Author Topic: Tax Policy  (Read 248904 times)

DougMacG

  • Power User
  • ***
  • Posts: 12043
    • View Profile
Re: Tax Policy - Ted Cruz and others with VAT tax
« Reply #600 on: November 05, 2015, 07:34:04 AM »
(From Ted Cruz thread)
I wrote previously about the VAT tax plans on the Presidential thread.  Posting more info on the Cruz plan here.  His strategy with it puzzles me.

Ted Cruz’s “Business Flat Tax” is what most tax policy experts would call a “tax-inclusive subtraction-method value-added tax” (VAT)
http://taxfoundation.org/blog/ted-cruz-s-business-flat-tax-primer

Senator Cruz’s (R-TX) tax plan would enact a 10 percent flat tax on individual income and replace the corporate income tax and all payroll taxes with a 16 percent “Business Transfer Tax,” or subtraction method value-added tax. In addition, his plan would repeal a number of complex features of the current tax code.
http://taxfoundation.org/article/details-and-analysis-senator-ted-cruz-s-tax-plan

The tab for taxes collected from businesses is ultimately passed through to individuals in the form of lower wages, reduced dividends, or higher prices. So for transparency, the best thing would be to scrap business taxes altogether, and collect the full tax load from individuals at a flat rate. That way, people could accurately perceive the full cost of government.
http://www.nationalreview.com/article/426469/ted-cruz-rand-paul-vat

(famous people caught reading the forum?)
So what happens 10 years from now or 25 years from now if statists control both ends of Pennsylvania Avenue and they decide to reinstate the bad features of the income tax while retaining the VAT? They now have a relatively simple way of getting more revenue to finance European-style big government.
And also don’t forget that it would be relatively simple to reinstate the bad features of the corporate income tax by tweaking Cruz’s business flat tax/VAT.
   - Dan Mitchell, Senior Fellow, Cato Institute
http://www.forbes.com/sites/danielmitchell/2015/10/29/ted-cruzs-tax-plan-is-pro-growth-and-reins-in-the-irs-but-there-is-one-worrisome-feature/
https://www.washingtonpost.com/blogs/right-turn/wp/2015/10/30/the-pluses-and-minuses-in-ted-cruzs-tax-plan/

DougMacG

  • Power User
  • ***
  • Posts: 12043
    • View Profile
What's up with the Republican VAT tax? Herman Cain's 9-9-9 is alive and well??
« Reply #601 on: November 05, 2015, 07:40:56 AM »
Bringing a couple of other posts over to the tax thread as well.  Crafty is optimistically thinking there will be life after the 2016 Presidential election.
   
What's up with the Republican VAT tax? Herman Cain's 9-9-9 is alive and well??
« Reply #625 on: November 03, 2015, 08:55:29 PM »  DougMacG

The tax plans from Bush, Trump and Rubio-Lee are all of the same general framework.  Rubio doesn't cut the rates low enough and Trump doesn't raise enough revenue - these are details to be negotiated with congress to get a final bill - if the candidate wins. 

On the other side of it, in addition to Huckabee and his fair tax (VAT tax), are Rand Paul and Ted Cruz who have both come out with tax plans that rely on a new VAT tax.  Paul calls for a 14.5% flat tax on income and a 14.5% Vat tax called a 'business transfer tax'.  Ted Cruz is proposing a 10% flat tax on income plus a 16% 'tax on business', VAT tax.  Great if you think this country with all the tax the rich rhetoric is going to change  that suddenly and switch the emphasis over to the more regressive consumption tax. 

It isn't realistic to me, that we would could a) pass near repeal the income tax on the rich, and b) implement a whole new layer of taxation and c) hope that liberals wull not someday come to power and raise up both tax rates to the sky, on top of the 8-10% tax many states and localities already put on sales and consumption.

My view is that we can't and won't agree to a new consumption tax (or any other new tax) without repeal of the income tax - and that isn't ever going to happen.

On the income tax side. bold cuts like Reagan's would be great but are also not likely to be politically possible, so we have to steer this big ship around a little more gently and gradually.  Propose cuts that are significant enough to grow the economy but modest enough to get elected..  Pass tax reform and regulatory reform and see results enough to turn the corner.  Turn around the trend of people leaving the workforce and businesses closing faster than new ones are opening, grow incomes, grow startups, grow the participation rate enough to curb spending demands.  Then cut again, both tax rates and spending.  And again.  Why not have our growth spiral be upward?

Hong Kong did something like this.  Their flat tax and free trade policies were so effective that they needed to keep lowering the rate to get rid of the excess revenues.

http://archive.freedomandprosperity.org/Papers/hongkong/hongkong.shtml
http://www.forbes.com/2010/02/18/hong-kong-tax-system-law-business-opinions-books-michael-littlewood.html
http://www.heritage.org/research/commentary/2006/03/flat-tax-is-the-way-of-the-future

DougMacG

  • Power User
  • ***
  • Posts: 12043
    • View Profile
Rubio's tax plan
« Reply #602 on: November 05, 2015, 07:46:43 AM »
Brininging this post over as well from the President Rubio thread.  This whole stupid argument with the biased and brain dead press ('professional journalists') is a big part of tax policy as well.

http://newsbusters.org/blogs/nb/tom-blumer/2015/10/29/two-weeks-after-correcting-himself-cnbcs-harwood-lies-about-rubios

Two Weeks After Correcting Himself, CNBC's Harwood Lies About Rubio's Tax Plan — Again

By Tom Blumer | October 29, 2015 | 1:41 AM EDT

The competition for the worst moderator moment of Wednesday night's GOP debate is fierce. John Harwood's rephrasing of an old and discredited charge that Marco Rubio's tax plan disproportionately benefits the top 1 percent has to be in the running.

That's especially true because Harwood himself had to back away from a similar contention two weeks ago, yet still brought up the same issue with a similar dishonest assumption Wednesday night. After Rubio refuted Harwood and pointed out that the CNBC hack previously had to correct himself about the substance of the Rubio-Lee plan, a finger-wagging Harwood still insisted he was correct (bolds are mine throughout this post):

JOHN HARWOOD: Senator Rubio, 30 seconds to you.

The Tax Foundation, which was alluded to earlier, scored your tax plan and concluded that you give nearly twice as much of a gain in after-tax income to the top 1 percent as to people in the middle of the income scale.

Since you're the champion of Americans living paycheck-to- paycheck, don't you have that backward?

RUBIO: No, that's -- you're wrong. In fact, the largest after- tax gains is for the people at the lower end of the tax spectrum under my plan. And there's a bunch of things my tax plan does to help them.

Number one, you have people in this country that...

HARWOOD: The Tax Foundation -- just to be clear, they said the...

(CROSSTALK)

RUBIO: ...you wrote a story on it, and you had to go back and correct it.

HARWOOD: No, I did not.

RUBIO: You did. No, you did.

(APPLAUSE)

(CROSSTALK)

HARWOOD: Senator, the Tax Foundation said after-tax income for the top 1 percent under your plan would go up 27.9 percent.

RUBIO: Well, you're talking about -- yeah.

HARWOOD: And people in the middle of the income spectrum, about 15 percent.

RUBIO: Yeah, but that -- because the math is, if you -- 5 percent of a million is a lot more than 5 percent of a thousand. So yeah, someone who makes more money...

HARWOOD: (inaudible)

RUBIO: ...numerically, it's gonna be higher. But the greatest gains, percentage-wise, for people, are gonna be at the lower end of our plan, and here's why: because in addition to a general personal exemption, we are increasing the per-child tax credit for working families.

We are lowering taxes on small business. You know, a lot of business activity in America is conducted like the guy that does my dry cleaning. He's an S corporation. He pays on his personal rate, and he is paying higher than the big dry-cleaning chain down the street, because he's paying at his personal rate.

RUBIO: Under my plan, no business, big or small, will pay more than 25 percent flat rate on their business income. That is a dramatic tax decrease for hard-working people who run their own businesses.

(CROSSTALK)

RUBIO: ...The other thing I'd like to make about our plan, one more point, it is the most pro growth tax plan that I can imagine because it doesn't tax investments at all. You know why? Because the more you tax something, the less of it you get.

I want to be in -- I want America to be the best...

PAUL: ...John...

RUBIO: ...in the world for people...


Sean Davis at the Federalist noted that Harwood's stance was so outrageous that the Tax Foundation's Scott Hodge had to tweet the record straight in almost real time:



Here is Harwood's tweeted correction from two weeks ago: -



A graphic representation of the Rubio-Lee tax plan by income decile plus the top 1 percent is here.

Those who want to defend Harwood on the basis that he was asking about the "middle" of the income scale and not the entire rest of the income scale need to understand two things:

Harwood's question still has a false premise, as seen in focusing on the middle 60 percent as presented in the following table from the Tax Foundation's model:



The dynamically scored after-tax income effect for the top 1 percent of income-earners is 27.9 percent. The average of the deciles from 20 percent to 80 percent is 16.2 percent. 27.9 divided by 16.2 is 1.72. That's closer to 1-1/2 than it is to 2; there no justification for calling 1.72 a "nearly twice" impact. John Harwood doesn't get to "creatively" round up like this and get away with it — and he didn't.

Harwood was treating the upper 19 percent (between 80 percent and 99 percent) and the lower 20 percent as if they don't exist. Why? Because he didn't want to admit the large favorable impact on the bottom 20 percent — because, y'know, the Republican Party is the party of the rich which never helps the less fortunate. Rubio, to his credit, got it in there anyway.
Those who believe that the GOP should never have allowed CNBC to host one of the its presidential debates, and especially should have insisted that Harwood not be one of its moderators, should feel vindicated — but still quite frustrated — tonight.
-----------------------------------

(My comments that followed that news account):

One comment on the previous Rubio post:  The argument Rubio won against NBC's John Harwood was crucial  along with all the media and opponent drivel based on static scoring that shows other plans 'costing us trillions' illustrates why his plan has to be so modest at the high end to get elected.  Yes, the top rates should be much lower but that feeds the labeling of all tax rate cuts being a 'giveaway' to the rich.  Unfortunately, you have to win the  election to reverse Obama's tax increases or repeal Obamacare or anything else.  The alternative is Hillary going further than Obama on amnesty and big government.

No wonder NBC's (no one but Clinton?) John Harwood felt the need to have his Candy Crowley moment.
« Last Edit: November 05, 2015, 08:03:06 AM by Crafty_Dog »

DougMacG

  • Power User
  • ***
  • Posts: 12043
    • View Profile
Tax Policy unintended consequences, Pfizer is latest tax inversion largest ever
« Reply #603 on: November 23, 2015, 10:46:51 AM »
http://www.zerohedge.com/news/2015-11-23/its-official-allergan-pfizer-combine-biggest-ever-tax-inversion-defy-jack-lew

This is why we demand dynamic scoring!  High rates apply to less income, lower rates apply to more income.  Tax it and you will get less of it.  Everyone knows this, yet deny it when doing the math.

Crafty_Dog

  • Administrator
  • Power User
  • *****
  • Posts: 49762
    • View Profile

DougMacG

  • Power User
  • ***
  • Posts: 12043
    • View Profile
Re: Tax Policy, Pfizer: "Fighting with one hand tied behind back"
« Reply #605 on: November 27, 2015, 08:37:46 AM »
"Our tax rate highly disadvantages American multinational high-tech businesses," Read said at a Wall Street Journal event. "I am fighting with one hand tied behind my back."
http://www.reuters.com/article/2015/10/29/allergan-ma-pfizer-idUSL3N12T51K20151029#mPxXalBeRcWu6ag8.99

Companies can't wait to get out.

Everyone knows it is a global market and yet the US has the highest corporate tax rate in the world.

At what point will the Obama-Hillary-Bernie tax raisers be satisfied?  When the last company leaves and when no more are ever started??

The Dem / Obama administration response to this is to try to block the exits.  Reminds me of the Berlin wall; their borer security was to keep people in - against their will.
« Last Edit: November 27, 2015, 08:40:10 AM by DougMacG »

Crafty_Dog

  • Administrator
  • Power User
  • *****
  • Posts: 49762
    • View Profile
POTH cluelessly examines tax games of the super rich
« Reply #606 on: December 30, 2015, 10:14:51 AM »
The staggering economic ignorance displayed here by Pravda on the Hudson is typical, but I suggest we do note the article and its logic because we are sure to see it widely parroted and must be ready with our counters:

http://www.nytimes.com/2015/12/30/business/economy/for-the-wealthiest-private-tax-system-saves-them-billions.html?emc=edit_na_20151229&nlid=49641193&ref=cta&_r=0

DougMacG

  • Power User
  • ***
  • Posts: 12043
    • View Profile
High US Tax Rates, It is violation of their fiduciaray duty if they don't leave!
« Reply #607 on: December 30, 2015, 11:38:30 AM »
The staggering economic ignorance displayed here by Pravda on the Hudson is typical, but I suggest we do note the article and its logic because we are sure to see it widely parroted and must be ready with our counters:

http://www.nytimes.com/2015/12/30/business/economy/for-the-wealthiest-private-tax-system-saves-them-billions.html?emc=edit_na_20151229&nlid=49641193&ref=cta&_r=0

1)  They begin:  "With inequality at its highest levels in nearly a century..."  - But this is after they have had control of tax policy for nearly a decade.  More of the same means even wider inequality.

2)  "Route the money to Bermuda"  - USA has the highest business tax rates in the OECD, especially states like Calif, NY, MN.  Most of the money and productive resources routing out of our tax system is caused by tax rates here being too high.  Raising them further means more resources diverted, not less.

3)  "Closing loopholes"  - has been the strategy for 3 decades.  The bucket finds another leak.  The loophole is inevitable if a) the rates are high, and b) we continue to operate a system of favors and preferences.  Conservatives and centrists have their exclusions and liberals have others.  The constitution implies that all people and therefore all activities be taxed the same.  Crazy talk.

4)  ”Unless you plug every hole or get a new barrel, it’s going to leak out.”  - How come they can't say both parts of 'lower the rates' and 'close the loopholes'?  You can't just close loopholes which requires blocking flows of money and taxing overseas activities.  You have to chip away at the underlying cause, the scary high rates.


Liberals think companies should morally and ethically pay high taxes.  Pointed out with one of the US companies setting up headquarters in Ireland at a fraction of the tax rate:  

Business leaders are in violation of their fiduciary duty if they don't use all legal means to escape punitive and prohibitive tax rates.
« Last Edit: December 30, 2015, 11:43:44 AM by DougMacG »

Crafty_Dog

  • Administrator
  • Power User
  • *****
  • Posts: 49762
    • View Profile
Brokkings attaxkcs Cruz tax plan
« Reply #608 on: February 17, 2016, 02:08:26 PM »
https://www.washingtonpost.com/news/powerpost/wp/2016/02/16/cruz-tax-plan-would-cost-8-6-trillion-second-only-to-trump/?postshare=6601455660382217&tid=ss_fb-bottom

Cruz tax plan would cost $8.6 trillion, second only to Trump’s
By Kelsey Snell February 16

DES MOINES, IA - FEBRUARY 01: Republican presidential candidate Sen. Ted Cruz (R-TX) stands with his wife Heidi as he addresses supporters after winning at the caucus night gathering at the Iowa State Fairgrounds on February 1, 2016 in Des Moines, Iowa. Cruz beat out frontrunner Donald Trump and Marco Rubio (R-FL) to win the Iowa caucuses. (Photo by Christopher Furlong/Getty Images)
Republican presidential candidate Sen. Ted Cruz (R-Tex.) stands with his wife Heidi. (Photo by Christopher Furlong/Getty Images)

Republican presidential candidate Ted Cruz’s plan to impose a flat 10 percent tax on all personal income and greatly lower the corporate tax rate would cost the federal government at least $8.6 trillion over a decade, according to a new analysis.

The plan would be the second most expensive tax proposal in the GOP presidential field, with only businessman Donald Trump offering a proposal that would add more in government debt over the next 10 years, according to data released Tuesday by the nonpartisan Urban Brookings Tax Policy Center. Trump’s plan would cost the government $9.5 trillion in lost revenue.

[A $9.5 trillion price tag for Trump’s tax plan]

Republican presidential candidates have been quick to campaign on promises to cut taxes, but because most have yet to detail how they would slash spending to offset this lost revenue, analysts have projected their proposals would be deficit busters.

Cruz’s plan also falls short of fulfilling the Texas senator’s promise that his flat tax system would be so simple that taxpayers would file their returns on a postcard.

Cruz would eliminate nearly every tax deduction except those for charitable contributions and mortgage interest and would increase the standard deduction to make doing your taxes easier. He would also eliminate all credits except the earned income tax credit for low-income workers and the child tax credit.

The streamlined system is the simplest plan released by any presidential candidate, but analysts said Cruz’s proposals would still require most people to fill out more than a postcard.

“I would think the form would have to look not that different than what you do now,” said Tax Policy Center Co-Director Eric Toder.

The Cruz campaign declined to respond to questions Tax Policy Center staff sent about the plan, which meant it had to make some assumptions about Cruz’s proposal in areas where there was a lack of detail.

The proposal also falls short of Cruz’s promise that under his plan every income-level would see double-digit increases in after-tax income.

Analysts found that while most workers would receive a tax cut, the lowest-income workers would see their after-tax income decline by 0.6 percent.

There would be a 16 percent flat business tax under Cruz’s proposal, which functions like an across-the-board consumption tax that would increase the amount workers are taxed by their employers. Those low-income workers who don’t make enough to file taxes wouldn’t benefit from the expanded standard deduction that is meant to offset the payroll-side increases.

“Somebody below the standard deduction amount, they cannot benefit much,” said Tax Policy Center Director Leonard Burman, who served in the Treasury Department during the Clinton administration. “They would benefit very little from repealing the corporate income tax, so on net they would end up paying higher taxes under the Cruz plan.”

Cruz’s business tax has also been criticized by fellow presidential candidate Sen. Marco Rubio (R-Fla.), who compared it to a European-style value added tax. Burman said Rubio is correct and that Cruz’s system would impose a version of the consumption tax system popular in much of Western Europe. The center estimates that Rubio’s tax proposal would cost the government at least $6.8 trillion in lost revenue over the next decade.

[The VAT tax fight between Rubio and Cruz]

The biggest beneficiaries under Cruz’s plan would be the top 0.1 percent of earners. People earning over $3.7 million per year would see an average tax break of more than $2 million in the first year, according to the analysis.

The plan would add $10.2 trillion to the national debt in the first decade, according to the center, when you include interest payments on the additional government borrowing that would occur.
Cruz: 'We should abolish the IRS'
Play Video0:45
Republican presidential candidate Ted Cruz told voters in Anderson, S.C. on Feb. 16 he would create a flat individual income tax and that among other changes, he would aim to eliminate the Internal Revenue Service, if elected to office. (Reuters)

Cruz isn’t alone in crafting a tax plan that would cost the federal government trillions while delivering big benefits for the wealthy; all of the Republicans running for president are doing it.

“All of the plans benefit high-income people more than low-income people,” Burman said. “They are enormous tax cuts compared to the current system, and they are enormously regressive.”

Analysts said the lost revenues could be reduced through spending cuts, including Cruz’s plan to repeal the Affordable Care Act, but Cruz and most other Republican candidates have yet to provide detailed lists of the cuts that should be made.

Burman said the plan would make it easier and more beneficial for businesses and individuals to invest. Lower tax rates and benefits for businesses would likely encourage major investments in the early years of the plan, but analysts said they expect interest rates would increase and the economy would decline as a result of the ballooning debt.

“The plan by itself, not including the unspecified spending cuts, would surely depress the economy,” Burman said.

Correction: An earlier version of this story misstated the Tax Policy Center’s analysis of the cost of the Rubio plan. It is $6.8 trillion, not $6.8 billion.

objectivist1

  • Power User
  • ***
  • Posts: 1035
    • View Profile
Walter Williams on Taxes...
« Reply #609 on: March 03, 2016, 01:30:20 PM »
What Is the Fair Share of Taxes?

Why voters fall victim to political charlatans

March 3, 2016    Walter Williams


Presidential hopefuls Hillary Clinton and Sen. Bernie Sanders, along with President Obama, say they want high-income earners, otherwise known as the rich, to pay their fair share of income taxes. None of these people, as well as the uninformed in the media and our campus intellectual elites, will say precisely what is the "fair share" of taxes. That is because they would look ignorant and silly, so they stick with simply saying that the rich should pay more. Let's you and I take a peek at who pays what in federal income taxes.

The following represents 2012 income tax data recently released by the Internal Revenue Service, compiled by the Tax Foundation (http://tinyurl.com/j5yr8cd). The top 1 percent, 1.37 million taxpayers earning $434,682 and more, paid 38 percent of all federal income taxes. The top 5 percent, those earning $175,817 and more, paid 59 percent. The top 10 percent of income earners, those earning $125,195 and up, paid 70 percent of all federal income taxes. The top 25 percent, those earning $73,354 and up, paid 86 percent. The bottom 50 percent, people earning $36,055 and less, paid a little less than 3 percent of federal income taxes. According to estimates by the Tax Policy Center, slightly over 45 percent of American households have no federal income tax liability.

With this information in hand, you might ask the next person who says the rich do not pay their fair share of taxes: Exactly what percentage of total federal income taxes should the 1-percenters pay? I seriously doubt whether you will get any kind of coherent answer. By the way, since 1-percenter income starts at $435,000, it might be pointed out that $400,000 or $500,000 a year is not even yacht or Learjet money. Plus, if one has two kids in college, a big mortgage and car payments, I doubt he would declare himself rich.

Our demagogues also claim that corporations do not pay their fair share of taxes. The fact of the matter, which even leftist economists understand but might not publicly admit, is corporations do not pay taxes. An important subject area in economics, called tax incidence, says the entity upon whom a tax is levied does not necessarily bear the full burden of the tax. Some of the tax burden can be shifted to another party. If a tax is levied on a corporation, and if the corporation hopes to survive, it will have one of three responses to that tax or some combination thereof. It will raise the price of its product, lower dividends or lay off workers. In each case a flesh-and-blood person is made worse off. The important point is that a corporation is a legal fiction and as such does not pay taxes. As it turns out, corporations are merely tax collectors for the government.

Politicians love to trick people by suggesting that they will not impose taxes on them but on some other entity instead. To demonstrate the trick, suppose you are a homeowner and a politician tells you that he is not going to tax you, he is just going to tax your land. You would easily see the political chicanery. Land cannot and does not pay taxes. Again, only people pay taxes.

Leftist politicians often call for raising the death tax, euphemistically called inheritance tax. The inheritance tax brings in less than 1 percent of federal revenue. It is on the books because it serves the interests of jealousy, envy and our collective desire to tax the so-called rich. The effects of inheritance taxes are economically damaging. It has this impact because in order for people to pay the death tax, they often must sell producing assets, such as farms, factories, stocks and bonds. These are high-powered dollars that are shifted from productive activity to government consumptive activity.

Too many Americans are ignorant of tax issues and thus fall easy prey to the nation's charlatans and quacks.
"You have enemies?  Good.  That means that you have stood up for something, sometime in your life." - Winston Churchill.

ccp

  • Power User
  • ***
  • Posts: 10161
    • View Profile
Re: Tax Policy
« Reply #610 on: March 03, 2016, 05:40:29 PM »
Hi objectivist,

Playing devils advocate not that I disagree with Walt.

Walt Williams who I like writes:  "Exactly what percentage of total federal income taxes should the 1-percenters pay? I seriously doubt whether you will get any kind of coherent answer."

A liberal, or redistributionist might respond with this:  (depending on whose numbers one chooses to believe)

http://www.cnbc.com/2016/01/17/62-people-have-as-much-wealth-as-worlds-36b-poorest-oxfam-finds-ahead-of-davos.html

or

http://www.bbc.com/news/business-35339475

or
http://www.ips-dc.org/billionaire-bonanza/
« Last Edit: March 03, 2016, 05:49:10 PM by ccp »

DougMacG

  • Power User
  • ***
  • Posts: 12043
    • View Profile
Re: Tax Policy
« Reply #611 on: March 03, 2016, 09:10:01 PM »
"slightly over 45 percent of American households have no federal income tax liability"
   - One telling descriptor of the O'Bummer economy.

"Exactly what percentage of total federal income taxes should the 1-percenters pay?

From a conservative point of view, there are two criteria that guide the answer. the efficiency question and the moral question.

From an efficiency point of view, there is no reason and it is counter-productive to tax at above a rate where the person taxed is mostly motivated to avoid the tax even to the point of choosing to not earn the additional dollar of income.  That helps no one, especially the federal treasury.

One case in point, during the decade of the 1980s, the top marginal rate was lowered from 70% to 28%.  Coincidentally, revenues to the treasury doubled during the decade of the 1980s.  Even if the revenues were the same, a 28% rate is less disruptive than a 70%. 

Second example, Gingrich-Clinton lowered capital gains tax rates in the 1990s and revenues exploded to the point of balancing the budget by the end of the decade.

At some point, lowering the rates brings in less revenue.  At the state level, Kansas learned that.  They lowered their rates further than income could rise, because of the Obama economy and because their rates were still higher than places neighbors like South Dakota and Texas.  No one was moving their business to Kansas just for the tax rates.

From the moral point of view, it is wrong to put a tax on someone else that you wouldn't pay yourself.

From the liberal point of view, punishment and retribution are the motivators for setting higher and higher marginal tax rate, which is morally wrong and highly inefficient.  Earning legal, taxable income in America is a great thing in America and we need more of it.

If we really want to have lower tax rates, we need to CUT SPENDING FIRST.  If you are at the 45th or 50th percentile of income in America, you are not in need of government income assistance.  You are in need of having government get out of your way, making all these taxes and rules that drive up the cost of living.

DougMacG

  • Power User
  • ***
  • Posts: 12043
    • View Profile
Tax Foundation scores Rubio and Cruz tax plans better than Trump's
« Reply #612 on: March 06, 2016, 11:10:17 AM »
We don't see many of these comparisons because we don't hear the candidates publicly getting behind their own tax plan very much.

I think Ted Cruz is being completely unrealistic to thin we are going to a top marginal rate of 10% anytime soon.  Hillary will eat his lunch on that.  Likewise for Marco Rubio's plan to put a zero tax on capital gains.  That would be a wonderful thing for growth and solve all of my problems personally.  As it stands now I would have to die to get at my accumulated net worth and then get taxed on it anyway!  But a zero tax on capital gains is not going to happen.  So from my point of view, I am waiting for the Ryan plan that will hopefully balance out the concerns and have the best chance at prevailing in the election and getting enacted.

All that said, Trump actually has the most reasonable tax rates but his plan is scored worst for deficit and growth by the Tax Foundation:
------------------------------------------------------------------------------------
http://taxfoundation.org/blog/why-marco-rubio-and-ted-cruz-s-tax-plans-generate-more-growth-donald-trump-s

Why Marco Rubio and Ted Cruz’s Tax Plans Generate More Growth than Donald Trump’s

An exciting presidential race has brought attention to tax policy, and frequently, to Tax Foundation’s analysis of candidate plans. The three most popular candidates in the Republican race have all put together tax reform proposals.

Tax cuts can increase the size of the economy by improving incentives to work or invest. To some extent, all three candidates’ proposals do this, and our modeling results for each plan show growth. But our model shows more growth from the Rubio and Cruz plans than the Trump plan, even though Trump proposed a larger cut:



Some of our readers may be curious why some tax cuts generate more growth than others. The answer is pretty simple. While Donald Trump largely opted for big rate reductions across the board, Rubio and Cruz made improvements to the structure of taxes, while cutting taxes by less overall. In this, they got more bang for their buck. I’ll highlight one particular example here.

Senators Rubio and Cruz both put thought into the nature of the taxes that businesses pay. They noticed that the current way businesses are asked to calculate taxes creates a bias in the code. When a business builds something new, like, say, a new industrial lathe, that decision actually has a higher tax burden, on net, than simply disbursing the money to shareholders. That’s bad news for machinists, who would much rather that they had new and better tools with which to do their jobs.

Rubio (through modifications of the corporate income tax) and Cruz (through the total conversion of corporate income taxes to his business flat tax) both fix this problem by making the full amount of money spent on the lathe deductible from taxable income. And of course, this applies not just to lathes but to all other kinds of capital investments that businesses purchase: things like buildings or pile drivers or trucks or oil rigs. I write about the cleverness of this policy in Marco Rubio’s plan here, though it applies equally to Ted Cruz’s plan.

In contrast, Trump did little to change the domestic corporate tax system, and merely lowered its rate. This policy has its benefits, including the benefit of growth, but it substantially reduces revenue.

There are, of course, other things in play besides this particular provision. But it’s a good example of a broader trend: the senators pay attention to the details of the tax base, and try to fix incentive problems that the tax base creates. Mr. Trump mostly lowered rates.
Our model notices distinctions like this, and observes the incentives that different tax systems create. America under the Marco Rubio or Ted Cruz tax plan would simply have more lathes and buildings and trucks, and people would be more productive and have higher incomes because of it. And this is not because they propose fewer taxes, but rather, because they propose taxes with better bases.

DougMacG

  • Power User
  • ***
  • Posts: 12043
    • View Profile
Americans spend more on taxes than food, clothing, housing combined
« Reply #613 on: April 06, 2016, 11:04:36 AM »
A point I have been making for my personal, low income situation for a long time is now true for everyone.  This is not a tax issue, but a burden of government programs issue.  We have to levy these taxes and more if we want the government to do EVERYTHING.

Americans spend more on taxes than food, clothing, housing combined

http://www.washingtonexaminer.com/americans-spend-more-on-taxes-than-food-clothing-housing-combined/article/2587799

http://taxfoundation.org/article/tax-freedom-day-2016-april-24


ccp

  • Power User
  • ***
  • Posts: 10161
    • View Profile
No surprise
« Reply #614 on: April 13, 2016, 10:34:56 AM »
http://www.atr.org/hillary-confirms-trillion-dollar-tax-hike-plan   Not a peep about 50% paying not one cent in Federal taxes.   Nothing.  Just more of the same tax half the country and redistribution to the other 50% and bigger government.......

How else would she pay for this?  Immigration reform consists of spending more money not to enforce existing laws but to make it easier for illegals to come here and be set up as future voters for the Democrats.  The coup de grace so to speak for conservativism's demise:

http://dailycaller.com/2016/04/13/clinton-would-create-federal-immigration-agency-to-help-illegals/

One recent poll had Trump only a few percentage points behind the felon.  On Drudge there is a report about what it would be like having a President on probation.  I'm telling you.  The chance of indictment is very low.  And if it does occur it will not cause her to drop out.  Lets say it does occur.  The fix will just come a little farther down the chain of events.  Plea deal, probation, etc.  
« Last Edit: April 13, 2016, 10:38:15 AM by ccp »

DougMacG

  • Power User
  • ***
  • Posts: 12043
    • View Profile
Tax Policy, 45.3% of American households pay no federal income tax
« Reply #615 on: April 18, 2016, 09:59:04 AM »
45.3% of American households — roughly 77.5 million — will pay no federal individual income tax

http://www.marketwatch.com/story/45-of-americans-pay-no-federal-income-tax-2016-02-24

"On average, those in the bottom 40% of the income spectrum end up getting money from the government. Meanwhile, the richest 20% of Americans, by far, pay the most in income taxes, forking over nearly 87% of all the income tax collected by Uncle Sam."
-----------------------------------------------------------------------------------------------------------------

Reagan lowered the highest tax rates in the country by making his cuts "across the board" tax rate cuts and selling it partly that it would take millions of people off the tax rolls completely.  That last part of it was a mistake.

Our goal now should be the opposite, to get the highest percentage of people to be participating in the next round of economic growth, benefiting from the prosperity and participating in their fair share of paying for what they vote for.
« Last Edit: April 18, 2016, 10:01:07 AM by DougMacG »

ccp

  • Power User
  • ***
  • Posts: 10161
    • View Profile
Re: Tax Policy
« Reply #616 on: April 18, 2016, 11:09:11 AM »
I posted, "Not a peep about 50% paying not one cent in Federal taxes" on April 13th

Today's headlines on Drudge as Doug points out, "45.3% of American households".

What can I say.  I stand corrected.   :wink:

DougMacG

  • Power User
  • ***
  • Posts: 12043
    • View Profile
Re: Tax Policy
« Reply #617 on: April 18, 2016, 11:37:23 AM »
I posted, "Not a peep about 50% paying not one cent in Federal taxes" on April 13th
Today's headlines on Drudge as Doug points out, "45.3% of American households".
What can I say.  I stand corrected.   :wink:

45% paying nothing plus rich elite liberals plus government employees plus minimum wage employees plus college professors plus K-12 teachers union members plus crony government 'business' people plus 95% of blacks, gays, Jews, Hispanics and Muslims and a few other groups I missed somehow takes that core Dem market over 50%.

On the other side, taking a really hard line on immigration gets you 33% - of Republicans - and maybe the nomination and second place at best in the general election.

G M

  • Power User
  • ***
  • Posts: 17454
    • View Profile

ccp

  • Power User
  • ***
  • Posts: 10161
    • View Profile
Re: Tax Policy
« Reply #619 on: April 26, 2016, 08:00:56 AM »
"The left's outrage will be....muted."

As will be the fact that Bernie and wife paid only 14% tax rate on over 200K income as per Greta last night.  I don't blame them for doing THAT (and agree with Greta that I would like to know just how they got away with it)  but it is just the hypocrisy of it all.

But, because they are Dems and "for the po" in their loving hearts, it is all OK.


DougMacG

  • Power User
  • ***
  • Posts: 12043
    • View Profile
Re: Tax Policy
« Reply #620 on: April 26, 2016, 08:28:07 AM »
ccp:  "As will be the fact that Bernie and wife paid only 14% tax rate on over 200K income as per Greta last night.  I don't blame them for doing THAT (and agree with Greta that I would like to know just how they got away with it)  but it is just the hypocrisy of it all."


To his credit, George McGovern had some regrets later, after trying and failing at business, about the massive burden of government - back then.

Bernie at 74 is new at being a rick star. He likes being a 1%er like the Clintons and Michelle Obama, note the jumbo jet and entourage this common man took for his 3 minute meeting with the Pope.  Like a lottery winner, he will have learned nothing along the way of what ordinary people need to do to raise their income and how government fights you every step of the way, taxes jut being a part of it.

In terms of hypocrisy, why is it that none of them give an extra dollar they don't have to when they think it is the agent of the greatest good of all.

Tax vs. charity or coercion versus philanthropy:  What if all those things government does for people were great and we believed people are great and trusted the to do the right thing.  Why not let people prosper and then give to all these great causes voluntarily?  This is the antithesis to leftism where coercion is the centerpiece, not the great good you are pretending to be doing. 

It turns out that freedom, prosperity and philanthropy beats coercive socialism every time it is tried.  Besides being morally superior, it turns out it is far more efficient and effective.

What a shame that Bernie's vision of returning to something so close to slavery sounds appealing to so many young people and is not being effectively countered by our side at all.

ccp

  • Power User
  • ***
  • Posts: 10161
    • View Profile
Re: Tax Policy
« Reply #621 on: April 26, 2016, 09:36:25 AM »
"To his credit, George McGovern had some regrets later, after trying and failing at business, about the massive burden of government - back then."

I remember very well his coming public about it - and the IMMEDIATE shutdown he got from his Democratic PARTY peers!

As far as I know we never heard another peep about it in the media.

Amazing how the PARTY, supposedly of the common people are able to silence all dissent.

DougMacG

  • Power User
  • ***
  • Posts: 12043
    • View Profile
Tax the rich, give to the poor, doesn't solve inequality
« Reply #622 on: May 03, 2016, 09:11:54 AM »
It's hard to believe that well intended government programs don't accomplish what they set out to do, and only do harm, but that is the case here.

We didn't need a study to know this; we just lived through seven years of Obama.  Income inequality had been going up for decades, so he raised taxes on the rich and gave to the poor.  Result: Income inequality went up even faster.
--------------------------------------------------------------------------------------

Why Hillary’s And Bernie’s Tax Hikes On The Rich Are Doomed To Fail

http://www.investors.com/politics/capital-hill/why-hillarys-and-bernies-tax-hikes-on-the-rich-are-doomed-to-fail/

...Using historic data in the U.S. from 1930 to 2010, they created a model based on income and capital asset values that very closely tracked wealth inequality in America. The correlation was 96% — a very tight fit between the model and reality.

So, they asked, what would happen in the U.S. if by 2030 you taxed away much of the income of those at the top of the earning ladder? Would the gap in wealth between the rich and the rest of us shrink?

The surprising answer that came back was no. As Ross Pomeroy noted at the Real Clear Science web site, even raising taxes to a level that created very low income inequality would still lead to the top 10% of all incomes controlling 78.6% of all the wealth by 2030. OK, but what if you cut taxes on the rich instead, leading them to have even more income in 2030 than they already do? The top 10% would control roughly 79.3% of all the wealth.
http://journals.plos.org/plosone/article?id=10.1371/journal.pone.0154196
http://www.realclearscience.com/journal_club/2016/04/27/raising_income_taxes_wont_fix_wealth_inequality_109613.html
...
Nor is this the only research to come to this conclusion.

A study from the liberal-centrist Brookings Institution last year asked what would happen if the top tax rate was lifted to 50% from 40%, with the money going to the bottom fifth of all households. That would equal roughly $100 billion a year in income redistribution.

The study’s authors found the impact on income inequality, as measured by the widely used Gini index, would still be “exceedingly modest.”
http://www.brookings.edu/~/media/research/files/papers/2015/09/28-taxes-inequality/would-top-income-tax-alter-income-inequality.pdf
...
In the most recent year for which data are available, the top 1% in incomes earned 19% of all U.S. income, but paid 38% of all income taxes. So Sanders and Clinton are right when they say the tax code is unfair — it’s unfair to those at higher incomes.  The only reason for imposing higher taxes on the wealthy, who already pay more than their fair share, is class warfare, spite and envy...
« Last Edit: May 03, 2016, 09:39:44 AM by DougMacG »

G M

  • Power User
  • ***
  • Posts: 17454
    • View Profile
Re: Tax Policy
« Reply #623 on: May 03, 2016, 09:22:05 AM »
Class warfare, spite and envy is the democratic brand in 2016.

Pay no attention to the wealthy dems.

DougMacG

  • Power User
  • ***
  • Posts: 12043
    • View Profile
Re: Tax Policy
« Reply #624 on: May 03, 2016, 09:47:38 AM »
Assessing high tax rates on income is how you prevent people who are not already rich from ever catching up with the wealth accumulation of the wealthy.
-----------------------------------

In a purely socialist society (the Sanders campaign), each person voluntarily sends in $19 for the greater good and foregoes all personal uses of fossil fuels so that the leader can fly his entourage in a jumbo jet with empty seats across the Atlantic to the Vatican for a 3 minute discussion about the merits of socialism and giving up all things material.

DougMacG

  • Power User
  • ***
  • Posts: 12043
    • View Profile
Re: Tax Policy, 1/3 pay federal income tax
« Reply #625 on: May 19, 2016, 08:16:44 AM »
Tax issues, 40% of our country, keep falling to page two while shiny objects, bathroom issues, are front and center.  To the top...

One third of our country pays federal income taxes.  Two thirds do not.  7% make over 100,000 and pay 80% of the taxes.  Getting 93% to raise the taxes on 7% does not impress me as consent of the governed, but also doesn't help us grow the economy or ed the stagnation for anyone.

Looking around at cost of healthcare, homes, property taxes, insurance costs and the cost of raising kids and putting them through college, people living in mainstream America need to make over 100k in tday's dollars in order to pay their own bills.  Looking forward, that number keeps getting higher.  But if you do make enough to be self sufficient and tuck a little away, we punish you and punish you and punish you, while we propose to punish you further.

We have a tax code that rewards failure and punishes success.  What could possibly go wrong?  Look around.

http://townhall.com/columnists/bryancrabtree/2016/05/18/us-2016-failure-is-a-better-option-than-success-n2164582?utm_source=thdaily&utm_medium=email&utm_campaign=nl&newsletterad=

US 2016: Failure is a Better Option Than Success
Bryan Crabtree May 18, 2016

Two-thirds of Americans do not have any taxable income. The most recent IRS data shows that Americans earning over $100,000 per year pay roughly 80% of all taxes in America. This means that roughly seven percent of our nation pays the overwhelming majority of everyone else's government expenses.

I'm a big fan of the idea of a nationwide flat tax. But here's the problem: We already have a flat tax and an income tax. Almost every item we buy has a federal tax somehow levied on it.

When you pay your cell phone bill you pay a universal access fee which goes for programs such as the Obama-phone which are wrought with fraud. Your cable bill, home telephone bill, automobile, gas, utilities, alcohol and many other products and services have federal and state taxes baked in the cost or on the bill.

Most Republicans and Democrats loathe the discussion of abolishing the IRS because of its likely impact on many of their pet projects and donors. They also realize that each of them are complicit in scamming you. Many argue the federal income tax, compared to historic levels, is low. But, when the top income tax bracket was as high as 90 percent, we didn't have the ‘scam’ taxes (re: flat consumption tax) outlined above.

With numbers as staggering as the foregoing, there's no wonder why our country is becoming lazy, complacent and apathetic. When I read this data, my first thought was “why am I working so hard to give half of it to the government and provide many others with a free ride?”

...why should I work hard, take time away from my family and remain in a constant state of stress only to have the long arm of the federal government strip away half or more of what I earn to fund entitlements, fraud and waste?

We all pay Medicare and Social Security, but there's even a conversation about limiting that to some sort of a means test so the system doesn’t go bankrupt. So, again, we get to pay into a system but never receive benefits commensurate to our input, because we are above average in success?

We are clearly in a nation that penalizes success at almost every level and encourages failure at every other level. ...
« Last Edit: May 19, 2016, 09:40:27 AM by DougMacG »

DougMacG

  • Power User
  • ***
  • Posts: 12043
    • View Profile
Tax Cuts in Kansas
« Reply #626 on: September 06, 2016, 05:31:37 PM »
Through my liberal friends I hear that Kansas is the proof that "tax cuts don't work".

http://www.kansascity.com/opinion/opn-columns-blogs/yael-t-abouhalkah/article87210507.html
https://www.bloomberg.com/view/articles/2016-03-29/kansas-tried-tax-cuts-its-neighbor-didn-t-guess-which-worked
http://www.slate.com/blogs/moneybox/2016/04/20/kansas_tax_cuts_are_a_mistake_and_everyone_agrees.html
http://www.cbsnews.com/news/kansas-loses-patience-governor-sam-brownback-tax-cuts/
http://www.motherjones.com/politics/2016/05/sam-brownback-kansas-tax-cuts-trickle-down
http://www.politico.com/story/2016/06/kansas-income-tax-cut-prompts-new-debate-224379
http://www.politico.com/story/2016/06/kansas-income-tax-cut-prompts-new-debate-224379

What happened, what went wrong?

Here is my take.  

The Laffer Curve indicates that there is SOME point on the curve before you hit a 100% tax rate where a lower rate brings in a greater return, not at all points on the curve and not all tax rate cuts.  Supply side economics asserts that static analysis is always wrong for an important change, that there is always SOME revenue recapture when significantly decreasing the disincentive to produce, not that all tax rate cuts can bring in greater revenue.

The tax rate cuts reduced the highest income tax rates to 4.9 percent in 2013 from 6.45 percent and 6.25 percent.
http://www.kansascity.com/latest-news/article303137/Brownback-signs-big-tax-cut-in-Kansas.html#storylink=cpy

Actual revenues:  
FY 2012   $2.9 Billion
FY 2013    2.93
FY 2014    2.3
FY 2015    2.3

Kansas needed 8% in spending cuts in order to balance their budget with 24% tax rate cuts.   They didn't do that.

Other factors:

Kansas has an agricultural economy; farm prices and incomes are down.  Tax rate on profits doesn't change that reality or incentivize a business that is losing money or barely breaking even.  They face larger problems.  In the Kansas oil industry, prices imploded.  Their aerospace industry has been shrinking.

The Obama economy: True that Kansas under-performed against the national economy, but a surge of business in Kansas did not happen in part because business was not surging anywhere in America.  Overall for all businesses in Kansas, tax disincentives and all government burdens on business including regulations and Obamacare were worsening over this time.  There was no general incentive to expand - anywhere.

Another factor largely lost in the analysis is that other states still have much lower tax burdens than Kansas.  South Dakota, Texas and Florida for example all have no state income tax.  Businesses moving on that criteria will not choose Kansas for the 4.9% rate or the 6%, especially in a time of no growth generally.  
« Last Edit: September 06, 2016, 05:42:38 PM by DougMacG »

Crafty_Dog

  • Administrator
  • Power User
  • *****
  • Posts: 49762
    • View Profile
Re: Tax Policy
« Reply #627 on: September 07, 2016, 04:05:51 PM »
Good discussion full of usable bullet points.

DougMacG

  • Power User
  • ***
  • Posts: 12043
    • View Profile
Tax Policy: Why Taxing Fairly Means Not Taxing Inheritances, Mankiw
« Reply #628 on: September 15, 2016, 11:20:20 AM »
To match this former Bush adviser's never Trump stance, I should post never-Mankiw.  He misses the biggest point, the incentive to grow wealth, but he makes a couple of very good ones here, fairness and consistency.
--------------------------------------------------------

Why Taxing Fairly Means Not Taxing Inheritances
Economic View
By N. GREGORY MANKIW SEPT. 9, 2016

Does it make sense to tax inheritances and, if so, how much? The answer to this question is a perennial political football.

President George W. Bush, to whom I was an adviser, pushed for the elimination of the estate tax. He succeeded, but only briefly. In 2001, he signed legislation that phased out the tax and eliminated it in 2010. But the tax was back in 2011.

Today, the federal government imposes a tax of 40 percent on estates over $5.45 million ($10.9 million for married couples). And many states take a piece of the action as well. The state of New York, for instance, has a top estate tax rate of 16 percent.

Now, Hillary Clinton wants to increase the tax by reducing the threshold to $3.5 million and raising the rate to 45 percent. Donald J. Trump wants to eliminate it again.

It is easy to understand the appeal of the estate tax. We live in a time of great economic inequality, and the tax is levied only on the very wealthy. The tax helps fund government programs (though it raised only $19 billion last year, 0.6 percent of federal receipts).

But the estate tax is only one of many policy tools that can be used to make sure those at the top pay their fair share. Another would be to limit itemized deductions, as the Bowles-Simpson commission appointed by President Obama proposed in 2010. We could also reform the tax treatment of carried interest, which hedge fund managers use to reduce their tax burden to extraordinarily low levels.

From my perspective, the estate tax is a bad way to tax the rich because it violates a principle that economists call horizontal equity. The basic idea is that similar people should face similar tax burdens.

Consider the story of two couples. Both start family businesses when they are young. They work hard, and their businesses prosper beyond anything they expected. When they reach retirement age, both couples sell their businesses. After paying taxes on the sale, they are each left with a sizable nest egg of, say, $20 million, which they plan to enjoy during their golden years.

Then the stories diverge. One couple, whom I’ll call the Frugals, live modestly. Mr. and Mrs. Frugal don’t scrimp, but they watch their spending. They recognize how lucky they have been, and they want to share their success with their children, grandchildren, nephews and nieces.

The other couple, whom I’ll call the Profligates, have a different view of their wealth. They earned it, and they want to enjoy every penny of it themselves. Mr. and Mrs. Profligate eat at top restaurants, drink rare wines, drive flashy cars and maintain several homes. They spend their time sailing the Caribbean in their opulent yacht and flying their private jet from one luxury resort to the next.

So here’s the question: How should the tax burdens of the two couples compare? Under an income tax, the couples would pay the same, because they earned the same income. Under a consumption tax, Mr. and Mrs. Profligate would pay more because of their lavish living (though the Frugals’ descendants would also pay when they spend their inheritance). But under our current system, which combines an income tax and an estate tax, the Frugal family has the higher tax burden. To me, this does not seem right.

I recognize, however, that not all economists share my judgments about the estate tax. That is largely because issues of fairness transcend economics and thrust us into the realm of political philosophy, where agreement is all the more difficult.

But there is one thing that everyone can agree on: The estate tax you owe should not depend substantially on the exact moment you happen to expire. A person who died in 2010 paid no estate tax, no matter how wealthy he or she was. A year earlier or later, things would have been very different.

To avoid this particular unfairness, we need more stability in the tax code than we have had in the past. This stability is possible only if those with opposing points of view reach a compromise that, while not perfect from either perspective, is acceptable enough for everyone to live with. Neither Mrs. Clinton’s proposal of 45 percent nor Mr. Trump’s proposal of zero passes this test.

International comparisons are a natural benchmark. Over all, the United States is a low-tax country compared with many of our developed-nation peers. But that is not true when it comes to the estate tax.

Many countries do not tax inheritance at all, including Australia, Canada and Sweden. Most do, but the tax rates are usually much lower than what we impose in the United States. Among the nations in the Organization for Economic Cooperation and Development, the average for the top estate tax rate is 15 percent. The median is only 7 percent, which is the rate in Switzerland.

If the United States were ever to adopt such a low estate tax rate, it would surely put a lot of the estate planning industry out of business. Hiring expensive legal talent may make sense when the rate is 40 or 45 percent, but not when it is 7 or 15 percent. Yet that would be a good thing. The time those lawyers spend helping the rich skirt the estate tax is, from an economic standpoint, pure waste.

N. GREGORY MANKIW is a professor of economics at Harvard.

DougMacG

  • Power User
  • ***
  • Posts: 12043
    • View Profile
Re: Tax Policy, Tax rate increases yield virtually no revenue increase
« Reply #629 on: October 15, 2016, 10:00:39 AM »
I'm real sick of trying to point out what virtually no one in power is capable of learning.  ObamaCare had two dozen tax increases in it.  'We' ended 'Bush tax cuts for the wealthy', meaning we raised tax rates.  We, meaning Obama and the Democrats, increased the estate tax rate by infinity-fold.  We, meaning the US, have the highest corporate tax rates in the world, especially in NY, CA and MN to name a few overtaxed places.  We should be raking in the revenue.

Meanwhile:

"After adjusting for inflation, the amount of taxes collected by the federal government in fiscal year 2016 is slightly lower than the $3.3 trillion the government collected in fiscal year 2015".
(http://freebeacon.com/issues/government-collects-3-27-trillion-taxes-fiscal-year-2016/)

Higher rates didn't bring in higher revenues. 

Who fucking knew?!

The deficit went back up by 34% IN THE MIDDLE OF A "RECOVERY".  (Or is it the tail end of a 'recovery'?

If economics is a science, aren't these static analysis advocates like Obama, Hillary and every Democrat-run 'fact check' site DENIERS OF SCIENCE?? ?? ?? ?? !!

ccp

  • Power User
  • ***
  • Posts: 10161
    • View Profile
Trump on taxes - still not fair
« Reply #630 on: November 25, 2016, 12:58:45 PM »
After all said and done I may not get one cent off my taxes next year while those making hundreds of thousands will save tens of thousands:

https://www.yahoo.com/finance/news/middle-class-trump-plan-mean-tax-increase-153628510--finance.html

DDF

  • Guest
Re: Trump on taxes - still not fair
« Reply #631 on: November 25, 2016, 02:46:15 PM »
After all said and done I may not get one cent off my taxes next year while those making hundreds of thousands will save tens of thousands:

https://www.yahoo.com/finance/news/middle-class-trump-plan-mean-tax-increase-153628510--finance.html

Being that a number of these "single parents" are women who provoked the divorce, and bent the man over for child support and no 50/50 custody, and not ever letting the man have child tax credits, my heart is breaking.

I love how the liberal media finds the ONE case of a single mother who decides to share custody and tax credits with her ex, and cites that as a reference.

"Kelly Rodriguez, 47, who lives in Tampa, Florida, voted for Trump and is a single mother who claims two of her four children as dependents. (Her ex-husband claims the other two.)"

Sorry CCP.... and for you, I really am.... as for the single mother, child support protitutes, I could care less. The whole of America has let them screw over men for a couple of decades now (per US Department of Health and Human Services' own numbers - IIRC, something like 173 billion due in child support arrears, than has grown by 200 percent since 1970.... $1.50 federal tax dollars paid to every state, for every $1. the state collects....  more than 80% of child support is paid by men and women provoke most of the divorces and are granted primary custody in 11 of very 12 cases, while the guy gets to pay her lawyer, and goes to jail if he doesn't work, while the exact opposite happens to the woman). Well done America... you've created a growing class of men that no longer care.

Single families are going to take a hit? Men have been taking a hit for year, WHILE providing the cash for everyone else. I feel so bad.
« Last Edit: November 25, 2016, 02:48:44 PM by DDF »

ccp

  • Power User
  • ***
  • Posts: 10161
    • View Profile

Crafty_Dog

  • Administrator
  • Power User
  • *****
  • Posts: 49762
    • View Profile

DougMacG

  • Power User
  • ***
  • Posts: 12043
    • View Profile
Re: Tax Policy - House Republican Tax Plan, the blue state penalty
« Reply #634 on: January 30, 2017, 01:28:16 PM »
As I am understanding the tax proposal not yet made, they will keep 2 of the 3 essential deductions in place while lowering the rates.  Mortgage interest and charitable - in, state and local taxes paid deduction - out.

I think this is partly right in principle but will not work in practice.

Kind of fun to tell NY and Calif that their over-taxation at the state and local level does not give them anyu advantage on federal taxes.  Plus they didn't voter for Trump and the Republicans anyway.

In my case, I cannot pay taxes with after tax money.  There isn't enough left to do that.

Money paid in taxers isn't income, and it isn't cash available to pay more taxes.  This is a bigger problem than 100 refugees stranded in an airport...

I am normally willing to vote against my own interests but I can't support policies that bankrupt me or force me out of my home.

I wrote to the author of this piece for further information, will update if I receive any reply of substance.

Get ready for a fight.

https://taxfoundation.org/details-and-analysis-2016-house-republican-tax-reform-plan
Read it at the source if these table format unreadable here.

Details and Analysis of the 2016 House Republican Tax Reform Plan
July 5, 2016
Kyle Pomerleau
Download FISCAL FACT No. 516: Details and Analysis of the 2016 House Republican Tax Reform Plan (PDF)

Key Findings

The House Republican tax reform plan would reform the individual income tax and would move towards destination-based cash flow taxation of businesses.
According to the Tax Foundation’s Taxes and Growth Model, the plan would significantly reduce marginal tax rates and the cost of capital, which would lead to 9.1 percent higher GDP over the long term, 7.7 percent higher wages, and an additional 1.7 million full-time equivalent jobs.
The plan would reduce federal revenue by $2.4 trillion over the first decade on a static basis. However, due to the larger economy and the broader tax base, the plan would reduce revenue by $191 billion over the first decade.
Although the plan would reduce federal revenue by $2.4 trillion on a static basis in the first decade, much of the revenue loss is one-time. As a result, the plan will cost much less in subsequent decades.
On a static basis, the plan would lead to 0.7 percent higher after-tax income for all taxpayers and 5.3 percent higher after-tax income for the top 1 percent. When accounting for the increased GDP, after-tax incomes of all taxpayers would increase by at least 8.4 percent.
Introduction

In June, the House Republicans released a tax reform plan.[1] The plan would reform the individual income tax code by lowering marginal tax rates on wage, investment, and business income; broaden the tax base; and simplify the tax code. The plan would also lower the corporate income tax rate to 20 percent and convert it into a destination-based cash-flow tax. Finally, the plan would eliminate federal estate and gift taxes.

Our analysis finds that the House Republican tax plan would reduce federal tax revenue by $2.4 trillion over the next decade. The plan would reduce marginal tax rates on labor and substantially reduce marginal tax rates on investment. As a result, we estimate that the plan would boost long-run GDP by 9.1 percent. The larger economy would translate into 7.7 percent higher wages and result in 1.7 million more full-time equivalent jobs. Due to the larger economy and the broader tax base, the plan would reduce revenue on a dynamic basis by $191 billion over the next decade.

Changes to the Individual Income Tax

Consolidates the current seven tax brackets into three, with rates of 12 percent, 25 percent, and 33 percent (Table 1).
Table 1. Tax Brackets for Ordinary Income Under Current Law and the House Republican Tax Plan
Current Law   Proposal   Single Filers   Married Joint Filers   Head of Household Filers
10%   12%   $0 to $9,275   $0 to $18,550   $0 to $13,250
15%   12%   $9,275 to $37,650   $18,550 to $75,300   $13,250 to $50,400
25%   25%   $37,650 to $91,150   $75,300 to $151,900   $50,400 to $130,150
28%   25%   $91,150 to $190,150   $151,900 to $231,450   $130,150 to $210,800
33%   33%   $190,150 to $413,350   $231,450 to $413,350   $210,800 to $413,350
35%   33%   $413,350 to $415,050   $413,350 to $466,950   $413,350 to $441,000
39.6%   33%   $415,050+   $466,950+   $441,000+
Taxes capital gains and dividends as ordinary income and provides a 50 percent exclusion of capital gains, dividends, and interest income. This is equivalent to taxing capital gains, dividends, and interest income at half the rate of ordinary income, with three brackets of 6 percent, 12.5 percent, and 16.5 percent (Table 2).
Table 2. Tax Brackets for Capital Gains and Dividends Under Current Law and the House Republican Tax Plan
Current Law   Proposal   Single Filers   Married Joint Filers   Head of Household Filers
0%   6%   $0 to $9,275   $0 to $18,550   $0 to $13,250
0%   6%   $9,275 to $37,650   $18,550 to $75,300   $13,250 to $50,400
15%   12.5%   $37,650 to $91,150   $75,300 to $151,900   $50,400 to $130,150
15%   12.5%   $91,150 to $190,150   $151,900 to $231,450   $130,150 to $210,800
15%   16.5%   $190,150 to $413,350   $231,450 to $413,350   $210,800 to $413,350
15%   16.5%   $413,350 to $415,050   $413,350 to $466,950   $413,350 to $441,000
20%   16.5%   $415,050+   $466,950+   $441,000+
Increases the standard deduction from $6,300 to $12,000 for singles, from $12,600 to $24,000 for married couples filing jointly, and from $9,300 to $18,000 for heads of household.
Eliminates the personal exemption and creates a $500 non-refundable credit for dependents who are not children.
Increases the Child Tax Credit to $1,500 per child, limits the refundability of the credit to $1,000, and raises the phaseout threshold for the Child Tax Credit for married households from $110,000 to $150,000.
Eliminates all itemized deductions besides the mortgage interest deduction and the charitable contribution deduction.
Eliminates the individual alternative minimum tax.
Changes to Business Income Taxes

Reduces the corporate income tax rate from 35 percent to 20 percent.
Eliminates the corporate alternative minimum tax.
Taxes income derived from pass-through businesses at a maximum rate of 25 percent.
Allows the cost of capital investment to be fully and immediately deductible.
Eliminates the deductibility of net interest expenses on future loans.
Restricts the deduction for net operating losses to 90 percent of net taxable income and allows net operating losses to be carried forward indefinitely, and increased by a factor reflecting inflation and the real return to capital. Does not allow net operating losses to be carried back.
Eliminates the domestic production activities deduction (section 199) and all other business credits, except for the research and development credit.
Creates a fully territorial tax system, exempting from U.S. tax 100 percent of dividends from foreign subsidiaries.
Enacts a deemed repatriation of currently deferred foreign profits, at a tax rate of 8.75 percent for cash and cash-equivalent profits and 3.5 percent on other profits.
Modifies all business income taxes to be border-adjustable, disallowing the deduction for purchases from nonresidents and exempting export profits and foreign-derived profits from taxation.
Other Changes

Eliminates federal estate and gift taxes.
Impact on the Economy

According to the Tax Foundation’s Taxes and Growth Model, the House Republican tax plan would increase the long-run size of the economy by 9.1 percent (Table 3). The larger economy would result in 7.7 percent higher wages and a 28.3 percent larger capital stock. The plan would also result in 1.7 million more full-time equivalent jobs.

The larger economy and higher wages are due chiefly to the significantly lower cost of capital under the proposal, which is due to the lower corporate income tax rate and the full expensing of capital investment.

Table 3. Economic Impact of the House Republican Tax Plan
Source: Tax Foundation Taxes and Growth Model, March 2016
GDP   9.10%
Capital Investment   28.30%
Wage Rate   7.70%
Full-time Equivalent Jobs (in thousands)   1,687
Impact on Revenue

If fully enacted, the proposal would reduce federal revenue by $2.4 trillion over the next decade on a static basis (Table 4). The plan would reduce individual income tax revenue by $981 billion over the next decade. Corporate tax revenue would fall by $1.2 trillion. The remainder of the revenue loss would be due to the repeal of estate and gift taxes.

On a dynamic basis, the plan would reduce federal revenue by $191 billion over the next decade. The larger economy would boost wages and thus broaden both the income and payroll tax base. As a result, the federal government would see $566 billion in additional individual income tax revenue and $683 billion in additional payroll tax revenue. On the other hand, corporate income tax revenue would actually decline even more on a dynamic basis. This is because the plan would encourage more investment and result in businesses deducting more capital investments, which would reduce corporate taxable income.

Table 4. Ten-Year Revenue Impact of the House Republican Tax Plan (Billions of Dollars)
Tax   Static Revenue Impact (2016-2025)   Dynamic Revenue Impact (2016-2025)
Source: Tax Foundation Taxes and Growth Model, March 2016.
Note: Individual items may not sum to total due to rounding.
Individual Income Taxes   -$981   $566
Payroll Taxes   $0   $683
Corporate Income Taxes   -$1,197   -$1,324
Excise taxes   $0   $57
Estate and gift taxes   -$240   -$240
Other Revenue   $0   $68
Total   -$2,418   -$191
The House Republican tax plan contains a number of significant base broadeners. Eliminating all itemized deductions except for the mortgage interest deduction and the charitable deduction would significantly broaden the income tax base and raise about $2.3 trillion over the next decade.[2] In addition, the plan would eliminate most individual credits, except for the Child Tax Credit, the Earned Income Tax Credit, and the American Opportunity Tax Credit. This would raise an additional $104 billion over the next decade.

Expanding the standard deduction, replacing the personal exemption with a dependent credit, and expanding the Child Tax Credit would reduce revenue slightly ($127 billion over the next decade).

On the business side, there are two significant base broadeners. The elimination of the interest deduction would raise $1.2 trillion over the next decade. In addition, making business taxes border-adjustable would raise another $1.1 trillion over the next decade. The elimination of business credits and deductions and the limit on net operating losses would bring in an additional $701 billion over the next decade.

The largest sources of revenue loss in the first decade would be the individual and corporate rate cuts and the move to full expensing of capital investments. Reducing individual income tax brackets to 12, 25, and 33 percent would reduce revenue by about $2 trillion over the next decade, while cutting the corporate income tax to 20 percent would reduce revenue by $1.8 trillion over the next decade.[3] Capping the tax rate on pass-through businesses would reduce revenue by $515 billion (after accounting for the new, lower tax brackets). Full expensing of capital investment would reduce revenue by $2.2 trillion over the next decade.

Table 5. Ten-Year Revenue and Economic Impact of the House Republican Tax Plan by Provision
Provision   Billions of Dollars, 2016-2025
Static   GDP   Dynamic
Eliminate the alternative minimum tax   -$354   -0.3%   -$428
Eliminate all itemized deductions except for the mortgage interest and charitable contributions deduction   $2,331   -0.4%   $2,218
Eliminate most personal credits   $104   0.0%   $104
Tax capital gains and dividends as ordinary income, allow a 50% deduction for capital gains, dividends, and interest   -$609   0.3%   -$531
Allowfull expensing of capital investments   -$2,236   5.4%   -$883
Disallow interest deduction on new loans   $1,194   -0.1%   $1,176
Border adjust business taxes   $1,069   -0.4%   $936
Eliminate section 199 and all business credits, and limit net operating loss deductions   $701   -0.1%   $677
Repeal the estate and gift taxes   -$241   0.9%   -$20
Expand and consolidate the standard deduction, replace the personal exemption with a dependent credit, and expand the Child Tax Credit   -$127   0.0%   -$112
Consolidate individual income tax brackets into three of 12 percent, 25 percent, and 33 percent   -$1,954   1.5%   -$1,641
Tax income derived from pass-through business at a maximum rate of 25%   -$515   0.6%   -$388
Lower the corporate income tax rate to 20%   -$1,807   1.7%   -$1,325
Enact a deemed repatriation of deferred foreign-source income   $185   0.0%   $185
Move to a territorial tax system   -$160   0.0%   -$160
Revenue Impact Beyond the First Decade

Although the plan will reduce federal revenues by $2.4 trillion over the next 10 years, much of the cost is due to transitional, or one-time, revenue losses that disappear eventually. There are two provisions that contribute significantly to these transitional costs: full expensing of capital investments and the elimination of the interest deduction.

As stated above, moving to the full expensing of capital investments would reduce federal revenue by $2.2 trillion over the next decade. There are two revenue impacts from moving to expensing. First, businesses will be allowed to fully write off investment costs the first year. This speedup of cost recovery increases the present value of cost recovery and reduces federal revenue each year. Second, after full expensing is enacted, businesses will continue to write off investments they made under the old depreciation regime. When businesses fully write off new investments and continue to write off old investments, corporate taxable income falls significantly in those years, greatly reducing corporate revenue. However, once old depreciation has expired, the annual cost of expensing drops.

The plan also eliminates the deduction for net interest payments by businesses. We assumed that this provision would be prospective, or it would only apply to interest on loans made after the proposal went into effect. As a result, businesses would continue to deduct interest from loans acquired before enactment of the plan, reducing the amount of revenue this provision would raise in the first decade. In later decades, as old debt is retired, more interest would no longer be deductible, resulting in more revenue.

The plan also has one transitional revenue raiser: deemed repatriation. This proposal would tax corporations on their current deferred offshore profits. We assume that this provision would only raise revenue in the first 10 years.

As a result of these transitional issues, the plan would cost much less in subsequent decades. We estimate that the proposal would reduce federal revenue by 1.1 percent of GDP in the first decade, 0.5 percent of GDP in the second decade, and 0.4 percent of GDP after all transition costs have phased out.

Components of the Dynamic Revenue Estimate

The dynamic revenue impact of -$191 billion over the next decade can be broken down into three pieces: the marginal tax cuts, growth, and the base broadeners.

The first piece is the marginal tax rate reductions in the plan. These provisions include, but are not limited to, the cut in the corporate income tax rate to 20 percent, full expensing of capital investments, and the reduction in marginal tax rates for most individuals. Combined, these tax cuts would reduce federal revenue by $8 trillion over the next decade if enacted alone.

The second piece is the expected increase in revenue due to economic growth. As stated previously, this plan would reduce marginal tax rates on work, saving, and investment. Our model finds that these marginal tax rates would significantly increase the long-run size of the economy. The larger economy would boost wages and thus increase the tax base, especially for the individual income and payroll taxes. As a result, the growth from the plan would reduce the 10-year cost of the plan by roughly $2.5 trillion.

The third and final piece is the base broadeners in the plan. The House Republican tax plan contains a number of significant base-broadening provisions, such as the elimination of most itemized deductions, the elimination of the deduction for net interest expenses for businesses, and the border adjustment of businesses taxes. Combined, these provisions significantly broaden the tax base and reduce the revenue loss of the tax plan by $5.3 trillion over the next decade.

Distributional Impact of the Plan

On a static basis, the House Republican tax plan would increase the after-tax incomes of taxpayers in every income group. The bottom 80 percent of taxpayers (those in the bottom four quintiles) would see a small increase in after-tax income between 0.2 percent and 0.5 percent. Taxpayers in the top 10 percent would see a 1 percent increase in after-tax income. Taxpayers in the top 1 percent would see the largest increase in after-tax income on a static basis of 5.3 percent, driven by both the lower top marginal tax rate and the lower corporate income tax.

On a dynamic basis, all taxpayers would see an increase in after-tax income of at least 8.4 percent. The top 1 percent of taxpayers would see an increase in after-tax income of 13 percent on a dynamic basis.

Table 6. Static and Dynamic Distributional Analysis
Changes in After-Tax Incomes
Income Group   Static   Dynamic
Source: Tax Foundation, Taxes and Growth Model (March 2016 version)
0% to 20%   0.3%   8.4%
20% to 40%   0.5%   8.6%
40% to 60%   0.2%   9.1%
60% to 80%   0.2%   8.5%
80% to 100%   1.0%   8.8%
90% to 100%   1.5%   9.3%
99% to 100%   5.3%   13.0%
TOTAL   0.7%   8.7%

Conclusion

The House Republican tax plan would reform both the individual income tax and convert the corporate income tax into a destination-based cash flow tax. This plan would significantly reduce the cost of capital and reduce the marginal tax rate on labor. These changes in the incentives to work and invest would greatly increase the U.S. economy’s size in the long run, boost wages, and result in more full-time equivalent jobs. On a static basis, the plan would reduce federal revenue by $2.4 trillion, most of the revenue loss being from one-time transitional costs. However, due to the larger economy and the significantly broader tax base, the plan would reduce revenue by $191 billion over the next decade.

ccp

  • Power User
  • ***
  • Posts: 10161
    • View Profile
tax cuts are a sham
« Reply #635 on: January 30, 2017, 02:46:07 PM »
Under the proposal the bottom pay more and top get by far the biggest breaks and many in between get jack shit.   I am not for this. 


Current Law   Proposal   Single Filers   Married Joint Filers   Head of Household Filers
10%   12%   $0 to $9,275   $0 to $18,550   $0 to $13,250
15%   12%   $9,275 to $37,650   $18,550 to $75,300   $13,250 to $50,400
25%   25%   $37,650 to $91,150   $75,300 to $151,900   $50,400 to $130,150
28%   25%   $91,150 to $190,150   $151,900 to $231,450   $130,150 to $210,800
33%   33%   $190,150 to $413,350   $231,450 to $413,350   $210,800 to $413,350
35%   33%   $413,350 to $415,050   $413,350 to $466,950   $413,350 to $441,000

Crafty_Dog

  • Administrator
  • Power User
  • *****
  • Posts: 49762
    • View Profile
Re: Tax Policy
« Reply #636 on: January 30, 2017, 09:11:11 PM »
"I wrote to the author of this piece for further information, will update if I receive any reply of substance."

Please do!

I would note however that this is from July of last year.  My guess whatever happens now will vary quite widely from it.

DougMacG

  • Power User
  • ***
  • Posts: 12043
    • View Profile
Re: tax cuts are a sham
« Reply #637 on: January 30, 2017, 11:11:25 PM »
Under the proposal the bottom pay more and top get by far the biggest breaks and many in between get jack shit.   I am not for this. 
Current Law   Proposal   Single Filers   Married Joint Filers   Head of Household Filers
10%   12%   $0 to $9,275   $0 to $18,550   $0 to $13,250
15%   12%   $9,275 to $37,650   $18,550 to $75,300   $13,250 to $50,400
25%   25%   $37,650 to $91,150   $75,300 to $151,900   $50,400 to $130,150
28%   25%   $91,150 to $190,150   $151,900 to $231,450   $130,150 to $210,800
33%   33%   $190,150 to $413,350   $231,450 to $413,350   $210,800 to $413,350
35%   33%   $413,350 to $415,050   $413,350 to $466,950   $413,350 to $441,000

The article lists both static and dynamic scoring.  Look only at the dynamic  numbers (from a reliable source).  The static numbers are only for the deniers of the science, and to know in advance what the left will say.

In general, I disagree with you.  Some rich are losing hundreds of thousands in deductions. Still they will face a lower marginal tax rate on the next dollar of income - making them more likely to earn it, which is a good thing for the economy.  It's hard to help the lower earners with tax rate cuts; the lowest two quintiles pay in very little.  They will be helped by a growing economy.

This is a step in the right direction.  And as Crafty suggests, not necessarily the final draft.

ccp

  • Power User
  • ***
  • Posts: 10161
    • View Profile
Re: Tax Policy
« Reply #638 on: January 31, 2017, 05:08:47 AM »
Doug,
I have seen this chart before . It is right on Trump's website.

people making 37 to 91 K and 190 to 413K get no tax break at all.  While others get something.  And if mortgage interest can no longer be deducted then at least for those and probably many others who fall in between they get an effective tax increase. 

He ran on tax cuts for "everyone"

Not true , plain and simple.  We were bamboozled
 

Crafty_Dog

  • Administrator
  • Power User
  • *****
  • Posts: 49762
    • View Profile
Re: Tax Policy
« Reply #639 on: January 31, 2017, 07:04:10 AM »
"Eliminates all itemized deductions besides the mortgage interest deduction and the charitable contribution deduction."

This sounds to me like mortgage can still be deducted , , ,

DougMacG

  • Power User
  • ***
  • Posts: 12043
    • View Profile
Tax Reform "coming in weeks" Big League
« Reply #640 on: February 10, 2017, 08:50:06 AM »
We talked about the details, I've been wondering about the timing.  I have been telling people that the tax reform will be retroactive to Jan 1.  My prediction record around has not been so good...

I realize he has cabinet officials to get through, a porous border to stop up and a Supreme Court pick of the highest priority.  Not to mention healthcare and he is already being accused of presenting change in shock and awe fashion.  In addition to all that and regulatory reform that is equally urgent, he will be judged a complete failure if his economic growth record is not FAR above Obama's, and tax reform is the most direct way to get at that.

I can only hope they are taking their time in order to get it right.  It has to be good.  It has to pass.  It has to work, and it has to have some cover to answer the completely predictable complaints that will come from his opponents.  But everyday he waits, we are giving away revenues and delaying the surge of growth that most of us want.

Why would investment pick up based on unannounced new rates and how do you split the calendar year into a two system return.  e.g. How much of your 2017 income was earned before March 3rd or April 7th??!  Delay it a year or phase it in and certain recession sets in while people postpone transactions and investments decisions in waiting.  See 1981-1982.

http://www.foxbusiness.com/politics/2017/02/09/trump-says-big-league-tax-reform-details-coming-in-weeks.html

Crafty_Dog

  • Administrator
  • Power User
  • *****
  • Posts: 49762
    • View Profile
Wesbury: KISS
« Reply #641 on: February 13, 2017, 03:09:51 PM »
________________________________________
Keep It Simple, Stupid (KISS) To view this article, Click Here
Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist
Date: 2/13/2017

The biggest tax debate in Washington right now is not between Republicans and Democrats, but between Republicans and Republicans. Both sides of the debate seem to understand that the US tax code, particularly the fact that the US has the highest corporate tax rate of any industrialized country, is harming the competitiveness of US companies.

Both sides want to cut this tax rate and both sides want to allow for full and immediate expensing of business investment in plant and equipment. Both sides also propose to end the deduction for the interest companies pay on their (new) debts.

What they're fighting about is making the US corporate tax system "border adjustable." Some want to exempt from taxation any income generated by exports, and at the same time, no longer allow US companies to deduct the cost of imports from revenue. Like a Value-Added Tax (VAT) used in many other countries, the idea would be to promote exports. Meanwhile, it would create a level playing field between foreign and US companies trying to sell to US consumers.

Let's say the new tax rate is 20%. A Napa Valley vineyard could produce a $100 wine and pay $20 in taxes. Then, after a retailer sells that bottle for $150, the retailer pays a $10 tax on their $50 profit. Total, the IRS gets $30. If the retailer buys the $100 bottle from a French vineyard and sells it for the same $150, the retailer now pays the 20% tax rate on the full $150, and so sends the IRS the total tax of $30.

The retailer's revenues don't change, but its tax payments to the IRS soar while its after-tax profits plummet. In effect, a border adjustable tax forces US retailers to attempt to extract tax payments from foreign producers or US consumers. This is why retailers in the US are fighting so hard against it.

Some say retailers shouldn't care because the value of the dollar will soar as well, reducing the cost of imports. But, if this is really true, why haven't all the other countries with border adjustments in their VATs been able to take down the dollar? The theory might work on an academic chalkboard, but the value of the dollar depends on many factors. Betting on a stronger dollar to fix border adjustable tax rate problems is a HUGE gamble.

Don't get us wrong, the US should have lower tax rates. But why not just do it within the corporate tax system we already have instead of a system that's never been tried before? Trillions of dollars of decisions have been made based on the tax system we have in place today. Having the government suddenly change the "rules of the game" will create massive windfall winners and losers that may completely offset any potential positives from a change in the tax code.

Meanwhile, what if the forecast of a stronger dollar really happens? Many emerging-market companies borrow in dollars and might find it hard to repay their debts at the same time they find it tougher exporting to the US. Would the US find itself on the hook for foreign bailouts? And what about US exporters? Wouldn't a stronger dollar make it harder for Boeing to sell abroad and compete against Airbus? Would Boeing then lobby the government for looser monetary policy and a weaker dollar?

Instead, we need to keep tax reform simple. Policymakers should focus on cutting tax rates and excessive regulation (to make the US more competitive) and not get distracted by policy changes that will create big (and often arbitrary) windfall winners and losers.

Crafty_Dog

  • Administrator
  • Power User
  • *****
  • Posts: 49762
    • View Profile
Ret. Sen. Phil Gramm on Border Adjustment Tax
« Reply #642 on: February 23, 2017, 05:46:27 AM »
Sen. Gramm has a PhD in Economics IIRC:

How ‘Border Adjustment’ Poisons Tax Reform
The House’s 20% import fee is political industrial policy that will convulse the economy. Better to follow the 1986 model.
Photo: Getty Images/iStockphoto
By Phil Gramm
Updated Feb. 22, 2017 7:03 p.m. ET
137 COMMENTS

The goal of tax reform is to collect revenues while reducing the distorting influence that taxes impose on economic efficiency and growth. The 1986 tax reform stripped out deductions and credits—which had distorted resource allocation and sapped economic efficiency—and collected roughly the same amount of taxes with a 28% top individual rate and a 34% corporate rate that had previously been collected with a 50% top individual rate and a 46% corporate rate.

The economy boomed not only because the lower individual and corporate rates increased incentives to work, save and invest, but because stripping out tax-favored provisions reduced the drag on economic efficiency that is caused by allocating resources politically. Today the lesson of 1986 has been almost completely lost in the fixation on lower rates. The House border-adjustment proposal, with its 20% corporate tax rate, is a prime example.

Under that plan, revenues from exports would be excluded when determining profits for tax purposes, while the cost of imports would not be deductible as a business expense. That’s the equivalent of heavily subsidizing exports and imposing the new 20% corporate tax on imports. By assuming that the plan would not change international capital transactions, and therefore trade balances, the House assumes it would ultimately push up the value of the dollar by 25%.

This would offset the cost that the proposal imposes on consumers, who would be buying imports with a more valuable dollar. In the same way, the tax preference for exporters would also disappear as the cost of buying U.S. exports abroad rises with the dollar. Thus all exchange-rate-adjusted prices would return to where they were before border adjustment—except that with imports accounting for $600 billion more than exports, the 20% tax would produce a $120 billion annual revenue windfall.

In this happy world of assumptions, foreign producers, not American consumers, would absorb the cost of the new tax. Yet what is missing is any analysis of how tax preferences for exports and penalties on imports would drive up the value of the dollar. The real-world adjustment process would involve painful dislocations of capital and labor.

If imports cannot be deducted as a business expense, retailers selling imports and manufacturers using imported parts would face an immediate explosion in costs, which they would try to pass on to customers. Higher retail prices would result in fewer purchases, lower profits, layoffs, and the failure of marginal businesses. As the demand for imports declines, fewer dollars would be exchanged for foreign currencies to buy imports, and the value of the dollar would start to rise.

Similarly, since revenues coming from exports would not be taxable under the House bill, profits, capital investment and employment would surge in exporting industries. Cheaper U.S. exports would cause foreigners to demand more dollars to purchase them, and the value of the dollar would rise.

If the value of the dollar actually appreciates over time by 25%, all of these business adjustments then would have to be reversed. The 12% of the economy that produces exports would experience first a boom and then a bust, while the 15% of the economy using imports would experience a bust and then a boom.

If everything eventually returns to where it started—an improbable event, given that the value of U.S. exports plus imports makes up only 0.3% of total dollars traded—border adjustment is simply a gimmick that convulses $5.2 trillion of the economy to collect $120 billion in new taxes. If the value of the dollar does not rise by 25%, border adjustment is a massive industrial policy that distorts a larger share of the economy than all the special-interest provisions in all the other U.S. tax laws combined.

Even if we imagine that the value of the dollar could instantly rise by 25%, circumventing the adjustment process, the list of unintended consequences would still be immense. Much of the world’s public and private debt is denominated in dollars, and a rapid increase in the value of the dollar would cause massive financial upheavals and bankruptcies. A 25% increase in the dollar’s value would imperil American investments abroad—including hundreds of billions of dollars in private and state pension funds and university endowments. The domestic tourism industry, which does not get a tax subsidy on its sales to foreigners visiting the U.S., would be devastated.

Border adjustment will be challenged under international trade agreements. Proponents tell us that not taxing exports is only treating our income tax like a value-added tax, which normally is not imposed on exports. But countries with VATs also have income taxes. Could the U.S. persuade the World Trade Organization that exempting exports from income taxes is the equivalent of doing so for a VAT or sales tax? That’s doubtful, but if the answer is yes, other countries could do it as well—dissipating any U.S. advantage from subsidizing exports.

No other country in the world disallows the deductibility of imports, and here there is no parallel to a VAT. This policy is protectionism pure and simple, and the WTO would surely say so, opening America up to retaliation and possibly triggering a trade war.

Lower tax rates stimulate the economy only in the broader context of the overall tax code. The 1986 reform not only cut rates, it also made the rest of the tax code more efficient. The House bill “pays” for its 20% corporate tax rate by implementing policies that have little basis in economic logic, hinder economic efficiency, violate the letter and the spirit of numerous trade agreements, subject the economy to excruciatingly painful adjustments, expose America and the world to unacceptable economic risks—and in the process diminish or even eliminate the positive effect of the 20% rate.

If we do the hard work of stripping away subsidies and preferences in the existing tax code while lowering rates, Republicans can follow a proven path by adopting another 1986-type tax reform that would make the tax system more efficient and expand economic growth. Even if the resulting corporate tax rate is substantially above 20%, such a reform would help the economy, and federal revenues, grow.

Mr. Gramm, a former chairman of the Senate Banking Committee, is a visiting scholar at the American Enterprise Institute.

ccp

  • Power User
  • ***
  • Posts: 10161
    • View Profile
Re: Tax Policy
« Reply #643 on: February 27, 2017, 08:55:44 AM »
The property tax deduction is in danger .  So effectively many people in the middle will get tax increase if they own property and are in tax brackets that are NOT getting any break

Some of Tthe rich already don't pay property tax in NJ.  They have ways around it  - like hiring a low wage employee to grow some vegetables and claim it is farm.

https://www.yahoo.com/finance/news/gop-tax-plans-could-eliminate-083155224.html

Fairness my ass

G M

  • Power User
  • ***
  • Posts: 17454
    • View Profile
Re: Tax Policy
« Reply #644 on: February 27, 2017, 05:34:52 PM »
The property tax deduction is in danger .  So effectively many people in the middle will get tax increase if they own property and are in tax brackets that are NOT getting any break

Some of Tthe rich already don't pay property tax in NJ.  They have ways around it  - like hiring a low wage employee to grow some vegetables and claim it is farm.

https://www.yahoo.com/finance/news/gop-tax-plans-could-eliminate-083155224.html

Fairness my ass

Yes, but it's a nice way to hammer the blue states.

DougMacG

  • Power User
  • ***
  • Posts: 12043
    • View Profile
Re: Tax Policy
« Reply #645 on: February 27, 2017, 06:21:44 PM »
Yes, but it's a nice way to hammer the blue states.

Right, but also (further) punishing the red voters in the blue states.

I wrote about this earlier, that NJ ad MN among others were going to get hammered.

Yes it makes sense, but it could be a partial exclusion or have a  phase in period.

One thing about extreme ideas like this is that it most likely isn't going to happen.  Why not propose tax reform they can pass and pass it now, instead of talking like a think tank while they have a most certainly temporary governing majority.

G M

  • Power User
  • ***
  • Posts: 17454
    • View Profile
Re: Tax Policy
« Reply #646 on: February 27, 2017, 07:11:50 PM »
If you live in a blue state, it's past time to leave.


Yes, but it's a nice way to hammer the blue states.

Right, but also (further) punishing the red voters in the blue states.

I wrote about this earlier, that NJ ad MN among others were going to get hammered.

Yes it makes sense, but it could be a partial exclusion or have a  phase in period.

One thing about extreme ideas like this is that it most likely isn't going to happen.  Why not propose tax reform they can pass and pass it now, instead of talking like a think tank while they have a most certainly temporary governing majority.

DougMacG

  • Power User
  • ***
  • Posts: 12043
    • View Profile
First this,  GM: "If you live in a blue state, it's past time to leave."

Tax prison:  If I move to the moon, the inflation-only "gains" on my holding of MN property for decades are still taxable in MN and the US at punitive personal rates.  I don't plan to earn much more for our lousy government at these rates.  I just want back whatever I can get of what I already earned.

---------------------------------------------------------------
Treasury Secretary Mnuchin says: We're committed to 'very significant' tax reform by August recess
http://www.cnbc.com/2017/02/23/treasury-sec-mnuchin-says-were-committed-to-very-significant-tax-reform-by-august-recess.html

I know they have a lot on their plate and this is hard but I don't understand why this isn't ready to go now, retroactive to the first of THIS YEAR.  The so-called 'unified' Republican government told the American people they were ready to govern.  I did not understand that to mean, ready to govern using the Obama-Pelosi-Reid-Schumer-Durbin-Ellison tax code!

The delay in implementing tax rate cuts under Reagan cost us two years of extreme economic calamity:
https://en.wikipedia.org/wiki/Early_1980s_recession
A human tragedy of measurable proportions.  See the graph below.

The current economic miss is avoidable.  As Scott Grannis might say, close the gap, and do it before $3 trillion lost of GDP becomes 4, 5 and 6 trillion!



Look at the flat line stagnation before the Reagan tax rate cuts took effect and the steep recovery that closed that gap.  Then look at the gaping hole caused by our 1.9% Obama "growth" and ask why we want to wait to August, or never(?), to try to close it.  We are going on 10 years of lost economic growth.  Some of those millions leaving the work force aren't ever coming back.  What part of crisis and disaster don't they understand.  Do we need to become Venezuela eating zoo animals before we take decisive action?  http://www.telegraph.co.uk/news/2016/08/19/hungry-venezuelans-break-into-caracas-zoo-and-butcher-a-horse/

As I wrote before inauguration, skip the endzone dance and PLEASE get to work.  This isn't some B or C level priority!

 Crisis, What Crisis?

« Last Edit: March 03, 2017, 06:35:18 AM by DougMacG »


ccp

  • Power User
  • ***
  • Posts: 10161
    • View Profile
Forbes to Ryan - your idea is ridiculous
« Reply #649 on: March 09, 2017, 04:55:47 PM »
http://www.newsmax.com/Newsmax-Tv/Steve-Forbes-Border-Tax-Trump/2017/03/09/id/777881/

As for me I have given expecting even a smidgeon of a tax break.

As always I get screwed for being *sorta* "upper middle" class.

Gee I don't feel rich having to go to work like everyone else.  I have no problem giving tax breaks to everyone and to businesses.  But most people are not business owners they are employers.

And employers are not going to increase wages with their windfalls.  Yes they may create more jobs but what about the people who already have jobs who are working hard and going no where which is the majority of Americans.