Tax "Reform"

[malchior]

With tax reform looming - it is looking like battle lines are already being drawn. Shocking absolutely no one they are looking at using this to conduct political warfare on blue states. Some discussion are about eliminating the deduction for state and local taxes. This would kill high tax blue states. I don't see it happening to be honest since there would be incredibly widespread opposition to this. That this is even an idea that is based on punishing the political opposition is beyond unacceptable (if actually proposed that is).

[RunningMn9]

That would be devastating to states like NJ that already feature crushing property taxes.

[malchior]

Yep - back of envelope it'd cost me something like an additional $4000 on one of the nation's highest tax burdens. I can't imagine it'd get a single vote in CA, NJ, NY, IL except from the tea partiest persons. It is a bluff but shows the mindset underneath it all IMO. I like the idea it isn't fair - as if getting back 60 cents on the dollar and subsidizing most of the South wasn't enough.

[Zarathud]

Tax reform is very, very difficult. I expect the Republicans to screw it up much worse than health care and the Obamacare "repeal and replace."

That said, there will be a massive tax give-away to business and the wealthy during the Trump administration, as that is the constituency who recently met Trump in a "town hall" and occupies the Cabinet. I would not be surprised if it is funded by Blue States and the middle class.

[Kraken]

With tax reform looming - it is looking like battle lines are already being drawn. Shocking absolutely no one they are looking at using this to conduct political warfare on blue states. Some discussion are about eliminating the deduction for state and local taxes. This would kill high tax blue states. I don't see it happening to be honest since there would be incredibly widespread opposition to this. That this is even an idea that is based on punishing the political opposition is beyond unacceptable (if actually proposed that is).

Nixon famously took revenge on MA when we were the only state that didn't support his reelection. It's well known that we always do much better under Democratic administrations, with our economy built on healthcare, technology, education, and research. We were bound to take a hit under the antiscience party anyway. Add a personal vendetta, and things could get downright bleak for the next few years. The Republicans must hate that the blue states are booming.

[Max Peck]

White House explores two new tax ideas — a value-added tax and carbon tax — as leading proposal to raise revenue falters

President Trump's administration is exploring the creation of two controversial new taxes — a value-added tax and a carbon tax — as part of a broad overhaul of the tax code, according to an administration official and one other person briefed on the process.

Administration officials are aware of how politically divisive these ideas are, but they are searching for ways find new revenue sources.

The decision to explore these ideas reflects how the White House is willing to adjust its approach because they want to attract more political support from lawmakers in both parties who have said they are willing to negotiate. White House officials took a more hard-line approach when they pushed for a repeal of the Affordable Care Act, and the effort quickly stalled in Congress.

The value-added tax, which is popular in many other countries, would serve as a kind of national sales tax, one that consumers would pay when they make purchases and that businesses would pay for supplies, services and raw materials. But many economists view a VAT as a tax that disproportionately hurts lower-income workers, who typically benefit from a progressive income-tax system.

A carbon tax would target the emissions of carbon dioxide and other greenhouses gases in the burning of gasoline, coal and other fossil fuels. Many Democrats support the creation of a carbon tax as a way to address climate change, but they couldn’t even reach an agreement on the issue when they had control of Congress and the White House during the early years of the Obama administration.

The study of the new options — which would represent major changes to American economic policy — comes as the administration looks to tax reform as its next major battleground for implementing its agenda. Trump wants to cut taxes sharply, but his advisers are looking for ways to raise revenue so as not to create a giant hole in the deficit.

As with all things Trumpian, these ideas will undoubtedly end well.

[Sepiche]

As with all things Trumpian, these ideas will undoubtedly end well.

These Trumpian delights have Trumpian ends.

[Pyperkub]

Neither will get passed by the GOP. Those ideas are DOA.

[Zarathud]

These are colossal mistakes to suggest by the Trump administration.

The President who dismantles the EPA in charge of taxing carbon output? No way that flies with the Democrats, and Republicans who see a free pass to pollute aren't going to sign on either.

The value added tax has been a third rail for a ling time. Trump's "border adjustment" tax was panned but the value added tax is worse. Democrats hate its regressively and Republicans aren't going to pass a tax on sales or empower the IRS with new enforcement powers. They can't even get support to tax imports with the opposition of Wal-Mart, Target and Nike. Congressional offices have already received more than 10,000 calls after the Saturday Night Live ad opposing a border tax.

[malchior]

So his tax reform proposal is here.

Eliminate most deductions: Trump is now aligning himself with House Republicans, by calling for the elimination of all deductions except those for mortgage interest and charitable contributions.
Originally he'd called for a cap on itemized deductions.

Repeal a string of taxes: As he did during the election, Trump will call for the repeal of the Alternative Minimum Tax, the estate tax and the 3.8% Medicare surtax that applies to wages and investments above a certain level.

I just worked this out - it'll cost my household about $6000 on top of the nearly $25K that we paid this year. I suspect many in the NE, IL and CA and other higher tax states would be in the same boat. DOA based on that. This would be a *massive* tax cut for the wealthy on the back of a huge swath of the middle class in blue states. Good luck with that. And oh yeah - this will never happen considering we don't know how it applies to him personally. This is such a shit show.

[Zarathud]

It's even worse. US corporations pay an average effective tax rate of 12.6% in 2010 according to the GAO. Under the Trump plan, multinational corporations with US headquarters go from paying on their worldwide income to only their US income. With a 0% US tax on profits from sales to China, all that overseas economic growth won't help the US at all.

The Trump plan also has the Federal government taxing your state taxes -- hardly something you would expect from those believing in "states rights." It's just too convenient those states are Democratic leaning states.

So much bad policy. Come to me and I'll create you an S Corporation or C Corporation so you pay only 15% tax on what could otherwise be taxed at up to 35%.

But, that's not all, billionaires need relief from the estate tax and the 3.8% investment tax too.

$5-8 trillion over 10 years in net costs on corporate and passthrough tax cuts.

$275 billion cost over 10 years on the estate tax repeal.

The Tax Policy Center estimates a $20 trillion cost by 2036 -- larger than the ENTIRE US economic output in 2016. This is fiscal recklessness.

[malchior]

That is why I'm not actually worried that this will happen. It is just more evidence that Trump is a fucking moron. And is surrounded by complete morons. He might as well has a piece of paper that says my plan and has a drawing of tech tycoons living in fortified bunkers. That is a reasonable guess at what'll actually happen if this "plan" did somehow get through.

[Kraken]

Tax cuts are the GOP's weapon of choice in class warfare.

Mercifully, for now Trump and his party appear stalled on the final particulars of income taxation. Their failed health care law already conferred large tax cuts on the rich; by drastically shrinking health benefits for everyone else, it also created a spending reduction which, under budgetary procedures, laid the predicate for further and permanent upper-income tax cuts. Stymied, Trump has proposed passing an even more draconian health care law, which would advance these goals.

So how do Republicans mask all this catering to the wealthy as a social good? They invoke the tax fairy, that mythical figure who turns tax cuts for plutocrats into a boon for all.

It's a foregone conclusion that, under an all-R government, the wealthy are going to get a huge tax cut. The middle class will get just enough to keep us from reaching for the torches and pitchforks. The deficit will explode, programs that benefit the poor will be slashed, and we'll all be living in a red state dystopia. Somehow, Democrats will be blamed.

One can only hope that the acrimony between congress and the white house will prevent anything more than tinkering at the edges.

[RunningMn9]

So his tax reform proposal is here.

"his".

You know he has absolutely no idea what is in there.

[malchior]

Totally. I think he smashed his tiny fists on a table and said I want tax cuts. They showed him a piece of paper with the outlines of this plan and he said it was genius. Mostly because he is a fucking moron.

It's a foregone conclusion that, under an all-R government, the wealthy are going to get a huge tax cut. The middle class will get just enough to keep us from reaching for the torches and pitchforks. The deficit will explode, programs that benefit the poor will be slashed, and we'll all be living in a red state dystopia. Somehow, Democrats will be blamed.

I am reasonably sure this would hit millions of people in the blue states at all income levels above the poverty line up to the 5% or so negatively. That is why I think it is DOA. Aside from the frothing zealots the Rs know that this would be radioactive.

[Smoove_B]

Now with 5 different fonts:

[Holman]

Now with 5 different fonts:

That's what you get when you just cut-and-paste from the Heritage Foundation, Rush Limbaugh's website, Grover Norquist's emails, and a dog-eared copy of Atlas Shrugged.

[Kurth]

I've yet to hear one positive review of this tax plan, to the extent you can call that single sheet of paper (albeit, with 5 fonts), a "plan" for anything.

One question though: For those doing rough estimations of how Trump's proposals would impact your personal finances, how can you even estimate if you don't know where the cut-offs for his proposed 10%, 25% and 35% tax brackets fall?

[malchior]

I assumed that I'd go from 28% to 25%. I doubt I'd drop to the bottom - especially at our combined income. It seems like a reasonable assumption. I also took the doubled standardized deduction into account. I know my local and state taxes well from staring at them in great anger just a week ago. So I figured out the loss of that deduction on those taxes. But it is a swag nonetheless. Interestingly this isn't too far from the plan they kicked around earlier (about 2 months ago now I think) so I had done much of this analysis already. I think it is important to point out with these deductions the blue states in general still send far more money than we get back. This would blow that out of the water and make the tax code even more deeply unfair and unreasonable than it already is.

[Pyperkub]

I think this is DOA (on the individual/family side at least). TurboTax and H&R Block will kill it quickly.

[hepcat]

In other news, Trump has no intention of releasing his tax returns.

We should ask to see his birth certificate,

[Octavious]

As we said before, he's under a routine audit! Don't you get it?!?!?

[tgb]

I'm sure he has nothing to hide, unless you count claiming Yakov Smirnov as a dependent for the last 30 years.

[Carpet_pissr]

Heard an interview on NPR the other day that basically said so many people are shouting for the tax returns, expecting to find some kind of smoking gun of law breaking, or maybe a direct Russia connection, and they just...won't do that.

""People have an extravagant idea about what might be on these returns," she says. "A tax return is not a financial disclosure document."

The returns can reveal how much Trump makes in a given year, but not how much he is worth, something that has been a topic of much debate.

Among other things, the returns are likely to shed little light on whom his real estate partnerships owe money to or his alleged financial ties to Russia, Sheppard says."

http://www.npr.org/2017/04/18/524569221 ... s-finances

[stessier]

Now with 5 different fonts:

This is all I've had time to read, but it's not necessarily all bad policy. Particularly the ideas of getting rid of the deductions for things like state taxes and the like. 538 wrote about this back in 2015. I think it depends a lot on how broad a base they can get and how low the tax rates goes.

It's interesting they get the mortgage deduction as that seems to be the least fair deduction out there.

[Defiant]

Treasury Secretary Steve Mnuchin can't guarantee middle class wouldn't pay more under tax plan

[malchior]

This is all I've had time to read, but it's not necessarily all bad policy. Particularly the ideas of getting rid of the deductions for things like state taxes and the like. 538 wrote about this back in 2015. I think it depends a lot on how broad a base they can get and how low the tax rates goes.

It's interesting they get the mortgage deduction as that seems to be the least fair deduction out there.

That 538 article is complete crap - it totally misses the big picture. The reason why those deductions favor the wealthier are because they are most applicable to higher income states such as in the North East and California. Those also are the most expensive places to live. Big picture the US Government already funnels far more dollars *out* of these states in general which are generally bluer and sends those dollars to redder states. So dropping those deductions loads even more burden on their shoulders. And they are already creaking financially in a big way. This isn't a class divide so much as regional wealth differences. In effect slashing those deductions without keeping it at least tax neutral for those blue states would make an already very unfair system more unfair. That is why reform is so complicated. The local paper is estimating this would cost the average person in NJ $3500. And we are one of the heaviest taxed populations in the country to begin with. How is that 'good policy'?

Edit: If we were really worried about reforming the system to make it more progressive - we could just cap the deductions according to income and target the top x% or so. That'd at least be targeting it at the people who can afford it. But that isn't the point - it is to punish the blue states for being blue in favor of red states. These suggestions are political warfare being conducted through fiscal policy.

[Smoove_B]

That is why reform is so complicated.

To be fair, nobody knew tax reform could be so complicated.

[malchior]

Quick prediction btw - any tax "reform" is going to aim to achieve two goals. It will help the very wealthy since we are essentially Plutocratic and the second will benefit the boomers in general who are still the largest voting block. It just so happens that boomer income is on the decline as they retire to low tax red states. What a coincidence, right?

[RunningMn9]

If we were really worried about reforming the system to make it more progressive - we could just cap the deductions according to income and target the top x% or so.

They already do that. If you itemize and claim deductions like state income tax, local property tax, and mortgage interest - there is already a section to determine if your income is high enough to limit those deductions.

Getting rid of those deductions *only* targets the middle class. For what purpose?

[malchior]

If we were really worried about reforming the system to make it more progressive - we could just cap the deductions according to income and target the top x% or so.

They already do that. If you itemize and claim deductions like state income tax, local property tax, and mortgage interest - there is already a section to determine if your income is high enough to limit those deductions.

Good point - I was very unclear there. I didn't mean to imply they didn't do it at all now I was more referring to a hypothetical thought exercise they could engage in to actually achieve what the 'conservative economists' are saying.

Getting rid of those deductions *only* targets the middle class. For what purpose?

This is a better way to express what I was trying to say.

[Remus West]

Which group showed the least enthusiasm for candidate Trump? Which group needs to be brought to heel the most to firmly establish "President" Trump? Why this tax reform again?