Posted on 11/14/2017 11:59:00 PM PST by Oshkalaboomboom
Last week, Texas Republican Kevin Brady, using the power available to him as chairman of the House Committee on Ways and Means, introduced another of what's known as a "manager's amendment" to the tax reform bill. The changes that amendment made to the bill, which passed with ease, were both important and effective, making him perhaps the most influential House member since Jack Kemp on the subject of taxes.
It is clear Chairman Brady had it in mind to mitigate controversy in order to produce the strongest, most passable conservative reform framework possible. Thanks to his efforts last week, it seems that the bill should now muster enough GOP support to cross the finish line in both the House and Senate.
Criticisms of the House reform efforts have focused mainly on the bill's alleged marginalization of American families and small businesses. Brady took most of their negative talking points away in one fell swoop with two simple changes.
First and foremost, he resurrected the adoption tax credit. Politically, this had to be done after everyone from Sen. Ben Sasse (R-Neb.), and a multitude of influential social conservative organizations, to left-leaning media outlets like Vox and the Huffington Post expressed outrage over its repeal. Adding new financial barriers to parenting made the GOP look cold and unfeeling and could even be said to have laid the groundwork for an increase in the commonality of abortion, however inadvertently. Brady, who is the father of two adopted children, quickly picked up on this point and swiftly added it back into the bill with reasonable conditions.
Next, Brady responded to Republican criticism of how the plan did not help enough small businesses by further slashing the top rate for active owners in "pass-through" companies -- firms where business owners pay taxes through the income tax rather than the corporate tax -- to nine-percent on their first $75,000 of taxable income. By ensuring that this new, special rate would only apply to those who make less than $150,000 from these firms, all while putting more higher income earners in the House's 14-percent lower top rate, he ensured that detractors would have less reason to label this bill a giveaway to the rich.
By taking the initiative to fix what the Wall Street Journal considered to be two of the most significant fault lines, he undoubtedly pleased many critics. How, though, did he pay for these changes? Thankfully, not with the expected new revenue raisers that would open new political can-of-worms.
To many analysts' surprise, Brady did not create a new form of double taxation by hiking the treatment of carried interest. Instead, he just increased the number of years investments must be held to qualify for the 23.8 percent rate to prevent financial engineering. His intelligent compromise was smart politics, as it seems to have appeased the White House and even Breitbart executive chairman Steve Bannon, both of which wanted to initially see taxes raised on this crucial stimulant to investment and risk-taking in the American economy.
He also did not resurrect Rep. Dave Camp's old, disastrous advertising tax idea, which the Washington Post not long ago included on its short list for potential new revenue raisers. This plan would have removed advertising spending's full deductibility and only made it half deductible for the first few years.
While the concept of temporarily holding ad spending may seem harmless on its face, it would have undoubtedly increased consumer prices by reducing co-op advertising agreements -- plans where manufacturers agree to finance 30-50 percent of businesses' ad spending -- which would have hurt American families and those on fixed incomes. For this reason and more, a bipartisan coalition of 15 senators, including Sens. James Inhofe (R-Okla.), John Boozman (R-Ark) and Rand Paul (R-Ky.), signed an October 30th letter to leadership stating their opposition to such a tax. Their Dear Colleague letter followed one from May which 124 members of the House endorsed.
Instead of enacting one of these dangerous tax increases, Brady listened to his colleagues and made smart, conservative decisions to fill the new revenue gaps. Rather than alter the expensing of something that would have amounted to a hidden consumer tax, the Ways and Means chair instead amortized business research expenses over a five-year period -- a far more sustainable alternative for the middle class. He also closed the moving expense deduction for everyone but military families. When considering how much extra money the new personal and corporate tax rates will put in everyone's pockets, these minor changes should not have a marketable economic impact.
With tens of thousands of lobbyists screaming at congressional doors, it takes a special kind of person to parse through every concern and determine what is in the best interest of the country as a whole. In recent weeks, Kevin Brady has proven to be of this unique mold -- going through the arduous development process multiple times in order to reach near-perfection. Thanks to his efforts, not only will the House bill likely pass this week, but Sen. Orrin Hatch (R-Utah) and the rest of the Senate Finance Committee will also have an excellent blueprint to review before their first markup.
It makes no difference, the 3 RINO’s will kill this just like they killed obamacare repeal.
lower or eliminate the already double or triple taxed private Cap Gains tax.
Middle class people invested in IRA’s and private post earning taxed investment dividends.
Taxed when in the paycheck stage, then invested, held one year to qualify for lowest Cap Gains tax rate.
Also, the companies that declare dividends paid taxes on
the earnings that they pay as dividends to shareholders
Yep. This will either be a lot of hard work wasted or it’s Kabuki theater. The end result will be the same if these RINO’s are still dug in.
“Carried interest” tax adjustment would bring in $2 billion a year...
Hearings on the bill are the best situation comedy on TV today (well, except for reruns of some really old shows). There are so many obvious flaws that *crew the middle class and set smaller businesses up to be overwhelmed by their globalist large-business competitors. There’s nothing in either bill that stops repatriated money from being used to line the pockets of upper-tier employees and owners and from using the money to buy out smaller competitors. That’s what the banks did with the money they got after their crisis.
So you are now opposed to repatriating the earnings of U.S. companies that are parked abroad for tax reasons? Are you also opposed to shifting to a territorial taxation basis for corporate earnings? And why do you think it is any of the Congress' business what companies do with repatriated profits? If they pay it out to owners and top tier employees, that money will be taxed at individual income tax rates that are probably higher than the effective corporate rate that the company would otherwise have been paid. If they buy out smaller competitors, so what? Companies buy each other every day.
I disagree. Individual and small businesses are what will bring back the middle class. Less regulations helps. Simpler lower takes for small business would help. The discrepancy between the income of the top 5% of the population and everyone else is appalling. Why should, for example, the Waltons, get any tax breaks that don't have to directly go into workers wages and nourishing small US companies? They got rich off the backs of employees who have wages that are so low that they're eligible for government benefits in many cases.
The masterminds coming up with these “tax reform” plans cannot or will not relinquish their power over taxpayers, so they pick winners and losers instead of simple tax rate reductions across the board. Perhaps get rid of the Death Tax and EITC in a simple 1-page bill.
Spit.
The whole point of buying (selling) small businesses is so the owner can start another. That’s the biggest factor in creating new jobs: creating new companies after selling the old ones.
The winners and losers were already chosen years ago. Removing some of the mortgage interest and local tax deductions just gets back to having no winners and losers. The real answer is to move away from high tax states, mostly run by dems. That’s the best part about the bill.
> The real answer is to move away from high tax states, mostly run by dems <
The purpose of tax policy is to fund the necessary and proper functions of government. Of course that’s not what the progressive GOPe is doing. The reason Paul Ryan constantly refers to the “average taxpayer” getting a tax break is because he cannot say ALL taxpayers will have their taxes cut. That’s picking winners and losers.
This isn’t about high tax states or low tax states. It’s about tax relief for ALL INDIVIDUAL TAXPAYERS.
I just don't get the insistence on ALL taxpayers getting a cut. I certainly won't get a cut since VA income tax is my largest deduction. But I am looking at the big picture and the greater good.
What this says about you are two things. You do not believe in supply side economics. It also says that you think that cutting all tax rates for everyone will decrease federal revenues, which is a falshood.
The simplest and fairest tax of all would be a uniform import tariff.
> However business tax and income predictability is a strong driver for the economy. <
The corporate side of these “tax reform” bills looks good. No beef from me. But individuals pay taxes, not “averages”. One of those individuals is my daughter who lives in CA, is in the 13.5% state tax rate, and because of insane home prices has a mortgage over $500k. Married with two kids seems “average” to me, but she’ gets absolutely CRUSHED by the republicans “plan”.
Supply side works, that’s why I am for a corporate rate cut above all else. The cut for other people is a demand side argument. The argument is that people will spend more. That’s nice but not as useful as the well-off and companies investing more.
Too bad about your daughter. Perhaps she should leave that tax hellhole for somewhere with sane fiscal policies.
Nope. He saved the new form of double taxation for state and local income taxes.
Horse hockey. They got rich by initially by putting their own money at risk to start a company. Then they worked their balls off to sustain and grow the business, and make a profit. They then reinvested their profits, putting their money at risk again, to grow the business. Along the way, they created hundreds of thousands of jobs that, without their efforts, would not otherwise exist. Many long-term employees became millionaires themselves.
The narrative of the rich getting rich on the backs of the poor is pure BS. But if it makes you feel better, think what you like and be a proud socialist.
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