Republicans Release Tax Plan

[Jimmy Higgins]

The GOP has released it's plan. I have no idea how the numbers are supposed to work. Of course, there seems to be confusion on a lot of news sites as to what the rates are.

From what I can find, the first $24k is untaxed and then to $45k is taxed at 12%, which is a massive cut! It cuts an individual's taxes in half if they take how $50k after deductions. A larger issue is if a family has several children. The new family deductible is $24k, but the personal exemptions are gone. My effective tax rate effectively dissolves.

This cut costs $1.5 trillion (which apparently what is allowed, I thought it was supposed to deficit neutral). We know that W's tax cut cost was $1.6 trillion sticker price... and well... it wasn't even close.

 

[SimpleDon]

A 150 billion dollar a year increase in the national debt isn't a big problem, the biggest driver of the national debt now is the trade deficit, money that leaves our economy and is converted into debt, T-Bills.

The main problem with the tax cut is that about 80% of the cuts go to those earning more than one million dollars a year. This won't do much to boost the economy, The 20% going to the under a million dollars a year will increase GDP by about 30 billion dollars a year, a drop in the bucket in a 20 trillion dollar a year economy.

 

[none]

we're all going to die

 

[ZiprHead]

A 150 billion dollar a year increase in the national debt isn't a big problem, the biggest driver of the national debt now is the trade deficit, money that leaves our economy and is converted into debt, T-Bills.

The main problem with the tax cut is that about 80% of the cuts go to those earning more than one million dollars a year. This won't do much to boost the economy, The 20% going to the under a million dollars a year will increase GDP by about 30 billion dollars a year, a drop in the bucket in a 20 trillion dollar a year economy.

You're going to see growth like you've never seen before. So much growth you're going to get tired of it. Bigly growth.

 

[LordKiran]

A 150 billion dollar a year increase in the national debt isn't a big problem, the biggest driver of the national debt now is the trade deficit, money that leaves our economy and is converted into debt, T-Bills.

The main problem with the tax cut is that about 80% of the cuts go to those earning more than one million dollars a year. This won't do much to boost the economy, The 20% going to the under a million dollars a year will increase GDP by about 30 billion dollars a year, a drop in the bucket in a 20 trillion dollar a year economy.

You're going to see growth like you've never seen before. So much growth you're going to get tired of it. Bigly growth.

Big deal. My grandfather's cancer cells saw growth but it wasn't necessarily good for anyone.

 

[Jimmy Higgins]

One thing that strikes me, this "tax reform" was supposed to be about simplifying the tax code. So now we can submit our taxes on a postcard, which is great... but people with easy tax situations, could already file a single sided piece of paper return, so the postcard is the same thing, just smaller.

But that isn't simplifying the tax code. Simplifying the tax code would be rooting through the code removing a bazillion deductions and what not. That they need to eliminate the AMT means these deductions still exist and the tax code is just about as complicated as it was.

 

[jonatha]

One thing that strikes me, this "tax reform" was supposed to be about simplifying the tax code. So now we can submit our taxes on a postcard, which is great... but people with easy tax situations, could already file a single sided piece of paper return, so the postcard is the same thing, just smaller.

But that isn't simplifying the tax code. Simplifying the tax code would be rooting through the code removing a bazillion deductions and what not. That they need to eliminate the AMT means these deductions still exist and the tax code is just about as complicated as it was.

Well, they did get rid of personal exemptions, the limitation on itemized deductions, the estate tax and generation-skipping transfer taxes, the credits for

- the elderly and the permanently disabled
- adoption
- postsecondary education (the HOPE and Lifetime Learning credits)
- plug-in electric vehicles,

the deductions for

- interest on student loans
- tuition and related expenses
- sales taxes
- personal casualty losses
- income tax preparation fees
- medical expenses
- alimony paid
- moving expenses
- employee business expenses

the exclusion from taxable income of

- employer-provided educational assistance
- savings bond interest used to pay educational expenses
- the reduction in tuition for employees of an educational institution
- employee achievement awards
- employer-provided dependent care assistance
- reimbursement of moving expenses
- employer-provided adoption assistance

and that's just in the first title of the five titles in the bill....

On the fact of it, it promises to be a great deal simpler - if you're married, unless your mortgage interest and charitable contributions are over $24K you won't be itemizing anymore.

(The taxation of passthrough income, OTOH, looks like a real mess...)

 

[Jimmy Higgins]

One thing that strikes me, this "tax reform" was supposed to be about simplifying the tax code. So now we can submit our taxes on a postcard, which is great... but people with easy tax situations, could already file a single sided piece of paper return, so the postcard is the same thing, just smaller.

But that isn't simplifying the tax code. Simplifying the tax code would be rooting through the code removing a bazillion deductions and what not. That they need to eliminate the AMT means these deductions still exist and the tax code is just about as complicated as it was.

Well, they did get rid of personal exemptions, the limitation on itemized deductions, the estate tax and generation-skipping transfer taxes, the credits for

- the elderly and the permanently disabled
- adoption
- postsecondary education (the HOPE and Lifetime Learning credits)
- plug-in electric vehicles,

the deductions for

- interest on student loans
- tuition and related expenses
- sales taxes
- personal casualty losses
- income tax preparation fees
- medical expenses
- alimony paid
- moving expenses
- employee business expenses

the exclusion from taxable income of

- employer-provided educational assistance
- savings bond interest used to pay educational expenses
- the reduction in tuition for employees of an educational institution
- employee achievement awards
- employer-provided dependent care assistance
- reimbursement of moving expenses
- employer-provided adoption assistance

and that's just in the first title of the five titles in the bill....

On the fact of it, it promises to be a great deal simpler - if you're married, unless your mortgage interest and charitable contributions are over $24K you won't be itemizing anymore.

(The taxation of passthrough income, OTOH, looks like a real mess...)

Sure, but this doesn't really make the tax code easier. We already have the 1040EZ for people that file easily.

The only reason to eliminate the AMT is because the tax code is still very manipulable and far from simple.

 

[James Brown]

It's a winning strategy...

One year before Election Year, discuss eliminating certain deductions.

Sit back as your coffers flood with donations from special interest groups dependent on those deductions.

Use donations to win your election.


I also liked Kevin Drum's analysis that the new tax code seems to favor Red State voters over Blue State voters. The party in power wouldn't be so brazen as to rewrite the tax code to punish the opposition, would it?

 

[Jimmy Higgins]

It's a winning strategy...

One year before Election Year, discuss eliminating certain deductions.

Sit back as your coffers flood with donations from special interest groups dependent on those deductions.

Use donations to win your election.


I also liked Kevin Drum's analysis that the new tax code seems to favor Red State voters over Blue State voters. The party in power wouldn't be so brazen as to rewrite the tax code to punish the opposition, would it?

And red state people won't get the whole Blue State thing, where property taxes can easily equal what people in red states pay for on their mortgage!

I have had people in Ohio complain about property taxes and I have to smack them in the head and explain what high property taxes actually are.

 

[Don2 (Don1 Revised)]

These are major changes. So I am probably going to have to hire an accountant.

 

[Tom Sawyer]

These are major changes. So I am probably going to have to hire an accountant.

I should hope so. It would be depressing for the accounting industry if all of those campaign donations didn't end up resulting in increased business for them.

 

[Jimmy Higgins]

These are major changes. So I am probably going to have to hire an accountant.

What are the major changes, I mean other than to the deductions us proles could actually take advantage of?

Based on what I've read, the mortgage interest / property tax / state tax issues could make this a non-starter as 35 Republicans could be voting to raise taxes on their constituents.

 

[Don2 (Don1 Revised)]

These are major changes. So I am probably going to have to hire an accountant.

What are the major changes, I mean other than to the deductions us proles could actually take advantage of?

Yeah, it's the deductions. I hope my wife has been collecting receipts.

 

[dismal]

It's a winning strategy...

One year before Election Year, discuss eliminating certain deductions.

Sit back as your coffers flood with donations from special interest groups dependent on those deductions.

Use donations to win your election.


I also liked Kevin Drum's analysis that the new tax code seems to favor Red State voters over Blue State voters. The party in power wouldn't be so brazen as to rewrite the tax code to punish the opposition, would it?

And red state people won't get the whole Blue State thing, where property taxes can easily equal what people in red states pay for on their mortgage!

I have had people in Ohio complain about property taxes and I have to smack them in the head and explain what high property taxes actually are.

Last I looked states don't pay income taxes, individual people do.

 

[Jimmy Higgins]

Here is an interesting article on the bill.

Then there is the GOP’s big addition to the tax code, which would add new complexity: a new, 25 percent rate for so-called “pass through” companies, which include everything from small businesses to hedge funds. Republicans argue that the rate will promote investment and increase economic growth, but it will also encourage high-income individuals to reclassify their income so they can take advantage of the 25 percent rate. Republicans crafted a complicated set of rules to block such tax avoidance, which will create new headaches for the 95 percent of businesses organized as pass throughs. “There will be complex rules in the code and then complex regulations and then complex struggles to enforce it,” said David Kamin, a tax expert at New York University who was an economic adviser to Barack Obama.

The same problem exists with the GOP plan to change how businesses’ overseas earnings are taxed. Under the current tax code, those earnings are not taxed until they are brought back into the U.S., leading to trillions of dollars of income kept offshore. Republicans want to move to a system where only domestic earnings are taxed. But this would create a huge incentive for businesses to shift their income so it appears as foreign income, requiring policymakers to create new rules to prevent such tax avoidance. “That will be a full employment act for international tax lawyers in the U.S.," said tax lawyer Libin Zhang.

 

[jonatha]

What are the major changes, I mean other than to the deductions us proles could actually take advantage of?

Yeah, it's the deductions. I hope my wife has been collecting receipts.

The general picture seems fairly straightforward.

Unless your mortgage interest and charitable contributions are more than $14K, you won't be itemizing, so there's no need to worry about receipts and deductions.

At today's rates, you'll need a mortgage balance of $350K or better (or a very giving nature) to get to that point.

- - - Updated - - -

Here is an interesting article on the bill.

Then there is the GOP’s big addition to the tax code, which would add new complexity: a new, 25 percent rate for so-called “pass through” companies, ...

There is some complicated verbiage in the bill that I didn't understand, but apparently its effect is to limit the amount of passthrough income that can take advantage of this to 30% of the passthrough income.

Makes me wonder why they bothered...

 

[Shadowy Man]

These are major changes. So I am probably going to have to hire an accountant.

If you have to hire an accountant then they haven't made the tax code simpler.

If they do make the tax code simpler, who will care about all the CPAs out of work?

 

[Treedbear]

Anything on eliminating the inheritance tax?

 

[jonatha]

Anything on eliminating the inheritance tax?

Phases out by 2023 or 2024. Immediate doubling of exemption.