We’re not going to get to 4% growth without a tax cut
ETA: or, I think the inspiration is roughly something along those lines.
Why stop at 4%? Let’s do away with corporate taxes entirely and really get the economy revved up! Let’s shoot for 10%! It won’t be trickle-down…it’ll be full on shower-down of the gold variety!
Do you think 4% growth is something that can reasonably be attained under Trump’s economic policies?
“can reasonably be attained”? Yeah, perhaps, but I’m not expecting it and if it happens it will probably not have all that much to do with Trump’s economic policies.
I knew it!! Good catch.
I don’t. For growth you need people or productivity. Ideally both. We’re near full employment, we’re reproducing slowly, and he doesn’t want immigrants. So we’re not getting many more people. Productivity has been flattish, and I don’t see that as a policy focus.
Your prediction is made by a certain Donald J. Trump — is he an award-winning economist?
Over the past fifty years, the average annual U.S. economic growth, as measured by real per-capita dollars, has been less than 1.8%. That’s “One point eight” with an “O.” Since the 1991 recession, the only time there has been sustained growth of 3% or more was during the height of the Clinton Boom.
Oh, I understand that U.S. corporate profits may continue to boom, but when Ivanka Trump makes clothing in China, that doesn’t count as U.S. economic growth. U.S. capitalists are getting rich off of foreign workers and robots, forcing up housing prices for U.S. workers with stagnant wages.
This is one reason I favor infrastructure development as a path to U.S. economic growth — U.S. workers would be employed. Capital would be invested in this country. Give Ivanka Trump a tax windfall and she’ll spend it building more factories in China.
Look, let’s keep things simple. America’s working poor need help. We need to find smart ways to reduce health cost, but until we do the working poor and retirees living on SocSec need their SocSec, Medicare and Obamacare subsidies. Most Republicans pretend that they don’t want the Public Debt to escalate; government needs to cut military spending or increase taxes on the rich or both.
Instead the plan is to cut Obamacare, cut CHIP, cut Medicare, cut SocSec and institute tax reforms directed specifically to further enrich the rich. With a nice screw-you for deductions most relevant in Blue States. The GOP tax plan is a transfer from the poor to the rich of unprecedented scope; it’s disheartening to see this not more widely recognized. And disheartening to see workers in the $200,000 ballpark try to figure out whether they’re among the middle class getting a $1000 hike or a $1000 break while a great ocean of greed and grief looms over us.
You’re right. I pulled down Table 1.1.1 from the BEA website. The title of the table is “Percent Change From Preceding Period in Real Gross Domestic Product - [Percent] Seasonally adjusted at annual rates.” I averaged out the following years:
Reagan ('81-'88) 3.64375%
Bush 41 ('89-'92) 2.2625%
Clinton ('93-'00) 3.821875%
Bush 43 ('01-'08) 1.796875%
Obama ('09-'16) 1.846875%
Trump ('17) 2.433333333%
Who has said anything about cutting CHIP / Medicare / SocSec ?
The more I read and hear about this plan, the worse it seems to me.
On a personal level, I have to partially retract a correction I made to a previous post. The child tax credit will not apply to my kids, who are both over 16. That puts me down by about $1K. Not a lot, but it puts the lie to the GOP claim that this is a middle-class tax cut (unless middle-class doesn’t include slightly upper middle class).
Here are a few of the more infuriating things:
The estate tax elimination does not include killing the stepped-up basis provision of current estate tax law. This means that not only does wealth pass from generation to generation tax-free, selling assets shortly after the date of death won’t even incur a capital gains tax liability. Even if you believe capital gains should be taxed at a lower rate, how in the world can you justify an effective zero rate for people who never earned or risked a dime of their own money for it? I kind of understand the rationale for stepped-up basis–it makes the accounting easier, allows the heirs to avoid having to dig up records from the deceased that might not be there, etc. But the estate tax should be there to make up for some of that lost capital gains tax.
The reduced pass-through business tax rate comes with a bunch of additional rules ostensibly to prevent personal services businesses from taking advantage of it. First off, the point of tax reform is to simplify the code, right? This just immediately adds a layer of complexity to a new provision. That’s how the tax code got so complicated in the first place–create a rule, then create a bunch of more rules to cover the unintended consequences of that rule. Second, I heard someone pointing out that personal services firms can get around this by buying their buildings, creating an S-corp or partnership that owns the building, and charging stupidly high levels of rent to the services business. Then all the profit comes from the capital-owning real estate business. Shocking that Trump’s family businesses will definitely qualify for the new pass-through rates.
No more deductions for adoption expenses. I thought the GOP wanted to encourage unwanted children to be born and given up for adoption. This will certainly help.
Throwing fetal personhood into 529 college savings accounts. Note that this is entirely unnecessary, since one can already start a 529 to be used for prospective children. The beneficiary can be designated at any time later.
There are ideas in this bill that make some sense. The mortgage interest deduction is a distorting force on the market that mostly benefits the upper income brackets. Corporate taxes probably should be lowered, or eliminated entirely. But then the income from corporate profits–dividends or capital gains–should be taxed as ordinary income when it gets to an actual person (as opposed to the notional corporate person). That might allow rates to be lowered overall without even increasing the deficit. But that’s not what this is about. It’s about cutting taxes on the rich, while claiming the pittance going to lower income households is a huge gift. Can’t remember who said it, but “Don’t piss on my leg and tell me it’s raining.”
[QUOTE=RickG;20585857
The estate tax elimination does not include killing the stepped-up basis provision of current estate tax law. This means that not only does wealth pass from generation to generation tax-free, selling assets shortly after the date of death won’t even incur a capital gains tax liability. Even if you believe capital gains should be taxed at a lower rate, how in the world can you justify an effective zero rate for people who never earned or risked a dime of their own money for it? I kind of understand the rationale for stepped-up basis–it makes the accounting easier, allows the heirs to avoid having to dig up records from the deceased that might not be there, etc. But the estate tax should be there to make up for some of that lost capital gains tax.
[/QUOTE]
Pretty much, IMHO that’s all it should do. Tax unrealized capital gains with a Personal residence or Family farm or sole proprietership getting a large exclusion.
But all those stocks? Yeah, no reason not to tax them.
I was wondering if it would be possible to give taxpayers the option – either pay the estate tax on an estate worth more than a set amount (basically, $5.5 million for 2017, which I would accept) OR eliminate the stepped-up basis. Those who would find it too onerous to dig up records could pay the tax, everyone else would pay the full capital gains tax when they sold the asset.
I haven’t seen much comment here about medical deductions and thought the topic was worthy of discussion.
AIUI the plan as it stands would not allow deductions for medical expense. Currently, medical costs are deductible to the extent that they exceed 10% of AGI. I couldn’t find any cites on how many taxpayers took medical deductions for 2016 income, but in 2015 according to this site, 19% of returns that itemized deductions took a medical deduction. In 2015 expenses in excess of 7.5% of AGI were deductible, so it’s almost guaranteed that the number taking the deduction in 2016 was quite a bit lower.
But still, people who are in the position of having that much in medical expense also seem to be the ones who really need a tax break for some of that expense.
OK, at least the people whose deductible health care costs do not include insurance premiums. This is I’m guessing most people, but if you buy your own insurance (for example, through COBRA) you can include your premiums in health costs.
Which leads to my second point – one current deduction that I don’t think has ever been considered by the GOP for elimination is the deduction for employer-sponsored health insurance. I think many people don’t really think about this – the employer-paid part is I believe rarely thought of as income, and the portion paid by the employee is not included in W2 earnings so is never subject to itemization.
But disallowing this could have a substantial impact on taxes. I imagine that steps would be taken to keep most people “whole” in terms of take-home pay, but the repercussions of including health care premiums as income would have substantial impacts in other ways, some of which may be beneficial to the economy as a whole. And since the GOP seems determined that the government should not be in the business of underwriting health care, this should be right up their alley. The main reason why they don’t do this is likely because most of their constituents don’t want to be reminded that their own healthcare is subsidized by the federal government. But shouldn’t it be on the table?
Plus – what’s the rationale of not taxing employer-provided insurance and not allowing even part of premiums paid in full by taxpayers to be tax-exempt?
In a sort-of related note, I see that Ryan wants the new tax plan to get rid of the ACA individual mandate. I’m not exactly sure what he means by this, but I’m guessing it’s the discontinuation of the tax paid by people who choose not to have insurance. Wouldn’t this further reduce revenues?
CHIP has already hit the chopping block:
http://boards.straightdope.com/sdmb/showthread.php?t=840089
Medicare hasn’t been specifically targeted yet, but it certainly would have been strained if the ACA repeal had succeeded in cutting $700-$900 Billion from Medicaid as was proposed, since many millions of Medicare recipients have their benefits supplemented by Medicaid. (The prior is a federal program, the latter is a state program, so by yanking the state funds provided by Medicaid, it’s a defacto cut to benefits to most Medicare recipients who no longer have their individual state covering what the federal government doesn’t on their Medicare plan).
Social Security hasn’t been targeted yet, but it’s fairly reasonable to assume it’s on the wish list of Ted Cruz and company.
This is the very important point that is usually ignored in discussions of the estate tax.
Note that the many millions of dollars worth of stocks, art, homes that Joe Richguy Jr. inherits on the death of Joe RichGuy Sr. are NOT the short-term stocks Senior was playing with a few months ago, but wealth that has been in the family for decades — quite possibly Senior inherited it from his own father. 90% of this wealth or more is often in the form of unrealized capital gains. (Just look at your own stock portfolios. Unless you’re young, your long-term holdings will be mostly unrealized capital gains by now. This is accentuated for the rich whose wealth will mostly be in a family business, not mutual funds.)
This important fact is so flagrantly overlooked, that I’ll repeat it in a larger font:
90% of the estates of the super-rich will be in the form of unrealized capital gains — gains that go completely untaxed without the estate tax.
This fact is completely absent from the debate. Instead the liars and kleptocrats prattle on and on about the “unfair death tax.” This minor(?) aspect of tax law demonstrates the extent to which Ignorance is now the guiding principle of American “democracy.”
Nitpick: most Medicare recipients are not covered by Medicaid. There are about 9 million “dual eligibles” out of a total Medicare population of 37 million.
‘Who cares?’: GOP unbothered that most voters dislike their tax plan
Isn’t the GOP the same party that spent 8 years complaining about how the PPACA was “shoved down our throats”? If that was such a bad thing to do, why are they now trying to do the same thing all the time?
And is anyone surprised?
The GOP cares deeply about the opinions of their constituents, and would never dream of doing anything counter to their wishes. In this case, their constituents consist primarily of the Koch brothers, the US Chamber of Commerce, and the Club for Growth.
The objection I have to the idea that is being conveyed here is that it seems to assume that the default position is that things ought to be taxed, and that only through the grace of government are some things excluded from its grasp. I wouldn’t go so far as to say the default position that nothing ought to be taxed, but these gives and takes are part of social policy. The idea that there are “lost capital gains” tax relies on the idea that there is something owed. That’s not true and therefore there is nothing to make up.
I realize the estate tax benefits a tiny sliver of the population which will likely never include me. I am also in favor of its elimination because I disagree with the principle of taxing things passed through inheritance. This has nothing to do with whether or not the recipients earned or risked a dime of their own money.
But you are generally okay with the idea of taxing a person’s income? If so, why do you think that income earned should be taxed more than income gifted? Or perhaps more accurately, why are you okay with taxing income earned but not okay with taxing income that was gifted?
I am not a tax expert, but would Richie Richpants be able to create some type of corporation, run by family members, that owns all the assets? So when he dies, the assets remain in the corporation, now headed by Richie Jr.
I’d be OK with taxing all income the same, provide long term gains (things owned > a year) were indexed to inflation. If I sell an asset that I bought 20 years ago, some of the gain is just inflation.