GOP Tax Reform

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anonymous_coward
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GOP Tax Reform

Here's the actual working document:
https://waysandmeansforms.house.gov/uploadedfiles/tax_cuts_and_jobs_act_...

Highlights:
1) Doubles the standard deduction. Huge bonus for renters & people who don't itemize deductions (students, poor people, etc.)
2) Removes/limits a bunch of deductions:
State & Local taxes (this is under debate, so it might just be a cap)
student loan interest
mortgage interest can only be deducted on mortgages less than $500k (was $1mm before)
charitable deductions are limited
tax prep
moving expenses
etc.
3) Collapses the rate brackets into 5. Generally the levels are lower, so for most people this is a cut.
4) Cap gains on primary residence is more restrictive (must be 5 of last 8 years instead of 2 of last 5).
5) AMT is eliminated - a huge tax cut for wealthy who have a lot of deductions (usually real estate)
6) Estate tax exclusion is raised to $10mm (was $5mm) - in other words, a tax cut for 5-10 millionaires who are about to eat it. 2023 it will be eliminated (but who the hell knows what will happen between now and then)
7) corporate tax rate is cut to a flat 20% (currently has 4 tiers from 15-35, so if you're in the 1st tier, 0-50k, you're getting a tax increase).

There are obviously a lot more but those are the broad strokes.

Generally speaking as a fiscally conservative liberal, I like and don't like it (I am guessing that is the probably the common response).

On one hand, with the exception of the elimination of AMT & the estate tax, it's fairly progressive. It cuts taxes for a lot of lower and lower-middle class people, and keeps the highest tax bracket unchanged. The corporate tax cut will probably be a net positive, since even though corporate taxes are imposed on companies, a lot of economic thinking suggests that the burden is shouldered by the consumer and the employees.

On the other hand, it's going to increase the deficit. All the bullshit about stimulating the economy is just that, bullshit. We're already at 3% growth, it's not going to magically jump to 5% without some dramatic game changing technology breakthrough. The supply sider snake oil has been peddled so many times it's basically rancid at this point.

I'll be the first to say it, I'd rather have LePage style *real* fiscal discipline than have everybody get free money. Sorry, that's just how I roll.

pmconusa
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This scheme is nothing but a

This scheme is nothing but a rearrangement of the chairs on the Titanic. It still comes up with a negative outflow because the spending still exceeds the receipts to pay for them. It also posits that the increase in economic activity generated by the added money plugged into the system will generate more revenue than costs. This is impossible because, even if it is taxed at 100% it will only recover what is added. That is exactly what is not going to happen.

The corporate tax reduction will funnel more money to the firms that actually pay corporate tax and it will disappear into the pockets of the executives who manage these companies and more likely to the unions who will extract the savings as they did when many of them were replaced by machines. No new jobs will be created as a result, except in subsidized industries and government protected monopolies as the excess money available will be spent on items manufactured more cheaply in foreign countries.

As our population grows, so too will the welfare state. We have already seen the government declare there is no inflation and the Social Security payments have been capped. Government creates additional inflation, or a decrease in value in the currency for every dollar they add to the system and if you take into consideration the cost of government and not just a basket of commodities, the cost of living rises every year because it is the nature of the economic system we have adopted as has every society since the invention of currency, be it specie or paper. This failing system is described in my book The Real Economy along with a substitute that will extend the life of humans on the planet.

john w k
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GOP tax reform is tax

GOP tax reform is tax manipulation, not tax reform!

When it comes to tax reform you can bet your bottom dollar our Washington Swamp Creatures [Republican and Democrats alike] want nothing to do with tax reform which would actually alter the manner in which federal revenue is raised. What our Republican Swamp Creatures falsely claim is “tax reform”, is nothing more than a plan to manipulate the existing method of laying and collecting taxes calculated from profits, gains, salaries, wages tips and other “incomes”, and it would create a whole new set of winners and losers using this type of tax.

Keep in mind, under Kevin Brady’s so called “tax reform”, we still wind up with a direct unequal tax upon individuals and businesses which is calculated from profits, gains, salaries and other “incomes” ___ a tax system allowing our federal government to create privileged classes exempt from taxation; a tax which can, and has been used as a weapon by notoriously evil politicians to harass and punish political foes; a tax system allowing corrupt politicians to require taxpayers to divulge the most personal aspects of their private lives; a tax which has allowed our federal government from one Congress to another to micro manage our lives and businesses and place the heel of an oppressive government on the necks of America's most productive citizens and business owners, which in fact has resulted in our current repressive state of affairs.

President Trump may very well have his heart in the right place when it comes to “tax reform”, but he is being conned by slithering snakes like Kevin Brady, Paul Ryan and Mitchell McConnell who have no intention to end the authoritarian system of federal taxes calculated from profits, gains, salaries and other “incomes” ___ a system of taxation which has proven to be a tool of corrupt politicians and is destructive to our nation’s general welfare and prosperity.

Unlike our Founders who wanted America’s market place to be used to fill our national treasury using specific taxes laid upon articles of consumption ___ a kind of tax which is limited by the purchase of such articles, making it a “self-regulating” tax ___ and across-the-board imposts and duties at our water’s edge such as tonnage taxes, and if necessary a direct apportioned tax to extinguish deficits should Congress find impost, duties and excise taxes insufficient during the course of a fiscal year, Brady, Ryan and McConnell have joined forces with the Democrat Party Leadership to keep alive the notoriously evil system of income taxation, which is a primary source of power used by Washington sewer rats to reward donors, punish enemies, redistribute wealth which America’s labor, businesses and investors have worked to produce, and keeps the heel of a corrupt federal government on the necks of the American People.

Real tax reform is not found in keeping alive “income taxation” and manipulating its application. It is found by ending the socialist income tax experiment and returning to our Constitution’s ORIGINAL TAX PLAN as it was intended to operate by our Founders. Unfortunately, not one member of Congress, nor any media personality to the best of my knowledge, including those at FoxNews, has, in recent times, discussed the merits and wisdom of the Fair Share Balanced Budget Amendment which would return us to our Constitution’s original tax plan. In fact, there really isn’t any “tax reform” being discussed. Instead, all that is talked about is income tax manipulation and creating a whole new set of winners and losers, while keeping this notorious evil tax alive with all its miseries, shortfalls and never ending class warfare which is destroying America from within.

JWK

“Honest money and honest taxation, the Key to America’s future Prosperity“ ___ from “Prosperity Restored by the State Rate Tax Plan”, no longer in print.

john w k
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Paul Ryan lies on FoxNews and


Paul Ryan lies on FoxNews and no one calls him out!

 
 
Paul Ryan was on FoxNews this morning [the 8AM hour] and once again he has lied about his tax reform plan, saying that under his plan and its simplification, the American People would be able file their tax returns on a post card. The truth is, the American people will still have to determine what is and is not “taxable income” under his plan, and this is the gimmick used by Congress to grant preferences and exclusions, and select winners and losers. And for one to determine what their “taxable income” is under Paul Ryan’s alleged tax reform, will still require full knowledge of what is taxable income and the reams of pages Congress uses to define “taxable income”.

Perhaps someday one of our friends at FoxNews will ask Paul Ryan, what are the characteristics which define taxable income under his "tax reform"? Of course, this question was succinctly answered many times by our Justice system, e.g., in Eisner v. Macomber 252 U.S. 189, 206 (1920), a case challenging a tax on "income" the Court states the following:

"In order, therefore, that the clauses cited from article 1 of the Constitution may have proper force and effect, save only as modified by the amendment, and that the latter also may have proper effect, it becomes essential to distinguish between what is and what is not 'income,' as the term is there used, and to apply the distinction, as cases arise, according to truth and substance, without regard to form. Congress cannot by any definition it may adopt conclude the matter, since it cannot by legislation alter the Constitution, from which alone it derives its power to legislate, and within whose limitations alone that power can be lawfully exercised.

The fundamental relation of 'capital' to 'income' has been much discussed by economists, the former being likened to the tree or the land, the latter to the fruit or the crop; the former depicted as a reservoir supplied from springs, the latter as the outlet stream, to be measured by its flow during a period of time. For the present purpose we require only a clear definition of the term 'income,' [252 U.S. 189, 207] as used in common speech, in order to determine its meaning in the amendment, and, having formed also a correct judgment as to the nature of a stock dividend, we shall find it easy to decide the matter at issue.


After examining dictionaries in common use (Bouv. L. D.; Standard Dict.; Webster's Internat. Dict.; Century Dict.), we find little to add to the succinct definition adopted in two cases arising under the Corporation Tax Act of 1909 (Stratton's Independence v. Howbert, 231 U.S. 399, 415 , 34 S. Sup. Ct. 136, 140 [58 L. Ed. 285]; Doyle v. Mitchell Bros. Co., 247 U.S. 179, 185 , 38 S. Sup. Ct. 467, 469 [62 L. Ed. 1054]), 'Income may be defined as the gain derived from capital, from labor, or from both combined,' provided it be understood to include profit gained through a sale or conversion of capital assets, to which it was applied in the Doyle Case, 247 U.S. 183, 185 , 38 S. Sup. Ct. 467, 469 (62 L. Ed. 1054)."

As you can see, defining what is and what is not taxable income requires a taxpayer to deduct all necessary expenses and outlays from gross receipts in order to arrive at taxable income. Income from a business which was wholly illegal was held subject to income tax in United States v. Sullivan, 274 U.S. 259. Nevertheless, it was necessary to determine what that income was, and the cost of an illegal purchase of liquor was subtracted from proceeds of the illegal sale of the liquor in order to arrive at the gain from the illegal transaction which were subjected to a tax in that case.

And, in Sullenger vs. Commissioner, 11 T.C. 1076 (1948) the Court allowed the business owner [who made illegal purchases of meat] to deduct the cost of meat purchased at a higher price then set by the Office of Price Administration, a World War II price control agency, which he then resold for profit. The “income” from those sales was being taxed which was at issue in the case. The Court went on to cite Sullivan and concluded: “No authority has been cited for denying to this taxpayer the cost of goods sold in computing his profit, which profit alone is gross income for income tax purposes.”

So, what is the cost of goods sold by a wage earner? Is it not his/her time, labor, skills, the cost of travel to and from work, etc? The value of which must be deducted from gross receipts in order to arrive at an alleged profit or gain?

Shouldn't a working person be allowed to deduct transportation costs to and from work in calculating their profit or gain? How about the costs involved with providing the necessities of life or medical expenses which a wage earner incurs when making their labor possible? Shouldn't a wage earned be allowed to deduct these costs from gross receipts in calculating his/her profit or gain?

How about the eight hour of life which a working person invests in earning a wage? Is this not to be considered as their property and a capital outlay, the value of which must be deducted from gross receipts in order to arrive at an alleged profit or gain?

Do we now see one of the reasons why Paul Ryan’s “tax reform” is still capricious, arbitrary and an immoral system of taxation, and why the power to lay and collect taxes calculated from incomes must be withdrawn from Congress' hands?

JWK

"The property which every man has in his own labor, as it is the original foundation of all other property, so it is the most sacred and inviolable. The patrimony of the poor man lies in the strength and dexterity of his own hands; and to hinder him from employing this strength and dexterity in what manner he thinks proper, without injury to his neighbor, is a plain violation of this most sacred property." ___ Butchers’ Union Co. v. Crescent City Co., 111 U.S. 746 (1884)

JackStrawFromWichita
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“the American People would be

the American People would be able file their tax returns on a post card.”

Does Ryan want us to go back to mailing in tax returns versus e-filing them like 91% currently are?

anonymous_coward
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Update, apparently they are

Update, apparently they are making graduate school tuition wavers non-exempt:
https://www.wired.com/story/grad-students-are-freaking-out-about-the-gop...

Obviously graduate students aren't going to bear the brunt of that, because they have no money. If anything, the universities will either have to pay them to cover the tax bill (charging undergrad students more, or else getting more funding from your tax dollars), or else come up with some financial gymnastics to get around it (no tuition, but if you're not a good student, you are required to do extra TAing. Or something like that).

pmconusa
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You are all missing the

You are all missing the forest for the trees. In the economic system we employ the government, in order to finance the welfare state must take the money earned by some in order to give it to those who do not earn anything. In order for some to retain more than others the government takes less from those who support it and give them the power to continue this disparity. When it does not take enough, the government must borrow (print money) so the tax burden is unchanged. They have printed over $20 Trillion and as the number of non-earners increases and the demand for welfare increases, more borrowing (printing) is necessary. The tax bill that is proposed will increase the $20 trillion by over $1.5 trillion and some people will be paying more as well, otherwise, if the bill was revenue neutral, the $1.5 trillion would be far higher as it was under Obama when many more were added to the welfare pool and those collecting received more per person.

In my book the Real Economy I describe an economic system based on what really backs the currency, food. In that economy there is no taxation except a tax on those who exploit their monopoly and the economy is limited to the energy value of the food we consume in order to produce work. The current economic system would have failed much earlier had it not been for advances in agriculture. Those advances have now topped out and since the mid 1980s the United States produced its maximum and that has been going down ever since on a population basis. The food supply is stagnant in growth but the number of consumers is steadily increasing. We now import enough food to sustain the lives of over 50 million people and are one of the few who still produce a surplus. This is not the case in many countries and is why there is a vast shift of populations to those with substantial welfare states.

You can now do the math and calculate when the U. S. food supply will just be able to sustain the lives of our citizens at 2500 kcal per day and determine when the U. S. population will reach that number. It turns out that a conservative estimate is before the end of this century or during the lives of your grandchildren. Still want to except more immigrants?

Melvin Udall
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As I asked before, in your

As I asked before, in your new economy, where do you take your car to get it fixed, and who makes the parts? Who provides the fuels, lubes, tires, etc necessary to keep it running?

And how do you pay them all?

pmconusa
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If you read the book you

If you read the book you would know but, because you didn't I'll lay it out for you. The country produces sufficient food (fuel) for its population. That fuel, in turn provides everyone the opportunity to use their skill to obtain payment from those who do not have it or would do something else instead. Credit, equivalent to the value of the fuel being produced is distributed to every man, women and child, that is 2500 kcal per day over the course of the year. When you need your car repaired you go to a mechanic who has learned how to repair cars and pay him the hourly equivalent of the fuel he used in repairing your car. If it needs parts, you reimburse him for the kcal he paid to the person who used their kcal to make the parts.

The first thing you need is food, air and water. The air is provided for free by nature. The water is also provided by nature but if you want it delivered to your home you will have to fork over the kcal in your account to the people whose time was required to deliver it to you. If you obtain it from an unpolluted stream yourself you can use the kcal to purchase the time of others for things you need or want. If you save some of your kcal by doing without something you want but do not need you can purchase things that cost more in time than 2500 kcal will buy.

It is not socialism or communism because those who produce not only get their share of nature's bounty up front but can earn extra by utilizing their time to provide the needs and wants of those who consume but do not produce. They can however earn only twice what nature provides because that is all that is available. In other words, one person relies on at least one other if he does nothing and uses his 2500 kcal to pay someone to do all the things necessary to sustain his life.

For a fuller explanation of how this system works READ THE BOOK. In any case, the human race, like all other living things depends on the availability of oxygen, water and food. Only food is being reproduced by nature and when we use up all the oxygen or water we will not longer be able to produce food. It can easily be shown that the first thing that will be in short supply will be food, when the number of mouths to feed exceed its necessary production. Only the United States and a few other countries produce internally sufficient food to feed their population and actually have a surplus that is sold to those who are short for things they have in surplus. For example, Saudi Arabia produces a fraction of the kcal necessary to feed their population, that includes millions who are not Saudis. It is their surplus oil that enables them to buy the food necessary to feed their population. When the oil begins to run out or it costs more in man-hours to produce than its imputed value, the population will either migrate or starve. It has happened with gold and all other metals as their supply dwindles.

Gerald Weinand
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Of course, the entire

Of course, the entire argument by pmconusa relies on the definition of "earn." I think we can all agree that folks that work by the hour, be they tradesmen or retail clerks or truck drivers - even lawyers and doctors - "earn" their pay. These are wages. But "earning" involves much more beyond wages, what is known as "passive" income, that is, income that requires little or no effort by the recipient to maintain it.

johnw
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The more I read and hear

The more I read and hear about this tax plan the less enthusiastic I am about it......Think about this , the politicians are so out of touch with lower income wage earners that they Keep trying to convince people that in this inflationary economy that a few hundred bucks less on taxes is going to make a significant difference in the quality of their lives . The rest of the lie is that big corporations are going to take care of the little folks if we just give them a chance .....and then the tooth fairy said.......
If the republicans can’t do any better than this mishmash of gobbledygook then they deserve to be tossed out.....

pmconusa
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Gerald: All income is

Gerald: All income is "earned". Some of it is direct in that a person sells his skill (time) for a wage or salary. Another means is dividends on investment that offers employment to others. Under the economic system I propose in my book you can save enough to invest in other people's employment but the return is maximized at the amount initially being distributed to everyone because there is only so much "income" to go around and it is equal to the kcal requirements of the population that produces the work to obtain a portion of the kcal available. A fuller description of this system is available in the book.

Toolsmith
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Maybe this is smarter than it

Maybe this is smarter than it looks at first...

https://patriotpost.us/opinion/52521

Personally, I think most of the overpaid professors should just be retired. And if you've got $60B, you can forgive some of that student debt instead of passing it on to the taxpayers. Not that the education, such as it is, is worth the price anyway.

Toolsmith
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On point, I almost never have

On point, I almost never have enough to itemize even with mortgage interest and state/local tax. So for anyone like me, it's a cut. And the point that a state/local tax deduction is subsidizing bloated government is true as well... either eliminate it, or cap it at a reasonable amount. If you want big government, fine... but you pay for it, don't pass it on to all the other states.

anonymous_coward
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CBO score is in:https://www

CBO score is in:
https://www.washingtonpost.com/news/wonk/wp/2017/11/26/senate-gop-tax-bi...

TL;DR: increases the debt by 1.4 trillion over 10 years, net effect is cutting taxes on rich and costing the poor more (they include the increased cost of health care that they would have to shoulder, which outweighs any tax benefits).

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