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Old 04-26-2017, 07:16 PM   #1
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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?
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Old 04-26-2017, 07:45 PM   #2
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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.
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Old 04-26-2017, 08:19 PM   #3
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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.
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Old 04-26-2017, 08:55 PM   #4
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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.
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Old 04-26-2017, 09:16 PM   #5
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Originally Posted by whodoyoulike View Post
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.
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Old 04-26-2017, 10:10 PM   #6
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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.
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Old 04-27-2017, 01:47 AM   #7
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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!!)

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. )
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Old 04-27-2017, 02:43 AM   #8
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Even though half the country needs a federal income tax break like horseplayers need a higher takeout.
That would be the approximately half of the country that actually pay any federal income tax?
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Old 04-27-2017, 11:27 AM   #9
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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.
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.
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Old 04-27-2017, 11:36 AM   #10
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Every time a Republican cuts taxes, some American who really needs help gets screwed.

...
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.
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Old 04-27-2017, 04:09 PM   #11
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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.
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Old 04-27-2017, 11:02 PM   #12
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Relax NJ or you're not going to make it 4 yrs
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Old 04-28-2017, 11:12 AM   #13
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The Dumbest Part of Trump's Dumb Tax Plan

https://www.washingtonpost.com/opini...a66_story.html
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Old 04-28-2017, 12:52 PM   #14
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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.
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Old 04-28-2017, 03:49 PM   #15
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The dumbest thing about the entire article are the lame, old, tired, illogical leftist talking points.
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.
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