Posted on 11/27/2017 10:55:44 PM PST by Oshkalaboomboom
The current GOP tax plan sitting in front of Congress has problems. If a true-blue lifelong conservative tax cut evangelist like me is not sold 110 percent, something is very wrong.
I’m a Ronald Reagan-Barry Goldwater-Jack Kemp conservative. I’ve been preaching tax cuts since third grade. Until now, I’ve never in my life met a tax cut I didn’t support!
My goals are simple- more power and money to the people that earned it (taxpayers and business owners) and less money for the greedy, wasteful government.
That’s why it pains me to say the current GOP tax plan is not what politicians and tax experts claim it is.
This doesn’t mean I won’t support it. I can still be convinced if several changes take place in the negotiations between the GOP House and Senate. But it means I’m disappointed because this could have been great. This could have been Reagan- Part Deux. This could have really saved small business and the middle class.
The problem is Congress ruins everything it touches. Just like the repeal of Obamacare. They could have simply voted to kill Obamacare. Instead, they made the repeal a trillion-dollar mess no one understood. So, it failed. Well don’t look now, but the stupid GOP Congress has done it again.
Why didn’t the GOP keep it simple? The goal of cutting taxes is two-fold.
A) Make the economy explode upward by allowing people to keep more of their own money.
B) Win elections, because voters are so thankful for the extra money and the prosperous economy.
All the GOP had to do was cut taxes across the board by 10 percent this year, 10 percent next year (2018), 10 percent in the third year (2019). Give the tax cut to everyone. Keep it simple. Make everyone jump for joy. Do that, and Americans would be walking into voting booths with more money in their hands for the next two elections. The GOP would win in landslides in both 2018 and 2020.
The most important rule of business is: “KISS- Keep It Simple Stupid.” Instead, the stupid GOP Congress made this tax plan so complicated; even I have no idea what’s in it, or what the effect will be on my taxes.
First, GOP politicians are trying to convince us this is a huge tax cut. Reagan cut taxes dramatically from 70 percent to 28 percent. He didn’t cut them from 39 percent to a lousy 35 percent.
Secondly, this tax plan barely cuts tax rates for individuals, but in return, it cuts a ton of deductions. Important deductions. Mortgage interest. State income taxes. Property taxes. Medical expenses. Student loan interest. And how about this doozy- it dramatically changes the way alimony is counted towards taxes.
So, is this really a “tax cut?” If I save $5000 a year in taxes based on lower rates, but pay $10,000 a year more based on reduced deductions, how is that a “tax cut?” Sounds like a tax raise to me. And when people figure this out a year from now, they aren’t going to vote Republican.
Here are the big problems.
*If a 35 percent corporate tax rate is far too high for big business, so high that companies are moving out of America, why is a 35 percent tax rate just fine and dandy for individuals?
*If you lower our taxes a little, but take away most of our deductions, how is that a “tax cut” at all? Sounds to me like this is “revenue neutral," which means you’re not actually cutting our taxes.
*If you’re giving a 20 percent tax rate to big business to encourage economic growth, spending and job creation, why not for small business, or individuals?
*Why are you making the gigantic tax cut for corporations permanent, while the tiny tax cut for individuals is temporary? Does anyone notice this?
*If eliminating the deduction for state and local taxes is such a fantastic idea for individuals, why are you leaving that exact deduction in for corporations?
*If a homeowner has a $20,000 property tax bill, but can’t deduct it anymore, you’re asking them to pay taxes on money they don’t have. How is that helping the economy?
*Why is the cut for individuals so small? Why are you only cutting the top rate from 39 percent to 35 percent (and making that tiny cut temporary)? Is this because you’re giving away 75 percent of the money to a gigantic permanent cut to big business, and leaving crumbs for the rest of us?
*Why are you making this so darn complicated? Why don’t you just cut everyone’s taxes across the board?
*I’ve saved the most important for last. The claim is there’s a fantastic new special 25 percent tax rate for small businessmen like me. Great! This is what President Trump wanted from day one. This is the main reason I’d support this new tax plan. Except I’ve come to find out the new lower tax rate only applies to 30 percent of a small businessman’s income. The other 70 percent gets taxed at the highest personal rate. Really?
That’s your “big idea” to save small business? Small business creates 2/3rds of all new private sector jobs. How is giving us a special 25 percent tax rate on only 30 percent of our income putting small business on an equal footing with big business, who gets a permanent 20 percent tax rate on 100 percent of their income?
Don’t get me wrong. I’m looking for reasons to support this GOP tax plan. I’m looking for reasons to sell it to the millions of conservatives who listen to my national radio show on USA Radio and my national TV show on Newsmax TV.
If changes are made to lower tax rates for individuals; to apply the special tax rate for small business to 100 percent of their income; to restore crucial tax deductions like the mortgage interest deduction, property tax deduction and medical expenses deduction; I could be persuaded to give my full support to this GOP tax plan.
But if someone like me, who has never before in his life questioned a tax cut plan, has significant issues and concerns, it’s a safe bet that I speak for millions of conservatives. This bill has huge problems.
Let’s make it more conservative. Let’s aim it at small business and individuals, not just big business. Let’s make it more Goldwater/Reagan/Kemp.
Because until you do that, this tax cut evangelist warns this GOP tax plan doesn’t really cut taxes. At least not for the people that matter- GOP voters.
It’s all fun and games until you start taking money out of people’s pockets. If those people are the people that put you in power, things could get ugly quickly.
The advice to ask about the possibility of a different structure for small businesses came to me from an accountant who visited for Thanksgiving, by the way. She’ll be looking into it more in depth after a bill is signed. I don’t run a small business at this time but do find the subject interesting.
“...adjust other brackets as needed to make the math work,...”
That is where the problem comes, somebody has to pay to make the whole thing work.
Until congress has the balls to slash welfare to the bone and starts taxing the leeches that pay nothing, there can’t be any real tax cuts.
Bookmark.
This turkey was written by lobbyists. Small guys don’t have lobbyists. Big corporations do. Republicans are owned by lobbyists. Republicans seem preprogrammed to snatch defeat out of the jaws of victory. It’s who they are.
Just think how many more jobs they'd create if they really cut taxes and spending?
I'm curious why you are so in favor of this plan? It sucks. It's another boon to CPA's, lawyers and accountants. It just complicates taxes more than they are already.
Why aren't the lowest brackets paying some taxes? EVERYONE should pay taxes on their income if one person has to. This crap of getting back more than you paid in is a double tax on those of us who pay. Not only are we paying our share but we have to pay theirs.
Why are there no cuts to the budget? Who cares if a tax plan is neutral? I want taxes to go down - for everyone.
I forgot to ask: Is that next year or over ten years? Nine hundred thousand new jobs isn't much, really.
Well we didnt elect Trump to see more of our money taken by the federal govt to be spent on the pet projects of pretty much the same set of fools thats been in power for decades
Such waste and we are forced to subdidize it all while hearing “ tax cut tax cut tax cut” from a bunch of rich scheming incompetent liars
Just cut taxes for all Americans instead of playing class envy and income redistribution games like we dont see whats going on
The tax bill is intended to fix several structural problems -- not all of them, but some big ones. It brings the U.S. corporate tax rate down to a competitive level. It moves us to territorial taxation. It should encourage U.S. companies to repatriate some of the dollars they have stashed overseas, because the current tax code makes it stupid to bring them home. It eliminates the death tax. That's a lot.
The whining is because the authors have to pass it under reconciliation, which means they have to comply with budget rules. They needed offsetting revenue increases to balance at least some of the reforms.
This brings us to a simple substantive and political test. There are a lot of things wrong with the U.S. tax code, but the biggest structural problems are on the corporate side (due to leftist class warfare over the years). The biggest loopholes, not surprisingly, are on the individual side. At the top of the list are the big, popular middle class deductions: the deductibility of state and local taxes and home mortgage interest. These things are bad policy for several reasons, but they are politically sensitive.
So: if reformers can't touch regressive subsidies that incentivize bad behavior in high-tax states, we might as well give up on tax reform. An across-the-board rate reduction will be rolled back the moment the Democrats again have a majority. Structural changes are likely to be more durable. The things that this bill targets are stupidly self-destructive. While the Democrats will demagogue the changes as a matter of short term political disinformation, changing them going forward will be much more difficult.
The Republicans should follow this bill with an immediate second package focusing on tax reform and relief on the individual side. The key there would be to lower the rates while broadening the base. Again, most of the individual exemptions should go. All employer contributions to individual health insurance and retirement plans, for example, should be counted as taxable income to the employee (with taxation deferred on thrift savings contributions). Imagine: letting people know what their health insurance really costs ....
Even more radical, I'd make all government transfer payments fully taxable. I grant that most people getting food stamps, Medicaid and Obamacare subsidies, and housing benefits aren't making enough money to pay much in taxes anyhow. But welfare clients ought to go through the exercise anyhow. If taxpayers have to file annually, so should tax eaters. At least they'd know how much they are costing their neighbors. And it would be a big step towards policing fraud and making everything much more transparent and accountable.
Finally, lest I forget, eliminate the non-taxable status of state and municipal bonds. That's just another subsidy to the spenders.
The really big tax loopholes are on the individual side. The contested deductions on the corporate side are mostly much smaller and are often quite defensible both in terms of tax theory and public policy. Why should expensing or accelerated depreciation, for example, be considered a giveaway? Smart countries want their companies to aggressively invest and modernize. Our tax code is viciously stupid.
Federal statute can. The "Byrd Rule" is Federal law(2 U.S.C. § 644) in the form of an amendment to the 1974 Congressional Budget Act of 1974 which was passed by Congress in 1990. It's not just a Senate rule that can be modified at a whim.
If the stupid party doesn’t truly cut taxes, repeal Obamacare, and build the wall, there will be a massacare in the 2018 midterms.
Me too.
It's not a start. This is it. The start and the end.
And deleted the personal exemption. For a family of three then there is no net increase in exemptions. For a family of four our more the taxable income goes up.
How will it increase wages?
Senate Bill
The Senate bill would also eliminate personal exemptions. As was the case with HR 1, the Senate bill will attempt to ease the pain on families by increasing the Child Tax Credit to $1,650, a $50 increase over the House proposal but a $650 rise when compared to current law. The Senate proposal provides protection for the upper reaches of the middle class that is missing from the House bill, however, by increasing the income levels at which phase-out of the credit begins to $500,000 (if single, $1,000,000 if married). This will enable many more taxpayers to make up for lost personal exemptions with the enhanced CTC as compared to HR 1.
What about the adults in the family? They're raising the standard deduction by $12000, they say. The increased child tax credit will make up for the loss of the standard deduction, they say. Well there is no tax credit for adults so the $12,000 increase is offset by the loss of $8100 in personal exemption. Each child cuts that deduction by $4050 and the increase in child tax credit may offset it up to a point. But the larger the family, especially when the income in over $80,000 the more likely you are to have your taxes go up.
> I forgot to ask: Is that next year or over ten years? Nine hundred thousand new jobs isn’t much, really.
“over the next decade” and I agree, not much but likely a ‘static’ evaluation. In reality it may be much more, I’d expect.
You forgot to include this part:
“The Senate proposal provides protection for the upper reaches of the middle class that is missing from the House bill, however, by increasing the income levels at which phase-out of the credit begins to $500,000 (if single, $1,000,000 if married). This will enable many more taxpayers to make up for lost personal exemptions with the enhanced CTC as compared to HR 1.”
Look, I was responding to how Wayne Root framed his questions. There’s more to it than he was saying.
Would I prefer a low flat tax - yes! But this “populist” phrasing of Root was insulting and sounds more like the liberals and never Trumpers....
> I’m curious why you are so in favor of this plan? It sucks.
Again, just responding to Wayne Root’s phrasing of the questions with tax foundation’s answers.
I’d prefer a flat tax, but at this point, I hope this is just a start and Trump doesn’t need another ‘loss’.
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