Plot Twist: The GOP wants to raise your Taxes!

[BrerBear]

Really? You got hired to just stand around and do nothing because a corporation had extra money they wanted to spend? Weird.

No, when I was helping to plan the headcount and expenditures for my division for our next fiscal year, I was able to make growth projections with the CEO based on our income and expenses. That includes tax costs.

WTF are you going on about? You still never read my second paragraph did you?
Letting corporations keep more money has some benefits. It's not as simplistic as you seem to think. Tax the payments from those corporations to investors if you want better wealth distribution.

[PACOX]

GOP: "Poor people, we just want you die and give us your money already".

[Gestopft]

No, when I was helping to plan the headcount and expenditures for my division for our next fiscal year, I was able to make growth projections with the CEO based on our income and expenses. That includes tax costs.

But the point is that while you need money to hire people, whether or not you actually use that money for hiring is based on the growth projections, not the availability of capital, right?

Sure, capital is a prerequisite to hiring, but expected growth is the determinant factor.

[Mafic]

Uhhh... my own? Countless others?

When you aren't sitting on large cash reserves -- and many corporations are not -- or have good access to borrowing, lower corporate taxes certainly do help you make payroll and invest in capital for expanding your business. Not all corporations are sitting on giant stockpiles. Which leads me to...


You didn't read my second paragraph, did you?

I agree with you.

A corporate cut tax helps businesses that have slim or small margins. Many times these business have to cut into a payroll, so a cut to corporate tax cut would be a big win for brick and mortar businesses where employees are employed for services. Being able to hire more workers and not have to dip into payroll would be a big win for the service sector.

I am not convinced the tech companies would bring back the money to the US though even with a low, one time fee that Trump cited in his speech today. That to me seems a bit of wishful thinking IMO.

[Rasulis]

People have such short memory. Anybody here remember the Repatriation Tax Holiday of 2004? Yes? No? Anyway, you can read about it yourself.

So, what did companies do with all those extra cash?

Hire more people? No. They cut 20,000 jobs.

Expand business maybe? No. Instead they bought shares back. Although, since most companies are currently already sitting on a lot of equity, they probably won't do that this time.

What else did they do? They paid bigger dividends. Good for the investors.

They also bought other corporations. Remember all those storms of merger and acquisition in 2004 – 2005? B of A bought MBNA? Probably not.

According to a congressional report, that short holiday cost the U.S. Treasury 3.3 billion.

[Draco-Onis]

Yes.

And frankly, even though the average corporate tax rate after deductions is currently closer to, I forget, 15%?, there's plenty of good case to be made for reducing corporate income tax. Even for moderates and progressives, corporate income tax reduction has merit. Corporations paying less in taxes mean that they can pour that money into capital and hiring (more jobs, yay!).

If one wants to address the vast wealth and income inequality, it's much better to do that through investment and income tax changes as opposed to corporate taxes. Of course, Trump's proposal doesn't do this either, at least what I've seen about it so far.

It is far more nuanced than that corporations have had record cash flows for years breaking new records each time. What they have done with the money is M&A, stock buy backs, dividends and job cuts. Of course if you reduce the corporate tax rates and specifically target small to medium businesses you would get growth since businesses that size don't participate in financial engineering but that has never been the republican plan.

[Breccia]

Anybody here remember the Repatriation Tax Holiday of 2004?

Yes, but back then, giving people who liked money, more money, didn't make them create more jobs. They just kept the money they liked.

This time, it'll be different.

[Draco-Onis]

I agree with you.

A corporate cut tax helps businesses that have slim or small margins. Many times these business have to cut into a payroll, so a cut to corporate tax cut would be a big win for brick and mortar businesses where employees are employed for services. Being able to hire more workers and not have to dip into payroll would be a big win for the service sector.

I am not convinced the tech companies would bring back the money to the US though even with a low, one time fee that Trump cited in his speech today. That to me seems a bit of wishful thinking IMO.

Repatriation has been tried before under Bush the results were abysmal, why pay a fee or lower rate when you can get away with paying zero.

[Grapemask]

The lower class doesn't pay much income taxes

* in comparison to the higher taxed. In comparison to cost of living, aka the only metric that is relevant to the affordability of taxes, they do not have a good time. Which isn't to say they even get taxed too much, but rather, that their wages are too low and cost of living too high to afford much else.

[Rasulis]

Yes, but back then, giving people who liked money, more money, didn't make them create more jobs. They just kept the money they liked.

This time, it'll be different.

Half the companies that took advantage of repatriation in 2004 have different CEOs now. So you may be right.

[Milchshake]

Not sure you have a good hand on what neoliberalism means. For as long as there has been neoliberalism, the Republican Party was always the more neoliberal party. After all, they started it when Ronald Reagan followed the lead of Thatcher in dismantling the Keynesian economic consensus of the post-World War II era and usher in a new era of neoliberal economics. The right-wing are the ones who started it, embraced it, and always wanted to go further even as the left slowed or stalled it, even though the left accepted it and declined to reverse it for the most part. After all, neoliberalism is the "20th-century resurgence of 19th-century ideas associated with laissez-faire economic liberalism". The Republican Party is the more economically liberal party in the United States. While much has changed in American politics over the last 150 years, and the parties having switched places in many ways and had the coalition of voters that make up their base change over the years (such as social conservatives and, more recently, authoritarians moving to the Republican Party), in terms of economics the Republican Party has consistently been the more liberal party of the American two-party system. With liberal here not to be confused with how the word is often used colloquially in the United States as synonymous with "left".

Ya i know this. There's just a weird intersection of Trump and Bernie supporters (or Putin shills) on this forum. They like to dogpile and accuse Democrats of being the more neoliberal party. Trying to take advantage that most Americans that dont understand the history of NeoLiberalism or political movements in general.

So I'm just being snarky and having fun in pointing out Republicans have, and will be the more NeoLiberal party in US politics.

[Gestopft]

Not sure you have a good hand on what neoliberalism means. For as long as there has been neoliberalism, the Republican Party was always the more neoliberal party. After all, they started it when Ronald Reagan followed the lead of Thatcher in dismantling the Keynesian economic consensus of the post-World War II era and usher in a new era of neoliberal economics. The right-wing are the ones who started it, embraced it, and always wanted to go further even as the left slowed or stalled it, even though the left accepted it and declined to reverse it for the most part. After all, neoliberalism is the "20th-century resurgence of 19th-century ideas associated with laissez-faire economic liberalism". The Republican Party is the more economically liberal party in the United States. While much has changed in American politics over the last 150 years, and the parties having switched places in many ways and had the coalition of voters that make up their base change over the years (such as social conservatives and, more recently, authoritarians moving to the Republican Party), in terms of economics the Republican Party has consistently been the more liberal party of the American two-party system. With liberal here not to be confused with how the word is often used colloquially in the United States as synonymous with "left".

To be fair the neoliberalism sort of started during Carter and then hit full speed during Reagan.

Ya i know this. There's just a weird intersection of Trump and Bernie supporters (or Putin shills) on this forum. They like to dogpile and accuse Democrats of being the more neoliberal party. Trying to take advantage that most Americans that dont understand the history of NeoLiberalism or political movements in general.

So I'm just being snarky and having fun in pointing out Republicans have, and will be the more NeoLiberal party in US politics.

Yeah, Republicans were historically the "neoliberal" party (before it was called that), and the Democrats were more populist. But with the realignment, (to oversimplify) it wasn't just the populist social conservatives that switched from D to R- the socially liberal "neolibs" switched to the Dems from the GoP. The upshot is that today, both parties have neoliberal (currently establishment) wings. Today's Republicans, of course, push it much harder than the Democrats do.

[Milchshake]

To be fair the neoliberalism sort of started during Carter and then hit full speed during Reagan.
Yeah, Republicans were historically the "neoliberal" party (before it was called that), and the Democrats were more populist. But with the realignment, (to oversimplify) it wasn't just the populist social conservatives that switched from D to R- the socially liberal "neolibs" switched to the Dems from the GoP. The upshot is that today, both parties have neoliberal (currently establishment) wings. Today's Republicans, of course, push it much harder than the Democrats do.

It totally got a soft start under Carter and Volker. But it's what the US electorate wanted. They rejected strongly labor Democratic nominees like McGovern, Mondale, and Stevens. Voters only rewarded Democrats when they nominated more centrist candidates like Carter and Clinton.

[Mafic]

Repatriation has been tried before under Bush the results were abysmal, why pay a fee or lower rate when you can get away with paying zero.

Trump didn't go into details but I imagine there is more to it than the Bush plan over a decade ago. Still, I agree that in the grand scheme of things repatriation is a feel good ploy and will not translate to anything tangible.

But reworking the taxcode is going to be the make or break issue of the Trump administrations agenda.

[Jimmy Woods]

I'm all for tax cuts for businesses if there's some major tax reform to individuals. I don't see why they also can't do progressive tax brackets for corporations like your first $2million is taxed at 0%, next $10million can be taxed at maybe 8% and so on up to 25-30% for multi-billion dollar companies. Apply the same progressive tax rate to individual capital gains as well so multi-millionaires get taxed more then someone investing a few bucks for their kids college fund.

Republicans saying "we're cutting taxes to give Americans more money in their pockets and hire more people" sounds good, but right now American corporations are holding the most cash they've ever had, $2.6 Trillion. There's 6+ million unfilled jobs. Trump and his officials say growth will pay for the cuts, but the Fed says 2% annual GDP growth next 3 years slowing to 1.8% for 2020 and beyond. It's fantasy land. Need to put more money in poorer Americans hands and have them increase spending and increase demand if you want to grow the economy. The thing is I'm pretty sure the Republicans don't want the economy to grow. As long as their base suffers they can win re-election. And as long as their own taxes get cut they can make as much money possible while everyone else suffers. Look at Trump's statements on how "his friends" are going to Africa to make money or how "his friends in the shipping industry" don't want Trump to screw them over on Puerto Rico. Rich people have an entire globe to invest in and make money they have no loyalty to the US.

Also TIL the farmers affected by the estate tax on average will have received $3million in tax payer subsidies throughout their life. Boot straps and stuff.

[Breccia]

It was a matter of time before someone did this.

Fact-checking Trump's claims from his speech on taxes

President Trump touted his administration's new tax proposal in Indiana Wednesday, saying the yet-to-be-fleshed-out framework will bring relief to low and middle-income families and businesses.

But the president, as he rolled out the White House goal to simplify the tax code and bring businesses back to the U.S., also made some comments that could benefit from further scrutiny. The plan, generally applauded so far by Republicans and scorned by Democrats, leaves many of the details to the tax-writing committees in Congress. Based on the framework the White House has released, this is how the president's comments stack up.

Statement 1: "Our framework includes our explicit commitment that tax reform will protect low-income and middle-income households, not the wealthy and well-connected. They can call me all they want. It's not going to help."

Mr. Trump made a few claims in that statement, so let's unpack it.

The plan is unlikely to do much to help low-income individuals and families. The framework does increase the standard deduction from more than $6,000 to $12,000, meaning that basically, anything a single person makes up to $12,000 is all his or hers. The standard deduction for married couples filing jointly will increase from more than $12,000 to $24,000, meaning anything a married couple earns up to that amount is basically tax free. But the president's proposal also raises the lowest tax rate, currently at 10 percent, to 12 percent. It's unclear who will be paying that rate, since the White House didn't give any income levels. But it's fair to say that those people won't be making very much. Mr. Trump does want to increase the child tax credit, up from its current level of $1,000. The president's plan does not mention the Earned Income Tax Credit, or EITC, which applies to lower-income filers with children.

For middle-class families and individuals, even White House officials earlier this week in a conference call with reporters were unable to promise it will not add to their tax burden, and they certainly weren't able to promise it will significantly reduce their taxes. The plan could very well mean some middle-class families pay slightly less, while some pay slightly more. The impact of the tax changes also depends not just on income, but on geography. The president's plan eliminates a deduction for state and local income taxes, meaning those in higher-tax states like California and New York will pay significantly more in taxes to the federal government.

The administration's tax plan is most likely to benefit the wealthy, of any income group, from what we know.

For one thing, the plan eliminates the estate tax, a tax that penalizes only the wealthy, and thus, only the wealthy would benefit from its repeal. In 2016, the exemption for the estate tax was $5.45 million, far more than most families are able to pass on to their heirs. That tax only applied to 4,700 returns in 2013, according to a 2015 congressional report.

The proposal does lower the top personal income tax rate from 39.6 percent to 35 percent, although again, it's unclear who will be paying that tax. Right now, the highest tax rate of 39.6 percent applies to those earning at least $418,400. The Trump administration has said its plan includes the elimination of many credits and deductions, which often only the wealthy are able to take advantage of, but none of that is certain. The plan, for the most part, doesn't specify which credits and deductions it plans to eliminate.

The proposal is also likely to benefit wealthy business owners who have so-called "pass through" companies. The president's plan would set the tax rate for pass-through companies at 25 percent. Currently, most "pass-through" companies pay the individual tax rate their owners pay, which is, of course, currently much higher than 25 percent for wealthy business people.

Statement 2: "I'm doing the right thing, and it's not good for me. Believe me."

It's worth noting it's hard to say exactly how the president's plan will apply to the president, as he has declined to release his tax returns. So, unfortunately, this involves a bit of estimating based on the very basic information we do know.

His plan does eliminate the alternative minimum tax, or AMT. The AMT is designed to keep wealthy people from avoiding loopholes for credits and deductions that largely only the rich can leverage. According to the president's leaked 2005 tax returns, he paid $31 million under that tax, at a rate of 24 percent.

On the business side of things, the president's proposal could benefit his vast business empire. Since the president's plan lowers the tax rate for "pass-through" businesses, that new 25 percent rate likely applies to some of his companies.

Since the president's plan eliminates the estate tax, and since his assets make him one of the small percentage of Americans in the country to qualify for that tax, his family would also benefit from the elimination of the "death" tax.

But everything Mr. Trump's White House has proposed is subject to change, once it's all in the hands of Congress.

Oh, and for good measure:

Statement 3: "We have the votes on Graham-Cassidy. But with the rules of reconciliation, we're up against a deadline of Friday — two days. That's just two days. And yes-vote senator — we have a wonderful senator, great, great senator — who is a yes vote, but he's home recovering from a pretty tough situation."

This is not just misleading — it's flat-out false. Mr. Trump was referencing Sen. Thad Cochran, who is home in Mississippi recovering from a "urological issue."

It simply isn't the case that the votes exist for the Graham-Cassidy bill, Republicans' last-ditch effort before Senate reconciliation rules on Sept. 30 make it tougher to pass legislation to repeal and replace Obamacare with just a 50-vote majority. But the Senate lacked the GOP votes to pass the bill, with or without Cochran.

Sens. Rand Paul (R-Ky.), Sen. John McCain (R-Ariz.) and Sen. Susan Collins (R-Maine) came out in opposition to the bill, with other Republicans wavering. Those three Republicans were enough to sink the legislation.

"We don't have the votes," Sen. Bill Cassidy, the Louisiana Republican whose name is on the bill, told reporters bluntly on Tuesday.

Senate leadership canceled the vote on Graham-Cassidy precisely because Senate Majority Leader Mitch McConnell (R-Ky.) knew he lacked the votes.

[BrerBear]

Ugh, too many posts to respond to individually. But some points:

Repatriation is not the same as corporate tax cuts. If you have enough spare cash to be stashing it offshore, that’s its own issue entirely.

Corporate tax cuts are not “good” and they are not “bad”, despite whatever feelings you have for Big Business. They can be used for job growth, if the nuance is right and they can help the wealth distribution crisis if they are coupled with capital gains/investment changes. No one here is claiming that the Trump proposal gets this right, though.

If you want to participate seriously in a tax discussion, go into it knowing that details matter and that sweeping proclamations are harmful no matter which side deploys them.

[Varvara Spiros Gelashvili]

Who thevhell could they blame other than themselves at this point? They failed twice to repeal the aca with.....something. Even using the special rule with 51 votes they still couldn't pass it. Now we get a tax plan that seems to have scraped the 25k and under don't get any income tax plan (since wage growth has sucked it would be a good increase). It just amazes me at the lack of leadership in the Republican party.

They just need to scream Hillary or Nancy Polci because republicans are experiencing a severe amount of extremism. It will stop once the economy takes a hit but until then it's everyone elses fault.

[Breccia]

The White House tries to sell that "The wealthy are not getting a tax cut under our plan."

I don't think anyone buys that.

This analysis of Trump's campaign tax plan is a good place to start. The numbers aren't perfect, of course, since Trump's campaign plan cut the top tax rate to 33% not 35%, the lowest 12% not 10%, and business taxes were cut far lower as well, but until the current plan is formally analyzed this similar report will act as a starting point. In particular, the three rates being asked for are close, the income brackets are actually set (not under the current plan yet), the Estate and AMT are gone, etc.

The top quintile—or fifth of the distribution—would receive an average tax cut of $16,660(a 6.6percent increase inafter-tax income), the top 1 percent an average tax cut nearly13times larger($214,690, or 13.5percent of after-tax income), and the top 0.1 percent an average tax cut approaching$1.1million (14.2percent of after-tax income). In contrast, the average tax cut for the lowest-income households would be $110, 0.8percent of after-tax income. Middle-income households would receive an average tax cut of $1,010, or1.8 percent ofafter-tax income

Mr. Trump’s revised taxplan would provide largernominal tax cuts in 2025—averaging $4,020. These cuts would likewise represent a largershare (4.3percent) of after-tax income than in 2017 (table 5 and figure 1). On average, households in the bottom twoquintiles would see their after-tax income rise by less than 1.0percentand households in the nexttwoquintiles by less than 2.0percent, while households in the top quintilewould have tax cutsaveraging7.3 percent ofafter-tax income. The highest-income households (top 0.1 percent) would receive a much larger nominal average tax cut than in 2017 (about $1.5million), butit would represent a slightly smallershare (14.0percent) of their after-tax incomethan during the first 10 years.

And, of course, the massive cuts that come to business owners.

But here's the kicker: analysis of the Trump campaign tax plan was a GDP reduction. That's right: the increase on the debt/deficit would be so crippling, that interest rates would rise so high, that in 10 years the net effect would be a loss after a few years.

he PWBM estimates that the revised Trump plan’s effects on investment and labor supply would boost GDP by 1.0percent in fiscal year 2017, but GDP would decline by 0.5percent in 2026and by 4.0percent in2036 (table 6). Those economic effects would in turn alter the revenue effect of the proposal, increasing them (relative to revenues before macro feedback) by $42.5billion in fiscal year 2017 and by $178.3billion between 2017 and 2026, butwould reduce revenues (by an additional $1,371.2billion) between 2027 and 2036 (table 2). Taking into account the dynamic effects on GDP and revenues from the PWBM, the plan would increase debt by 25.4percent of GDP in2026 and by 55.5percent of GDP in2036 (table 3). These ratios of debt to GDP are lower in 2026 than projected in TPC’s conventional estimates, but higher in 2036.

"Oh, but the spending cuts will offset that!"

Not enough, they won't.

Senate Republicans are allowing themselves up to $1.5 trillion in deficit-financed tax cuts to pass tax reform. If the group’s estimates are correct, they will need to find billions more in revenues to pass the bill according to standards they set for themselves.

"Oh, but the economy will grow and cut that down!"

That is the cut-down value. And it might be higher.

The study found that tax cuts in the plan amounted to roughly $5.8 trillion over a decade. New revenues in the form of “base broadening” would bring the overall cost down to $2.2 trillion.

Other aspects of the plan could add even more to the cost.

“Given that it calls for only five years of expensing rather than permanent — a major budget gimmick — it also potentially sets the stage for an extenders package of over $1 trillion when expensing expires,” the study said.

And even that assumes the budget cuts don't affect anything involving building things (infrastructure, energy, etc). Cutting those dollars means cutting those jobs and the GDP even further.

Formal analysis on what exists so far is surely on the way, but this plan resembles his campaign plan fairly closely, and his campaign plan cost trillions of revenue and gave most of it to the rich, at the cost of deficit/debt and was more harm than good to the country in the long run.

[zenkai]

I don't know all the details of the Tax plan yet but I am angry about it.

I think this sums up this thread nicely.