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Senate Passes Tax-Cut Bill In Milestone Move Toward Overhaul
>> I don't wish to fit into some box you choose to put me in.
Wait, so are you disowning what you wrote about trickling and noblesse oblige? How is taking you at your words fitting you into some box of my choice ? Ah, because of those two terms? So help me understand what it is you are saying with
'optimistic about wealth creation and the social obligation that many of those blessed with wealth have historically exhibited to the less fortunate and to the advancement of society'
and
' this type of tax reform will energize individuals and their communities, that made them wealthy in the first place, to continue and expand that good work' [such as is / was found in San Fran]
Voluntary charity is a good model for social policy?
All taxation is redistributive to some extent. Social covenants and all that. But you know this.
It should be obvious that the authors of this bill are only interested in paying back their campaign donors. In fact, a NY Rep admitted as much. That is why it favors capital over income, ultra rich people over the middle class corporations over individuals and red states over blue.
If they really reduced the top rate to 37% it is obvious that they were only responding to the hue and cry from the ultra wealthy in red states with high property taxes and some tiny fraction of the citizens in blue states with high income taxes. They are purposely screwing the large number of taxpayers in blue states in the below 37% brackets who pay the vast majority of income taxes there, in order to continue fueling the exodus to low tax states
The are several hidden agendas here... Depopulate the blue states, create a budget disaster in ten years when ( unlike corporate taxes) the "middle class tax cuts" will expire in a time of enormous budget deficits and then destroy Medicare and Social Security. Ryan has admitted as much.
This is why even knowing little about this bill the vast majority of Americans don't like it. Of course, they do little to influence Congress's votes. They just sit at home watching Game of Thrones
@davimoran, Not sure I agree with the author when he states that someone employed by a business is in a "similar situation" to someone who owns that business...he states,
This violates a basic rule of good tax policy: that taxpayers with similar situations should be treated similarly.
Running a small plumbing business as the (owner & plumber) is very different than working solely as a hired plumber (employee) for that small plumbing business. Isn't the tax code recognizing that the small business owner has additional business related expenses and therefore is providing tax deductions for taking on that business expense?
Further explanation of:
'optimistic about wealth creation and the social obligation that many of those blessed with wealth have historically exhibited to the less fortunate and to the advancement of society'
I just think individuals do a more effective job when it comes to caring for the needs of a community. Federal Taxation is a more effective tool for throttling economic factors like inflation / deflation/ aggregate demand than a mechanism for the redistribution of wealth (from the wealthy to the needy). I don't believe that should be its role, nor is it very good at it.
Lewis seems convinced that after you raise your children and influence your grandchildren...maybe even impress your great grand children with lifesavers that they will some how squandered all their inheritance on "Beemers, Beach Houses and Babes". I don't know how to get around family entitlements much like I don't know how we get around government entitlements.
I never said that. My point is that regardless whether heirs squander or steward their inheritance wisely they did not in fact earn the inheritance they are receiving. If you take two ten year old boys-one whose parents are billionaires and the other whose parents are broke, neither are truly responsible for their financial situation if their parents die. The current estate tax law would allow the billionare's children to receive at least $600 million after taxes. I think that is a suitable inheritance for a child who did nothing at all to produce that wealth. I don't think there's much moral hazard to enforcing that tax. To the contrary a steeper inheritance tax might encourage the child to work harder and make their own way in the world.
The real moral hazard in all of this is that the already-wealthy benefit while those who struggle do not. No one is asking the question, "how much should anyone be worth, while others die from lack of basics?" That conversation could be focused upon the USA, or expanded to a worldwide frame. And yes, on this basis, there is a great deal which is ALREADY screwed-up about society. We already live in a new Gilded Age, and it's becoming all the more so. And we have a morally vapid President and Congress. For the foreseeable future, then, the situation is not going to get better.
Even if one claims that individuals do a better job caring for the needs of the community, there is still ample reason for an estate tax. Many individuals give to charities to help their communities specifically to avoid the estate tax. It acts as an incentive to increase charitable giving. So if individuals are so much better as Bee is claiming, let them give all their money to charity. See Warren Buffett, Bill Gates, etc. Otherwise, they can just pay the tax.
@MFO: Since I started this thread, I'm going to take the liberty and state that it is time to move on. We won't know what the final tax bill will contain until all the lose ends are agreed upon by both the House and Senate. I linked the latest tax draft earlier today. Regards, Ted
It seems hard to believe that if this bill passes, which it looks like it will, it's going to last past the next time Democrats win power. So if I'm a business, I wouldn't make long-term decisions based on it. It's why tax reform worth the name has always been bipartisan.
Seems like there may be a groundswell for business owners to reconfigure towards pass-throughs...more loopholes /benefits for the wealthy & corporations who can afford to hire accountants.
@PRESSmUP: Thanks for the insight- that certainly explains Senator Grassley's comment. The working poor can't afford to hire accountants because "they are just spending every darn penny they have, whether it’s on booze or women or movies.”
And I happen to know that for those using public assistance like food stamps, they have to undergo repeated humiliation by re-proving their eligibility every 3 months. (Massachusetts. Dunno if it's a State or national policy? I bet MA isn't the only one...) But by all means, give the corporations a ride on the gravy train.
@Crash There's a fool proof method "for those using public assistance like food stamps, they have to undergo repeated humiliation by re-proving their eligibility every 3 months." Its called a job ! Regards, Ted
@Mark, you make an interesting point that was echoed in this podcast I listen to today. It centered on two Amazon warehouses that opened in two US towns...one in Texas and one in Minnesota.
Each town cut a deal (provided tax incentives and grants) for Amazon to build a warehouse in their town. Amazon hired towns people at minimum wage...maybe a little higher, but many still needed to apply for assistance to cover the cost of daycare, housing, food help.
The councilman who was interviewed pointed out that this has been a bad deal for the town and its citizens. Amazon, much like a sport team, creates a competitive bidding frenzy between towns and states. They often merely displace retail job at stores like Sears and KMart, these companies close, and Amazon opens up a shiny automated factory warehouse with tax payer financing and hire the Sears and KMart worker for less than they were making before Amazon arrived.
No new job, just a displaced/replaced worker...in many cases making less money and needing additional tax payer assistance to live.
@Mark, @Ted: I know for a fact that some of the full-time workers at the Safeway in Guerneville CA are eligible for, in need of, and do receive food stamps.
I have read multiple times over the years that similar workers for Walmart are in the same situation. Walmart (and I guess Safeway too) game the system- they pay their workers so little that some of Ted's tax dollars are needed to help support them with food stamps. I'll bet that really pisses him off.
I spoke with an economist/market strategist a while ago who said the first thing entrepreneurs and executives do with a tax break is not hire more people but invest in labor-saving technology. It was one of the reasons he argued that when the Reagan tax cuts initially passed they caused a recession and didn't spur growth.Businesses needed less labor because they now had all this productivity enhancing tech. I don't remember where exactly he got the data from, though. The problem with any broad tax cut is it really is a blunt instrument. The idea that it will trickle down necessarily is absurd. This is why fiscal government spending can be so much more effective if done correctly. It can be targeted to the specific sectors that need it. For instance if there was a normal infrastructure spending bill without any idiotic add-ons, that money would go towards infrastructure spending and that sector of the economy would have increased jobs. With a corporate tax cut who knows where the money will go except to corporations? Certainly executives will come first--pay bonuses--then perhaps shareholders will come second or tech spending, then perhaps consumers come third with lower prices or better products maybe, then at the bottom might be labor and not necessarily U.S. labor by the way. The tax cut could be used to open a factory overseas, even though the professed goal is to bring corporate spending back home.
Ah Lewis, we all know that a handsome chunk of this tax break will go into the back pocket of those smug politicians and their PAC's via the lobbyists for the corporations. That's all that matters to them. Screw all that greater good stuff.
We shouldn't view this bill as just a tax cut for corporations. Why, just look at the latest change that Congress threw in - it's a setback for corporations. Instead of getting their promised reduction to 20% nominal, the current draft is to cut the corporate rate "merely" to 21%.
Congress might have used the additional "revenue" (actually reduced loss in revenue due to cutting corporate taxes less) to lower the cost of this bill. Or it might have cut all individual taxes further. That would have been a broad tax cut.
Comments
>> I don't wish to fit into some box you choose to put me in.
Wait, so are you disowning what you wrote about trickling and noblesse oblige? How is taking you at your words fitting you into some box of my choice ? Ah, because of those two terms? So help me understand what it is you are saying with
'optimistic about wealth creation and the social obligation that many of those blessed with wealth have historically exhibited to the less fortunate and to the advancement of society'
and
' this type of tax reform will energize individuals and their communities, that made them wealthy in the first place, to continue and expand that good work' [such as is / was found in San Fran]
Voluntary charity is a good model for social policy?
All taxation is redistributive to some extent. Social covenants and all that. But you know this.
http://www.taxpolicycenter.org/taxvox/senates-tax-bill-would-cut-taxes-three-times-more-business-owners-workers
If they really reduced the top rate to 37% it is obvious that they were only responding to the hue and cry from the ultra wealthy in red states with high property taxes and some tiny fraction of the citizens in blue states with high income taxes. They are purposely screwing the large number of taxpayers in blue states in the below 37% brackets who pay the vast majority of income taxes there, in order to continue fueling the exodus to low tax states
The are several hidden agendas here... Depopulate the blue states, create a budget disaster in ten years when ( unlike corporate taxes) the "middle class tax cuts" will expire in a time of enormous budget deficits and then destroy Medicare and Social Security. Ryan has admitted as much.
This is why even knowing little about this bill the vast majority of Americans don't like it. Of course, they do little to influence Congress's votes. They just sit at home watching Game of Thrones
Not sure I agree with the author when he states that someone employed by a business is in a "similar situation" to someone who owns that business...he states, Running a small plumbing business as the (owner & plumber) is very different than working solely as a hired plumber (employee) for that small plumbing business. Isn't the tax code recognizing that the small business owner has additional business related expenses and therefore is providing tax deductions for taking on that business expense?
Further explanation of:
'optimistic about wealth creation and the social obligation that many of those blessed with wealth have historically exhibited to the less fortunate and to the advancement of society'
I just think individuals do a more effective job when it comes to caring for the needs of a community. Federal Taxation is a more effective tool for throttling economic factors like inflation / deflation/ aggregate demand than a mechanism for the redistribution of wealth (from the wealthy to the needy). I don't believe that should be its role, nor is it very good at it.
>> I just think individuals do a more effective job when it comes to caring for the needs of a community.
Got it. Thank goodness this view has been utterly repudiated for over a century!
Yeah, thanks; I was just thinking about formal implementations of taxation and the nonwar rationales for same.
Regards,
Ted
https://www.wsj.com/articles/for-pass-through-businesses-let-the-tax-games-begin-1513161000
Regards,
Ted
Each town cut a deal (provided tax incentives and grants) for Amazon to build a warehouse in their town. Amazon hired towns people at minimum wage...maybe a little higher, but many still needed to apply for assistance to cover the cost of daycare, housing, food help.
The councilman who was interviewed pointed out that this has been a bad deal for the town and its citizens. Amazon, much like a sport team, creates a competitive bidding frenzy between towns and states. They often merely displace retail job at stores like Sears and KMart, these companies close, and Amazon opens up a shiny automated factory warehouse with tax payer financing and hire the Sears and KMart worker for less than they were making before Amazon arrived.
No new job, just a displaced/replaced worker...in many cases making less money and needing additional tax payer assistance to live.
I have read multiple times over the years that similar workers for Walmart are in the same situation. Walmart (and I guess Safeway too) game the system- they pay their workers so little that some of Ted's tax dollars are needed to help support them with food stamps. I'll bet that really pisses him off.
If you believe that and you're a Republican, you're in the minority (29%). Only half as many Democrats and Independents were as optimistic.
"A SurveyMonkey poll asked Americans whether they thought their pay would go up if their employer got a tax cut. Most were doubtful."
https://www.nytimes.com/2017/11/14/business/economy/taxes-polls.html
Congress might have used the additional "revenue" (actually reduced loss in revenue due to cutting corporate taxes less) to lower the cost of this bill. Or it might have cut all individual taxes further. That would have been a broad tax cut.
But Congress decided to target this money. Not at lower income workers, by making more of the Earned Income Credit refundable, but at top earners, reducing their taxes from 39.6% to 37%.
http://www.businessinsider.com/gop-republican-tax-bill-change-to-tax-brackets-benefits-ultra-wealthy-2017-12
Of course this tax bill is targeted.
http://nymag.com/daily/intelligencer/2017/12/amazingly-unqualified-judicial-nominee-flayed-by-senator.html
but to get back to tax reality:
https://www.washingtonpost.com/opinions/the-gop-tax-bill-may-be-the-worst-piece-of-legislation-in-modern-history/2017/12/14/c1def814-e119-11e7-bbd0-9dfb2e37492a_story.html
and bigly boosting the idle rich (not the hardworking anyone) is the chief point, as if we did not know:
https://www.washingtonpost.com/blogs/plum-line/wp/2017/12/15/want-to-know-what-republican-values-are-look-at-the-choices-theyre-making-in-their-tax-bill
http://www.factcheck.org/2017/09/death-tax-talking-point-wont-die/
http://www.taxpolicycenter.org/publications/distributional-analysis-conference-agreement-tax-cuts-and-jobs-act/full