“President Donald Trump and congressional Republicans are proposing a tax plan that they say will be simple and fair,” The Associated Press reports.
“In a document obtained by The Associated Press on Wednesday, their outline a blueprint for almost doubling the standard deduction for married taxpayers filing jointly to $24,000, and $12,000 for individuals,” AP reports. “The plan calls for cutting the corporate tax rate from 35 percent to 20 percent. The GOP proposal also calls for reducing the number of tax brackets from seven to three with a surcharge on the wealthiest Americans.”
“The plan also leaves intact the deduction for mortgage interest and charitable deductions,” AP reports. “The White House and Republicans plan a formal roll out later Wednesday.”
“President Donald Trump has two red lines that he refuses to cross on overhauling taxes: the corporate rate must be cut to 20 percent and the savings must go to the middle class,” AP reports. “Gary Cohn, the president’s top economics aide, says any overhaul signed by the president needs to include these two elements.”
“Republicans will unveil sweeping changes to America’s tax code Wednesday in a proposal that dramatically lowers taxes on businesses and many households but remains silent on thorny issues such as how to pay for it all,” Ylan Mui reports for CNBC. “The framework—a joint product of the Trump administration and Republican leadership—calls for lowering the corporate rate from 35 to 20 percent. It would also bring down the rate for so-called pass-through businesses to 25 percent; currently, they are taxed under the individual code.”
“The plan, described to CNBC by multiple sources, would collapse the current seven personal tax brackets to just three: 12, 25 and 35 percent. It eliminates the deduction for state and local taxes, but nearly doubles the standard deduction. The child tax credit also would be substantially increased, though it was unclear by exactly how much,” Mui reports. “The tax reform plan being unveiled Wednesday cuts the top individual income tax rate from 39.6 to 35 percent, although lawmakers received the green light to add a higher fourth rate to respond to pushback, according to a source familiar with the discussions.”
“The framework raises the bottom tax rate from 10 to 12 percent, which primarily affects low-income households. Doubling the standard deduction and expanding the child tax credit could offset that increase for poor households—and possibly result in more people paying no taxes at all,” Mui reports. “But experts said that the income brackets that lawmakers set for each tax rate would determine whether that is the case.”
MacDailyNews Take: As we wrote back in April: “We’ll see where it all ends up (the corporate tax rate won’t end up being 15%, but it may end up being 20-25%, which is certainly better than the stifling 35% it is now). As we’ve been saying for many years now, the U.S. corporate tax rate is way too high. Obviously.”
Apple CEO Tim Cook and U.S. President Donald Trump at tech summit in June 2017Under the current U.S. corporate tax system, it would be very expensive to repatriate that cash. Unfortunately, the tax code has not kept up with the digital age. The tax system handicaps American corporations in relation to our foreign competitors who don’t have such constraints on the free flow of capital… Apple has always believed in the simple, not the complex. You can see it in our products and the way we conduct ourselves. It is in this spirit that we recommend a dramatic simplification of the corporate tax code. This reform should be revenue neutral, eliminate all corporate tax expenditures, lower corporate income tax rates and implement a reasonable tax on foreign earnings that allows the free flow of capital back to the U.S. We make this recommendation with our eyes wide open, realizing this would likely increase Apple’s U.S. taxes. But we strongly believe such comprehensive reform would be fair to all taxpayers, would keep America globally competitive and would promote U.S. economic growth. – Apple CEO Tim Cook, May 21, 2013
MacDailyNews Note: Please keep the discussion civil and on-topic. Off-topic posts and ad hominem attacks will be deleted and those who post such comments will be moderated/blocked. Permanent loss of screen name could also result.
The sooner the better. The Child tax credit should be reduced, especially if the child comes from a single parent family, its the duty of the father and mother to look after their child till they are 18 years old after which they can look for themselves. If mum and dad cannot handle that responsibility then they should not have children. Too many people wants to have their cake and eat it and getting away with it.
Snoop Dogg advocates:
“The Child tax credit should be reduced, …”
By any chance, do you happen to support the maintenance of the minimum wage (passed almost a decade ago) … as many Republicans in Congress prefer… because they contend increasing the “minimum wage” [sic] … would be hamper economic growth?
My opinion is about Child Credits, your minimum wage tangent is completely different. Saying that i dont agree with the Republican (or whoever) stance you mention on the minimum wage. Dont confuse things by purring words into my mouth
It was sarcasm in response to the bulk of your comment:
” especially if the child comes from a single parent family, its the duty of the father and mother to look after their child till they are 18 years old after which they can look for themselves. If mum and dad cannot handle that responsibility then they should not have children. Too many people wants to have their cake and eat it and getting away with it.”
CGC
Snoop Dogg…I get where you are going, and it leads to the GOP obsession with “takers.” Your proposal faces glaring issues:
What if one of the parents dies? Are you saying that the child tax credit for this “single parent family” should be reduced or eliminated?
Similarly, a parent could divorce and remarry.
Or two people may have a child but choose not to get married. How would that work?
I concur that in an ideal world children would be supported by both parents. I understand your concern with the idea of “incentivizing” people to have kids in excess of their financial means to raise them. But the irony is that the GOP generally opposes other policies which might help to reduce the prevalence of single-parent families in this country. In the grand scheme of things, you are way too focused on a tax policy detail which likely has little impact on the issue you identified.
You misunderstood me, doesn’t matter if the couple is married or not, if 2 people have children then they should plan it and be responsible for it. I am referring to stupid single mums with 5+ kids from 3 + different fathers living on welfare, and these absentee fathers make no contribution. Use condoms and contraception, i am not saying one should not have relationships. However if a kid is born, dont reley on the tax payers to support them, its their responsibility to support their kids or dont have them. This is why child credits should be reduced as its being abused. Obviously if a parent dies and therefore the other parent is a single parent without thier choice, that is unfortunate special circumstance, and the remaining parent is entitled to govt help
“The framework RAISES the bottom tax rate from 10 to 12 percent, which primarily affects low-income households….”
“The tax reform plan … CUTS to 35 percent, although lawmakers received the green light to add a higher fourth rate to respond to pushback…”
And this massive tax cuts for the rich (less than 1% of Americans including Trump, many of his cabinet secretaries, e.g., Mnuchin, Price, DeVos and cronies; and donors) was supposed to be partly funded by severely cutting MEDICAID to almost a trillion of dollars per year — had the Republican “Trumpcare” health reform plan succeeded.
“Doesn’t matter much what the tax rate increase is if now you have little to no taxable income.”
It really depends on where the “income cut off” at the bottom is.
But imagine a single person, who is just starting work, earning $30-60k/y — saddled with student loans and had to live in urban areas. Every single dollar counts. In fact, even those earning $100-150k/y in high tech urban areas can be “homeless” — if you followed stories about living in progressive urban areas.
The bottom line is that if the “tax rates” are maintained or just barely reduced for those in the lower 25% tax brackets would not be a tax boon to about 70-80% of Americans.
In contrast, just a 1% tax reduction at the uppermost income tax bracket would mean tens of thousands of dollars tax savings for 1% of Americans.
Presumably the “income cut off” is much higher, because the standard deduction almost doubled.
As for the single person, just starting out in urban areas with student loans, yes, I can imagine it, as I was that person back in the mid-80s. And yes, every dollar did count, but you know you have to suck it up when you’re just starting out.
As for tax fairness, there are a million ways to argue fairness. The system is already progressive. The tax rates always seesaw between more and less progressive, depending upon Administration, but they’re always progressive. You’re not going to always get more and more progressive rates.
BTW, I estimate I’m going to have to pay more since I’m in the 20% bracket now, and I assume I’ll be in the 25% bracket in the future.
KenC states:
“As for tax fairness, there are a million ways to argue fairness. The system is already progressive.”
If that is true: would you suggest that the propose major tax cuts make the tax system more progressive or less? During the past three decades or so, do you ever recall a Republican controlled Congress that proposed a major tax cut legislation that’s meant mainly to be more progressive (fair) to the bottom majority (85%) of Americans?
Then, there’s the proposed justifications for the proposed tax cuts, already outlined in other posts.
It is well known what happened when the tax cuts during the time of Bush did lead to the budget surplus projected. And what’s one of the Republican proposals to close the deficit? — Cut Social Security benefits.
More recently, at the state level, Kansas proposed major tax cut to stimulate its economy.
First of all, don’t get saddled with loans, student or otherwise, especially if your post graduation income is prolly gonna be less than $60K! There are ways to get a college education without getting enslaved to debt! Yes, they may be harder or take longer, but I know too many 30-somethings who are completely paralyzed by massive school debt. They would have been much better off going to community/online/state schools instead of racking up debt at a private colleges.
HS students, for example, should dual enroll their junior/senior years. You can easily receive up to a year’s college credit by doing this, thus lowering overall college bill by $20-$40K.
HS students should also work their butts off in Math, language skills, and/or software programming. There are 100s, if not thousands of ways to do this very cheaply, and every one of these skills can provide future education and job opportunities. Think of how much time you spend in sports or gaming and imagine if you invested four years of that time learning a life-skill! before you get to college! It will put you WAY beyond most college freshman!
De-prioritize sports, gaming.
Every point on the ACT can save thousands! Work your butt off to get the best scores possible.
Unless you are incredibly gifted, (as in Division 1 University gifted), sports scholarships are an illusion, They give you $5K – $10K but you still have to pay the other $30K. Not to mention that you will be a slave to the athletic department for four years.
Music scholarships/opportunities can actually be quite excellent for even non-music majors if you become truly proficient on an orchestral instrument. (I’m just sayin’ instead of playing Destiny for two hours a day, what if you practiced/studied an instrument?)
College isn’t the only route for success. Everyone wants to have Europe’s “free” education system, but Germany, for example, doesn’t let everyone go to college, they funnel many people into trade/technical/ schools and apprenticeships. Consider your options!
Yes it does. Everyone needs to pitch in. If you can’t contribute to society financially, then the poor should be earning tax credits through volunteerism. America is rapidly becoming a land with 3% billionaires, 17% stressed out professionals who just want an honest pay for honest work, and 80% of the population slipping into poverty through bad education, bad diet, bad life choices, and a patchwork of uncoordinated charities creating a subsistence safety net, with totally inadequate federal leadership in ending poverty via job training and, yes, a serious dose of tough love. Walk through any major American city and you will see panhandling, druggies, and psychos. It is shocking compared to how society works here in Europe. So glad we moved!
What you’re not accounting for is the doubling of the standard deduction for low and middle-class income earners. That more than offsets the increase the bottom tax rate. Single deduction goes from 6,000 to 12,000 and for married couples from 12,000 to 24,000. You’ve got to include of the facts!
Do you really believe that doubling the single deduction for those in the bottom tax brackets (comprising more than 85% Americans) would justify lowering tax rates at the top tax brackets?
Note also that ALL Americans including those in the upper tax brackets would benefit from the doubling of the deductions you cited.
Even Trump is realizing the injustice of his tax cutting plan (that benefits Trump and many of his donors) that may jeopardize the passage of the proposed tax bill — so he is supposedly “willing” not to reduce the tax rate at the top tax brackets. More than likely, the Republican controlled Congress would include lowering the upper tax brackets, otherwise the tax cut bill would be pointless to them.
If you want to include ALL the facts, then what you should focus on are the alleged current tax deductions that the Republican controlled Congress have to remove to offset these planned tax cuts:
1) State and local income tax deductions
2) Home Mortgage loan deductions
3) and many others that are popular to the same interests groups that have huge lobbies that donate predominantly to the Republican party.
The aforementioned difficulties is the reason why up to now, the proposed tax cut plan remains sketchy.
Yes, and %age wise, the upper tax brackets benefit less than the lower ones. And did they really lower the top tax bracket? They’ve already stated that there will be a 4th bracket, due to a surcharge, which may make the top bracket the same as before. More than anything, this has turned 7 brackets into 4, the way it used to be in the 80s. As I mentioned above, taxes swing back and forth depending upon Admin.
KenC
As I stated earlier, it was in fact Trump who proposed during a meeting with Republicans and Democrats at the White House that there will be no tax cuts for the rich
However, the public speech of Trump in Indiana (?) and the one released in the media did not include the Trump promise and others proposed by the Democrats in their meeting with Sec. Mnuchin and other cabinet members involved in the preliminary meetings.
Just like the Obamacare repeal, the Republicans actually are not really united on the details of the tax cut proposals, more specifically what current tax deductions and credits would be removed to offset the tax revenues that would be lost with the proposed tax cuts.
Each of the aforementioned tax deductions and tax credits have powerful lobbies (and Republican donors) behind them, so it would be a tight rope balancing act to decide what to ax or keep.
More significantly, the Republicans were banking on the savings from Medicaid cuts (amounting to about a trillion dollars) had they succeeded in repealing the ObamaCare.
So far, the Republican controlled Senate has not succeeded in repealing ObamaCare because their proposed replacement is not acceptable even to those that voted Republican.
As a result, Trump proposed the “no tax cut” for the rich in an attempt to recruit a few Democrats, especially those in the more vulnerable Red states.
CGC
Your math about the increase in the standard deductions may not “include [all] of the fact.”
I’ll go you one better. The tax rate for corporations should be 0% ZERO! Pass all of the profits to the shareholders and let them pay the taxes. As it is now the profits are taxed twice. Once for the corporation and again when it’s distributed to the shareholders. Essentially it is double taxed. How is that fair?
it’s not, I agree…but as a matter of pragmatism, considering the jackasses of congress, 15% would bring overseas capital roaring back to our shores and our people.
depends on how the costs of the wages paid to people here to do the work stack up against the cost of much lower wages paid to people overseas to do the work,
not to mention the comparative expenses of acquiring land and the cost of building facilities here, compared to overseas, where everything is much cheaper. my guess is that corporations already over seas will stay put and just harvest the extra profit generated by lower taxes.
and yes, the u.s. govt could levy tariffs on overseas products, but that would only increase the costs of those products to the u.s. consumer, and things are kind of tough on people already – which is why walmart does so well selling cheap chinese products to low income consumers – as well as not paying their employees very well, and counseling them on how to get by and make ends meet by qualifying for food stamps. which are paid for out of my, and even your, taxes.
i think the solution you envision is not a simple as you may wish to think
I think you’ve been sucking trump’s dick too long.
No. Balanced budget amendment, then retire debt, then lower tax. Period. GOP is just going to create more debt than the last 40 years of failed trickle down.
As a fiscal conservative, I can say that reducing the corporate tax rate won’t do much to help the economy or create jobs. Before the flames start let me explain.
This is just finance 101.
Corporations are taxed on net income, not revenue. Corporations collect their revenue, pay all their expenses including payroll, investments, etc… and then are taxed on the remaining net income or profit. If they pay their employees more or re-invest in the company they will have a lower profit and pay lower taxes. Re-investement in a company is paid with pre-tax dollars. After additional write-offs and deductions most corporations pay much less than the 30-35%. Some corporations even pay zero taxes…look at GE.
If the corporate tax rate is reduced they will just be able to keep more of the profit and give their execs bigger bonuses. Reducing corporate taxes won’t increase employment since payroll is already paid before taxes. Corporations will only hire more people if they need to in order to meet demand not because of taxes.
Individuals are taxed on revenue. Taxes are taken directly from our paychecks and then we need to pay our expenses with post-tax money.
The best way to use taxes to grow the economy is to give tax cuts in individuals in the middle class or even lower middle class. Giving individuals tax cuts will give individuals more money to spend. People who live paycheck to paycheck will spend all of their tax savings which will create more demand or sales for corporations. This demand will will fuel the economy. When corporations see demand for their goods and services pick up, because people are spending more, they will hire more people to keep up with the demand.
It’s not complicated, but politicians who in corporate CEOs back pockets keep pushing for tax cuts for corporations. This is just so the CEO’s and politicians can make more money, not individuals.
One more thing. I am not exactly sure what the correct tax rate for corporations should be 35%, 30%, 20%, etc… but we should have that conversation.
My point is that a tax cut for individuals will go a lot further to improving the economy than a corporate tax cut.
The Republican’s new plan calls for three individual rates, 35%, 25% and 10% and a reduction to 20% in the corporate rate. The plan is just out.
The problem with reducing the corporate rate is that given all of the loop holes, many of the big corporations pay little to nothing in federal taxes.
I favor going back to the rate that existed when President Eisenhower was in office, or, if those are too high, then the rates in place when President Reagan took over.
“The problem with reducing the corporate rate is that given all of the loop holes, many of the big corporations pay little to nothing in federal taxes.”
One solution would be to have an alternative Minimum Tax wrt gross revenue or income, normalized to specific industries or sectors.
However, I doubt very much that a Republican controlled Congress would espouse such a solution as the said approach would be contrary to the interest of many of the donors and lobbyists that gravitate to the Republican party.
Fair point, but we can’t forget about the National Debt. Reducing tax revenue makes it harder to pay down the debt. Yes a better economy will help wrt to the debt, but we need to make sure our tax policy actually helps grow the economy.
Good article by a Republican. From his commentary:
“Virtually everything Republicans say about taxes today is a lie. Tax cuts and tax rate reductions will not pay for themselves; they never have. Republicans don’t even believe they will, they are just excuses to slash spending for the poor when revenues collapse and deficits rise. There is no evidence that tax reform raises growth, although it may improve fairness and tax administration. And the Republican idea that tax increases always crash the economy is belied by the experiences after Bill Clinton raised taxes in 1993 and Barack Obama did the same in 2013. The economy grew nicely and the stock market boomed in both cases.”
you’re almost there, John…and who benefits from the perpetual loans and the corporate “socialism”?
who?
Executives are the primary beneficiaries of corporate welfare.
The list of billionaires in the world today doesn’t include hardly anyone who invented a product that you can’t live without. Brilliant scientists like Einstein, Salk, or Pasteur didn’t die as multimillionaires. The professional management class are the ones who skim off the profits of the inventions and labor of the undemocratic feudalistic pyramid schemes that we call corporations. There is no meritocracy anymore. The billionaires of the world have either inherited their wealth (Waltons, L. Jobs) or skim money from transactions which may or may not benefit society (any Wall Street executive, Madoff, Buffett), or they just exploited a monopoly market position ( Rockefeller, Gates, Slim).
Bezos and Musk are about the only rich bastards today who are pumping their money back into the economy via tech ventures; to her credit Melinda Gates is giving away Bill’s wealth to improve the quality of life of an overcrowded planet. Billionaire Botvinnik, like Trump, just wants huge tax cuts so they can hoard more wealth. Nobody with a working brain believes that billionaires will spur the economy if you lower the tax rate. Eisenhower did exactly the opposite, giving the 1% elite a reason to spend and invest their obscene wealth and thus jump start the economy.
If memory serves me correctly, it was during the last Bush administration that there were massive tax cuts — with the justification that these tax cuts would stimulate companies and those in the high income tax brackets to invest (in the US) to stimulate the economy, increase job growth and employment, bring more tax revenues, etc., etc.
Did these rosy predictions come to reality?
There are many reasons of course, but by the end of the Bush administration the economy and stock market collapsed, the unemployment skyrocketed, the salaries of common workers decreased (relative to inflation) as there were no minimum wage low increases to match the inflation rate. In contrast, the salaries of corporate managements, especially at the top levels while steering companies that were either failing or proposed their manufacturing arm to be located in other countries.
Among the unexpected impacts of all these economic downturns was the lower state and local tax revenues. Also, many federal policies (not only during the Bush administration) tried to offset these tax cuts or other increasing federal programs (e.g., defense) by reducing federal programs that impacted many states. These caused difficulties among states, especially those mandated to have balanced budgets. All sorts of local taxes, including sales or fees were then imposed to offset loss in revenues — essentially tax increases or fees that mainly affect those in the lower income tax brackets. Also, many local programs were reduced or eliminated to balance state and local government budgets.
I will assume that the dignified president you slander as the “muslim usurper” is the twice elected President Barack Obama, a man who accomplished more in his lifetime than anyone on this forum.
There is a massive difference between Obama and GW Bush. For one, Bush started 2 offensive foreign wars. Obama started 0. Bush rang up trillions in national debt and thousands of troops lives. Obama stabilized the economy by winding down war spending as fast as he could and, per bipartisan demands, approved the corporate welfare that Congress drew up — and it prevented the recession from turning into a depression.
Obama also coordinated a major legislative reform, the AHA, which was a Republican plan for insurance industry welfare which didn’t bloat federal debt. Dubya passed major debt creating pharma welfare via unfunded Medicare Part D.
Bush presided over the fastest loss of jobs since Reagan. Obama presided over the longest economic expansion in US history — slowly but streadily.
Real estate had fully recovered and Wall Street had record profits when Obama left office, and it didn’t tricckle down to lower classes. But for some reason you think Trump’s tax plan as written by Goldman Sachs thieves will put more money in your pocket. You’re delusional. For every dollar you save in taxes, Trump saves 10, the federal government goes $11 in debt, and your children will be on the hook to pay interest on that debt while Donny Trump Jr parks his daddy’s inheritance in the Cayman Islands.
There is no sentence in any language in the history of the written word that justifies seventeen exclamation marks. You are prone to hyperbole and pretension. There is only one gaffe worse: ending your comment with “’nuff said.”
’nuff said!!!!!!!!!!!!!!!!
no multi-national corporation, but an idiot without accountants and lawyers, actually pays an effective 35% tax rate in America.
President Trump has delivered a forward looking tax reform framework that will let hard working Americans keep more of their money, simplify our system, end carve outs for special interests, and will help make our businesses competitive abroad. The Freedom Caucus looks forward to sending a final bill based on this framework to President Trump’s desk as soon as possible/ – The House Freedom Caucus
Yes, but get down into the details where they have to put their name on it, defining which of the companies in THEIR state is considered a special interest, and they’ll sink it OR cause it to be sunk by taking a position other republicans can’t accept due to THEIR interest in self preservation. It’s happened before, quite recently.
I take a wait and see approach rather than sing their praises prematurely.
Tax reform could be a wonderful thing, if done properly. But true tax reform is unlikely to happen any time soon because there are too many people and businesses relying on and profiting from our complex and convoluted tax system. This will not simplify our tax system because it does not get rid of deductions and such.
My primary concern is that this country begin to pay *in full* for the services it consumes. We need to logically work towards a balanced budget, and that will likely involve tax revenue increases in combination with spending reductions. Over the past four decades, the U.S. has tried several different approaches for magically generating tax revenue while reducing tax rates. The net effect has been a rapidly growing national debt, which now exceeds our GDP.
Concepts in the tax reform outline:
1) Lower the corporate rate from 35 to 20 percent
The way (distribution) in which taxes are collected can be even more important than the amount. As long as the reduction in business tax revenue is offset by tax revenue increases elsewhere, then I think that this could be good for the country in the long run.
2) Reduce the rate for so-called pass-through businesses to 25 percent; currently, they are taxed under the individual code.
I need to research this aspect of the proposal. I need to understand who this change would impact and why the current approach is considered to be wrong.
3) Collapse the current seven personal tax brackets to just three: 12, 25 and 35 percent (down from 39.6%). Lawmakers received the “green light” to add a higher fourth rate to respond to pushback, according to a source familiar with the discussions. Plus, the key information that is currently missing is the income range for each tax bracket. If 35% starts at $1M in taxable income, then that is one thing. If it starts at $100M then that is something else.
Personally, I would prefer four brackets – 10% (up to $100K), 20% (up to $200K), 30% (up to $1M) and 40% ($1M+). The taxable income ranges are just rough examples, depending on changes to deductions and the overall tax revenue needs and distribution plan.
To be clear, this really doesn’t simplify anything. The number of brackets does not change the process. You will still calculate your taxable income and then look up your taxes owed in a table.
4) Eliminates the deduction for state and local taxes, but nearly doubles the standard deduction.
I like the increase in the standard deduction. There should be an income floor under which no taxes are owed. Whether these are the right levels or not is subject to debate.
The deduction for the state and local taxes also makes sense to me. For far too long, this has been used as a means of redistributing taxes from the Fed to the states. A couple of states do not have income taxes, so they started allowing a sales tax offset as a compromise. This will reduce the complexity of federal income tax a bit, but will have major repercussions, especially in high tax states. I imagine that the GOP loves this provision because it will strike California the hardest.
One key concern is how this might affect lower income couples and individuals, even with the increase in the standard deduction.
5) The child tax credit also would be substantially increased, though it was unclear by exactly how much.
Although I have four kids and, thus, have benefitted from this tax credit over the years, I have never really liked it. I like the idea of supporting people raising children, because it is quite expensive. And, despite the griping of childless people who do not like paying for public schools and such, the kids eventually help them too. After all, someone has to fill out the job force when you retire, and it would help if they have a decent education, too.
The jury is open on changes to the child tax credit. It really depends on the degree of change. If I were a Congressperson, this is not likely an issue over which I would be willing to fall on my sword, unless there was an attempt to balloon it beyond reason (which seems highly unlikely).
Overall, I might be a supporter of this new tax plan. But there are far too many unknowns to make a definitive judgment at this point. Hopefully, we will see a more complete proposal soon.
This could be a small step in a good direction. But it does not simplify the system, so it is really not tax “reform” as much as tax tweaking.
My personal preference would be to eliminate most deductions, including the mortgage interest deduction and the charitable donation deduction. Deductions are just one of the tools politicians use to buy votes. A simple tax plan would exempt a certain amount of income from taxation (say the first $10K or $20K) and implement a few tax rate steps (for example, the four I listed above, or something along those lines) with no other deductions. You could almost figure out your income tax in your head. And it would be much simpler to predict tax revenues and tweak and balance the system in the future.
Zero taxes for maximum economic strength and world dominance, while using quantitative easing money-printing to pay for absolutely all socialist programs like highways, libraries, fire dept., Pentagon, bridges, sewer system, NSA, etc.
As somebody who doesn’t know much more about taxes than the average Joe, I believe that when rich people who stand to make a windfall tell you that you will benefit from this, typically is major BS. They will benefit while laughing at you, behind your back. The Rich have always been F’N over the poor since the beginning of time, and it is no different.
Once again eliminating the Inheritance Tax is being rolled out as a way to save the “Farmer” How many times are people going to fall for that one? That alone will save Trumps Family Billions, and maybe the best reason for running in the first place.
This is a terrible tax plan. For one thing, individuals who are saving for retirement, and people who itemize deductions could pay thousands more a year. That’s most of the middle class.
The effective corporate tax rate is lower than many other industrialized countries. Another bunch of lies by Republicans.
How does the average Republican fall for this crap? I know you’re stupid but voting for things that take money out of your pocket? That hurt your children?
Oh and what the hell does this have to to with Apple or technology? MDW RWNJs at it again.
Raise taxes of the most profitable corporations to 75% and up, depending on a tiered profit scale.
Oil, banks, real estate, advertising and medical are the closest to look at. Plus they can’t leave the country to avoid taxes. They rape people’s wallets so they should bare the burdan of society.
Also CEO pay shouldn’t be more than 100 times the lowest paid employee.
If you don’t like what I write, too bad, because this will make a difference for the common good.
All the money collected should go into education and healthcare for everyone.
“To me, selling giant tax cuts to rich people as responsible tax reform is like giving whiskey and car keys to teenage boys and calling it responsible parenting.”
Just announced: The cannot guarantee that taxes won,t be raised for the middle class. No doubt they will raise. Middle class always gets bent over backwards in preparation for the shaft.
And there goes the Freedom Caucus. They are more beholden to their consituents than the leaders, and none of them will want to go home and say “I raised your taxes and lowered the taxes of your bosses!”
The sooner the better. The Child tax credit should be reduced, especially if the child comes from a single parent family, its the duty of the father and mother to look after their child till they are 18 years old after which they can look for themselves. If mum and dad cannot handle that responsibility then they should not have children. Too many people wants to have their cake and eat it and getting away with it.
Doing the Chinese “one child policy” one better.
Snoop Dogg advocates:
“The Child tax credit should be reduced, …”
By any chance, do you happen to support the maintenance of the minimum wage (passed almost a decade ago) … as many Republicans in Congress prefer… because they contend increasing the “minimum wage” [sic] … would be hamper economic growth?
CGC
My opinion is about Child Credits, your minimum wage tangent is completely different. Saying that i dont agree with the Republican (or whoever) stance you mention on the minimum wage. Dont confuse things by purring words into my mouth
Snoop Dogg:
It was sarcasm in response to the bulk of your comment:
” especially if the child comes from a single parent family, its the duty of the father and mother to look after their child till they are 18 years old after which they can look for themselves. If mum and dad cannot handle that responsibility then they should not have children. Too many people wants to have their cake and eat it and getting away with it.”
CGC
Snoop Dogg…I get where you are going, and it leads to the GOP obsession with “takers.” Your proposal faces glaring issues:
What if one of the parents dies? Are you saying that the child tax credit for this “single parent family” should be reduced or eliminated?
Similarly, a parent could divorce and remarry.
Or two people may have a child but choose not to get married. How would that work?
I concur that in an ideal world children would be supported by both parents. I understand your concern with the idea of “incentivizing” people to have kids in excess of their financial means to raise them. But the irony is that the GOP generally opposes other policies which might help to reduce the prevalence of single-parent families in this country. In the grand scheme of things, you are way too focused on a tax policy detail which likely has little impact on the issue you identified.
You misunderstood me, doesn’t matter if the couple is married or not, if 2 people have children then they should plan it and be responsible for it. I am referring to stupid single mums with 5+ kids from 3 + different fathers living on welfare, and these absentee fathers make no contribution. Use condoms and contraception, i am not saying one should not have relationships. However if a kid is born, dont reley on the tax payers to support them, its their responsibility to support their kids or dont have them. This is why child credits should be reduced as its being abused. Obviously if a parent dies and therefore the other parent is a single parent without thier choice, that is unfortunate special circumstance, and the remaining parent is entitled to govt help
“The framework RAISES the bottom tax rate from 10 to 12 percent, which primarily affects low-income households….”
“The tax reform plan … CUTS to 35 percent, although lawmakers received the green light to add a higher fourth rate to respond to pushback…”
And this massive tax cuts for the rich (less than 1% of Americans including Trump, many of his cabinet secretaries, e.g., Mnuchin, Price, DeVos and cronies; and donors) was supposed to be partly funded by severely cutting MEDICAID to almost a trillion of dollars per year — had the Republican “Trumpcare” health reform plan succeeded.
CGC
“taxpayers filing jointly to $24,000, and $12,000 for individuals,”
Doesn’t matter much what the tax rate increase is if now you have little to no taxable income.
KenC states:
“Doesn’t matter much what the tax rate increase is if now you have little to no taxable income.”
It really depends on where the “income cut off” at the bottom is.
But imagine a single person, who is just starting work, earning $30-60k/y — saddled with student loans and had to live in urban areas. Every single dollar counts. In fact, even those earning $100-150k/y in high tech urban areas can be “homeless” — if you followed stories about living in progressive urban areas.
The bottom line is that if the “tax rates” are maintained or just barely reduced for those in the lower 25% tax brackets would not be a tax boon to about 70-80% of Americans.
In contrast, just a 1% tax reduction at the uppermost income tax bracket would mean tens of thousands of dollars tax savings for 1% of Americans.
CGC
Presumably the “income cut off” is much higher, because the standard deduction almost doubled.
As for the single person, just starting out in urban areas with student loans, yes, I can imagine it, as I was that person back in the mid-80s. And yes, every dollar did count, but you know you have to suck it up when you’re just starting out.
As for tax fairness, there are a million ways to argue fairness. The system is already progressive. The tax rates always seesaw between more and less progressive, depending upon Administration, but they’re always progressive. You’re not going to always get more and more progressive rates.
BTW, I estimate I’m going to have to pay more since I’m in the 20% bracket now, and I assume I’ll be in the 25% bracket in the future.
KenC states:
“As for tax fairness, there are a million ways to argue fairness. The system is already progressive.”
If that is true: would you suggest that the propose major tax cuts make the tax system more progressive or less? During the past three decades or so, do you ever recall a Republican controlled Congress that proposed a major tax cut legislation that’s meant mainly to be more progressive (fair) to the bottom majority (85%) of Americans?
Then, there’s the proposed justifications for the proposed tax cuts, already outlined in other posts.
Here’s what Bruce Bartlett, a Republican working with Rep. Jack Kemp had to say:
https://www.usatoday.com/story/opinion/2017/09/27/tax-cut-fever-republican-supply-side-theory-hogwash-bruce-bartlett-column/704464001/
It is well known what happened when the tax cuts during the time of Bush did lead to the budget surplus projected. And what’s one of the Republican proposals to close the deficit? — Cut Social Security benefits.
More recently, at the state level, Kansas proposed major tax cut to stimulate its economy.
Google “The Great Kansas Tax Cut Experiment” if you have not followed the ensuing debacle. It got so bad that the Republican controlled state legilasture had to override the veto of the Governor.
http://www.aei.org/publication/the-great-kansas-tax-cut-experiment-is-over-what-are-the-takeaway-lessons/
CGC
First of all, don’t get saddled with loans, student or otherwise, especially if your post graduation income is prolly gonna be less than $60K! There are ways to get a college education without getting enslaved to debt! Yes, they may be harder or take longer, but I know too many 30-somethings who are completely paralyzed by massive school debt. They would have been much better off going to community/online/state schools instead of racking up debt at a private colleges.
HS students, for example, should dual enroll their junior/senior years. You can easily receive up to a year’s college credit by doing this, thus lowering overall college bill by $20-$40K.
HS students should also work their butts off in Math, language skills, and/or software programming. There are 100s, if not thousands of ways to do this very cheaply, and every one of these skills can provide future education and job opportunities. Think of how much time you spend in sports or gaming and imagine if you invested four years of that time learning a life-skill! before you get to college! It will put you WAY beyond most college freshman!
De-prioritize sports, gaming.
Every point on the ACT can save thousands! Work your butt off to get the best scores possible.
Unless you are incredibly gifted, (as in Division 1 University gifted), sports scholarships are an illusion, They give you $5K – $10K but you still have to pay the other $30K. Not to mention that you will be a slave to the athletic department for four years.
Music scholarships/opportunities can actually be quite excellent for even non-music majors if you become truly proficient on an orchestral instrument. (I’m just sayin’ instead of playing Destiny for two hours a day, what if you practiced/studied an instrument?)
College isn’t the only route for success. Everyone wants to have Europe’s “free” education system, but Germany, for example, doesn’t let everyone go to college, they funnel many people into trade/technical/ schools and apprenticeships. Consider your options!
Yes it does. Everyone needs to pitch in. If you can’t contribute to society financially, then the poor should be earning tax credits through volunteerism. America is rapidly becoming a land with 3% billionaires, 17% stressed out professionals who just want an honest pay for honest work, and 80% of the population slipping into poverty through bad education, bad diet, bad life choices, and a patchwork of uncoordinated charities creating a subsistence safety net, with totally inadequate federal leadership in ending poverty via job training and, yes, a serious dose of tough love. Walk through any major American city and you will see panhandling, druggies, and psychos. It is shocking compared to how society works here in Europe. So glad we moved!
What you’re not accounting for is the doubling of the standard deduction for low and middle-class income earners. That more than offsets the increase the bottom tax rate. Single deduction goes from 6,000 to 12,000 and for married couples from 12,000 to 24,000. You’ve got to include of the facts!
jeffreybillings:
Do you really believe that doubling the single deduction for those in the bottom tax brackets (comprising more than 85% Americans) would justify lowering tax rates at the top tax brackets?
Note also that ALL Americans including those in the upper tax brackets would benefit from the doubling of the deductions you cited.
Even Trump is realizing the injustice of his tax cutting plan (that benefits Trump and many of his donors) that may jeopardize the passage of the proposed tax bill — so he is supposedly “willing” not to reduce the tax rate at the top tax brackets. More than likely, the Republican controlled Congress would include lowering the upper tax brackets, otherwise the tax cut bill would be pointless to them.
If you want to include ALL the facts, then what you should focus on are the alleged current tax deductions that the Republican controlled Congress have to remove to offset these planned tax cuts:
1) State and local income tax deductions
2) Home Mortgage loan deductions
3) and many others that are popular to the same interests groups that have huge lobbies that donate predominantly to the Republican party.
The aforementioned difficulties is the reason why up to now, the proposed tax cut plan remains sketchy.
CGC
Yes, and %age wise, the upper tax brackets benefit less than the lower ones. And did they really lower the top tax bracket? They’ve already stated that there will be a 4th bracket, due to a surcharge, which may make the top bracket the same as before. More than anything, this has turned 7 brackets into 4, the way it used to be in the 80s. As I mentioned above, taxes swing back and forth depending upon Admin.
KenC
As I stated earlier, it was in fact Trump who proposed during a meeting with Republicans and Democrats at the White House that there will be no tax cuts for the rich
However, the public speech of Trump in Indiana (?) and the one released in the media did not include the Trump promise and others proposed by the Democrats in their meeting with Sec. Mnuchin and other cabinet members involved in the preliminary meetings.
Just like the Obamacare repeal, the Republicans actually are not really united on the details of the tax cut proposals, more specifically what current tax deductions and credits would be removed to offset the tax revenues that would be lost with the proposed tax cuts.
Each of the aforementioned tax deductions and tax credits have powerful lobbies (and Republican donors) behind them, so it would be a tight rope balancing act to decide what to ax or keep.
More significantly, the Republicans were banking on the savings from Medicaid cuts (amounting to about a trillion dollars) had they succeeded in repealing the ObamaCare.
So far, the Republican controlled Senate has not succeeded in repealing ObamaCare because their proposed replacement is not acceptable even to those that voted Republican.
As a result, Trump proposed the “no tax cut” for the rich in an attempt to recruit a few Democrats, especially those in the more vulnerable Red states.
CGC
Your math about the increase in the standard deductions may not “include [all] of the fact.”
http://www.businessinsider.com/trump-tax-plan-doubled-standard-deduction-2017-9
Interesting, as usual, the devil is in the details. Let’s see what the committees actually come up with, because a 9-page tax outline is pretty vague.
business & corporate: 15%
period.
I’ll go you one better. The tax rate for corporations should be 0% ZERO! Pass all of the profits to the shareholders and let them pay the taxes. As it is now the profits are taxed twice. Once for the corporation and again when it’s distributed to the shareholders. Essentially it is double taxed. How is that fair?
You won’t see many corporations agreeing to distributing 100% of the profits to shareholders.
it’s not, I agree…but as a matter of pragmatism, considering the jackasses of congress, 15% would bring overseas capital roaring back to our shores and our people.
maybe, maybe not,
depends on how the costs of the wages paid to people here to do the work stack up against the cost of much lower wages paid to people overseas to do the work,
not to mention the comparative expenses of acquiring land and the cost of building facilities here, compared to overseas, where everything is much cheaper. my guess is that corporations already over seas will stay put and just harvest the extra profit generated by lower taxes.
and yes, the u.s. govt could levy tariffs on overseas products, but that would only increase the costs of those products to the u.s. consumer, and things are kind of tough on people already – which is why walmart does so well selling cheap chinese products to low income consumers – as well as not paying their employees very well, and counseling them on how to get by and make ends meet by qualifying for food stamps. which are paid for out of my, and even your, taxes.
i think the solution you envision is not a simple as you may wish to think
I think you’ve been sucking trump’s dick too long.
No. Balanced budget amendment, then retire debt, then lower tax. Period. GOP is just going to create more debt than the last 40 years of failed trickle down.
there is no “retiring the debt” there is only the Federal Reserve Act of 1913.
As a fiscal conservative, I can say that reducing the corporate tax rate won’t do much to help the economy or create jobs. Before the flames start let me explain.
This is just finance 101.
Corporations are taxed on net income, not revenue. Corporations collect their revenue, pay all their expenses including payroll, investments, etc… and then are taxed on the remaining net income or profit. If they pay their employees more or re-invest in the company they will have a lower profit and pay lower taxes. Re-investement in a company is paid with pre-tax dollars. After additional write-offs and deductions most corporations pay much less than the 30-35%. Some corporations even pay zero taxes…look at GE.
If the corporate tax rate is reduced they will just be able to keep more of the profit and give their execs bigger bonuses. Reducing corporate taxes won’t increase employment since payroll is already paid before taxes. Corporations will only hire more people if they need to in order to meet demand not because of taxes.
Individuals are taxed on revenue. Taxes are taken directly from our paychecks and then we need to pay our expenses with post-tax money.
The best way to use taxes to grow the economy is to give tax cuts in individuals in the middle class or even lower middle class. Giving individuals tax cuts will give individuals more money to spend. People who live paycheck to paycheck will spend all of their tax savings which will create more demand or sales for corporations. This demand will will fuel the economy. When corporations see demand for their goods and services pick up, because people are spending more, they will hire more people to keep up with the demand.
It’s not complicated, but politicians who in corporate CEOs back pockets keep pushing for tax cuts for corporations. This is just so the CEO’s and politicians can make more money, not individuals.
One more thing. I am not exactly sure what the correct tax rate for corporations should be 35%, 30%, 20%, etc… but we should have that conversation.
My point is that a tax cut for individuals will go a lot further to improving the economy than a corporate tax cut.
The Republican’s new plan calls for three individual rates, 35%, 25% and 10% and a reduction to 20% in the corporate rate. The plan is just out.
The problem with reducing the corporate rate is that given all of the loop holes, many of the big corporations pay little to nothing in federal taxes.
I favor going back to the rate that existed when President Eisenhower was in office, or, if those are too high, then the rates in place when President Reagan took over.
JWW
“The problem with reducing the corporate rate is that given all of the loop holes, many of the big corporations pay little to nothing in federal taxes.”
One solution would be to have an alternative Minimum Tax wrt gross revenue or income, normalized to specific industries or sectors.
However, I doubt very much that a Republican controlled Congress would espouse such a solution as the said approach would be contrary to the interest of many of the donors and lobbyists that gravitate to the Republican party.
CGC
do both: individual and corporate.
Fair point, but we can’t forget about the National Debt. Reducing tax revenue makes it harder to pay down the debt. Yes a better economy will help wrt to the debt, but we need to make sure our tax policy actually helps grow the economy.
National Debt is only a concern when there’s a Democratic president. Funny how that works.
Another point of view from someone who certainly knows more about taxes and economics than I do, and maybe more than many MDN readers…
https://www.usatoday.com/story/opinion/2017/09/27/tax-cut-fever-republican-supply-side-theory-hogwash-bruce-bartlett-column/704464001/
Good article by a Republican. From his commentary:
“Virtually everything Republicans say about taxes today is a lie. Tax cuts and tax rate reductions will not pay for themselves; they never have. Republicans don’t even believe they will, they are just excuses to slash spending for the poor when revenues collapse and deficits rise. There is no evidence that tax reform raises growth, although it may improve fairness and tax administration. And the Republican idea that tax increases always crash the economy is belied by the experiences after Bill Clinton raised taxes in 1993 and Barack Obama did the same in 2013. The economy grew nicely and the stock market boomed in both cases.”
Of course tax cuts can pay for themselves via quantitative easing and the printing of money and perpetual loans for corporate socialism.
you’re almost there, John…and who benefits from the perpetual loans and the corporate “socialism”?
who?
Executives are the primary beneficiaries of corporate welfare.
The list of billionaires in the world today doesn’t include hardly anyone who invented a product that you can’t live without. Brilliant scientists like Einstein, Salk, or Pasteur didn’t die as multimillionaires. The professional management class are the ones who skim off the profits of the inventions and labor of the undemocratic feudalistic pyramid schemes that we call corporations. There is no meritocracy anymore. The billionaires of the world have either inherited their wealth (Waltons, L. Jobs) or skim money from transactions which may or may not benefit society (any Wall Street executive, Madoff, Buffett), or they just exploited a monopoly market position ( Rockefeller, Gates, Slim).
Bezos and Musk are about the only rich bastards today who are pumping their money back into the economy via tech ventures; to her credit Melinda Gates is giving away Bill’s wealth to improve the quality of life of an overcrowded planet. Billionaire Botvinnik, like Trump, just wants huge tax cuts so they can hoard more wealth. Nobody with a working brain believes that billionaires will spur the economy if you lower the tax rate. Eisenhower did exactly the opposite, giving the 1% elite a reason to spend and invest their obscene wealth and thus jump start the economy.
If memory serves me correctly, it was during the last Bush administration that there were massive tax cuts — with the justification that these tax cuts would stimulate companies and those in the high income tax brackets to invest (in the US) to stimulate the economy, increase job growth and employment, bring more tax revenues, etc., etc.
Did these rosy predictions come to reality?
There are many reasons of course, but by the end of the Bush administration the economy and stock market collapsed, the unemployment skyrocketed, the salaries of common workers decreased (relative to inflation) as there were no minimum wage low increases to match the inflation rate. In contrast, the salaries of corporate managements, especially at the top levels while steering companies that were either failing or proposed their manufacturing arm to be located in other countries.
Among the unexpected impacts of all these economic downturns was the lower state and local tax revenues. Also, many federal policies (not only during the Bush administration) tried to offset these tax cuts or other increasing federal programs (e.g., defense) by reducing federal programs that impacted many states. These caused difficulties among states, especially those mandated to have balanced budgets. All sorts of local taxes, including sales or fees were then imposed to offset loss in revenues — essentially tax increases or fees that mainly affect those in the lower income tax brackets. Also, many local programs were reduced or eliminated to balance state and local government budgets.
CGC
There is no difference between Dubya and The Muslim Usurper.
I will assume that the dignified president you slander as the “muslim usurper” is the twice elected President Barack Obama, a man who accomplished more in his lifetime than anyone on this forum.
There is a massive difference between Obama and GW Bush. For one, Bush started 2 offensive foreign wars. Obama started 0. Bush rang up trillions in national debt and thousands of troops lives. Obama stabilized the economy by winding down war spending as fast as he could and, per bipartisan demands, approved the corporate welfare that Congress drew up — and it prevented the recession from turning into a depression.
Obama also coordinated a major legislative reform, the AHA, which was a Republican plan for insurance industry welfare which didn’t bloat federal debt. Dubya passed major debt creating pharma welfare via unfunded Medicare Part D.
Bush presided over the fastest loss of jobs since Reagan. Obama presided over the longest economic expansion in US history — slowly but streadily.
Real estate had fully recovered and Wall Street had record profits when Obama left office, and it didn’t tricckle down to lower classes. But for some reason you think Trump’s tax plan as written by Goldman Sachs thieves will put more money in your pocket. You’re delusional. For every dollar you save in taxes, Trump saves 10, the federal government goes $11 in debt, and your children will be on the hook to pay interest on that debt while Donny Trump Jr parks his daddy’s inheritance in the Cayman Islands.
Get a clue!!!!!!!!!!!!!!!!!!
There is no sentence in any language in the history of the written word that justifies seventeen exclamation marks. You are prone to hyperbole and pretension. There is only one gaffe worse: ending your comment with “’nuff said.”
’nuff said!!!!!!!!!!!!!!!!
no multi-national corporation, but an idiot without accountants and lawyers, actually pays an effective 35% tax rate in America.
I question whether or not they’d be able to get the Freedom Caucus on board. They’ve been fairly successful at blocking progress so far.
House Freedom Caucus Supports President Trump’s Tax Plan
President Trump has delivered a forward looking tax reform framework that will let hard working Americans keep more of their money, simplify our system, end carve outs for special interests, and will help make our businesses competitive abroad. The Freedom Caucus looks forward to sending a final bill based on this framework to President Trump’s desk as soon as possible/ – The House Freedom Caucus
Yes, but get down into the details where they have to put their name on it, defining which of the companies in THEIR state is considered a special interest, and they’ll sink it OR cause it to be sunk by taking a position other republicans can’t accept due to THEIR interest in self preservation. It’s happened before, quite recently.
I take a wait and see approach rather than sing their praises prematurely.
Tax reform could be a wonderful thing, if done properly. But true tax reform is unlikely to happen any time soon because there are too many people and businesses relying on and profiting from our complex and convoluted tax system. This will not simplify our tax system because it does not get rid of deductions and such.
My primary concern is that this country begin to pay *in full* for the services it consumes. We need to logically work towards a balanced budget, and that will likely involve tax revenue increases in combination with spending reductions. Over the past four decades, the U.S. has tried several different approaches for magically generating tax revenue while reducing tax rates. The net effect has been a rapidly growing national debt, which now exceeds our GDP.
Concepts in the tax reform outline:
1) Lower the corporate rate from 35 to 20 percent
The way (distribution) in which taxes are collected can be even more important than the amount. As long as the reduction in business tax revenue is offset by tax revenue increases elsewhere, then I think that this could be good for the country in the long run.
2) Reduce the rate for so-called pass-through businesses to 25 percent; currently, they are taxed under the individual code.
I need to research this aspect of the proposal. I need to understand who this change would impact and why the current approach is considered to be wrong.
3) Collapse the current seven personal tax brackets to just three: 12, 25 and 35 percent (down from 39.6%). Lawmakers received the “green light” to add a higher fourth rate to respond to pushback, according to a source familiar with the discussions. Plus, the key information that is currently missing is the income range for each tax bracket. If 35% starts at $1M in taxable income, then that is one thing. If it starts at $100M then that is something else.
Personally, I would prefer four brackets – 10% (up to $100K), 20% (up to $200K), 30% (up to $1M) and 40% ($1M+). The taxable income ranges are just rough examples, depending on changes to deductions and the overall tax revenue needs and distribution plan.
To be clear, this really doesn’t simplify anything. The number of brackets does not change the process. You will still calculate your taxable income and then look up your taxes owed in a table.
4) Eliminates the deduction for state and local taxes, but nearly doubles the standard deduction.
I like the increase in the standard deduction. There should be an income floor under which no taxes are owed. Whether these are the right levels or not is subject to debate.
The deduction for the state and local taxes also makes sense to me. For far too long, this has been used as a means of redistributing taxes from the Fed to the states. A couple of states do not have income taxes, so they started allowing a sales tax offset as a compromise. This will reduce the complexity of federal income tax a bit, but will have major repercussions, especially in high tax states. I imagine that the GOP loves this provision because it will strike California the hardest.
One key concern is how this might affect lower income couples and individuals, even with the increase in the standard deduction.
5) The child tax credit also would be substantially increased, though it was unclear by exactly how much.
Although I have four kids and, thus, have benefitted from this tax credit over the years, I have never really liked it. I like the idea of supporting people raising children, because it is quite expensive. And, despite the griping of childless people who do not like paying for public schools and such, the kids eventually help them too. After all, someone has to fill out the job force when you retire, and it would help if they have a decent education, too.
The jury is open on changes to the child tax credit. It really depends on the degree of change. If I were a Congressperson, this is not likely an issue over which I would be willing to fall on my sword, unless there was an attempt to balloon it beyond reason (which seems highly unlikely).
Overall, I might be a supporter of this new tax plan. But there are far too many unknowns to make a definitive judgment at this point. Hopefully, we will see a more complete proposal soon.
This could be a small step in a good direction. But it does not simplify the system, so it is really not tax “reform” as much as tax tweaking.
My personal preference would be to eliminate most deductions, including the mortgage interest deduction and the charitable donation deduction. Deductions are just one of the tools politicians use to buy votes. A simple tax plan would exempt a certain amount of income from taxation (say the first $10K or $20K) and implement a few tax rate steps (for example, the four I listed above, or something along those lines) with no other deductions. You could almost figure out your income tax in your head. And it would be much simpler to predict tax revenues and tweak and balance the system in the future.
Zero taxes for maximum economic strength and world dominance, while using quantitative easing money-printing to pay for absolutely all socialist programs like highways, libraries, fire dept., Pentagon, bridges, sewer system, NSA, etc.
I noticed you put “sewer system” next to “NSA” in your list.
good work.
As somebody who doesn’t know much more about taxes than the average Joe, I believe that when rich people who stand to make a windfall tell you that you will benefit from this, typically is major BS. They will benefit while laughing at you, behind your back. The Rich have always been F’N over the poor since the beginning of time, and it is no different.
Once again eliminating the Inheritance Tax is being rolled out as a way to save the “Farmer” How many times are people going to fall for that one? That alone will save Trumps Family Billions, and maybe the best reason for running in the first place.
This is a terrible tax plan. For one thing, individuals who are saving for retirement, and people who itemize deductions could pay thousands more a year. That’s most of the middle class.
The effective corporate tax rate is lower than many other industrialized countries. Another bunch of lies by Republicans.
How does the average Republican fall for this crap? I know you’re stupid but voting for things that take money out of your pocket? That hurt your children?
Oh and what the hell does this have to to with Apple or technology? MDW RWNJs at it again.
Raise taxes of the most profitable corporations to 75% and up, depending on a tiered profit scale.
Oil, banks, real estate, advertising and medical are the closest to look at. Plus they can’t leave the country to avoid taxes. They rape people’s wallets so they should bare the burdan of society.
Also CEO pay shouldn’t be more than 100 times the lowest paid employee.
If you don’t like what I write, too bad, because this will make a difference for the common good.
All the money collected should go into education and healthcare for everyone.
“To me, selling giant tax cuts to rich people as responsible tax reform is like giving whiskey and car keys to teenage boys and calling it responsible parenting.”
Nick Hanauer
Just announced: The cannot guarantee that taxes won,t be raised for the middle class. No doubt they will raise. Middle class always gets bent over backwards in preparation for the shaft.
And there goes the Freedom Caucus. They are more beholden to their consituents than the leaders, and none of them will want to go home and say “I raised your taxes and lowered the taxes of your bosses!”