And then there is the Republican Tax Plan. It finally came out this week and that caused Trump to state at least a dozen times on national TV that it would be the largest tax cut in our history (a lie), that it would benefit the middle class (a bigger lie), and that it would create huge job growth (the biggest lie, It looks very much like just another try by the GOP to get a huge tax break for the rich. But let’s not jump to a lot of conclusions. Let’s just sit back and take a look at this bridge the GOP is trying to sell us.
The individual tax brackets would be reduced from seven to four:
Single Couple
12%- 0-45K 0- 90K
25%- 45L-200k 90K-260k
35%- 200l-500l 260k-1M
39% -Over 500K Over 1m
Corporate taxes cut from 35% to 20%:
This is supposed to encourage big business to create jobs. Fat chance. That morbid theory is the heart of trickle down economics, which never worked because the rich save, they don’t need to spend. This is a big asset for the rich but does nothing for anyone else and it will be a huge contributor to the deficit. Normally this would never fly but it’s the reason for the entire bill so it’s hard to believe that the GOP will let the bill go through without it.
Pass through rate cut to 25% from 39.6%
This could conceivably help because even though it is a benefit to the rich it also helps entrepreneurial and small business owners who crate jobs. This is a better way to cut business taxes than cutting the corporate rate but to get this, we may have to give the corporate rate.
Taxes on repatriated Foreign Income adjusted
This is something that we tried before when we allowed foreign made profits to come back into the country at a lower rate. It kind of worked but only for the year it was allowed. The businesses that were involved then just sat on the money waiting for it to happen again. The way to solve this is to allow American companies to deduct foreign taxes paid on overseas operations and then to pay taxes on whatever profits they made in a given year regardless of whether profits are brought back or not.
Immediate write-offs for equipment
This is a good thing! It will encourage research and development as well as the purchase of new equipment and supplies all of which will stimulate the economy. Currently the write-off period is so long that many small business owners keep operating obsolescent equipment when the purchase of new equipment would help them and their suppliers and increase the GDP.
Doubles the standard deduction to 12K for singles or 24K for couples.
This is a good thing. The estimate is that 85% of people who now itemize deductions would now take the standard deduction. The bill’s authors claim that this would also mean that a family of four wouldn’t pay any taxes until they earned $55k. That’s a good thing
Medical Expense Deduction eliminated.
This is definitely a bad thing. Most people don’t get to deduct medical expenses anyhow because you can only deduct those expenses that exceed 7% of your total gross income and most people just don’t spend that much on this, but those that do, our sickest people are the ones who would be hurt by this and it just isn’t fair and won’t make much difference in the total tax savings.
Student loan interest deduction eliminated
This is a terrible idea, mainly because there shouldn’t be any interest on student loans. The government should finance them because educating our kids ultimately benefits the whole country. Rather than penalizing our kids for getting an education and getting into the mainstream we should at least let them deduct this burden.
Eliminating both the medical and student loan deductions are pathetic attempts by the GOP to offset the income loss created by tax cuts to the rich. That alone should eliminate them from consideration.
Child tax credit raised from $1k to $1.6k
$300 deduction for each parent, non-child dependent.
This is a good idea but it is only slated to last for five years. This allows the GOP to get rid of it after that.
Eliminates alternate minimum tax
This is a terrible idea. The AMT is the IRS’s way to make sure those rich creeps who manage to sneak out of paying their legitimate share because of phony deductions and such will have to pay something. Trump’s only tax return that has been seen shows that he paid $31M in AMT that year.
Eliminates estate tax after 6 years.
Another bad idea! This only affects the very rich. The argument for it is that it will save family farms and small businesses but tax records show that only 80 such instances happened last year. The others who paid were the very rich. They can afford it.
Mortgage interest deduction dropped from $1 million to $500k on new loans.
This will hurt many members of the middle class in certain huge cost areas of the country where home prices are considerably higher than in others. This is especially rue in suburban areas surrounding all of our major cities.
Property tax deduction capped at $10K
This will definitely hurt those in states with high priority taxes like NY, CT, NJ, CA etc. This is definitely a GOP ploy aimed at Democratic voters who come principally from these areas.
Eliminates deduction for state and local income taxes
See above!
Eliminates 15% credit for those 65 and older on disability payments
This is the work of a real scumbag.
Eliminates adoption expense deduction
Another one that deals with such a small segment that it will show no benefits but will hurt a really beneficial program.
No change in 401K deductions
This is a good idea as it will continue to encourage people to save for the future.
CARRIED INTEREST: Holding period is doubled to two years.
That means nothing as the holding period for most of this kind of investment is at least five years. The guys who benefit from carried interest are making so much money right now that it is criminal to let them pay half the going tax rate for their bracket. Carried interest should be eliminated as a thing
No CBO score has yet been given to the bill but the savings for big business are huge and the savings for middle income is tiny.
Trump continues to promise a tremendous tax cut for the American people but the only ones who will actually get it are millionaires.
Paul Ryan tries to tell us that this plan is for the middle class. Yeah, if you consider a paycheck for a million bucks a year middle class. That’s the same BS that tries to tell us that cutting corporate taxes will create jobs. It never has and it never will.
This bill will save the rich $1 trillion and the middle class $300,000 over ten years. Does that sound like a middle class tax cut?
The deficit will increase by $1.5 trillion. The GOP says this will be eliminated by an increase of GDP. That’s a lie. The same thing was said about the Bush tax cuts and it never came to pass. We are now staggering under the increase in debt that those cuts left us with.
Kevin McCarthy (R) CA comes up with a ridiculous line of BS on how the middle class will benefit. He speaks to the doubling of the basic deduction which he says will save the average family of four, $1,200 per year. Then he claims to have discovered a company named Boadcom, which has announced that because of the reduction in corporate taxes they will come back to the United States. Broadcom is the third largest manufacturer of computer chips in the world. They abandoned the United States and its labor force to move their operation overseas to a cheaper Asian labor market. Making billions in profit wasn’t enough fr them. They had to screw the people who helped build their company, just to make a couple of bucks more. Then McCarthy throws out billion dollar numbers about what Broadcom will spend in R&D if only we drop their tax rate from 35% to 20%.
Companies like Broadcom don’t pay anything like 35% taxes. Look at GE, which pays nothing. So why should they come back here to this high cost labor market for a tax decrease? If you believe all this nonsense about some company that fled our shores so they could make more money and now is willing to come back come back for a tax cut that will not apply to them, I have a cherry used car to sell you. I say we should make them stay where they are and put up with whatever it is that is making tem want to come back. It sure in hell isn’t any phony tax cut that’s encouraging them to return. No big business is currently paying 35% in corporate taxes. As stated above, many, like GE pay nothing and none more than the 20% they claim they want the tax level to drop to.
But McCarthy makes a big slip when asked about assurances. He says that Republicans want you to save more and spend less. That’s true, maybe the first true thing he has said. It means if we give tax breaks to the rich they will save the money, not spend it on development and creating jobs, which is exactly what all those who are opposed to this bill are saying. Trickle down doesn’t work because the rich save, they don’t spend and they don’t create work. Those who want to be rich create work as a part of the plan to reach their goal. The only tax plan that will help America is one that encourages entrepreneurial action. This plan does not do that. This plan gives more money to the already rich to take out of circulation.
In relation to the fact that the child tax credit will be removed in five years, McCarthy says; “As you know, we’ve made everything permanent but because of the rules of the Senate we cannot make those things permanent.” Yeah, go ahead, read it again. Is that the biggest bullshit double talk you’ve ever read or isn’t it. This guy is so full of crap that it’s bursting out of his ears. McCarthy is the majority leader of the House and he can speak to nothing without the help of doubletalk. In this, he truly represents the GOP authors of this bill.
Look, this is a very complicated bill with a lot of moving parts. What it has going for it, maybe the only thing it has going for it, is the GOP desire to pass something, anything before the end of the year. So far Trump and the Republicans have been a disaster as far as legislation goes. They need this desperately! So maybe they will back off some of the more onerous stuff in order to get it passed.
Every Republican who speaks to this bill talks about how it will help small businesses, but the small business lobby is against it. How come?