(11-02-2017, 07:09 PM)MalabarJag Wrote: (11-02-2017, 05:10 PM)jj82284 Wrote: I think the one thing that we can learn from this debate on taxes is that this country has a massive spending problem that we are going to have to deal with sooner or later. In the meantime, we are stuck with this lowering rates while eliminating deductions shell game.
I believe in supply side tax cuts. I don't think that's what this bill is. When Mitt Romney ran for president he gave an t.v. interview right before his plane took off for the next campaign stop. In that interview he talked about the virtues of "revenue neutral tax reform." He wanted to assure the American people that he wasn't REALLY lowering anyone's taxes. He was just making the code simpler but everyone would pay just about the same. His Vp at the time? Paul Ryan. Doubling Deductions, but eliminating exemption. Lowering rates but taxing interest on student loans and medical expenses. Lower corporate taxes but now a GLOBAL minimum profits tax and taxing business interest.
Don't get me wrong, this is still a lot better than the debacle that we would have had with Shrillary, but I am not really all that enthused. It's not about me personally. I think I will probably wind up about the same next year. The problem I have is that a lot of people that I talk to who hate Trump express a lot of open mindedness when we talk about tax cuts, but I am afraid that for the most part this isn't really going to be a tax cut for people. Anyone who itemizes in a state with an income tax is going to pay higher. I just don't see how the math is going to work.
The Laffer curve is real. There is a point where, if you lower taxes, you end up with more revenue. The problem is that we are on the left side of the curve, where any further tax decrease will decrease revenue. So supply side income tax cuts will increase the annual deficit. However, there is still room to gain with corporate tax cuts. That's the big supply side plus in this plan.
With respect, that doesn't make a lot of sense. If memory serves, on the laugher curve the x-axis represents the marginal tax rate. The marginal corporate tax rate and the individual tax rate are the same under current law, thus we are on the same side of the curve either right or left. Plus, we are going to 20% on the corporate side, dramatically increasing the deductions they can take for purchasing equipment Etc. Etc. Etc.
Now don't get me wrong. I think that the purpose of tax policy should be to maximize economic growth, not revenues to the treasury. That's why I started by saying that we have a spending problem. But under the current proposal there is a much greater risk that the reform to the corporate tax rate will be revenue negative than whats being done on the individual side.
Only 30% of households itemize, and with the standard deduction doubling (I didn't see that in the blurb, but it was touted by Trump) a lot of people will benefit by just switching to the standard deduction. Yes, there are always winners and losers when a revenue neutral simplification is applied. In this case people who itemize and pay lots of state income tax will pay more. I think the Republican party sees most of them as Hillary voters living in Blue States. For example, many of the California Republicans have already fled the state.
Yes, the standard deduction will double, but the individual exemption will be abolished. Son on balance, that really doesn't mean anything. That's just a way of insulating a lot of people from realizing the amount of money that will be soaked from the income earners and job creators that do itemize. And for families with more than one child MORE of their income will be subject to taxation under this plan than current law.
Now we find out that there is a 46% bubble tax in the law. The FORMULA to determine pass through income designates 70% of that income as wages. When you do the math, it's really only a 4% decrease in the marginal rate for small business owners. I'm all for across the board tax cuts, but when you tell me that you are going to increase the base of taxation on small business owners and the "cut" in the marginal rate is really just a teaser rate that only amounts to a bout 4% then I wonder why the @#$^& you went to congress.
Carly Fiorina was the only one who actually talked about the problem. The annual budget automatically increases 8% (baseline budgeting.) If we don't get rid of that and actually target revenue negative tax policy (intentionally leaving more money in the economy) then not only are we not going to sustain economic growth but we are going to loose our brand of low taxes and individual freedom that is already under attack. If that happens then there is no way that we can out Santa the Democrats and we will wind up like the rest of the social democracies.
