Posted on 10/22/2017 11:44:11 AM PDT by newberger
Tax reform is now the order of the day. Congressional Republicans have been eager all year to rewrite the tax code. Slashing and simplifying taxes is, they believe, the straw that stirs our economic drink. Get this right, they say, and America will enter a new golden age of fast growth.
This might well be true. But the details of their tax proposal will pose many political problems for the GOP. Too many provisions give the impression that the party cares more about helping the well-off than about aiding average Americans and their families.
This is because the plan’s immediate benefits heavily tilt toward corporations and the rich. Large corporations would get more than a 40 percent cut in their tax rates, from 35 percent to 20 percent. Smaller, privately held businesses would see a similar decline, from as high as 39.6 percent to 25 percent. Economists argue about the effect of these changes on the national economy, but the political import is clear: Combined with a proposed cut in the top rate on labor income from 39.6 percent to 35 percent, liberals will enjoy saying that the well-to-do will fare well under the GOP plan.
Whether or not these tax reductions would lead to more jobs, the immediate effect is that the average worker would not fare so well. The plan raises the lowest rate of tax from 10 to 12 percent, meaning some working-class workers will see a slight raise in their tax rates. Middle-income workers will at best see a modest drop in the tax rate they pay, from 15 to 12 percent. Compared with what the wealthy get right away, that’s small beer.
The plan’s authors point to a near doubling of the standard deduction most taxpayers take. However, the plan also eliminates the personal exemption all taxpayers currently take for each member of their household. If you have two or more children, the increase in the standard deduction is smaller than the amount of the exemptions you will lose. Taxes for big families may go up.
Plan authors say they will take care of this by increasing the amount of the child tax credit, but have not provided any guess as to how much that increase will be. That leaves average people wondering whether they will get the tax cut they expect.
Furthermore, the plan does away with the mortgage interest deduction for most taxpayers by eliminating the deduction for state and local taxes. That’s because families only deduct their interest if the total amount of their itemized deductions, including deductions for mortgage interest and state and local taxes, exceeds the amount of the standard deduction. Under the Republican plan, only families paying more than $24,000 a year in mortgage interest and charitable donations, combined, will be able to deduct those expenses from their income taxes. Since most people don’t spend that much on those items, they will have lost their most valuable deduction.
The result: Upper-middle-income families will see their taxes go up. Most people making less than $50,000 a year will see little or no change. The people in the middle don’t have enough information to know if they are winners or losers. That’s not good politics.
Republicans have always suffered from the perception that they care more about the rich than the common man. Their tax plan might help the common man in the long run by increasing investment and business activity. But the current plan looks like a much better deal for the rich than for the average people who put Donald Trump in the White House.
In politics, perception can quickly become reality. Republicans should deal with this problem before it’s too late.
OK, let's look at this another way (or two):
We are empty nesters. That means a standard combined deduction in the *current* system of 12,000 + $8,100 = $20,200. With my itemized deductions, for 2016 my combined (exemptions + deductions) was over #34,000.
BUT, my home is paid off so I have no deduction there and although my itemized deductions were over $24,000, the lack of mortgage interest wipes out my itemized deductions - a loss of over $12,000 in exemptions + deductions under the new system.
A major loss!
True! That's why now is the time to complain about the framework.
Thank you for your prior informative post.
Complain about what?
That’s the whole point. You folks aren’t even sure what the real bill will have in it.
Why don’t you protest the Betsy Ross Flag tax too? What Betsy Ross Flag tax? Well, what doing away with other tax credits too? You just don’t know.
Yes, and your employer pays half your SS taxes from his own pocket. You pay nothing!
Politicians love people who don’t know they’re paying taxes.
Reducing Corp taxes allows them to reduce prices. Those that do will attract market share and make more profit.
That hasn't stopped Trump, Ryan, and McConnell from claiming that this will be the greatest tax cut for the average person in recorded history. So there has to be a whole lot they're keeping to themselves because based on what's known so far the average person is in for a royal shaft.
That’s what puzzles me.
These two are idiots, but the tax changes you folks are addressing would kill them politically. They aren’t interested in that. Ryan thinks he’ll be king of the House for the next, well forever, it seems.
What would he gain from this?
And if tomorrow Congress passed a law doing away with the employer contribution to Social Security then do you honestly think that the employers would add that money to the employees paycheck? Really?
Reducing Corp taxes allows them to reduce prices. Those that do will attract market share and make more profit.
Taking the tax cut and keeping the prices at the same level will make even more profits.
The sufficiently anxious will ignore their own knowledge.
We have a large family - 5 of our kids are still on our tax return. The child tax credit normally is lost the same year the child turns 17.
So with the loss of personal exemptions and one child’s credit plus extra 2% for lower bracket - we are looking at a good sized increase (depending on details of the new child tax credit & bracket cut offs)
These are just the same old tired excuses that the rich benefit more. Well since they pay more to begin with they are going to see bigger numbers remaining in their control instead of the government that wastes resources. However, they still will have a larger burden as well, then those lower tiered taxpayers. We want growth, and that growth is provided in large measure by the wealthy. As the middle class starts to recover then they too will add investment money.
I don't agree with them on the business and top level tier taxes. They *should* come down to move the economy into a higher gear.
It's just the administration is marketing this as a benefit for the middle class. It isn't a cut for me and it isn't a cut for large families.
P.S. World News Group is conservative and bases their reporting on a biblical world view.
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