The new forums will be named Coin Return (based on the most recent vote)! You can check on the status and timeline of the transition to the new forums here.
The Guiding Principles and New Rules document is now in effect.
[US Tax Reform] Congress passes tax bill, hope you are a billionaire
Blackhawk1313
Demon Hunter for HireTime RiftRegistered User regular
Demon Hunter for HireTime RiftRegistered User regular
So 2018 for the GOP has been earmarked for tax reform, by which they mean, massive cuts for the rich and corporations with the deficits assumed to be taken care of by revenue generation that is wildly unrealistic at best.
The initial framework plan has been revealed and contains the following:
Tax brackets are reduced from seven to three:
The new proposed tax brackets are 12% 25% and 35%. There is flexibility supposedly to add a fourth top bracket but if you think that's likely then I have a bridge to sell you. The relevant end results of this in particular are felt at both ends of the tax spectrum of course. For the poor it's (shockingly) worse for them as the former lowest bracket was 10%, so they'd be facing a hike of 2%. Meanwhile the top end would see its rate drop from 39.6% to 35%, a decrease of 4.6%. Normal people would say they have this completely backwards but in bizzarro GOP-land they claim the poor will be "better off" with the new changes.
Doubling the Standard Deduction:
The proposal is a doubling the standard dedication for families from 12000 to 24000. The premise here is to reduce the number of people itemizing deductions.
Increased Child Tax Credit:
The plan is that both eligibility and the credit itself will be increased giving more for the credit and giving it to more people. I fully expect this is a trap of some kind.
Itemized deduction eliminations:
It calls for eliminating most itemized deductions, of particular note, the state and local tax deductions, and removing personal exemptions meaning taxable income that can be exempted drops a lot (4050 per person loss).
But not all itemized deductions:
Some are likely to be kept, including deductions for education, home ownership, charitable giving, and retirement savings. There is no concrete plan on these though.
Repeal the AMT:
Here we are! Another one for the wrong end of the brackets, this is Alternative Minimum Tax (AMT) exists to make sure that the rich paid at least something in taxes. It normally impacts those making between 200,000 and 1,000,000.
Kill the estate tax:
This tax is imposed on estates over 5.5 million. So of course they wanted it gone.
Lower the Corporate Rate:
The proposal is to reduce it from 35% to 20% bringing it below the 22.5% average rate of the rest of the industrialized world. This will of course result in an estimated deficit of about 1.5 trillion over a decade but IOKIYAR.
Rate drop on small businesses and pass-throughs:
The top rate would be 25% down from 39.6% on the profits of so-called pass-through businesses. A pass-through passes its profits through to partners and shareholders, who then report them on their individual returns.
Changes to multinational taxes:
Today, U.S. multinational firms pay a 35% tax on overseas profits when they bring them back to U.S. shores. The framework calls for a switch to a "territorial system," where the overseas profits of U.S. companies would no longer be subject to U.S. tax, just to the tax of the government where the money was made.
The hope is that the new system will make U.S. companies more competitive with their foreign counterparts, and that they will use more of their foreign profits to invest and create jobs in the United States.
But to dissuade U.S. companies from artificially shifting their profits to low-tax (or no tax) havens, the framework also would impose a minimum foreign tax, though the rate is unspecifiied.
In addition, it would offer a low, one-time tax rate on existing overseas profits to entice companies to bring that money back too. It's not yet clear if the tax would have to be paid even if the money isn't brought back.
Per request, no paywall link to the tax summary, because it's a summary, not a bill, and the above is essentially exactly what their "plan" says.
https://www.axios.com/heres-the-gop-tax-reform-plan-2490159611.html
Please keep discussion in here about taxes and tax reform only. Have at it.
The initial framework plan has been revealed and contains the following:
Tax brackets are reduced from seven to three:
The new proposed tax brackets are 12% 25% and 35%. There is flexibility supposedly to add a fourth top bracket but if you think that's likely then I have a bridge to sell you. The relevant end results of this in particular are felt at both ends of the tax spectrum of course. For the poor it's (shockingly) worse for them as the former lowest bracket was 10%, so they'd be facing a hike of 2%. Meanwhile the top end would see its rate drop from 39.6% to 35%, a decrease of 4.6%. Normal people would say they have this completely backwards but in bizzarro GOP-land they claim the poor will be "better off" with the new changes.
Doubling the Standard Deduction:
The proposal is a doubling the standard dedication for families from 12000 to 24000. The premise here is to reduce the number of people itemizing deductions.
Increased Child Tax Credit:
The plan is that both eligibility and the credit itself will be increased giving more for the credit and giving it to more people. I fully expect this is a trap of some kind.
Itemized deduction eliminations:
It calls for eliminating most itemized deductions, of particular note, the state and local tax deductions, and removing personal exemptions meaning taxable income that can be exempted drops a lot (4050 per person loss).
But not all itemized deductions:
Some are likely to be kept, including deductions for education, home ownership, charitable giving, and retirement savings. There is no concrete plan on these though.
Repeal the AMT:
Here we are! Another one for the wrong end of the brackets, this is Alternative Minimum Tax (AMT) exists to make sure that the rich paid at least something in taxes. It normally impacts those making between 200,000 and 1,000,000.
Kill the estate tax:
This tax is imposed on estates over 5.5 million. So of course they wanted it gone.
Lower the Corporate Rate:
The proposal is to reduce it from 35% to 20% bringing it below the 22.5% average rate of the rest of the industrialized world. This will of course result in an estimated deficit of about 1.5 trillion over a decade but IOKIYAR.
Rate drop on small businesses and pass-throughs:
The top rate would be 25% down from 39.6% on the profits of so-called pass-through businesses. A pass-through passes its profits through to partners and shareholders, who then report them on their individual returns.
Changes to multinational taxes:
Today, U.S. multinational firms pay a 35% tax on overseas profits when they bring them back to U.S. shores. The framework calls for a switch to a "territorial system," where the overseas profits of U.S. companies would no longer be subject to U.S. tax, just to the tax of the government where the money was made.
The hope is that the new system will make U.S. companies more competitive with their foreign counterparts, and that they will use more of their foreign profits to invest and create jobs in the United States.
But to dissuade U.S. companies from artificially shifting their profits to low-tax (or no tax) havens, the framework also would impose a minimum foreign tax, though the rate is unspecifiied.
In addition, it would offer a low, one-time tax rate on existing overseas profits to entice companies to bring that money back too. It's not yet clear if the tax would have to be paid even if the money isn't brought back.
Per request, no paywall link to the tax summary, because it's a summary, not a bill, and the above is essentially exactly what their "plan" says.
https://www.axios.com/heres-the-gop-tax-reform-plan-2490159611.html
Please keep discussion in here about taxes and tax reform only. Have at it.
Blackhawk1313 on
+12
Posts
This OP seems dramatically slanted. The AMT, for example, is crazy complex and maybe not even necessary if most itemized deductions are eliminated.
And who did that 1.5T deficit increase estimation? The CBO?
Honestly I don't really see how this is any different than his tax plan released a few months ago. It's just a wish list with none of the critical math or details attached. Guess the difference is now that healthcare repeal is dead (until it's not again) they're going to really focus and work hard on this. Or as hard as Congress currently works on anything these days.
There isn't enough detail on it ("8" pages with more white space than a 4th grade book report you never read.) but assuming the best intentions around the 12% bracket, I'd save just shy of a grand compared to today. Assuming realistic intentions for Republicans, I'll save a couple hundred bucks compared to today. Then I'll start owing more money when we have kids in a couple years. Which is great timing since kids are so cheap. So my taxes are set to go up so our billionaire President's can come down further than his accountants can already cheat it to.
It isn't even 9 pages, it has a cover page.
That would require putting details on a page.
It's a GOP tax proposal. "It's going to fuck the poor and give money away to the rich" is axiomatic. Extraordinary evidence would need to be presented to make that not a core truth.
https://www.washingtonpost.com/powerpost/white-house-republican-leaders-plan-to-reveal-tax-cut-details-in-two-weeks/2017/09/13/ff88c3b8-988d-11e7-87fc-c3f7ee4035c9_story.html?utm_term=.8432cf810168
So it looks even more like they just slapped something together the day of the final and called it their term paper, made even worse by the fact that it was their own self-imposed deadline.
Yeesh.
Since, you know, the corporate tax rate is an extremely misleading way of looking at corporate taxes paid.
Edit: hey look, a link
https://www.cbpp.org/research/federal-tax/actual-us-corporate-tax-rates-are-in-line-with-comparable-countries
I do find it funny that the party howling about double taxation for the last 40 years is going to take away the state tax deduction. I know why (a fuck you to CA and NY), but still.
I suspect most people in the 15% bracket would be better off as well, but anything beyond that is impossible to say without a real bill to discuss.
I would guess almost everyone will technically pay less, but the people who don't need it will get a vast majority of the cuts. And the poor will be far more impacted by a loss of services in future budgets.
Current brackets for individual:
Current brackets for married:
So at the low end, it makes sense - two incomes, the brackets are set 2x higher. At the top end of 25%, it starts to drop, up through 33% where married brackets are the same as individual (and then it bounces back up a bit for some reason). As near as I can tell, this is mostly stemming from an era where there was one primary income, and if there was a married couple with a second person working it was usually supplemental income, at a lower level, as opposed to the modern era where both members of a married couple ostensibly can make the same.
It's something that is more noticed in the tech industry, I think - you end up with individuals making, say, 80k each. Not married: all income taxed at 25%. Married: top income taxed at 28%. It's not much, but it's a weird disincentivization towards marriage. I've got some friends who are actively avoiding getting married for exactly this reason.
With regards to the GOP proposal, unsure if the latest one has been amended from this, but as part of the standard deduction increase, they were talking about removing the deduction for mortgage interest payments, which would hit a lot of people super hard (primarily in cities where housing is more expensive, of course).
The plan outlined today would preserve at least some part of the interest deduction, but no details in if they plan to lower the cap like was rumored.
It isn't just mortgage interest though; if they remove the state tax deduction you don't have to have a very big mortgage to have the combination be way over the doubled standard deduction.
I just did quick math and based on current brackets, if we lost those deductions my wife and I would see a massive tax increase (10% more of our income, jumping from 15%-25%).
We literally could not afford to live in our house. Fortunately we have no other debt, but we would have to sell our house and downsize pretty substantially to get by on our current income.
And I think that's where a lot of people are missing the point, and as Republicans try to sell this shit cake, they will actively avoid pointing it out: The specific amount above or below the standard deduction only matters so far into what bracket it moves you into. Yes, a few $thousand either way is going to make a modest difference overall, give/lose you a few hundred bucks on your return; but for some people you only need a slight nudge to move you into a different bracket that can change your income dramatically. You can bet your ass that wherever they would set the three new brackets at, the 25% one would be set right below median income, to ensure most people actually get a tax increase. And a big one.
Cool for all the rich and corporations though! I'm totes sure they'll reinvest in the actual economy, and not just throw all their extra money into their magical financial casino only they're allowed to participate in. I eagerly await the sob stories and being told how they're too important to fail during the next crash.
EDIT: yeah, i r dum, that's what I get for trying to figure this shit out when I'm exhausted. I did real maths later, but I'll leave this here as penance for my stupidity.
Origin: Galedrid - Nintendo: Galedrid/3222-6858-1045
Blizzard: Galedrid#1367 - FFXIV: Galedrid Kingshand
I feel like you are operating under the misconception that tax brackets are discrete and not "income over X is taxed at Y%" based in the way you're writing here.
Except they remove personal exemptions.
Er, just to be clear here, you understand that income below one bracket is not taxed at the new bracket, correct?
Like, just because you make enough money to get taxed at 25% does not mean your entire income is taxed at that rate.
Is there actually anything stopping the Republicans from changing it to a system like that though? After their nightmare vision of a healthcare plan, I'm not sure what their tax plan would need to do to shock me.
Because marginal rates turning into absolute rates would be a tax increase on the rich, and therefore unpalatable to the GOP. People in the highest bracket only pay 39.6% on dollars once they reach that bracket, not on the thousands of dollars below.
Yeah, I know. I realized that after I posted and went to shower. I'm super tired. Actual math is we'd end up with a 25% increase of the taxes we pay (due to the portion of our income over the bracket mark at the higher rate EDIT: because of (not and) the hefty loss in deductions). Not "have to sell the house" money, but a few thousand dollars that would be far better used in virtually any way.
I'll just leave my post there because I can handle looking like an idiot.
Origin: Galedrid - Nintendo: Galedrid/3222-6858-1045
Blizzard: Galedrid#1367 - FFXIV: Galedrid Kingshand
If there's a silver lining (there is not), at least charitable contribution deductions will never go away because of how vital it is to the wealthy to shelter so much of their income.
Though...I guess I would happily pay the higher taxes if my wife left the LDS church and thus we weren't pissing away money on tithing anymore. But that's a topic for a different thread! :rotate:
EDIT: to be clear, I am an advocate of no religious tax exemptions, period, and thus no contributions to churches being tax exempt, but I am going on the assumption that hell will freeze over before that happens.
Origin: Galedrid - Nintendo: Galedrid/3222-6858-1045
Blizzard: Galedrid#1367 - FFXIV: Galedrid Kingshand
The problem is that it hits states like NY and Cali the most....which is probably the actual reason why they're doing it in the first place. Fucking over those libby libs is a positive to some parts of the country
Except a lot of rich Republican donors live in New York and California. I really doubt they'll eliminate it, or damn near any other deduction after there is any push back.
Not if they're families. A 3 person household at best breaks even (depending on marital status) with the elimination of exemptions, probably will be worse off, and then starts out in a higher rate bracket at 12% versus the current 10%.
If you eliminate the personal exemptions that number isn't nearly as large
There's nothing stopping them from just repossessing all your money. How likely is it do you think that the Republican Party will pass a broad tax increase and if they did
1) would it be so bad? It's not common to hear folks criticize tax policy from the left by saying it takes too much from the citizens.
2) would they survive the 2020 elections? A tax increase for the majority, passed by the Party of Lower Taxes, would trigger a massive electoral bloodbath.
You assume the voters are even mildly informed
Even the most uninformed voter knows that the Republicans control everything. It's not like people have gotten appreciably dumber since 1992 and the last Republican tax increase ushered in the Clinton years after a 1-term president who was a damn sight more competent than the current one.
Republicans shifted the tax burden down under Reagan. Income tax rates were cut while payroll taxes were increased.
And I would be okay with a tax hike if it started from the top rather than from the bottom, or was for something more useful than to just eliminate the estate tax and a 0% rate for profit repatriation.
profit repatriation is a huge achievement just on its own though, isn't it?
and the estate tax is ghoulish, it should diaf regardless.
The estate tax ensures that an aristocracy at least has to pretend to make an effort.
-There is no mention of having things auto adjust with inflation. That should be thing, ideally you'd only want to have to revisit your tax code and taxes if cost of living changes drastically (sure you could have this be automatic, but I feel like we should force this to be manual so that there is hopefully some scrutiny over why it has gone up aka is there something that should be done to reign it in and well cost of living can vary quite a bit). Also to revisit it if there is a massive uptick in spending (ideally this either ends up being for something constructive like massive infrastructure improvements or in response to a major disaster. It should not be a result of a racist fucker spending $Texas$ on a useless ass structure in butt fuck nowhere."
-I'm not seeing any mention of having a set cap on total tax deductions. Like this would be the huge fix because every interest group will fight to keep their pet deductions alive and we still have the arms race where clever lawyers find new and creative ways to legally dodge taxes. Plus, it's nice to have a means to encourage certain beneficial behaviors via tax breaks, but have a much more robust auto kill switch than just a sunset clause (since there is a cap, less people will be interested in pushing to keep shit around if hey can hit the cap with other items).
-Removal of the estate tax. This is just fucking stupid and is enabling a cancer that is harming this country. Kind of ironic to giving all the shit we hear about boot straps. If anything the estate tax probably needs a few more brackets and few increases. If snot-nosed heirs of of oligarchs are hot shit like they claim, they shouldn't need to inherent the entirety of the parent's kingdom to succeed. To me this is a non-starter and probably something to keep an eye on to gauge where things will go in the future. If it dies because of opposition from both sides, that's a good thing and this might be an areas where democrats hold the line. We'll see if a couple republicans decide their donors can fuck off because a handful of donors won't let them stay in office.
-Removal of having deductions for taxes spend on state and local taxes and this probably should be separate from the overall tax deduction cap. I feel that in the vast majority of cases, if things are run right, states investing in infrastructure and services is a net gain for the US. The intent here is pretty clear, it's the GOP trying to give blue states the middle finger. I'm willing to be this will die because it pretty much fucks over republican voters and we have some great loser states to point out for why we shouldn't go this route.
-No attempt to fix the issue of how wealth inequality is fucking this country over. IMO there is a certain income and wealth level where personal income tax rates should end up higher than business tax rates. Don't get me wrong, I think there are a ton of shitty companies that need a good trust busting. It's just that Random Megacorp with 20 million dollar income is still contributing more than Uncle Moneybucks, who also makes 20 million. Random Megacorp hires people, likely spends money on R&D, buys office supplies and will put money towards infrastructure spending (sometimes that spending could benefit the public as a whole). Uncle Moneybucks will likely have capped out on the number of servants he hires well before he hit such an income, is unlikely to spend money on R&D, he wont' buy much and what he does probably won't be something that generates as much income as the basic office supplies that Random Megacorp needs to buy over the year. I think part of the problem with our tax code, is that idiot entitled rich people have little incentive to grow companies past a certain point because they can just start funneling the money into personal income and attempt to run the company with as little resource use as possible. Sure a setup like that means we get a few jobs that exist because Uncle Moneybucks hates the federal gub'mint and would rather hire people to minimize how much of his money ends up in the hands of the federal government (I mean it's jobs and the fucker isn't send that money to a tax haven or using it to inflict people like Donald Trump upon us as elected officials).
-Telling tax prep companies to suck it and make it so people have to opt out of having the IRS file for them (I have to wonder if that would help with some of the issues we're dealing with now in regards to identity theft). Could always require the IRS to give everyone a password that requires them to go in and get it changed from time to time.
-If anything I feel we probably should have another tax bracket or two.
As for the bill.
I'm trying to figure out if anyone is hurt by the minimum rate being 12% and by how much, when we factor in the standard deduction being doubled. My bet is there is bullshit at the top end that will make this awful for the middle class, while allowing the rich to keep even more money.
Also tax holidays are a fucking awful idea. Every time this country has done it, big business has used it as an excuse to lay a bunch of people off. On that note, I would love for them to look into the idea of maybe making it so that national US businesses (business that operate in multiple states) and intl businesses headquartered in the US have to pay a fixed tax setup for state and local taxes that applies to the US as a whole (aka nix the rat fucking race to the bottom that leads to business headquartering in the state that gives them the lowest tax rate. Force them to pick a state or territory based on other factor, which I'll concede will leave some states at a disadvantage, but I think it would be a better deal for most states). If a state wants to have a different tax rate for businesses that just operate in the state, I have no issue with that (only tricky bit is how you deal with e-commerce since anyone can run a printed t-shirt store online).
Not really. The reason the number is as large as it is now is due to the last repatriation holiday incentivizing holding off until a Republican gets elected. The proceeds of the last repatriation also went nearly exclusively to stock buybacks, executive compensation, and M&A. None of which are particularly beneficial at a macro level. (I mean, it's great if you own Apple stock...)
Wholly disagree about the estate tax. Triply especially with the step up in basis rule on capital gains.
Rock Band DLC | GW:OttW - arrcd | WLD - Thortar