The 2017/2018 Trump/GOP tax plan

[Velocity]

A Canadian is concerned about the bill’s effect, which might make Canada less competitive vis-a-vis the United States.

[Snowboarder_Bo]

Republicans Passed Their Tax Bill, Now They Have to Fix It (Expect that to take awhile.)

Any major piece of legislation will contain glitches, flawed language that opens an unforeseen loophole or minor clauses that clash in unexpected ways. These quirks always require follow-up legislation or regulations to patch up the new regimen. But this bill was not only an especially massive overhaul of the tax system, it was also a 1,097-page rush job, created by fusing two equally rushed and flawed prior versions over a week of secret conferencing.

There was, to tax policy expert Steven Rosenthal’s eye, no real attempt to even try to catch mistakes before the bill was signed into law. “This bill was drafted so badly and in such a rushed fashion,” he told me, “that the level of errors will be unlike anything we’ve seen before.”

Republican leaders are well aware that their bill is deeply flawed. Days before they released the final bill, congressional heavy hitters were already talking about how to flesh out vague language and troubleshoot problems; they plan on writing a corrections bill soon. Yet while technical corrections are often routine legislative measures, it’s not actually clear at this point that Republicans will be able to make any major fixes. Intrigue surrounding the fixes for this bill will be going on behind the scenes for a good chunk of 2018, if not longer.

And then there’s the past 8 years to factor in as well:

But legislation introduced to fix errors as people cop onto them will face an uphill battle. Unlike the tax bill itself, corrections can be filibustered in the Senate. In previous eras, passing fixes was routine, but that’s no longer the case: In 2010, Republicans, bitter about the partisan passage of the Affordable Care Act, used the filibuster power to stonewall tweaks that would have allowed healthcare exchanges and individual plans to work better, crippling the program to make it easier to attack. Now there’s a real fear that Democrats, angry at the partisan nature and breakneck pace of this legislative process, will return that favor. With any major legislation, said Bill Hoagland, a longtime Senate staffer now at the Bipartisan Policy Center, “if it’s not done in a bipartisan way, the other party doesn’t have any incentive to make it better.”

I’m not sure the Democrats have much incentive to make this better without there being more Democrats in Congress, but to be honest I haven’t given much thought to the fix-it process yet. My initial reaction is that it’s going to be difficult for Republicans to acknowledge problems in the first place, let alone fix them. They aren’t exactly noted for being able to get things done; more like being able to prevent anything from getting done (and lately for undoing, too).

[HurricaneDitka]

@Snowboarder_Bo

… They aren’t exactly noted for being able to get things done… .

Still feel that’s the case after last week?

[running_coach]

@HurricaneDitka

Still feel that’s the case after last week?

Yes. They rushed it through to the extent of scribbling changes in the margins. I wouldn’t call that careful and considered lawmaking. it’s more like the kid staying up all night to write the paper that’s due in the morning.
What was the rush?
Was it really necessary to finish this by an artificial deadline rather than do it right?

Do you really think they should be praised for half-assing one thing after almost a year of having control of both Houses and the WH?

[running_coach]

Tax plan is Congress’ Christmas gift to accountants and lawyers

Tax professionals everywhere can breathe easy. The tax code is no simpler than it was last week.

“Accountants and tax lawyers rejoice, it’s Christmas from Congress!” said tax lawyer John Ransom, chair of the corporate practice for Jackson Walker’s Houston office. “Forget any simplification. It’s going to wring people’s brains out certainly for the next couple of months.”

Before the tax bill, the wealthiest Americans benefiting from pass-through income paid the top rate of 39.6 percent in taxes. That was not significantly different from the 35 percent tax rate paid by corporations, especially since flow-through income was not taxed twice like it is at C-corps.

The new tax bill, however, slashes the corporate tax rate to 21 percent, potentially taxing flow-through businesses at a much higher rate. To balance the rates out, Congress changed the law on flow-through income, but in so doing, created an extremely complicated new system that even Ransom, a veteran of the 1976 and 1986 tax code rewrites, finds difficult to understand.

“I’m having to read some of this stuff a third and fourth time,” he told me.

Republicans Passed Their Tax Bill, Now They Have to Fix It

On Friday morning, Donald Trump signed the irresponsible and unpopular Republican tax bill into law, securing at least one legislative victory for 2017. But that doesn’t mean the tax bill’s saga is anywhere close to over. Any major piece of legislation will contain glitches, flawed language that opens an unforeseen loophole or minor clauses that clash in unexpected ways. These quirks always require follow-up legislation or regulations to patch up the new regimen. But this bill was not only an especially massive overhaul of the tax system, it was also a 1,097-page rush job, created by fusing two equally rushed and flawed prior versions over a week of secret conferencing.

There was, to tax policy expert Steven Rosenthal’s eye, no real attempt to even try to catch mistakes before the bill was signed into law. “This bill was drafted so badly and in such a rushed fashion,” he told me, “that the level of errors will be unlike anything we’ve seen before.”

So what happened to the fucking postcard?

[amarone]

Statements like the following are misleading.

But a person’s contributions can be limited by the gift-tax laws. You can only give up to $12,000 to each person in 2008 without being subject to gift taxes (married couples can give $24,000 to each person).

A person’s cotributions are not limited by the gift tax laws. You (or anyone) can give $200k up front if you wish. It just might generate gift taxes on the estate if you use up all the gift tax exemption and have an $11m+ estate.

[John_Mace]

@amarone

Statements like the following are misleading.

A person’s cotributions are not limited by the gift tax laws. You (or anyone) can give $200k up front if you wish. It just might generate gift taxes on the estate if you use up all the gift tax exemption and have an $11m+ estate.

Agreed, and my bad for not pointing that out in the cite I posted. Like many folks, I was not familiar with how gift taxes worked until it was explained just a few days ago in another thread.

[Ruken]

So I’m pretty much double wrong then. Any limits are just to avoid other taxes.

[Fiveyearlurker]

Trump told his rich “friends” that they “all just got a lot richer”.

[amarone]

@John_Mace

Agreed, and my bad for not pointing that out in the cite I posted. Like many folks, I was not familiar with how gift taxes worked until it was explained just a few days ago in another thread.

I didn’t quote you because the fault is in the media, not you. Statements like the one you quoted are very common, probably also leading to the misunderstanding that Ruken has just acknowledged.

[elucidator]

Saw a brief news report that said that the renewable energy tax incentives were scheduled to walk the Green Energy Mile, but now are not, such incentives will remain. The heck? They had it right there on the block, ax was raised and then they went “Nah.”?

Are a lot of them invested? Maybe moving their assets from fossil fuel to “green” energy like rats clambering aboard the ship that isn’t sinking? How could this fit the Republican agenda of totally shitting our global nest?

Is it a mistake, an artifact of the goofy, madcap comedy of improv legislation? Somebody just threw that in there, and nobody noticed? By golly, a lump of “clean coal” for each of their stockings!

[Fiveyearlurker]

Naive question here. Is there anything stopping California or New York from legislating a dollar for dollar tax credit on charitable donations to the state government? Charitable donations are still eligible for federal tax deduction. So, essentially, states could reinstitute the local government tax deduction.

[Really_Not_All_That_Bright]

@Fiveyearlurker

Naive question here. Is there anything stopping California or New York from legislating a dollar for dollar tax credit on charitable donations to the state government? Charitable donations are still eligible for federal tax deduction. So, essentially, states could reinstitute the local government tax deduction.

The state government has to qualify as a 501 group or some other tax-exempt entity. State governmental functions are generally exempt from federal taxes (states can be taxed on their business activities, such as state-run liquor stores), but contributions are not necessarily tax-deductible to the giver just because they are made to a not-for-profit entity.

[Damuri_Ajashi]

@Fiveyearlurker

I just prepaid my property taxes. I would suggest people living in high tax states look into it.

According to the IRS, this only works if you were assessed the tax in 2017. You can no more prepay your 2018 unassessed property tax bill for a state tax deduction than you can prepay your 2020 unassessed property tax bill for a state tax deduction.

IRS says 2018 property taxes may be deductible only if assessed and paid in 2017

[Damuri_Ajashi]

@Really_Not_All_That_Bright

The state government has to qualify as a 501 group or some other tax-exempt entity. State governmental functions are generally exempt from federal taxes (states can be taxed on their business activities, such as state-run liquor stores), but contributions are not necessarily tax-deductible to the giver just because they are made to a not-for-profit entity.

Other Eligible Donees | Internal Revenue Service

I think donations to states are in fact tax deductible. People donate stuff to state and local governments all the time.

[doreen]

@Fiveyearlurker

Naive question here. Is there anything stopping California or New York from legislating a dollar for dollar tax credit on charitable donations to the state government? Charitable donations are still eligible for federal tax deduction. So, essentially, states could reinstitute the local government tax deduction.

I think the dollar-for-dollar credit would disqualify the payment as a donation since you would receive something of value (the credit). Otherwise, I could have deducted the tens of thousands of dollars I paid in tuition for my kids by getting the schools to call the payments donations and giving me a dollar-for -dollar credit on the tuition.

[Fiveyearlurker]

@Damuri_Ajashi

According to the IRS, this only works if you were assessed the tax in 2017. You can no more prepay your 2018 unassessed property tax bill for a state tax deduction than you can prepay your 2020 unassessed property tax bill for a state tax deduction.

https://www.cnbc.com/2017/12/27/irs-says-2018-property-taxes-are-deductible-if-assessed-and-paid-in-2017.html

i prepaid the 2017 portion that is due in February. That qualifies.

@Really_Not_All_That_Bright

The state government has to qualify as a 501 group or some other tax-exempt entity. State governmental functions are generally exempt from federal taxes (states can be taxed on their business activities, such as state-run liquor stores), but contributions are not necessarily tax-deductible to the giver just because they are made to a not-for-profit entity.

i don’t think this is true. According to the IRS, donations to state and local governments are just as deductible as any other contribution:
*
What Constitutes a Charitable Contribution?

Generally speaking, a charitable contribution is anything that may be of value to a qualified charitable organization. This includes money or property in the form of cash, clothing, household items, cars, real estate, securities and other assets or services.

According to the IRS, donations to the following entities are tax-deductible, so long as they do not benefit any specific individual:

Churches, synagogues, temples, mosques, and other religious organizations

** Federal, state, and local governments, if your contribution is solely for public purpose**
Nonprofit schools and hospitals
Public parks and recreation facilities
War veterans groups
Expenses paid for a student living with you, sponsored by a qualified organization
Out-of-pocket expenses when you serve a qualified organization as a volunteer
Salvation Army, Red Cross, CARE, Goodwill Industries, United Way, Boy Scouts, Girls Scouts, and many other non-profit organizations.*

[Bone]

Instead of donations, states could shift away from income taxes and more to payroll taxes which would negate the salt limit for that portion. Volokh had an article on tho recently that I can’t find from my phone. Good luck in CA trying to get the legislature to reduce income taxes.

[Bone]

Here’s the article:

Opinion | Now that state income taxes aren’t going to be deductible, will...

But say California replaces the state income tax (at least for employment income) with a state payroll tax that’s paid by the employer, and that it comes in at the same amount per employee. As I understand it, the payroll tax — like most other business expenses, such as salaries paid to employees — is deductible by the employer; and it’s not taxable income for the employee, because it’s not the employee’s income.

[Fiveyearlurker]

i can’t believe there are loopholes in a bill so carefully crafted.