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.
What's better, having no job or getting taxed a bit more?
What Trump needs to do is link this to an executive order forbidding ALL hiring of non-citizens and the immediate expulsion of all foreign workers.
We'd have 20% GDP growth within 6 months.
None of this will change the fact that All Money is loaned in to society by the Federal Reserve Corporation with interest, and this will not change the perpetual debt cycle to complete collapse.
Only Abolishing Credit Money will cure the disease, the rest is just bandaids on a gunshot wound.
I’m in favor of cutting business taxes even if it means paying a bit more myself. Why? Something about a rising tide...
Nice way to tarnish your thoughts before the first word in the body of text is posted.
I want a decent tax cut across the board.
This doesn't makes sense.
This guy complains that if you don't pay more than $24k per year in interest on your home mortgage, you lose out.
No you don't. You simply don't need to itemize. You get the $24k deduction on the simple form.
If your mortgage interest and other deductions are larger than $24k, then itemize. Duh!
As for deductions for children, I think it would be stupid to take that away. If anything, we want to incentivize our middle class to have more kids.
Once again though, that $24k deduction per husband and wife is $12k more than it was. At $2k per child, that covers six of them.
It’s impossible to cut tax rates in any meaningful way without mostly cutting the rates of higher income people.
They are the ones paying most of the taxes.
I’ve seen three, now, Freepers who seem to see the loss of deductions but not the increased standard deduction and the lower tax rate (never mind the other effects).
Funny how people’s perceptions work.
He’s not arguing against cutting taxes for higher incomes. He’s arguing against RAISING them for middle incomes - and that seems to be a possible outcome of the current plan , though details are still sketchy. If it does turn out to be right, then the authors concerns are valid
Have a good deduction for children and get rid of the child tax credit.
We don’t need to be sending child tax credits to Mexico
The law hasn’t been written and already this site (ostensibly Christian) employs an author whose screed is one long complaint.
It’s not $2,000 per personal exemption (including parents *and* kids).
The exemption in 2016 was $4,050 per person. For a couple with two kids, that’s $16,200.
AND . . . personal exemptions are in addition to your deductions (standard or itemized).
This is huge hit for typical families.
Not sure how much money going to Mexico is in post tax dollars.
The child deduction is fine with me.
The same applies. The couple’s $12k is about to got to $24k.
That difference would certainly cover a few kids.
Only if you can afford a boat. How is raising my taxes going to make it easier for me to keep my head above water?
Scare tactics by the left. You can’t cut so much as a penny from any tax without them claiming we’re all going to die.
The fact is the individual/married deduction doubles, which covers losses otherwise.
This helps to make States with high taxes such as Kali and NY cut theirs too.
Come on! The is *being* written and these problems are in the proposal. NOW, is the time to object to problem areas.
“How is raising my taxes “
Because some left-wing nutjob says so you believe them?
Ye of little faith.
I remain unconvinced this is going to go south on the middle-class. It may, and if it does, I’ll oppose it.
Hang in there. We’ve seen the media game us at every turn this year.
“How is raising my taxes going to make it easier for me to keep my head above water? “
Make it easier to find work at a decent-paying job. When businesses grow - and when they are not chased overseas by high taxes - everyone is better off. Being able to switch jobs if you wish because there are plenty of jobs out there is more valuable, long term, than $500 in taxes.
Please note that personal exemptions ($4,050) and deductions are additive. You get *both* unless, of course, personal exemptions are eliminated as in the current proposal.
A couple with 2 kids would lose $16,200 in exemptions totally apart from deductions.
I am not sure how much money is going to Mexico either but any amount is too much.
There was a case where about 6 or more child credit payments were going to one household where only 2 kids lived. Money for the 4 or more was resent to Mexico. I doubt that is the only family doing that.
The child credit is a scam. A proper deduction is the only fair way.
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