Tax Reform
 

This should have it's own topic as it'll be in the news at least through August (more likely December).

My early questions are:

1) What constitutes a "business"?

In theory, individuals pay the individual rate and businesses pay the corporate rate. But most businesses aren't set up as corporations. They're LLP's, partnerships, or other entities that pass their profits straight through to their owners (who obviously pay the individual rate).

Right now that doesn't matter because the difference between the individual and corporate rates is minimal. But if the corporate tax rate is less than half the individual rate, it will make a HUGE difference.

If there is no change, the choice of business structure matters a lot. If there is a change where LLP's and partnerships pay the much lower corporate rate, what prevents wealthy individuals from sheltering income in perfectly legal business structures?

During the campaign, Trump boasted of not paying anything more than he was legally required. Do we really want to widen that door?

2) What about the deficit?

Both the Reagan and Bush2 tax cuts were championed as "revenue neutral" as they would pay for themselves through economic growth. In neither case was that true and the deficit grew under both. That argument is being raised a third time here.

I'm not overly worried about the deficit but I know others here have expressed greater concern. I get that it limits our future options. Do we accept the 2x failed logic here or is the deficit only a worry during a Democratic administration?

I believe after Reagan's tax cuts we say three straight years of 3% increase in GDP. That was many billions of dollars more to the U.S. treasury.

The Reagan tax cuts were in 1981 and we were in a recession in 1982 so your belief is inaccurate. +4% growth in 83 and +7% growth in 84 mitigate -2% in 82.

I don't doubt that the tax cuts in 81 contributed to that growth. I don't doubt that tax reform now will contribute to growth.

I do question whether the growth in the economy will balance federal spending. It didn't then and I seriously doubt it will now.

Good points!

As presented, this is more smoke and mirrors. He's been pandering.

Why not phase it in?

For example, cut individuals (except estate which only benefits the top 5%) ASAP and see the economic effects* and then one or two years later corporate and see the effects.

*I think the only individual deductions to be allowed are charitable and mortgage because that's what I just heard one of the presenters Cohn or Munckin(??) state on the news. Odd how as the boomers age medical will now be eliminated. Also, property tax deductions is a BIG deduction for most.

One of Trump's economic advisors is a guy named Peter Navarra. I remember him. He tried running for mayor and another political office here about 30 years ago and the voters realized he had his head up his ..... and he failed both times.

I doubt he's changed.

We disagree on this.

I think corporate tax reform is much more important for the economy. Our individual tax rates aren't that far out of step with the rest of the industrialized world. We are glaringly out of step on how we tax businesses and I think that part matters more.

I do think it's important to align our taxes with desired outcomes.

If we want companies to shelter income overseas, then carry on with what we have. If we want smart billionaires to turn themselves into LLC's because they pay 50% less in taxes, then pass what the administration proposes.

The debate over the next 4-8 months will be how we balance those extremes and reward business for behavior that results in long term growth.

My suggestion of phasing in individuals first is because I'm an individual and I want to see the impact. If individuals don't receive benefits as promised there's going to be a revolt.

The phase in can be corporates and then a couple years later individuals. It doesn't really matter that much to me. But, basically let's see if the benefits really do occur as promised otherwise cancel and reverse.

Again, smoke and mirrors because I don't think the benefits will occur.

Every time a Republican cuts taxes, some American who really needs help gets screwed.

But the GOP in all their magnanimous glory don't care. The rich have got to get richer (while promising more jobs and great tax breaks for all!!) :jump:

Even though half the country needs a federal income tax break like horseplayers need a higher takeout.

And good jobs never seem to trickle down.

And let's not forget the religious have to be pacified!! Otherwise who the hell would ever vote Republican? (Oh yea, those pesky straight shooters who don't see a problem with just about everybody packin' would. :popcorn: )

That would be the approximately half of the country that actually pay any federal income tax? :eek:

well it don't change overnight. It takes 1.5-2 years before the benefits are seen. that's how these things are constantly muddied up.

If being screwed is the standard you want to go for, then its hard to imagine that anyone in this equation gets screwed worse than the guy that has his money confiscated to get divvied up 3405 times before his twenty becomes a quarter penny for that guy that needs help.

I'm more in favor of tax reform than tax cuts. We could probably add efficiency and growth just by reforming the system. I don't see the upside of larger deficits. Even if it does stimulate some growth (which imo makes sense), there's almost no chance it's going to pay for itself.

IMHO, the perfect formula to #maga would be to reform the tax system, cut taxes, and slow the growth of spending. Then you get the benefits of a reformed system with lower taxes but without piling up more IOUs.

Relax NJ or you're not going to make it 4 yrs

The Dumbest Part of Trump's Dumb Tax Plan

https://www.washingtonpost.com/opini...a66_story.html

The dumbest thing about the entire article are the lame, old, tired, illogical leftist talking points. :ThmbDown:

The real purpose of Trump's tax reform is to eliminate the estate tax. There's really no reason to eliminate the estate tax from the POV of the majority of Americans. And, all of the other stuff is smoke and mirrors which won't pass as presented.

He wants to eliminate the estate tax because he wants to keep all of his estate even after he's gone (he doesn't want to share).

I think there are ways to still maintain control of your estate e.g., charitable trusts but they'll still have to disburse assets over time. But, I'm not positive about this because I will never have to research it.

George W's tax cuts lead to increases in Gov revenues, I believe they even set the then revenue record.

Under Bill Clinton, the capital gains tax was cut from 28% to 20% and tax revenue increased significantly.

In a 2008 debate between Obama and Hillary, the moderator cited that and asked Obama if he would maintain his policy to raise the capital gains tax, even if it meant less revenue.

Obama said, yes, he would raise that tax, if only in the interest of "fairness". :pound:

You are seriously going to quote this piece of trash article?

WaPo has become an absolute disgrace.

What in your view would result in tax reform? What specifically needs to be reformed?

Not only was I seriously going to, I seriously did! :ThmbUp:

It isn't just good enough to drastically cut taxes for the Low to Middle Class, you also have to penalize the Upper Class according to Dimwhit logic.

Every business who takes a huge loss this year is currently eligible going forward in years to come to to offset that loss right? We are all familiar with that one because of our President right? The point is all of these deductions are OK because they support the system right? A new system of the flat tax probably would not include many of the old systems deductions, but with the flat system everybody pays. This is not where we are going, but I think what will be is something that will provide the middle class some relief. In the end down the the road the flat tax will be more appealing after this transition. In my opinion we are going to make a few stops along the way. Anything that provides relief to the middle class is just fine, but cuts in service is mandatory. This mindset of thinking we can have both is not only uneducated but also very corrosive. Consider this, 30 Trillion in national debt will bring war the likes of which the world has never seen. If you have kids and grandchildren wrap your head around that reality.

Not sure I can agree with ANY of that.

The "Tax Plan' on board has been long debated. Flat Tax everybody, with essentially no exceptions.

Everybody gets a tax break. How anybody is bitching is laughable. Middle class get at least an 8 to 13% break.

The real question at hand is whether it can really happen.

Serious question. How does the flat tax work? I don't think there is even a consensus on what the flat tax is.

More serious question, how does the current tax system work?

Do you even know what tax bracket you are in, or do you just accept what is as what is?

A "flat" tax is just that. You make X amount of money, you'll be taxed at X rate. Nothing more, nothing less. For the vast majority of Americans that have a job, family, etc. that means 25%. I guarantee that is 10% less than you paid last year.

Ok, I own an apartment building as my only source of income, how do I determine how much I pay tax on? Can I write off depreciation, repairs, loan interest, property taxes, etc?

There is really not many brackets now, so having one bracket doesn't really bring a lot of simplification .

A flat tax rate, in my view, is by far the fairest way to tax but it would mean a huge tax cut for the rich and a huge tax increase for the people currently paying no income tax. Not a combination likely to win approval from congress or the public.

What do you pay for taxes now?

Businesses, even small, get a 15% tax rate. If it is just you, you go from 39% to 35% at the worst.

Either way, you'll get a massive tax break. By the way, I'm available for hire.

My wife and I reported a 6 figure retirement income in 2016 and our overall federal tax rate was just under 14%. California added another 3.75%.

I can't imagine that there is a single American who paid an overall tax rate of 35% much less the majority as you suggest. Maybe on the last dollars earned but certainly not on every dollar.

I think you might misunderstand the current progressive tax structure where you pay no taxes on the the first dollars earned and then higher rates as you earn more.

A flat tax where you pay the same rate on a $8000 yearly income as you do on $8,000,000 would be devastating to the majority of Americans which is why it has never gotten any traction outside of Steve Forbes.

I'm as middle class as you can get. During Bush's tax cut, you know the one the leftists said only helped the rich, I had to pay $1800 less in taxes. Hard to beat that. Under the new Trump plan, at least what's been talked about so far, the doubling of the standard deduction will net me about $2200 in tax savings. That's pretty sweet for this middle class guy lol

When you look at current practices, the government does not really care how much revenue comes in thru the tax system, because consideration thereof is almost non-existent when formulating their "budget" and determining how much they are going to spend.

On the other hand, taxation is more importantly used as a means of separating the middle class from more of their earnings, thus widening the gap between the two class groups.

There many who pay more than the 35%.

Bottom line.
The government is a bunch of lying thieves.

The FF had the tight idea when the English Muffin King George taxes them - they shot at him.

A lesson lost on today's victims.

Federal income tax paid/AGI, I don't think there are.

I'll have to back off my "no one". I don't know that. It's probable that across the entire tax paying population, there are some. But they are very few.

To be fair, I was responding to someone claiming a 25% flat tax would save most American's money.

I know wrong doesn't have actual degrees but if it did "no one pays 35%" is still closer to the truth than "a 25% flat tax saves everyone money".

Very few. The highest bracket is 39.6%, and that is on ordinary income over $400K. You would have to have a lot of income in that top bracket to average out the lower rates on the first $400K. But there are people in that income range that pay over 50% in total taxes, including federal, state, and local.

Anyone making that much is probably paying a lot of it as capital gains tax, which is 20% for the highest earners. And they are paying a good tax accountant to find ways to avoid taxes. In Trump's leaked 2005 tax return, he paid an over-all rate of about 24% on many millions.

Your statement wasn't FedTax/AGI. It was total income tax/AGI. A person can absolutely pay a FedTax/AGI of 35%+.

To be fair with the flat tax, most proposals I have seen have a hefty exemption amount so that a single person making $40,000 may not pay a nickel due to the exemption.

You would be shocked by the amount of people having W-2s showing millions in earnings.

The top capital gains rate is 23.8%.

The proposed Flat Tax "brackets" are 10%, 25%, and 35%. That is a flat tax.

Nobody making less than $17,000 or so (May be wrong on this number, but there is one) will pay a nickel in Federal Income Taxes, so yes, there will be a floor.

I'd be in favor of ramping up from 0% to 10% obviously based upon income, but I am all for this bracket.

Either way 10% is outstanding. The poorest of the poor actually working and bringing in income are taxed below previous levels. (Even the diehard Dems and Obama couldn't bring those kinds of promises home for "their" supposed voters and supporters.)

Top end of 35%? Yeah, with basically zero deductions, I'd be fairly certain that most (most as in > 51%) will pay more in Federal Taxes than they ever would have before in previous years. Any percentage going up in THIS tax bracket makes up for millions of people in "tax breaks" in other brackets, amirite?

But hey, lets just throw around stupid crap like nearly 40% and now 35%, and our Prez is giving the rich a Tax break. Schumer and Pelosi already have that craziness covered.

there may be a hell of a lot that pay 35% via Alternative Minimum Tax

*BUMP*

GOP tax plan unveiled:

https://www.nytimes.com/2017/11/02/u...publicans.html