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The US Tax Policy Thread

Old 11-20-17, 10:59 AM
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The US Tax Policy Thread

Seem that the issues of taxes weave their way in and out of various threads. I thought it might be time to give them their own.

I thought this article provided a lot of good points about the potential sweeping changes about the tax rewrite. The part about home ownership has me especially concerned, both personally and as a practicing tax preparer for 15+ years.
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Old 11-20-17, 11:09 AM
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Re: The US Tax Policy Thread

Originally Posted by JasonX View Post
Seem that the issues of taxes weave their way in and out of various threads. I thought it might be time to give them their own.

I thought this article provided a lot of good points about the potential sweeping changes about the tax rewrite. The part about home ownership has me especially concerned, both personally and as a practicing tax preparer for 15+ years.
America needs tax hikes, not tax cuts.
https://www.washingtonpost.com/opini...=.9da8d9d64d28
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Old 11-20-17, 11:21 AM
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Re: The US Tax Policy Thread

I'll admit to being largely uneducated on this topic, so am open to changing my mind; but with such massive debt why are tax cuts even an option? Balance the budget, pay off the debt, then consider tax cuts.
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Old 11-20-17, 11:27 AM
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Re: The US Tax Policy Thread

I think we need tax cuts, tax simplification (something close to a flat tax with 2 or 3 rates and no to few deductions), and spending cuts .. but no way Congress will do that.
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Old 11-20-17, 11:47 AM
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Re: The US Tax Policy Thread

I find it interesting that some in the GOP are publicly saying that if they don't pass tax reform then donations to them will stop.

So these "donations" by supporters were essentially done with the understanding that taxes would be cut and they'd get a "refund" on their "donation" paid for by those who can least afford it.

So much for "public" service....
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Old 11-20-17, 12:03 PM
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Re: The US Tax Policy Thread

I'm not a fan of corporate taxes myself, it should be kept at a minimum level required to sustain the services they use at that level. Considering the amount of loopholes existing, it really only hurts those that don't exploit the system.

One thing I would like though is to for the government to ban state and local governments from providing incentives to corporations to relocate their headquarters, or open new headquarters. Illinois has given away billions of dollars of state taxes (my money) to corporations to not leave Illinois, and most of those don't require any investment, many times they can layoff and still get the handout.

But I think any tax reform should be revenue neutral. The fact that the top 0.1% have been the main beneficiaries of the recent economic recovery, yet still get the bulk of the benefit of the tax reform is messed up. Any revenue lost by corporate tax reform should be made up by those in the upper tax brackets since they are the ones benefiting the most through their investments.
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Old 11-20-17, 12:22 PM
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Re: The US Tax Policy Thread

Originally Posted by Trevor View Post
I'll admit to being largely uneducated on this topic, so am open to changing my mind; but with such massive debt why are tax cuts even an option? Balance the budget, pay off the debt, then consider tax cuts.
Because wealthy donors want them and seemingly the budget shortfall doesn't matter anymore. There is no logical answer to your question without outside politics being considered.
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Old 11-20-17, 12:31 PM
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Re: The US Tax Policy Thread

David Frum at the Atlantic, an establishment conservative, is angry that the Republicans aren't doing genuine tax reform, but are using their chance instead to target Democrat voters and give a handout to corporations. In his opinion, good tax reform would be likely to stand, but this will be rolled back as soon as the other party gets into office.

He suggests that the Republicans are doing it because they are expecting to be voted out of office soon, and are setting themselves up for their next jobs as lobbyists for big money corporations.

America badly needs corporate tax reform.

The United States pretends to tax corporations heavily. But those heavy tax rates are perforated by randomly generous rules such that many tax-efficient firms pay nothing at all, or even receive money back from the U.S. Treasury. The result is heavy unfairness between industries and firms, an unfairness that many economists believe systematically distorts investment decisions. U.S. productivity growth has been sluggish since the Great Recession—and had actually turned negative by the beginning of 2016.

At the same time, the corporate share of the federal-tax burden has dwindled over the years and decades. More and more of the cost of government now falls upon the payroll tax, which weighs most heavily on low- and middle-income wage earners. These Americans are suffering stagnating incomes, very probably because of the poor productivity growth of the past half-decade.

Lowering the corporate rate while tightening collection—with a view to raising more revenue in a more rational way—has been a good government cause since the late 1980s. John Kerry campaigned on it during his presidential run, in 2004, as NBC News reported at the time:

“Some may be surprised to hear a Democrat calling for lower corporate tax rates,” Kerry told an audience at Wayne State University [in Michigan]. “The fact is, I don’t care about the old debates. I care about getting the job done and creating jobs here in the United States of America.”

Now, in 2017, the all-Republican federal government at last has a chance to make progress on this goal. And it is throwing that opportunity away.

As I write on November 19, it may seem like the GOP tax plans are carrying all before them. A big tax cut has passed the House. A somewhat different plan passed late Thursday night through the Senate Finance Committee. The president is bellowing on Twitter his readiness to sign almost anything that arrives on his desk.

But what is heading toward him is not the kind of reform that can command broad political support, and thus stand the test of possible electoral defeat in 2018 and 2020. It’s a scandalous expression of upper-class and Sunbelt chauvinism that will melt away within weeks of the next Democratic electoral success. Even if the plan becomes law, as still seems improbable in the face of its terrible poll numbers, what firm would venture a long-term investment based on tax changes so likely unsustainable?
The rest of the essay: https://www.theatlantic.com/politics...ors_picks=true
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Old 11-20-17, 12:44 PM
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Re: The US Tax Policy Thread

Originally Posted by PerryD View Post
I'm not a fan of corporate taxes myself, it should be kept at a minimum level required to sustain the services they use at that level. Considering the amount of loopholes existing, it really only hurts those that don't exploit the system.

One thing I would like though is to for the government to ban state and local governments from providing incentives to corporations to relocate their headquarters, or open new headquarters. Illinois has given away billions of dollars of state taxes (my money) to corporations to not leave Illinois, and most of those don't require any investment, many times they can layoff and still get the handout.

But I think any tax reform should be revenue neutral. The fact that the top 0.1% have been the main beneficiaries of the recent economic recovery, yet still get the bulk of the benefit of the tax reform is messed up. Any revenue lost by corporate tax reform should be made up by those in the upper tax brackets since they are the ones benefiting the most through their investments.
I disagree on corporate taxes. We need to close the loopholes and raise the corporate tax rate. I do agree about banning incentives for company relocations and new facilities. John Oliver did a good segment on this that showed that when all was said and done, virtually every city or state that used big incentives to attract corporations ended up with a net loss.

I don't remember which Chinese company it was, Foxconn maybe, that Wisconsin lured with big incentives. Scott Walker and Paul Ryan made a big show of getting the new plant there. Foxconn was only offering to generate 2,000 new jobs or something like that, and with the amount the state spent on incentives they could have hired 50,000 people (I don't have the figures in front of me but it was a shocking difference in the amount Foxconn would hire versus the amount the same incentive money could have hired).

And we should definitely be raising taxes on the top 1%. For some reason Americans have a hard time accepting that the people who make more should pay more, and in the end will still have far more than the vast majority of the country or the world ever will. Why do we suck up to billionaires so much? It makes no sense.
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Old 11-20-17, 12:47 PM
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Re: The US Tax Policy Thread

Originally Posted by Nick Danger View Post
David Frum at the Atlantic, an establishment conservative, is angry that the Republicans aren't doing genuine tax reform, but are using their chance instead to target Democrat voters and give a handout to corporations. In his opinion, good tax reform would be likely to stand, but this will be rolled back as soon as the other party gets into office.
That is a great article and I agree with it 100%. Any changes that happen now will be rolled back and then some the next time Democrats are in office. I have a strong feeling the very rich people that are happy now that their taxes are being cut are going to be especially upset when the top tax rates blow past 40% in a few years time.
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Old 11-20-17, 01:05 PM
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Re: The US Tax Policy Thread

Originally Posted by Supermallet View Post
Why do we suck up to billionaires so much? It makes no sense.
Because we're all just temporarily embarrassed millionaires.
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Old 11-20-17, 01:05 PM
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Re: The US Tax Policy Thread

Originally Posted by Supermallet View Post
Why do we suck up to billionaires so much? It makes no sense.
I honestly believe there is some sort of self delusion in all of this, if even at least at a subconscious level, that someday maybe, just maybe, we will be rich or maybe even they'll give us some of that money, too. It's where dreams meets fantasy and kicks reality out the door.

I remember one time an older couple who are very well off and I were talking about young people and current realities of student loan debt and they asked about mine. I explained how my payments work and they said it sounded tough. Even I had a split second in that conversation of wondering maybe, just maybe, they'll offer to pay some of that. But you know what? Fantasy is fantasy and I shrugged it off in about 0.25 seconds. We can't let the magic of a delusion take over the reality that this sort of thing isn't going to happen and stop voting for people who do things against our best interests.

This new tax reform is a joke. You're going to cut Medicare to give rich people more money? Are you kidding me?!
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Old 11-20-17, 01:16 PM
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Re: The US Tax Policy Thread

Originally Posted by story View Post
I honestly believe there is some sort of self delusion in all of this, if even at least at a subconscious level, that someday maybe, just maybe, we will be rich or maybe even they'll give us some of that money, too. It's where dreams meets fantasy and kicks reality out the door.

I remember one time an older couple who are very well off and I were talking about young people and current realities of student loan debt and they asked about mine. I explained how my payments work and they said it sounded tough. Even I had a split second in that conversation of wondering maybe, just maybe, they'll offer to pay some of that. But you know what? Fantasy is fantasy and I shrugged it off in about 0.25 seconds. We can't let the magic of a delusion take over the reality that this sort of thing isn't going to happen and stop voting for people who do things against our best interests.

This new tax reform is a joke. You're going to cut Medicare to give rich people more money? Are you kidding me?!
On my drive home from work every day I see a Powerball billboard with the current total available on it. And a part of me does think what if I bought the winning ticket and got that many millions of dollars? But then I remember it’s a scam and is there to distract me from exactly these sorts of real issues while also generating extra revenue for the state beyond taxes. But even if I thought it was worth it and that I had a good chance of winning, I still wouldn’t say millionaires should be taxed less or at the same rate as people making far less. It makes no sense. Wealth propagates wealth in most cases, so not only do the rich have more but they have more opportunities to generate even more, so it’s only right they should give more. And the same with corporations.

And yet all the time I see people defending the rich, defending the right of the rich to essentially ruin the country and the planet at our expense. It’s fucking insane.
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Old 11-20-17, 01:31 PM
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Re: The US Tax Policy Thread

Originally Posted by Supermallet View Post
On my drive home from work every day I see a Powerball billboard with the current total available on it.
When I was a kid, we'd make "lotto lists" of what we'd do with the money. Now I abhor the lottery and how it preys on people. The only thing worse than Minnesota using a slew of different types of taxes to build that stupid Vikings stadium is the old "we'll use charitable gambling pull tabs revenue" racket. The Vikings don't care about Minnesota, but we have to pay for their $1 billion dollar stadium so they'll stay until they can make more money somewhere else.

I'm sorry, what were we talking about again? Waffles? I could go for some waffles.
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Old 11-20-17, 01:33 PM
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Re: The US Tax Policy Thread

the problem with taxing businesses is that it is a sunk cost that needs to be passed down, so unless there is a real reason for it (like to help build roads, water, electricity, police, fire, etc) that benefits the company, they pass the cost down to the product they are making which means we end up paying for it anyway.

But increasing the top tax bracket on the rich doesn't affect them, if they are making $500k etc, paying an extra $20k or $50k in taxes doesn't affect them, except for the concept of trickle down when they buy a $100k car instead of a $50k car.

The income graphs that show the percentage of income held by the various income brackets over the years shows that everyone is basically flat to negative in all ranges except for the top 0.1%. Something has changed in our generation that has moved all of the new wealth to this exclusive group.
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Old 11-20-17, 01:37 PM
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Re: The US Tax Policy Thread

A lot of this is really exemplified by Joe the Plumber. Some guy who was at best middle income was upset because his taxes might be higher should he one day buy a company that might one day increase his income to $250K+. Anyone worried that they might one day have to pay more tax because they are going to see a big windfall, are looking at things in a completely roundabout way that follows no logic. You almost always get more money in your pocket by making more money and paying the corresponding taxes. It's like being upset at winning the lottery because now instead of $50K a year you will be making $300K a year and having to pay tax on that income, without realizing that your income will be almost 4x what it is now.
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Old 11-20-17, 01:42 PM
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Re: The US Tax Policy Thread

Originally Posted by PerryD View Post
the problem with taxing businesses is that it is a sunk cost that needs to be passed down, so unless there is a real reason for it (like to help build roads, water, electricity, police, fire, etc) that benefits the company, they pass the cost down to the product they are making which means we end up paying for it anyway.
The main thing that will increase with lower corporate taxes are dividends. Corporations pay corporate tax on all dividends they pay out. If they can pay less in tax, then that money can go straight into more dividends to owners without any negative impact on the business. I don't think most large businesses look at taxes as a sunk cost that is passed down. Do you really believe that if AT&T starts paying 5% in tax instead of 7% (based on their gross income) that they will lessen the bills to customers by 2%?
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Old 11-20-17, 01:43 PM
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Re: The US Tax Policy Thread

Originally Posted by story View Post
I honestly believe there is some sort of self delusion in all of this, if even at least at a subconscious level, that someday maybe, just maybe, we will be rich or maybe even they'll give us some of that money, too. It's where dreams meets fantasy and kicks reality out the door.
Originally Posted by JasonX View Post
A lot of this is really exemplified by Joe the Plumber. Some guy who was at best middle income was upset because his taxes might be higher should he one day buy a company that might one day increase his income to $250K+. Anyone worried that they might one day have to pay more tax because they are going to see a big windfall, are looking at things in a completely roundabout way that follows no logic. You almost always get more money in your pocket by making more money and paying the corresponding taxes. It's like being upset at winning the lottery because now instead of $50K a year you will be making $300K a year and having to pay tax on that income, without realizing that your income will be almost 4x what it is now.
Self-delusional fantasy of what might happen someday. People are hungry for wealth, and it doesn't even take true poverty to make that happen. Tomorrow will be better because of money because more money is more security. But the question remains: how much "more" will it take to have "enough"? The concept of "enough" rarely enters these conversations.
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Old 11-20-17, 01:47 PM
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Re: The US Tax Policy Thread

Originally Posted by story View Post
Self-delusional fantasy of what might happen someday. People are hungry for wealth, and it doesn't even take true poverty to make that happen. Tomorrow will be better because of money because more money is more security. But the question remains: how much "more" will it take to have "enough"? The concept of "enough" rarely enters these conversations.
Because we live in an economic system that is dependent on no one ever having enough. If someone has enough, that just means they need to be sold something even harder than before.
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Old 11-20-17, 01:56 PM
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Re: The US Tax Policy Thread

While also being sold harder that we really don't need Medicare and if we cut it that wouldn't ever impact you so just let it happen. You need this not that.

The thing about this tax code reform is it truly feels like it came out of nowhere. I've subscribed to the local paper after the election and read it every day for a year and I don't recall anything about tax reform until the last few weeks. It feels like a manufactured problem.
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Old 11-20-17, 01:58 PM
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Re: The US Tax Policy Thread

Tax reform has long been a GOP talking point but has taken a back seat in the last 8 years to Obamacare repeal hysteria and racist dog whistles.
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Old 11-20-17, 02:19 PM
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Re: The US Tax Policy Thread

I feel like I'm coming off as pretty angry in this thread. I am upset about this stuff, but I'm also at home sick with a sick kid and it's been a long weekend. Sorry if I am seeming cranky. I'm off to Minute Clinic.
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Old 11-20-17, 02:53 PM
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Re: The US Tax Policy Thread

Originally Posted by PerryD View Post
the problem with taxing businesses is that it is a sunk cost that needs to be passed down, so unless there is a real reason for it (like to help build roads, water, electricity, police, fire, etc) that benefits the company, they pass the cost down to the product they are making which means we end up paying for it anyway.
There's a whole branch of economics called incidence analysis that looks at things like this, and the short answer is no, business don't' just automatically pass along tax (or cost) increases. Obviously, they pass along what they can, but what they can depends on a lot of factors -- substitutes, elasticity of demand, elasticity of supply. At the end of the day, companies will pass on what they can, but what they can is seldom 100% of the tax.
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Old 11-20-17, 03:01 PM
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Re: The US Tax Policy Thread

Okay, I understand there are a lot of variables, but I'm just saying in general, added costs that don't have any direct benefit to the business (whether higher taxes, more regulations, etc), there can be only a negative overall effect, whether the cost of product, worker benefits, and sure, dividends, or even whether they need to lay off or shut down.

Whereas, I'm suggesting that you could argue that if you shifted the tax burden from the corporations to the very rich individuals, then it may be a wash to them since they benefit more directly from lower corporate tax rates (like the previously mentioned dividends and stock gains, etc). I'm not sure how much higher the upper tax bracket would have to be to account for reducing the corporate tax rate to 15%.

Plus, it has been debated that one benefit would be less corporations moving to tax havens, or hiding money overseas if there was a lower corporate tax rate here.
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Old 11-20-17, 03:17 PM
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Re: The US Tax Policy Thread

Or we could put other penalties in place for companies that want to move most of their money to tax havens while still maintaining a large presence in the United States.
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