There is a complaint that the provision to prevent US companies to shift their profits to foreign jurisdictions violates WTO rules. And some House members are holding tight to the 20% corporate rate and threatening to torpedo the bill if it get raised to pay for other provisions.
@calmom : When and if they can figure out how to pay their taxes, since banks won’t deal [ha ha] with them for fear of the feds.
I’m still betting this reconciliation is just a sham…and the senate bill will be what is passed.
@thumper, there’s the quarter trillion dollar extra tax on corporations though. That could stymie the passage of the Senate version.
Something that’s often lost in the discussion about the SALT deduction is that it’s not only high-tax states, but also high cost-of-living states that would be hit hard by the loss of this deduction. Tax brackets and the standard deduction aren’t indexed to the cost of living, which varies widely across the country. Online cost of living calculators say that you’d need to earn roughly 4 times as much in San Francisco to enjoy the same standard of living you’d get for annual earnings of $50K in Jackson, Mississippi. Taxes play some role, but by far the biggest influence is housing costs, which are roughly 6 times higher in San Francisco than in Jackson…
So, not surprisingly, wages and salaries need to be much higher in San Francisco for the same job. According to the Bureau of Labor Statistics, the average police officer in Jackson, MS makes $34,130 a year. The average police officer in San Francisco makes $110,050, and apart from the psychic rewards of living in San Francisco (which so far, anyway, they haven’t figured out how to tax), it’s doubtful the police officer in San Francisco is enjoying a higher standard of living. But that difference in nominal salaries means the police officer in San Francisco is in a higher tax bracket, and the proposed $24,000 standard deduction represents less than 1/4 of the San Francisco officer’s salary, while it represents more than 2/3 of the Jackson officer’s salary. So the San Francisco officer is much more likely to itemize, making her itemized deductions (including SALT) both more necessary and more valuable than to the officer in Jackson. And that’s quite independent of the effect of higher taxation, though that, too, is heavily influenced by the relative cost of living, as San Francisco needs to raise more than 3 times as much tax revenue as Jackson for each police officer it puts on the street. Proposals to limit the mortgage interest deduction also come into play, as the San Francisco officer is much likelier to have a mortgage over $500K, for housing roughly comparable to that enjoyed by the officer in Jackson for much less money—and the latter is much less likely to itemize in any event, so the mortgage interest deduction means less to her.
I think this tax bill should be called the “Stick It to New York, California, and Other High Cost-of-Living States Tax Act.”
Tax revenues are not the only thing that will be high.
There’s so many problems with this analysis. First, CNN’s COL calculator shows $50k in Jackson MS equivalent to $104k in San Francisco. Bankrate’s calculator shows $50k in the Jackson MS Metro equivalent to $106k in San Francisco-Redwood Metro. Payscale has San Francisco being 109% higher. So your 4x factor should be closer to 2x. HIstorically, housing prices in San Francisco have risen much faster than inflation, while housing prices have remained flat in real terms in Jackson MS. Assuming the police officer owns his house in CA and this trend continues, he’ll see greater wealth gains from appreciation in his home value living in CA, both in absolute and percentage terms. Then, as time goes by, less of the CA officer’s mortgage will go toward interest and more toward principal. So even if the CA officer has little free cash flow, his net worth is likely increasing at a faster rate. Then, at the retirement end, the CA officer gets paid based on his San Francisco salary, but can move anywhere to enjoy retirement. So he can draw a San Francisco level retirement benefit, while enjoying the Jackson MS cost of living in retirement. Finally, it’s questionable whether it’s fair to include housing costs in a standard of living adjustment. The relative differences in housing prices reflect the market’s judgment that living in San Francisco is a higher standard of living. If after considering all that the police officer in San Francisco still thinks he can get a better deal in Jackson, he should move.
It’s now clear why the tax bill is being rushed through. The more time allowed, the more the stories fall apart.
Another “family farm” tale falls apart:
Great. She completely lied about them owing ANY estate tax (since her Mom was and is still alive) and they collected millions of dollars in farm subsidies over the years. No wonder she’s a politician!
She was 21 at the time her dad died, and at that time she could have been confused about the family’s finances. But there is no excuse for her pushing this canard now. She says her family was subject to the estate tax, but her family apparently was not subject to the estate tax. She holds herself up as the poster child for eliminating the estate tax, when (apparently) her family never paid it.
They are all a bunch of liars. All their promises of what this bill will do is a lie.
Thirteen ways to profit off the Tax Bill: Sell your Rothko or your Monet to your company. Donate to charity this year instead of next. If you’re in line to inherit a huge fortune, make sure to surreptitiously murder your parents after the tax bill takes effect, but before 2026. Upgrade your private jet. Become a pass-through. Become a corporation. Split your business into two businesses, or three, or four. Become a tax accountant. And other fine ideas from the New York Times.
https://www.nytimes.com/interactive/2017/12/12/upshot/tax-hacks.html
“Become a tax accountant.”
Yup. Or a tax attorney. That LLM in Taxation program at the local U looks really good… 
https://www.cnbc.com/2017/12/12/rand-paul-says-he-cannot-vote-to-add-more-to-massive-us-debt.html
Narrator: “He voted for a bill that would add to the already massive $20 trillion debt.”
Neither party cares about adding to the debt as long as it does not benefit the other party when they increase the debt/
Won’t argue against that. Would argue that there are massive differences between the two parties though in terms of how the debt is used/discussed… but it wouldn’t get the thread shut down so I’ll move along.
And, of course, since the bill must go through conference committee, it is changing. The House, feeling the public outcry that this bill hurts the lower and middle classes too much to enrich the wealthy has decided to…
Cut the top individual rate from 39.6% to 37%, a 6.5% decrease.
Astonishing. They really, really, really don’t care about the popularity of this bill.
Of course, they will pitch it as a 2.6% decrease. If it was going the other way, I’m sure it would be pitched as a 7% increase.
Still in negotiations at this point.
There must be something you’re leaving out, here. How is this a 6.5% decrease?
(39.6-37)/39.6 * 100 = a 6.5% decrease in the top individual rate.
In absolute terms it’s 2.6%, but relative to the 39.6% rate, it’s a 6.5% decrease.
2.6/39.6 = .06565