New tax proposals

Parent Cafe
541

They are keeping two corporate deductions, R&D and low income housing while eliminating all others. I love it. Are you saying they should lower it to 28.5% not 20%? If I remember correctly, it should be 15% to be compatible with other countries. The US tax code has always been invesment oriented and it served the country well. So far, I don’t see a “giveaway”. They eliminated more deduction on business side than on presoanl income side although they lower tax on business side more. I hope they stick to their gun and fend off lobbyists.

Expenditure 10-year cost, in billions

Domestic production deduction $152 billion
Research and development credit (KEEP) $135
Low-income housing investment credit (KEEP) $90
Exclusion of interest on bonds used for public infrastructure $88
Orphan drug credit for testing drugs for rare diseases $53
Exemption of credit union income $35
Deduction for corporate charitable contributions $35
Energy production credit $28
Reduced rates for the first $10 million of taxable income $25
Special rules for employee stock ownership plans $23
Energy investment credit $18
Exclusion of interest on bonds used for hospital construction $11
42 other expenditures

542

It’s like a shell game. They give with one hand while taking away with the other, all designed to distract us from them adding 1.5 trillion to the deficit, mainly paid for by Medicare and Medicaid and mainly benefiting the corporate tax payer.

When cuts in spending have to be made, will they bring back the AMT or the estate tax, or add that tax on hedge funds that they promised? No, they will cut services even more.

543

Why shoudln’t they? Are we also feeling sorry for faculty members who makes well over 6 figures? Who is left we don’t feel sorry for?

I sure hope they bring back estate tax. Not just bring back, lower the exemption amount.

544

I like the new tax plan overall. It is more equitable. I do have a problem with estate tax snd that 39.6% doesn’t start until $1M for MFJ. I would also like to see charitable deduction disappear and tax all gigantic family trusts. There’s a lot to like; I like that they are tax compensation over $1M, mortgage deduction limit came down and also limited to a primary residence. I like that almost all corporate deductions are going away and carried interest will be ordinary income. I don’t mind corporate tax 20% insead of 28.5%. Hopefully, that will encourage business build in the middle of the country where NAFTA hit hard. This country is too big to have ony pockets of prosperous. Properity needs to be spread out.

545

I could never call this equitable when if you look at just the marginal rates they don’t go down for everyone. It defies logic that many folks in the 33% bracket should go up to 35%.

There are two items I like: the stadium funding removal, and the ability to deduct for second homes.

546

It’s equitable because of less deduction. It’s more out there, transparent. In the same bracket, t’s more likely to pay the same of amount of tax.One can have a good looking plan on paper but if it’s hard to implement in real life, what good does it do? NYT ariticle has a graph on who takes deductions. Stadium funding removal is a good one. That was long overdue. Wasn’t there something else related to sports? Something like income from sports is treated as something nonprofit? A few years ago, I read that somewhere explainging why billionaires are buying up sports franchises. They looked at backdoor Roth but leaving it as is. I would have liked to see that removed or allow everyone contribute to Roth without sneaking it in.

547

Why should it encourage businesses to build in the middle of the country?

548

All the removal of deductions/tax credits which help the average person need to be done because they have to do this bill under the rules of reconciliation. Reconciliation only requires 51 votes in the Senate (with the Veep being the tie breaker) instead of 60. The same as they tried to do to pass repeal of ACA. The new reconciliation “rules” were in the budget resolution they passed a few weeks ago. The tax cut bill cannot add more than 1.5 trillion to the deficit.

Besides all the deductions/tax cut removal for average person wait until we see the massive cuts to programs - especially Medicaid and Medicare when they need to pass the budget.

“The most important number for congressional Republicans is 51.

Like their strategy with Obamacare repeal, congressional Republicans are planning to pass their tax plan through a congressional loophole — “budget reconciliation” — which allows Congress to pass bills with a simple majority (51 votes) and bypass the threat of a Democratic filibuster.

To pass anything through budget reconciliation, Republicans needed to pass a budget resolution — a nonbinding agreement that establishes “instructions” for reconciliation bills. These instructions give Republicans a green light to move a tax bill and, depending on how strictly they are written, can also dictate how deeply Republicans can cut tax rates.

Republicans in both the House and Senate have now passed the same budget — narrowly. The reconciliation instructions only mandated savings for one committee: $1 billion from the Natural Resources Committee. It’s rumored this will likely come from a bill to allow drilling in the Arctic National Wildlife Refuge. Notably the budget did not mandate spending cuts to reduce the deficit, instead allowing for a $1.5 trillion increase to the deficit over the next 10 years.

In other words, this budget gives Republicans the freedom to make deep tax cuts without having to pay for them.

The $1.5 trillion deficit increase prompted some to vote against the budget altogether. In the Senate, there was only one holdout, Sen. Rand Paul (R-KY) who opposed the budget resolution because of its impact on the deficit — the budget’s proposal for defense spending was too high, he said.

But in the House there were 20 Republicans who voted against the resolution. Some of these “no” votes were over the deficit, but most were representatives from New York and New Jersey, in a symbolic vote against the state of tax reform negotiations themselves.”

https://www.vox.com/2017/10/17/16479864/republican-path-tax-reform

549

There’s more room, tax is lower, cost is less. At some point the scale would tip, I think. Only most profitable companies get to stay on the coasts at some point and east- and west- migration would happen, I hope.

550

Free tuition should be taxed. It’s actually salary in a different form. When we had a corporate car, the portion we used for personal driving was taxed as income.

Eliminating the medical deduction will be hard on seniors who have home health care and other large expenses on health that they currently deduct.

551

Simplification? Yeah sure.

They get rid of the rule that businesses can exchange “like-kind” assets without incurring tax. OK fine, but why is there an exemption for real estate only? That’s a loophole, not simplification.

They limit deductions that businesses can take on interest payments. But wait! Real estate is exempted.

This is not simplification. The complicated part of the tax code remains complicated. New loopholes are introduced. real estate developers get a sweet deal.

552

“There’s more room, tax is lower, cost is less. At some point the scale would tip, I think. Only most profitable companies get to stay on the coasts at some point and east- and west- migration would happen, I hope.”

The room, the low costs were always there. The tax… if federal, it is the same across the nation. So? Why would this fig leaf of a “reform” make a dent? :slight_smile:

553

Another thing that’s not simple, and is stupid: Marginal rates being higher at lower incomes, and lower at higher incomes.

I think they should just make exemptions and marginal rates continuous, with a nice smooth function, instead of having brackets. That would be simple. Simple to compute-- you have a computer do it-- and simple to explain-- each dollar you earn is a leetle bit more taxed than the last dollar.

554

There are already cities away from the two coasts that attract businesses - Denver, Austin, MSP, Chicago. These cities are definitely not cheap to live in and are progressive in terms of social issues and thus attractive to well educated young professionals needed by corporations to function effectively.

Sorry to inform you but companies are not going to move to Fargo or Chyenne, or anyplace in Kansas (which we know because the eliminating of taxes for businesses in Kansas did not increase business and economic development to kansas and the state is running such huge deficits that budgets there have had to be cut to the bone. )

555

@“Cardinal Fang” yes this is really sticking in my craw. If you make let’s say 275k you go from 33 to 35%, but if you make 700k you go from 39 to 35%. I’m really heated about this.

In anticipation of whatever changes are made I think I’m going to defer my entire check into my 401k to bring down our taxable income. Right now I defer a percentage to a Roth 401k.

556

If they want it to be revenue neutral and not have to raise taxes elsewhere and/or increase the budget deficit. But it appears that they would rather put future generations more in debt for near term tax cuts.

557

This is ridiculous, and NOT SIMPLE:

558

Point of fact: This tax proposal is not revenue neutral. In actual fact it adds massively to the deficit. What they’re moving money around to do is to get it to fit into the budget numbers—but those budget numbers are, again, most emphatically not revenue neutral.

559

It’s explicitly not revenue neutral. It’s designed not to be revenue neutral.

The reconciliation authorization specifically says that it will cost $1.5 TRILLION over ten years. Of that $1.5 trillion, about a quarter ($389 billion) could be saved by keeping the estate tax.

560

Foundations that avoid massive estate taxes should be taxed at the estate tax level. What people like Gates and Buffet do is avoid having their money go to the federal governernment. They direct where the money goes, no different than leaving it all to the kids and grandkids.