senate. If I recall, they’d have to first vote on whether to bring the bill to the floor, to then vote on the actual bill. That first vote, to bring the final bill to the floor, would be filibustered, and it itself would not receive 60 votes. At the point, the actual bill is DOA.
So, if something has to be cut from the federal budget - what would you cut? What should be transitioned to state responsibility?
For reference, here was the FY2016 US national government budget:
https://www.cbo.gov/sites/default/files/115th-congress-2017-2018/graphic/52408-budgetoverall.pdf
Oh there are a LOT of places that I can think of to cut which would actually help people rather than hurt them, but that’s political and would get this shut down 
13 tax law professors have written a paper about the loopholes etc in the tax bill.
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3084187
I was able to open it with the PDF, not behind a paywall.
@“Snowball City” it’s giving me an error. Can you tell the name of the paper so I can google it? Thanks!
Rom, I got an error when I tried to load it, then tried again and was able to get it. I bet their server is overloaded. Try again and see if it works.
Paper is called: The Games They Will Play: Tax Games, Roadblocks, and Glitches Under the New Legislation
Avi-Yonah et al. and there are a lot of al’s.
Daniel Shaviro of NYU Law School is one of the signers. He has a couple of further thoughts on his blogspot page as well as a link to the paper. I am not linking to his site because it is a blog.
Here is a new article and summary from USA Today:
https://www.usatoday.com/story/news/politics/2017/12/08/what-college-students-need-watch-republican-tax-bill-enters-home-stretch/930044001/
It’s not all that easy to convert regular employment into a pass-through scenario:
- The IRS has rules about what makes you an employee vs. a contractor or a hired business, and this is an active area for them
- Lots of companies are not going to want to deal with the paperwork or risk the legal issues. I've worked for companies that wouldn't hire 1099 contractors directly, they would only hire them if they were W2 employees of the contracting company. And they weren't interested in companies with one employee. I think this is mostly out of fear of a contractor later suing them claiming they were actually an employee, and then the company is on the hook for the employer share of FICA.
Plus, people’s tax returns will get a lot more complicated. Imagine 50 million people trying to fill out schedule C or dealing with 1065 or K1s or the ins and outs of S corps.
Also, if you turn yourself into a pass-through company, you are now responsible for both sides of FICA, which undoes a lot of the advantage.
This will hinge on which version of the pass-through tax break survives. I think the House version is not nearly as advantageous, because the tax break is not available if the revenues of the company are directly related to the employee’s labor, IIRC.
I don’t really get how becoming a C-corp will be advantageous if you need to actually draw a paycheck.
The estate tax doesn’t raise that much revenue. People rich enough to pay the estate tax can take advantage of trusts and other tax avoidance strategies to reduce their taxable estate.
Sure, but remember that initial transfers to trusts are subject to gift/estate tax exemptions. So it still raises revenue - apparently more than what is spent on the program that is being cut. Please don’t tell me it as all about joe the farmer and the kids losing the family farm…
@roethlisburger, I agree that it doesn’t raise that much revenue (in terms of the whole federal budget), but still the estate tax collected on those 5500 people who are subject to it annually is more than enough revenue to cover the CHIP program’s annual cost for 9 million children.
And if you are worried about family farms, it is less than 100 family farms a year, probably less than 10 a year. (And they would have 30 years to pay the tax owed.)
Sure, but if you fund a trust when your kid is born and they inherit 50-70 years later, most of the value of the trust could be in the investment gains and not the principal. GRATs can reduce the amount that counts against the estate/gift tax limitation. That’s just one tool. The ultra-wealthy can hire their kids and grandkids to be executives in one of their many businesses. Gary Cohn is said to have declared “only morons pay the estate tax.”
It will be, though. When switching from wages to pass-through income becomes as lucrative as this proposal makes it, everyone will want to do it. High paying employers will have to offer pass-through income scenarios to get good employees.
I know quite a few things about trusts. Sure you can gift an asset and let it grow tax free and pass it tax free. But this is not the point. Somehow, there is still a lot of revenue being raised through dead wealth taxation. There is more to estate taxation than just revenue raising. Money needs to be put to work, as it does not do much while sit in a piggy bank.
^I wouldn’t consider less than two thirds of one percent of federal revenue a lot in the context of the federal budget.
So why are we cutting a portion that is even smaller than that? 
notrich- most people will not be able to do it but high earners under contract like entertainers, athletes and coaches will do it. I believe Bill Self the basketball coach at Kansas did exactly that with his contract.