The 2017/2018 Trump/GOP tax plan

[Dinsdale]

Did some rough calculations the other day. Elimination of the state tax deduction would cost my wife and me a few thousand $. That would not affect my lifestyle much at all - maybe we’d travel a little less, and gift less to our kids. I don’t expect anyone to cry for us. But it would irritate me if my personal taxes were to INCREASE, while wealthier folks’ would DECREASE, services would be REDUCED, and deficits would INCREASE.

Can’t spend too much emotion/thought on it yet, as it is so vague. Will be interesting to see what Repub reps/sens from the affected states will say. Haven’t checked to see how the affected states fair in terms of % of federal tax dollars returned to the states…

[Snowboarder_Bo]

Trump made a pitch to truckers today, and there’s some info in the article I don’t recall reading elsewhere:

Trump highlighted the tax plan’s provisions aimed at encouraging international companies to bring back, or repatriate, cash that they’ve kept overseas. All told, there’s more than $1 trillion in cash held abroad by S&P 500 companies, according to Deutsche Bank.

“We will totally eliminate the penalty on returning future earnings back to the United States and we will impose a one-time low tax on money currently parked overseas so it can be brought back home to America, where it belongs and where it can do its job,” he said. He added that his Council of Economic Advisers estimates that the change, along with a lower tax rate, “would likely give the typical American household a $4,000 pay raise.”

“Could be a lot more than that, too,” he said.

The $4,000 in additional income estimate comes from a back of the envelope calculation by White House economics adviser Kevin Hassett based on companies returning 71 percent of their foreign profits over the course of eight years.

This estimate appears to assume that the returned profits would flow to workers in the form of higher wages. But many economists say much of it would likely be returned to investors in the form of stock dividends and buybacks.

[John_Mace]

Wages are set by market rates, not by how much money investors have. Now, “how much money investors have” might be part of what constitutes “the market” here, but I’d be very suspicious of any actual predictions that didn’t have some pretty large error bars.

[Snowboarder_Bo]

By slashing corporate tax rates, the Trump administration said Monday, the average U.S. household will get an estimated $4,000 more a year.

This stunning 5 percent increase was met with skepticism from tax experts and Democratic lawmakers who said the math was flawed. Spread across every U.S. household, the White House analysis claims it would generate “conservatively” an income jump totaling $504 billion, or about $200 billion more than the revenues currently generated by the corporate income tax.

With this new report, the White House is making a populist argument for its proposal to cut the 35 percent corporate tax rate to 20 percent. Trump has pitched his tax plan as supporting the middle class even though the details point to major companies and the wealthy as the biggest winners. Polls suggest that voters generally frown upon the idea of cutting taxes for businesses — essentially rewarding these firms for avoiding taxes by exploiting loopholes and keeping profits overseas.

Do you suppose there was a focus group and committee meetings that came up with a number that was high enough to make people think “ddamn, that’d be great to have” but low enough that people wouldn’t go “yeah, right” or do you think it came from serious study of the numbers involved and fastidious calculations to ensure that this would be a fair plan? :dubious:

The analysis by Kevin Hassett, chairman of the White House Council of Economic Advisers, said that the considerably lower rate would spur more investment by companies, which would then boost hiring and worker productivity. The average income gains from the reduced rate would range from $4,000 to as high as $9,000, the administration said. Those figures, however, rely on research arguing that workers — rather than investors — would primarily benefit from the lower corporate rates.

“I would expect to see an immediate jump in wage growth,” Hassett said in a phone call with reporters, saying that the salary gains would also come in part from companies bringing back profits held overseas to avoid the relatively high U.S. tax rates.

I’m really going to have to go with “made up the numbers”, considering:

Separate studies, including a 2012 Treasury Department analysis, found that the vast majority of any savings would go to investors, making it unlikely to push up wages as much as the administration has argued. The administration removed the 2012 analysis from the Treasury Department’s website after releasing its tax framework last month with Republican congressional leaders.

Outside economists said the income growth projected by Hassett appears to assume that workers appear to bear more than 100 percent of the burden of U.S. corporate taxes — a mathematical impossibility.

Jason Furman, Hassett’s predecessor under President Barack Obama, said on Twitter that the numbers in the report suggest that workers bear 250 percent of the costs.

[elucidator]

Gosh, it worked so well in Kansas!

[DrDeth]

@Snowboarder_Bo

By slashing corporate tax rates, the Trump administration said Monday, the average U.S. household will get an estimated $4,000 more a year.Do you suppose there was a focus group and committee meetings that came up with a number that was high enough to make people think “ddamn, that’d be great to have” but low enough that people wouldn’t go “yeah, right” or do you think it came from serious study of the numbers involved and fastidious calculations to ensure that this would be a fair plan? :dubious:I’m really going to have to go with “made up the numbers”, considering:

How the FUCK would cutting corp income tax put $$ into the pockets or ordinary citizens?

"
The analysis by Kevin Hassett, chairman of the White House Council of Economic Advisers, said that the considerably lower rate would spur more investment by companies, which would then boost hiring and worker productivity. …Those figures, however, rely on research arguing that workers — rather than investors — would primarily benefit from the lower corporate rate." Yeah, since when have great profits been plowed into higher paychecks for the workers?

[AI_Proofreader]

Maybe it’s a real number, but Trump thinks an “average” household is one that makes $500,000 per year.

[Robot_Arm]

@DrDeth

How the FUCK would cutting corp income tax put $$ into the pockets or ordinary citizens?

Because the noble job creators, in their role as public servants, are willing to go through the sacrifice of becoming wealthy for the good of the country.

Haven’t you been paying attention for the last 30 years?

[elucidator]

That’s damned white of them!

[septimus]

@Robot_Arm

Because the noble job creators, in their role as public servants, are willing to go through the sacrifice of becoming wealthy for the good of the country.

Haven’t you been paying attention for the last 30 years?

Thank you, Robot Arm. So many of the SDMB liberals scoff at the sacrifices made by our Great Corporations and Job Creators; your post is a refreshing change.

In 1968, the federal minimum wage expressed in 2017 dollars was a mere $11.60. Since then the minimum wage has skyrocketed all the way to $7.25. Over the same period, total corporate profits (again in constant dollars) have barely quintupled. Yet we still hear whining. Sheeeezh.

[Ruken]

WSJ this morning:

Currently, about 30% of U.S. homes are valuable enough to make it worthwhile to take the mortgage interest deduction, along with a deduction for state and local property taxes, according to an analysis by home search website Zillow. Under the proposed changes, the share would drop to 5%, according to Zillow.
[…]
Under current law, a typical homeowner would need to purchase a home worth at least $305,000 to make taking the break worthwhile, according to Zillow, while under the proposed law that would shoot up to $801,000. The median home value in the U.S. is just over $200,000

Of course under current law there’s still SALT and other deductions, so it’s the sum of deductions that matters. If my mortgage interest were just $1, I’d still be deducting that due to high local taxes.
Likely paywalled, but here’s the link: https://www.wsj.com/articles/gop-tax-plan-would-keep-the-mortgage-break-but-threaten-irrelevancy-1508146200

This might be the Zillow study they reference but don’t link to: Under Proposed Tax Changes, Taking MID Would Be Worthwhile on Only 5% of U.S. Homes - Zillow Research

[Ruken]

@Snowboarder_Bo

By slashing corporate tax rates, the Trump administration said Monday, the average U.S. household will get an estimated $4,000 more a year.

Here is the actual report: PDF

[elucidator]

And the voice of the turtle is heard in the land. Cow says “Moo”. Turtle says “Oink”.

[Snowboarder_Bo]

@Ruken

Here is the actual report: PDF

Thanks; much appreciated.

Wage growth in America has stagnated. Over the past eight years, the real median wage in the U.S. rose by an average of six-tenths of a percent per year. But even as Americans’ real wages stagnated, real corporate profits soared, increasing by an average of 11 percent per year. The relationship between corporate profits and worker compensation broke down in the late 1980s. Prior to 1990, worker wages rose by more than 1 percent for every 1 percent increase in corporate profits. From 1990-2016, the pass-through to workers was only 0.6 percent, and looking most recently, from 2008-2016, only 0.3 percent.1 The profits of U.S. multinationals are still American profits, but, increasingly, the benefits of those profits do not accrue to U.S. workers.

Huh. Just about the same time that they got really good at busting unions and rewriting labor laws. Imagine that.

[Try2B_Comprehensive]

Take a look at Krugman’s take on this

But how can an administration that pretends to be populist, to stand up for ordinary (white) working people, sell such elitist policies?
The answer is a strategy based entirely on lies. And I mean entirely: The Trump administration and its allies are lying about every aspect of their tax plan.

He outlines those lies here: Lies, Lies, Lies, Lies, Lies, Lies, Lies, Lies, Lies, Lies - The New York Times

Sorry for the sloppy link, posting from phone. It is worth a look.

[OldGuy]

I wonder if the proposed elimination of deductibility of state taxes and mortgage payments, etc. also applies to corporations. I’ll bet it does not. Those will still be considered expenses. It might be time to create a corporation to own your house and lease it back to you.

[Snowboarder_Bo]

@Try2B_Comprehensive

Take a look at Krugman’s take on this
He outlines those lies here: Lies, Lies, Lies, Lies, Lies, Lies, Lies, Lies, Lies, Lies - The New York Times

Sorry for the sloppy link, posting from phone. It is worth a look.

I read the whole thing and can confirm that it is indeed worth a look. I especially like that the title of the article is Lies, Lies, Lies, Lies, Lies, Lies, Lies, Lies, Lies, Lies.

[septimus]

An astounding fact is that 40% of American voters believe Trump’s tax plan is designed to help the average middle-class taxpayer.

The stupidity of Americans today is breathtaking. Are these the people that landed a man on the Moon? Future scientists will speculate that American humanoids in the late 20th century must have been interbreeding somehow with cockroaches.

[Senegoid]

@Snowboarder_Bo

I read the whole thing and can confirm that it is indeed worth a look. I especially like that the title of the article is Lies, Lies, Lies, Lies, Lies, Lies, Lies, Lies, Lies, Lies.

And furthermore, Krugman followed up that post with his regular column on Monday (Oct. 16), titled The G.O.P. Is No Party for Honest Men, in which he notes the total dishonesty of the Republican pitch on this issue, and attempts to analyze why they are doing that. He comes up with the obvious answer of course: They are thoroughly beholden to their masters, the big-money big-donors.

A salient excerpt:

@Paul Krugman

So what’s behind this priority? Follow the money. Big donors are furious at missing out on the $700 billion in tax cuts that were supposed to come out of Obamacare repeal. If they don’t get big bucks out of tax “reform,” they might close their pocketbooks for the 2018 midterm elections.

Beyond that, modern conservatism is a sort of ecosystem of media outlets, think tanks, lobbying outfits and more that offers many lucrative niches — so-called wingnut welfare — for the ideologically reliable. And that means being reliable to the interests of the wealthy.

But how can an administration that pretends to be populist, to stand up for ordinary (white) working people, sell such elitist policies?

The answer is a strategy based entirely on lies. And I mean entirely: The Trump administration and its allies are lying about every aspect of their tax plan.

(Links in original)

[Snowboarder_Bo]

About 44 million human beings would lose the state and local tax deduction, but zero corporations would be affected.

The Republican proposal would eliminate the federal deduction for state and local taxes, a widely popular break used by some 44 million Americans, especially in high-tax, Democratic-leaning states like New York, New Jersey, California and Illinois. But corporations, which pay billions in local property levies and state income taxes, wouldn’t be affected.