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Trump's Tax Plan


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We are beginning to see what it may look like.  Some interesting things, at least to me.

 

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The framework plan calls for increasing the standard deduction to $12,000 for individuals and $24,000 for families, which essentially doubles the amount of personal income that is tax-free.

Congressional Republicans describe the change as creating a larger “zero tax bracket.” 

 

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"It's clear from this plan that when it comes to tax reform, Republicans will always put the wealthy first,” said Massachusetts Rep. Richard Neal, the top Democrat on the tax-writing House Ways and Means Committee. “After more than a year of work …. this tax plan would give big tax cuts to the wealthiest Americans.”

Meanwhile, a battle is brewing among Republicans over a move to eliminate the deduction for state and local taxes, which is especially valuable to people in high-tax states such as New York, New Jersey and California. The plan retains existing tax benefits for college and retirement savings such as 401(k) contribution plans.

 

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The estate tax -- which is paid by those with multimillion-inheritances -- would be eliminated, a boon for wealthy individuals who inherit businesses, investments and real estate.

 

Along way to go, and I'm guessing a lot of changes to come.  With healthcare changes on hold for a while because there's no way they'll get to 60 with anything anytime soon and Trump will try to kill ACA due to no actions by him.  This will be the next big agenda piece.   It'll be interesting to watch how this unfolds.

 

As a middle class family man, I'm tentatively in support the three things listed here.   Of course this is just the bullet points, once we get into the weeds of the bill, I may find more problems than things I like, but so far, I can actually say this seems OK.

 

http://www.foxnews.com/politics/2017/09/27/republicans-unveil-tax-plan-call-for-doubling-deduction-and-cutting-rates.html

 

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I'm not sure what to think really. If it effects my pocket book positively at home I guess I'm all for it, but I wonder what all the details behind the scenes are? Because that could end up hurting the country as a whole in the long run. Obviously we'll all need more information on this as this plan moves forward. It's really too early for me to say "Yes, I'm for this."

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From the LA Times:


 

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But let’s examine a few specifics.

 

--The capital gains tax preference is preserved. As we’ve noted before, wealthy taxpayers have been willing to give up a lot of breaks, as long as the capital-grains preference remains in place. The top tax rate on ordinary income is 39.6% (reduced to 35% in the tax proposal); the top rate on capital gains is just over half that— 23.8%.


The Trump plan: Every bad tax idea, in one place

 

The preferential rate delivers an estimated $120 billion a year to taxpayers who are overwhelmingly members net merely of the 1%, but the 0.1%--they’re the recipients of 76% of the capital gains tax benefit. That’s because capital gains comprise much larger shares of the income of the wealthy than everyone else. Those with annual incomes of $1 million or more receive more than half their income from capital gains; working-class people earning $75,000 to $100,000 receive on average 75% of their income from wages.

 

There’s more to the capital gains break than merely the preferential rate. As Ed Kleinbard, the tax expert at USC, observes, it’s our only truly voluntary tax: Those with accumulated capital gains liabilities can choose when to pay them simply by deferring the sale of the capital asset, because that’s when they’re collected. Hold the asset long enough to bequeath to one’s heirs, and the tax is extinguished. No other U.S. tax encompasses such an enormous benefit.

 

--Repatriation of foreign corporate assets at a low rate. Big business has been pushing for this break for years, or since the last “one-time” repatriation amnesty in 2004. American multinationals hold an estimated $2.6 trillion of what Kleinbard calls “stateless income” offshore. They’ve resisted bringing the wealth back home because it would be taxed in the U.S. at standard corporate rates.


Why the rich are happy to give up the carried interest loophole: They get to keep a bigger loophole

 

The framework says foreign earnings held in forms other than cash will be subject to a lower rate, though it doesn’t say how low. In any event, the rationale, which is that corporations will use the money for investing in their future and for job growth, doesn’t hold water. As Steven M. Rosenthal of the Tax Policy Center observes, industry promised in 2004 that the repatriated profits would be used for job development and investment. For that they were gifted with a preferential 5.25% rate.

 

Instead, multinationals used the repatriated funds to pay dividends to shareholders and buy back their stock, actions that disproportionately benefit wealthy shareholders. In fact, the largest participants in the 2004 repatriation holiday, including Pfizer and IBM, cut jobs and research. “Once the holiday ended, the multinationals went right back to accumulating earnings off-shore, anticipating another tax holiday,” Rosenthal writes.

 

--Repeal of the estate tax. The estate tax is the perennial target of the most dishonest Republican spin in the whole tax code. Dubbed by its wealthy critics the “death tax,” this levy supposedly burdens family farms and businesses. During the Presidential campaign, Trump called the estate tax a burden on the “American worker.” Yet the estate tax affects only a few thousand people at most, all of them multimillionaires with an average nest egg of more than $30 million. Currently, the tax is set at 40% of estates, with an exemption worth $5.49 million per individual and $10.9 million per couple. Among those who would almost surely benefit from repeal: Ivanka, Eric, and Donald Trump Jr.

 

 

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IIRC, weren't many of you n favor of repealing the estate tax in earlier discussion about tax reform?


Also, one of the things I wasn't a fan of their early plan to scrap the alternative minimum tax. It's what makes sure the incredibly wealthy don't abuse deductions and loopholes so much that they wind up paying next to nothing. 

Guess what's still in their plan?

 

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We can identify at least one taxpayer who will hugely benefit from the proposal: President Donald Trump. We still haven’t seen his tax returns, but thanks to leaked documents we know that at least at some point in the past, the only income tax he paid was the alternative minimum tax (the AMT). We also know that his businesses operate through “pass-through” vehicles (partnerships, LLCs and S corporations). A regular corporation pays tax on its income; shareholders in turn pay tax on the dividends they receive. In pass-through vehicles, by contrast, business income is taxed only in the hands of the owners of the business, rather than at the entity level.

 

And we know that Trump is very wealthy, and therefore in the ordinary course of events might be expected one day to leave behind a large estate, which, to the extent not left entirely to his wife at that time, would attract a substantial estate tax bill. 

 

What does the Republican proposal do in this case? It eliminates the AMT. It subjects income derived from pass-through businesses like Donald Trump’s empire to a special 25 percent tax rate (rather than 35 percent or 39.6 percent, the individual rate), because owners of these businesses are special, in some indeterminate way. And the proposal repeals the estate tax.

 

Here you see the real agenda at work. When it matters, the proposal has more than enough detail to signal to President Trump and the Republican Party’s coterie of oligarch financial backers that their personal taxes will be slashed, not by a few hundred or thousands of dollars, but by millions and millions. 

 

The 25 percent tax rate for pass-throughs is particularly galling, because it has no principle at all behind it, and will be the subject of widespread abuse, as taxpayers maneuver to squeeze their incomes into the pass-through business box. The proposal describes this as some sort of discounted rate for small business owners, but that is simply dishonest. It applies to all pass-through vehicles, including those owned by Trump and his counterparts.

 

We'll have to see what the final product ends up being. There's a good chance that it winds up saving many of us a chunk in taxes. But it will be at the expense of a gigantic tax cut for the richest people among us & huge losses of revenue for the government. I'm not sure that a functioning, funded government is really a priority for this administration.

 

People were not lying when they said he was going to use this as a huge tax cut for himself.

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Here is a fair take on the plan I read last night.  It doesn't say the plan is totally horrendous, but there are some head scratchers in there.  And a lot left to be decided when details are released.

 

Sounds like the worst off will be single parents, married households with 2 or more kids, and people living in high state income tax states.

 

And $1.5M is the magic number to see if they need 51 or 60 votes.

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Small-order changes to the status quo for certain brackets and situations should do little to mask the large-scale goals this policy is meant to achieve.

 

If you want to lavishly reduce tax burdens for the wealthy, you'll find a token bone to throw here and there and try to present that as the best thing ever. 

 

Remember what the goal is.

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1 hour ago, Red Five said:

Here is a fair take on the plan I read last night.  It doesn't say the plan is totally horrendous, but there are some head scratchers in there.  And a lot left to be decided when details are released.

 

Sounds like the worst off will be single parents, married households with 2 or more kids, and people living in high state income tax states.

 

And $1.5M is the magic number to see if they need 51 or 60 votes.

Awesome.......I'm thrilled to get screwed over more on my taxes. My wife and I already "make too much" and have slowly lost the tax deduction for having children over the years. What a joke.....

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Ugly chart from the analysis of the nonpartisan Tax Policy Center:

 


I'll be honest with you all: I really couldn't care less about the U.S. GDP at this point. I saw a study that said it correlates very little to healthcare salary bumps, & I don't have any investments to be concerned with. I'd much rather we create a better society for ourselves and future Americans to live in.

 

I figure by the time I get settled down and make a real income, I'll MAYBE wind up in that fourth quintile? Looks like I'd get about a 1% cut that essentially disappears within ten years.

 

Notice how all our tax cuts start extremely modest and become nothing as we go? Meanwhile those wealthy tax cuts are far more massive and far more permanent.

 

I heard a snippet of Trump selling this the other day in Indiana where he said "I'm doing something that's not easy & not very good for me... Believe me."

 

Vox:

 

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In any case, TPC’s analysis is a strong indication that President Trump’s claim that the plan was designed "protect low-income and middle-income households, not the wealthy and well-connected" was wildly misleading, that Treasury Secretary Steve Mnuchin is breaking his famous pledge to not enact an absolute tax cut for the wealthy, and that White House economic adviser Gary Cohn’s contention that “the wealthy are not getting a tax cut under our plan” and Mnuchin’s claim that the plan will reduce the deficit by $1 trillion were both straight-up lies.

 

So far multiple Trump admin officials and the man himself are being as staggeringly dishonest about their tax plan as they are any other matter. They're currently busy propping this thing up with glaring lies.

 

Don't believe him.

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