Lion of the Blogosphere

Tax plan

The bad:

  • Why is Trump pushing this at all, before he fixes immigration?
  • Elimination of estate tax, a giveaway to the richest of the rich who nearly all hate Trump.
  • 25% pass-through tax, a big loophole that makes the higher 35% rate moot for everyone rich enough to afford accountants to turn their income into “pass-through” income. Making the tax plan a massive tax cut for the rich, lowering the top rate from 39.6% to 25%.
  • Tax break for “money” that’s overseas. Money is in quotes because in most cases that money is mostly an accounting trick to avoid paying taxes and not a bunch of bills in suitcases that are waiting to be paid to U.S. workers if only Republicans could “liberate” it from foreign captivity. Do big corporations like Apple and GE really need another tax break right now?
  • Move to a territorial tax system? The worldwide tax system keeps companies honest and prevents them from shifting all of their “profits” to low-tax countries. See above.
  • Elimination of AMT: new loopholes for the rich.

The good:

  • Reducing the value of tax deduction for state income tax, which punishes high-tax states like California and New York which never vote Republican. I say just pass this and forget about the rest of this stupid plan.

The prediction

  • Suddenly, Democrats will care about the budget deficit and Republicans will forget they ever cared about it. Politicians from both parties disgust me.
  • Like ACA repeal, zero Democrats get onboard, and enough Republicans refuse to cooperate so that nothing gets passed.

Written by Lion of the Blogosphere

September 28, 2017 at EDT am

Posted in Taxes

35 Responses

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  1. What’s there for the little guy? Who’s gonna take care of the little guy?

    Yakov

    September 28, 2017 at EDT am

  2. “Reducing the value of tax deduction for state income tax, which punishes high-tax states like California and New York which never vote Republican.”

    This is clearly the best part of the plan, so my prediction is that it won’t make it to the final bill.

    Mike Street Station

    September 28, 2017 at EDT am

    • So squeeze the UMC who pay high state taxes and not Romney super rich types who move all their income to low tax jurisdictions or even better defer it indefinitely? What BS.

      Pop

      September 28, 2017 at EDT pm

      • Living in a state with no income tax, I’m subsidizing that tax deduction for high tax states.

        Why? There is no national policy reason for that deduction, only a political one.

        Mike Street Station

        September 28, 2017 at EDT pm

  3. Budget deficits are financed by trade deficits. Trump has no intention of reducing the budget deficit therefore he’s not going to do anything about the trade deficit.

    And there are trillions of dollars in government and semi compulsory private spending that could be saved every year. Anyone who isn’t a moron would focus on those things rather than reducing taxes. The Republicans want none of those reforms and are complete morons, Democrats would support some of them, including the biggest which is a first world style health care system with price controls, and so are demi morons.

    There is noone in political life with sensible views on both identitarian and economic issues.

    Magnavox

    September 28, 2017 at EDT am

    • Yep. The only thing that can save this poor country is Augusto Pinoche. When I go to Chile, which I do indeed to do one day, I’m gonna lay a wreath on his grave and donate to charity for the benefit of his soul. He keeps growing in my eyes. Great, great, great man!

      Yakov

      September 28, 2017 at EDT am

  4. Republicans only care about deficits when Democrats are in power. Democrats only care about deficits when Republicans are in power. I agree that the immigration fix/border wall should come first.

    Black Death

    September 28, 2017 at EDT am

  5. “Reducing the value of tax deduction for state income tax, which punishes high-tax states like California and New York which never vote Republican. I say just pass this and forget about the rest of this stupid plan”

    You’re dreaming, Lion!

    Trump and his extended family in New York City needs this tax deduction.

    JS

    September 28, 2017 at EDT am

  6. It’s apparent that low tax regions in America aren’t net job creators.

    Just look at Staten Island, Phoenix and all the prole areas in America that vote reddy, and tell me if these areas are where young educated people want to work and live.

    JS

    September 28, 2017 at EDT am

    • Phoenix is a nice place.

      Lion of the Blogosphere

      September 28, 2017 at EDT am

      • There isn’t any job growth, especially for young people.

        Another reason why intellectuals avoid the greater part of greater America:

        Imbeciles!

        You call this sophistication, when Pepsi is show case in its downtown during a concert?

        JS

        September 28, 2017 at EDT pm

  7. Hopefully we can finally be rid of the stupid death tax.

    From the plan outline:

    The framework limits the maximum tax rate applied to the business income of small and family-owned businesses conducted as sole proprietorships, partnerships and S corporations to 25%. The framework contemplates that the committees will adopt measures to prevent the re-characterization of personal income into business income to prevent wealthy individuals from avoiding the top personal tax rate.

    If you eliminate most deductions then the AMT becomes irrelevant. I don’t see anything specific about eliminating the foreign savings loophole.

    Andrew E.

    September 28, 2017 at EDT am

    • Why do you care about the death tax if only the richest of the rich pay it, and they don’t even seem to care about it because they vote Democratic anyway?

      Lion of the Blogosphere

      September 28, 2017 at EDT am

      • The death tax is motivated by envy, not justice, and is thus poisonous. The super wealthy never pay it only the merely wealthy ever get caught up in it. Legitimate questions of wealth inequality should be handled at the level of monopoly regulation and immigration policy.

        Andrew E.

        September 28, 2017 at EDT am

      • “The super wealthy never pay it only the merely wealthy ever get caught up in it. ”

        Sounds like a liberal lie and to whatever extent it’s true then Congress should close the loopholes.

        Lion of the Blogosphere

        September 28, 2017 at EDT am

      • Shaping the creation of future wealth is far more powerful and meaningful than re-arranging existing wealth.

        Andrew E.

        September 28, 2017 at EDT am

      • Rich people become wealthy from value transference, not from creating value themselves.

        Lion of the Blogosphere

        September 28, 2017 at EDT am

      • Yes, indeed. Here’s value transference at work in the greatest city in the world with Democrats running the gravy train.

        I’m sure you heard of Carlina Rivera, that Puerto Rican lady who ran for NYCity council and won.

        It turns out that her husband is a son of BIGLAW partner, and he himself was a BIGLAWYER, then a cafe owner, and now a Hipster loafer on a trust fund, where he gets to live with Carlina in Sec. 8 housing in the Lower East Side, among a sea of Orthodox Jews and NAMs.

        Is this prole drifting or just elites working the system in their favor? Better yet, understanding that middle class sucks, and it’s better to be lower class with welfare benefits, and a trust fund wouldn’t hurt too.

        http://thevillager.com/2017/09/11/we-qualify-candidate-rivera-husband-defend-living-in-section-8-apartment/

        JS

        September 28, 2017 at EDT pm

    • You have to report foreign savings and trusts as it is now. Over 50k and you report yo fincen and IRS both. Fines are 10k per violation 60k max.

      Mrs Stitch

      September 28, 2017 at EDT pm

  8. When I was in law school I was being romanced by a liberal Jewish chick, five years my senior, who had Pinochet on the brain. Thought that Allende’s overthrow was the measure of America’s, or at least Nixon’s, evilness. I didn’t know anything about the issue, but kept my distance from her because I felt she was nutty. She had worked in the State Department, where I suppose everyone was entranced with marxist dictators. Eventually, we came to learn that Pinochet was actually the savior of the country.

    Marty

    September 28, 2017 at EDT am

    • Initially I didn’t know much about Chile, all I knew at the age of 14 was that the Soviets supported Arabs against the Jews and they supported Allende. So when Allende got killed, I rejoiced. I thought that the rebels had to be the good guys. The Soviet media was treating the coup like some great tragedy for mankind. Remember that Yom Kippur war was just a couple of weeks after the coup, so this I how Pinoche got on my good books to begin with.

      Yakov

      September 28, 2017 at EDT pm

  9. This is dumb. I’m not against the idea of tax cuts per se, but without equivalent spending cuts it’s just digging us into a deeper debt hole. Being in a big debt hole will not make America great again.

    Another huge problem with debt was highlighted by Magnavox just now:
    “Budget deficits are financed by trade deficits. Trump has no intention of reducing the budget deficit therefore he’s not going to do anything about the trade deficit.”

    If we have huge budget deficits, we finance that by selling bonds to overseas investors. They get the money to buy those bonds by running a trade surplus with the United States which is a trade deficit to us.

    Being in debt is bad for people and for countries. Why is this hard to see?

    I am pretty sure that “stop being in debt to foreigners” was a big part of MAGA. In that case, this tax plan is opposite of MAGA.

    Dan

    September 28, 2017 at EDT am

    • The way I see it as long as we’re talking about tax reform we’re not talking about DACA amnesty. Then maybe after many months of dithering they pass some watered down bill that keeps the bubble afloat another couple years buying time to reshape the GOP, immigration and judges, fighting amnesty along the way.

      Ending systemic budget deficits means ending systemic trade deficits means ending dollar reserve status which means MASSIVE dollar devaluation and debt/savings destruction. Maybe time it for right after Trump’s re-election. The Communist Dems can’t be trusted with such an opportunity.

      Andrew E.

      September 28, 2017 at EDT am

    • Yeah you fleshed out what I meant exactly. And it’s the trade deficits that are, at this point, much more damaging than the (neglible in real terms) interest payments on debt. Al tough I’m sure at some point in the future we’re going to be paying much more damaging rates interest and are going to be incapable of quickly reducing budget deficits even then.

      Magnavox

      September 29, 2017 at EDT am

  10. I am gonna scream if I read one more Trump supporter go all “muh immigration”.

    First of all, the public doesn’t give a shit about immigration. 2nd of all it is an issue that splits the party and has no chance of getting any meaningful bills through the Senate.

    Tax reform, in contrast, is doable. I don’t care about and it doesn’t really matter but let’s at least get something done going into the midterms. Also Trump needs a win so he doesn’t feel the need to cuck out on immigration.

    Tax reform can also give us some cred with the donor class and force the Dems to run on the platform of raising taxes.

    Otis the Sweaty

    September 28, 2017 at EDT am

    • Why is this plan so shitty? If he really wanted a win, he’d have Schummer over for Chinese again and slip in a few of that ghoul’s ideas.

      SWPL2

      September 28, 2017 at EDT pm

    • Who was the guy on here obsessed with “destroying the immigrant community”? And then there was a guy who thought we all should get on the impeachment train.

      Gozo

      September 28, 2017 at EDT pm

    • Who was the guy on here obsessed with “destroying the immigrant community”? And then there was a guy who thought we all should get on the impeachment train.

      Nothing a bit inconsistent about any of this.

      The Undiscovered Jew

      September 28, 2017 at EDT pm

  11. 25% pass-through tax, a big loophole that makes the higher 35% rate moot for everyone rich enough to afford accountants to turn their income into “pass-through” income. Making the tax plan a massive tax cut for the rich, lowering the top rate from 39.6% to 25%.

    Wrong.

    Nothing significant changes for the wealthy’s tax rate.

    Almost no one was paying the 39.6% rate anyway because it applied only to those earning $1 million a year.

    Of course, very few people earning close to $1 million a year earn it from salary. They gain it from Cap gains, stock and other assets.

    Taking the top rate down to 35% in practice is probably revenue-neutral.

    The Undiscovered Jew

    September 28, 2017 at EDT pm

  12. Like ACA repeal, zero Democrats get onboard, and enough Republicans refuse to cooperate so that nothing gets passed.

    everyone is afraid of losing an election, so nothing gets done. we need massive reform that results in one-term for congress members.

    healthcare is more expensive post-obamacare* so the aca should be scrapped. and the tax code is dumb, so we should really be moving to a flat tax and/or sales tax because that would raise money more efficiently.

    *i’ve never understood why lotb supports obamacare. because of the medicaid expansion? that could be done by charging people a fee, and/or cutting extraneous services to save enough money to pay for an expansion. there was no need to raise insurance premiums.

    • EDIT: the $1.2T spent on medicaid/medicare could be used to fund public hospitals. fun fact, there are more public hospitals in america than private for-profit hospitals, and the cost of running all hospitals is less than what we spend on medicaid/medicare: http://www.aha.org/research/rc/stat-studies/fast-facts.shtml

      combine them with free-clinics, the veteran’s system (1400 clinics), and any private facility willing to take a flat payment and we’d get an american nhs.

  13. My rule of thumb on legislation is that if I don’t see a compelling reason for it then I don’t want it, And I’ve yet to see anything about this tax plan to make me support it.

    destructure

    September 28, 2017 at EDT pm

  14. I am the fabled “small businessman” everyone in the GOP claims this tax plan is for. I have 18 employees and this year will have about $5m in revenue. Organized as an S-corporation–thus a pass-through entity. And I’m actually a Republican and a Trump supporter.

    I generally agree with Lion’s class analysis on the tax situation, but there are valid business concerns here.

    The extraterritorial taxation system, which to my knowledge is unique, is a real problem. Don’t forget it applies to individuals as well. If you’re an American citizen working in a foreign country, you still owe Uncle Sam (though your first $106k in foreign income is exempt and you do get a credit for taxes paid to the foreign government, so it isn’t too bad).

    There’s a special unfairness in it for small businesses. If any one shareholder owns more than 5% of the company (almost always the case in small and medium businesses), you must pay taxes on your foreign income REGARDLESS of whether or not that income is repatriated to the United States. In public companies generally there isn’t one shareholder who owns more than 5% of the company, so they don’t pay a tax on foreign income unless they repatriate it.

    As a small company we’re not engaging in accounting games either. We have actual production in another country, and that production serves that country plus markets around that country. Our American market (and many other markets) is served by production in America.

    While this isn’t an issue for Trump’s base, it is bad for America. In addition to punishing smaller companies which do business abroad, by preventing the repatriation of foreign income it contributes to our current account deficit–something that has a problem for 40 years now.

    Remember that whenever we run a deficit on our current account, it must by definition be balanced by a surplus on our capital account. This is spun positively as “foreign investment”, but other than greenfield investment (i.e. brand new factories built by foreigners) what this really means is either borrowing money from foreigners or selling them our assets. Thus every year that goes by more and more of our country is owned by foreigners.

    A lower tax rate for pass-through entities is indeed stupid and unfair, though I am personally pleased for obvious reasons. Logically it should be kept as it is and only the C-corporation rate cut. This will encourage pass-through entities to convert to C-corporations and thus retain more earnings. That should reduce business failure and possibly increase investment.

    Not covered by Lion–I think the top tax bracket of $418,400/470,700 (single/joint) is too low. That’s just not that much money (it’s only the top 1% of income). While not new brackets for $1m, $5m, $10m, etc.? You could then give people earning less than $1m a cut to 35% while not cutting taxes on people who earn much more.

    Thorfinnsson

    September 29, 2017 at EDT am


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