Posted on 11/06/2017 7:22:24 PM PST by SkyPilot
Ask Matt Labash, who says the GOP should have called its tax reform measure the "Robbing Peter to Pay Apple Act."
Dear Matt, Republicans have called their tax bill “The Tax Cut and Jobs Act.” President Trump wanted to call it “The Cut, Cut, Cut Act” (And here we thought his specialty was branding.) What would you have named it?
H.R. Block I’d be fine with calling it “The Republicans Pissing Down Your Leg While Telling You That You’re Bathing In A Warm Mineral Spring Act.” Or maybe “The Robbing Peter to Pay Apple Act.” (In this scenario, you, the lowly individual taxpayer, are Peter. Apple is Apple.)
If you want balanced, even-keeled, somewhat optimistic analysis of the proposed tax bill, I’d hand you off to my ever-capable colleague, Chris Deaton (also the regular editor of this column). If you want to hear the anguished, soul-wracked keening of a man whose ox was just gored, pull up a chair and sit a spell. You’ve come to the right place.
For I am that unfortunate species that Republicans want to pretend doesn’t exist: the middle-class schlub who will not feel tax relief, but tax pain, even as they attempt to re-cut the tax pie so that corporations get a 43 percent tax reduction (from 35 percent to 20 percent), while my top tax rate stays the same (25 percent) and I lose the lion’s share of my itemized deductions. Meaning my taxes, unlike most corporations, are going up, even as I’ll be getting taxed at a higher rate than Apple—whose 2016 revenue was $215.6 billion.
Or put another way, Apple’s revenue alone, last year, amounted to 72 percent of the cost of all individual tax cuts in the Republicans’ $1.5 trillion plan. According to the bipartisan Committee for A Responsible Federal Budget—Remember responsible budgets? Don’t worry if you don’t, neither does former deficit hawk Paul Ryan—only roughly $300 billion of the $1.5 trillion purported tax cut is due individual taxpayers. The rest goes to business tax cuts ($1 trillion) and repeal of the estate tax ($200 billion). If you’re a multinational corporation whose obscenely rich parents just died, you’re in the money!
Even when I abstained from voting for them (which I have for three out of the last four national elections), I am that breed of Republican who endured all manner of Republican inanities—misdirected foreign adventures, ill-advised government shutdowns, Sarah Palin—reasoning that no matter how inept Republicans were (very, it turns out), at least they didn’t pick my pockets, unlike Democrats. So I patiently endured eight years of Barack Obama hiking tobacco taxes, and Medicare payroll taxes, and indoor tanning service taxes, among many others. Only to emerge from that tunnel of darkness to see a unified Republican government touch the one thing Obama didn’t touch: federal income taxes. My own faux-populist party is now hiking taxes for me, and many millions of others, in the name of their hilariously billed “tax relief” plan.
At least I think my taxes will be hiked. It’s yet to be seen, as details still need to be hammered out in committee, and legislation needs to get passed. (Republicans, thus far, have proven unable to pass so much as gas, though if they did, they’d likely claim that the fake-news liberal media smelt it/dealt it.) Plus I have not yet run the numbers by my middle-class accountant. Whose services, under the new bill, I will no longer be able to deduct on my taxes, and who Republicans seem to want to make obsolete, thus eliminating more middle-class jobs. (“The only people who won’t like this is H&R Block,” taunted faux-populist-in-chief, Donald Trump.)
Better for me, Republicans would have it, to file my taxes on a postcard at a higher rate (so simple and befitting our modern attention span!), rather than pay some frazzled numbers-cruncher a couple hundred bucks around April 15 to cut my tax burden in half by exploiting tax code deductions that help me keep a little more of the money I earned, rather than packing it off to the federal kitty. (My effective rate is usually around 12 percent, after all is said and done. Which is about to change drastically. “Simple” is not always better, as the simple-minded would have us believe.)
Aside from no longer being able to deduct most of my business expenses under the sorry excuse of “simplification”—magazine subscriptions, gas miles, jumper-cable nipple clamps for difficult interview subjects—I’m really taking a hit with the elimination of half of the state and local taxes deduction (SALT). While Trump’s pet Democrats, posing as Republicans (that means you, Gary Cohn and Steven Mnuchin), flirted with raking revenue with everything from 401(k) contributions to charitable giving (which they’ve, for now, left alone), eliminating the SALT deduction seems to be their compulsory revenue-extracting vehicle of choice to fund their massive corporate giveaway.
After enduring a lobbying outcry from the home builders and realtors of America, echoed by anguished northeastern congressional Republican heroes from blue states, like Peter King and Lee Zeldin (both of New York), Republicans have decided to leave the cherished mortgage-interest deduction alone. Sort of—they cap it at $500,000 of debt for new mortgages on “primary” homes—which doesn’t even buy you a McMansion anymore in heavily populated zip codes. Also they’ve let stand deducting property taxes. Again, sort of—they cap property-tax deductions at $10,000.
But no longer are you allowed to deduct your state income taxes on your federal form. If you listen to the dog-whistle demagoguery emanating from House Republican leaders on this issue, you’d think the only people who enjoy a SALT deduction are from wealthy, coastal blue states. (Which is disturbing enough on its own—since when do we decide national tax policy on how people vote?) But like most of what comes out of Trump and House Republicans these days, they’re full of crap. (See Trump’s repeated claims that this is the largest tax cut of all-time. It’s not. Even if their numbers are what they purport them to be, this tax cut ranks well down the list, and no higher, in terms of GDP, than two tax cuts advanced under Barack Obama.)
Every state enjoys the SALT deduction. Some less than others. While it inarguably skews towards benefitting people who live in wealthy, high-tax states (mostly blue ones), it’s not just a tax break for the wealthy, as the Tax Foundation illustrates. While 80.55 percent of people in the $100,000-$499,999 income bracket currently itemize, claiming 6.55 percent of SALT deductions as a percentage of adjusted gross income, so do 45.63 percent of people in the $50,0000-99,999 range (claiming 3.95 percent in SALT deductions as a percentage of AGI), and 19.77 percent of those in the $25,000-49,999 range (with a 2.1 SALT deduction as a percentage of AGI).
The automatonic refrain of House Republicans has become: Why should lower-tax states subsidize high-tax states who disproportionately exploit the SALT deduction? This cynical electoral creative math, of course, leaves aside Republicans’ usual fetishizing of federalism, devolution, and holding that localities are better equipped to address the needs of their citizens than is the federal government.
But sure, red staters, gloat in the fact that, say, Alaska, South Dakota, and Wyoming represent only 0.1 percent apiece of a state share of SALT deductions. As opposed to say, coastal blue states like California, New York, or New Jersey (19.6 percent, 13.3 percent, and 5.9 percent, respectively.) Good on you. Except that you also, if you’re being honest, have to calculate that state taxes present a complex multi-faceted picture. (When it comes to federal revenue, all of the sudden, conservative congresspersons are no longer pro-states’ rights.)
For instance, seven states pay no state income tax at all, five of seven of which went red in the last presidential election. And when Wallethub, a personal finance site, calculated which states were most dependent on federal funds, a contrarian picture emerges. The top five federally dependent states were Kentucky, Mississippi, New Mexico, Alabama, and West Virginia. Four out of five of which went for Trump. The five least dependent states? All SALT-deduction lovers who pay more than their fair share of federal taxes: California, Illinois, New Jersey, Minnesota, and Delaware. Five of five of which went blue in the last election.
Hate to break the news to you, Trump-loving Alabamans, but even the SALT-deducting hedge-fund manager in Greenwich isn’t the welfare queen that you are. Connecticut = the 42nd most-dependent state on federal finances. Alabama = the fourth most-dependent state. When calculating federal tax revenue by state, six out of the top ten payers are blue states. So despite Republicans’ haste to punish coastal blue states, who suffer higher costs of living/state taxes, and therefore benefit disproportionately from taking SALT deductions, exactly who is subsidizing who is a very open question.
I’m not always happy about living in the People’s Republic of Maryland. For instance, we’re one of the few states with a “flush tax”: a tax for flushing our toilet, ostensibly to restore the Chesapeake Bay. (I’m a devoted fisherman, but presumably, stripers are catching toilet paper runoff in the face whether I pay my taxes or don’t.) And we love our SALT deductions. But even here, we’re still less federally dependent than red states like Georgia, Louisiana, and Montana. If House Republicans still don’t want to acknowledge that reality, maybe all us blue-state dwellers can move to Mississippi, and drive their costs of living to hell, too.
Of course, SALT-deducters aren’t the only ones getting screwed. Read the tax-plan analysis roundups, such as this or this, and it’s pretty clear that homebuilders, plenty of small-business owners, charities, people who adopt children, teachers expensing their classroom supplies, disaster-victims, and rare-disease sufferers are getting hosed, too. And that’s to name but a few sufferers under the Republican plan for “tax relief.”
But at least we can all agree on the winners: corporate giants like Apple. Of the top five richest companies in America—Apple, Alphabet (Google’s parent company), Microsoft, Berkshire Hathaway, and Amazon—their most recent effective tax rates are 25.8 percent, 19.35 percent, 17.64 percent, 19.35 percent, and 27.45 percent, all well below the current 35 percent statutory rate. And this is without the House Republican bill. Yet while the top individual tax rate remains at 39.6 percent, even as Apple and co’s. rate will be dropped to 20 percent while they keep most of their deductions, unlike you and me, the sky is the limit on how far they can go. I can’t wait to see what Trump’s new populist tax plan has in store for working stiffs like Apple! Maybe they can finally reinforce those suicide nets at their iPhone sweatshops in China.
Has it ever occurred to you that millions of us perhaps just don’t want to pay a boatload more in Federal taxes?
February 1, 2016, sorry for the typo.
This and massive government regulations burdening U.S. businesses is why China is taking over the world and has all our industries and tech.
Itemized deductions is central planning by government. Agree or not?
How DARE you accuse me of being a “never Ttumper”!
I was supporting DJT all through the primaries when FR was dominated by Cruz-bots who were all too willing to dish out abuse.
That’s why I am feeling very betrayed by this smoke and mirrors tax-shift.
Or more precisely, tax-shaft(ing)
Oh trust me: for opposing this massive tax hike, I have been called every name on the planet. It isn’t paranoia - just reality. But let’s try this instead: instead of throwing out name calling against the author, tell me what in that article is false?
Lebash is a Trump-hater. I don’t trust him enough to take the time to pick apart his long, pathetic argument.
Are you deliberately being dense? Corporations pass on the taxes they pay to their customers. YOU pay Apple’s corporate taxes as part of the selling price of the iphone or ipad or laptop. Do you not realize that?
And why do you think it is okay to tax a person’s estate at 50% when they die after they paid taxes on everything when they earn it? Do you realize that the majority of people affected by this are small business owners and farmers?
Here is another reason to oppose this lie of a “tax cut” bill. Even National Review admitted in a piece today that Ryan’s and Brady’s bill will incentivize states to hike property taxes even more.
Is that even after the standard deduction is doubled? Or did that get striped out of this bill?
Great. So corporations don’t need a tax cut. Or are you dense? So Trump and the entire Ways And Means Committee is lying when they say this bill will slash corporate taxes, but we have to “pay for” that cut by eliminating deductions and therefore raising taxes on others? Maybe Paul Ryan should call you and have you be the media spokesman, since all this dust up is just a great big misunderstanding? The problem is, they are raising taxes regardless of how you want to frame and spin this.
Hand waving will get you no where. The author is 100% correct in this piece. I love Trump myself. I love him to pieces. I pray for him all the time. But this bill screws millions of us over.
What? Did you even read his piece? Or did you just leap into the “your a whiner” mantra?
Based on that calculator, my taxes will go up.
“Standard deduction” is doubled, but it no longer includes state and local income taxes or property taxes in excess of $10,000. (Mine are nearly $12K).
Plus there will no longer be personal exemptions—they are included in the doubled SD.
No, don’t just say the entire premise. That’s akin to Hillary shouting at Trump during the debate with no evidence. The author even hyperlinked other articles in his piece that offer even more facts to support his claims. You, on the other hand, offer nothing.
The REAL problem is that the Senate has painted itself into a “revenue neutral” corner.
So they have no choice except to lower taxes on some while raising on others.
Just goes to show that today’s GOP really does not believe in supply side Reaganomics; nor does it believe that tax cuts for ALL would lead to a net increase in tax revenues.
Pathetic.
How much more material wealth do you want to be satisfied ?
“Hand waving will get you no where”
Geez, project much? I was very clear that I was expressing my opinion of the author’s credibility, nothing more. Yet you accused me of attacking everyone who is against the tax plan while I did nothing of the sort. You’re the one jumping up and down, waving his hands, and not accepting what is said by anyone who may not agree with you. I can’t even accept that you will pay more in taxes because you’re so emotionally distraught. Love of money will do that to you.
Take a pill, get some rest. You’ll feel better in the morning.
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