Trumpies Tax Cut Lies

[ZiprHead]

https://krugman.blogs.nytimes.com/2017/10/14/lies-lies-lies-lies-lies-lies-lies-lies-lies-lies/

"Modern conservatives have been lying about taxes pretty much from the beginning of their movement. Made-up sob stories about family farms broken up to pay inheritance taxes, magical claims about self-financing tax cuts, and so on go all the way back to the 1970s. But the selling of tax cuts under Trump has taken things to a whole new level, both in terms of the brazenness of the lies and their sheer number. Both the depth and the breadth of the dishonesty make it hard even for those of us who do this for a living to keep track.

In fact, when I set out to make a list of the bigger lies, I thought there would be six or seven, and was surprised to come up with ten."

 

[Harry Bosch]

https://krugman.blogs.nytimes.com/2017/10/14/lies-lies-lies-lies-lies-lies-lies-lies-lies-lies/

"Modern conservatives have been lying about taxes pretty much from the beginning of their movement. Made-up sob stories about family farms broken up to pay inheritance taxes, magical claims about self-financing tax cuts, and so on go all the way back to the 1970s. But the selling of tax cuts under Trump has taken things to a whole new level, both in terms of the brazenness of the lies and their sheer number. Both the depth and the breadth of the dishonesty make it hard even for those of us who do this for a living to keep track.

In fact, when I set out to make a list of the bigger lies, I thought there would be six or seven, and was surprised to come up with ten."

Nuts. I actually feel sorry for families who are currently eligible to pay the death tax. Do you have any idea how expensive it is to maintain a staff of maids and butlers?? $10.9 million does not buy what it once did.

 

[ZiprHead]

I know, right. Those gold plated toilets won't polish themselves.

 

[Loren Pechtel]

Nuts. I actually feel sorry for families who are currently eligible to pay the death tax. Do you have any idea how expensive it is to maintain a staff of maids and butlers?? $10.9 million does not buy what it once did.

The problem comes from the family business. Death taxes in a capital-intensive family business pose a substantial burden to the company.

The problem is that this narrow case is being used as an excuse for cutting taxes on a much broader group for which this isn't an issue.

(My personal take on it: In the family business case allow the tax burden to be "paid" with a lien--but it's % based, not $ based. The lien simply sits there so long as the shares in question are passed by inheritance or passed by sale to someone who already owns shares of the business. If a second such lien gets attached only the greater of them remains, the lesser vanishes. The lien is triggered if the shares are transferred to anyone else.)

 

[Cheerful Charlie]

https://www.vox.com/the-big-idea/20...report-corporate-taxes-wages-boost-job-growth

The President’s Council of Economic Advisers claims that slashing the corporate tax rate to 20 percent would boost the average American’s wages by $4,000 per year (“very conservatively”) — and perhaps by as much as $9,000. If true, that would be a remarkable gain for working Americans.
Unfortunately, it’s extraordinarily unlikely to be true.

-----

A report that debunks the presidents economic advisers' claims. England cut its corporate taxes deeply but wages dropped, not increased as promised. Plus other problems with their claims about cutting taxes.

 

[Loren Pechtel]

https://www.vox.com/the-big-idea/20...report-corporate-taxes-wages-boost-job-growth

The President’s Council of Economic Advisers claims that slashing the corporate tax rate to 20 percent would boost the average American’s wages by $4,000 per year (“very conservatively”) — and perhaps by as much as $9,000. If true, that would be a remarkable gain for working Americans.
Unfortunately, it’s extraordinarily unlikely to be true.

-----

A report that debunks the presidents economic advisers' claims. England cut its corporate taxes deeply but wages dropped, not increased as promised. Plus other problems with their claims about cutting taxes.

Republicans are utterly incapable of basic economics.

 

[fromderinside]

Like where they think they are on the IQ curve Republicans are also high on the Laffer curve. Of course, being Republicans, they are wrong headed.

 

[Jimmy Higgins]

https://www.vox.com/the-big-idea/20...report-corporate-taxes-wages-boost-job-growth

The President’s Council of Economic Advisers claims that slashing the corporate tax rate to 20 percent would boost the average American’s wages by $4,000 per year (“very conservatively”) — and perhaps by as much as $9,000. If true, that would be a remarkable gain for working Americans.
Unfortunately, it’s extraordinarily unlikely to be true.

-----

A report that debunks the presidents economic advisers' claims. England cut its corporate taxes deeply but wages dropped, not increased as promised. Plus other problems with their claims about cutting taxes.

Republicans are utterly incapable of basic economics.

Actually, they are very competent liars. They know this won't help the middle or lower class, in any respect, but they know the rich people will love it. It'll stifle revenue, which means more cuts down the road.

The absolute greatest lie of this plan is that the ACA repeal was supposed to pay for this, and now they are saying it should kind of pay for at least part of itself.

 

[Malintent]

Nuts. I actually feel sorry for families who are currently eligible to pay the death tax. Do you have any idea how expensive it is to maintain a staff of maids and butlers?? $10.9 million does not buy what it once did.

The problem comes from the family business. Death taxes in a capital-intensive family business pose a substantial burden to the company.

The problem is that this narrow case is being used as an excuse for cutting taxes on a much broader group for which this isn't an issue.

(My personal take on it: In the family business case allow the tax burden to be "paid" with a lien--but it's % based, not $ based. The lien simply sits there so long as the shares in question are passed by inheritance or passed by sale to someone who already owns shares of the business. If a second such lien gets attached only the greater of them remains, the lesser vanishes. The lien is triggered if the shares are transferred to anyone else.)

Bernie Sanders claims that there once was as many as 80 individuals out of the 320 million individuals in the US that fell under the category of "owning an individual proprietorship with a huge capital investment in depreciable machinery that makes the rich family appear richer than they are". Then, senate passed a reform that raised the Estate Tax to extremely high levels. There are now no longer ANY individuals in the US that fall under that level of individual proprietorship.

 

[Loren Pechtel]

The problem comes from the family business. Death taxes in a capital-intensive family business pose a substantial burden to the company.

The problem is that this narrow case is being used as an excuse for cutting taxes on a much broader group for which this isn't an issue.

(My personal take on it: In the family business case allow the tax burden to be "paid" with a lien--but it's % based, not $ based. The lien simply sits there so long as the shares in question are passed by inheritance or passed by sale to someone who already owns shares of the business. If a second such lien gets attached only the greater of them remains, the lesser vanishes. The lien is triggered if the shares are transferred to anyone else.)

Bernie Sanders claims that there once was as many as 80 individuals out of the 320 million individuals in the US that fell under the category of "owning an individual proprietorship with a huge capital investment in depreciable machinery that makes the rich family appear richer than they are". Then, senate passed a reform that raised the Estate Tax to extremely high levels. There are now no longer ANY individuals in the US that fall under that level of individual proprietorship.

I don't trust him to be accurately representing the problem.

Note that the old estate tax level it would pose a substantial burden to many family businesses. A small business is typically valued at about it's annual sales--it's not hard for a good family-owned business to go far above the original estate tax threshold. Had the next generation been competent my former employer would have been over even the new threshold.

 

[Harry Bosch]

Bernie Sanders claims that there once was as many as 80 individuals out of the 320 million individuals in the US that fell under the category of "owning an individual proprietorship with a huge capital investment in depreciable machinery that makes the rich family appear richer than they are". Then, senate passed a reform that raised the Estate Tax to extremely high levels. There are now no longer ANY individuals in the US that fall under that level of individual proprietorship.

I don't trust him to be accurately representing the problem.

Note that the old estate tax level it would pose a substantial burden to many family businesses. A small business is typically valued at about it's annual sales--it's not hard for a good family-owned business to go far above the original estate tax threshold. Had the next generation been competent my former employer would have been over even the new threshold.

Small businesses today are mostly valued by their EBITDA (net income + depreciation + amortization + owner's salary) times a multiplier. The multiplier is based on industry, value of financials, management team, and etc.

 

[Malintent]

Is this valuation the same thing as the capital gain on the transfer of ownership? I don't think so. I would think, from an Estate point of view, that only the capital investment of the company 'counts'.

This whole thing only applies to individual proprietorships.. where liability of the company rests on the individual... a Corporation is not structured that way, nor are they affected by Estate tax, as far as I understand.

So, why are these individual proprietorships (a structure designed for the "mom-and-pop corner store") so huge and still not LLCs or other types of Corporations, whose structure is designed for such financial size?

edited to add:

If I were a billionaire and got mugged, what would the cops say about my claim that 100 million dollars in cash was taken from my wallet? I mean, my financials say that I COULD have had that cash on me. Would no one wonder what a person of any wealth was doing with 100 million in cash.. and why it was just in my pocket?

Why the hell is such a large business not structured in a way to protect the company assets and employees from a tax law that is meant to apply to individual wealth, not corporate value? Because "they can"? Well, the tax is the "penalty" for incorrectly structureing you business..

.. like carrying an ungodly amount of cash around with you when a credit card, bank transfer, or many other financial devices are the more appropriate and commonly used.

 

[funinspace]

Well, FFvC might have burned a few too many bridges. If these guys won't support the Presidents deficit expansion bill, it will be toast...
https://www.fxstreet.com/news/talk-of-us-tax-bill-not-receiving-enough-rep-support-cnbc-201710241916

CNBC notes that Bob Corker, John McCain and Rand Paul might not support the tax overhaul.

 

[ZiprHead]

Trump repeated the lie the the US is the highest tax nation in the world.

 

[Elixir]

Trump repeated the lie the the US is the highest tax nation in the world.

If he gets his way, it WILL be. Then he can say "I told you so!".

 

[Loren Pechtel]

Is this valuation the same thing as the capital gain on the transfer of ownership? I don't think so. I would think, from an Estate point of view, that only the capital investment of the company 'counts'.

No, because capital gain is value - basis. As for estate valuation--it's based on what it would sell for in the open market, not counting market saturation effects. (Thus if the average demand for your stock is 100,000 shares/day and your estate has 10,000,000 shares you don't look at the low price you would get from trying to dump 10,000,000 shares quickly.) Basis is only used when dealing with something you can't reasonably value by any other means.

This whole thing only applies to individual proprietorships.. where liability of the company rests on the individual... a Corporation is not structured that way, nor are they affected by Estate tax, as far as I understand.

A corporation itself isn't but you can have a family business that's a C corp--and when the shares are passed down they are subject to the estate tax. The IRS recognizes the burden and had long-payment plans for such cases but even then those payments will amount to a decent chunk of the income those shares produce.

Why the hell is such a large business not structured in a way to protect the company assets and employees from a tax law that is meant to apply to individual wealth, not corporate value? Because "they can"? Well, the tax is the "penalty" for incorrectly structureing you business..

And why isn't your doctor making you immortal?

 

[Malintent]

Thank you for the responses, but I don't understand this part:

And why isn't your doctor making you immortal?

What are you asking / saying?

 

[Loren Pechtel]

Thank you for the responses, but I don't understand this part:

And why isn't your doctor making you immortal?

What are you asking / saying?

You're assuming a business can be structured to avoid the estate tax. You can act to minimize it but that's all--it's the same as a doctor's job is health but that doesn't mean they can make you immortal.

 

[Jimmy Higgins]

So back away from LP's world 'o hypothetical...

House Ways and Means Tax Reform Framework

This "tax cut" is very special, because it is using a whole bunch of new claims we typically don't see when they sell a tax cut. Usually when you sell a tax cut, you tell people they will pay less in taxes. In general, it is about how businesses will lavish employees (of which they'll hire more because...) with higher salaries because all small corporations have billions socked away overseas.

It then talks about fairness. But it doesn't talk a lot about actually lowering the effective tax rates.