Great Republican Lie (tax "reform")

kpt018

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Those following "tax reform" or better described as tax cuts know that the GOP and our President are selling the bill as a big boost for the middle class and reform that would drive tremendous economic growth. Trump has gone as far as to claim that he will personally pay much more under the plan and that his wealthy friends are not happy with him. GOP Senators and House members are claiming that the middle class will see savings near $2k on average.

It's a big fat lie.

First, let's look at what some CEOs are saying about tax cuts and what their plans are for investment.

https://www.washingtonpost.com/news...doing-what-hed-expect/?utm_term=.389a909865b2

Out of a group of CEOs only a handful raised their hands when asked if they will utilize tax cuts on capital expenditures. Not the result Cohn was looking for (embarrassing).

Here is a piece that illustrates many CEOs intend to repurchase shares of stock or distribute to shareholders.

https://www.accountingtoday.com/art...mises-undercut-by-ceo-plans-to-help-investors

Are there companies that will hire and invest in equipment? Yes. As a result of tax cuts? Very unlikely that is a significant number of companies.

Here are the distributive effects of the plan put out by the JCT:

https://www.cbpp.org/research/feder...-bill-skewed-to-top-hurts-many-low-and-middle

Yesterday Senators talked about adding a tax trigger which is not reflected since details have been withheld from the public, but that would only eliminate any of the economic benefits the GOP is claiming would be gained from the bill. It will be interesting to see who's taxes will go up as a result of the trigger.

From that piece analysis shows that many after-tax incomes for middle and low income earners will actually rise by 2021, and many more by 2027 due to sunsets of certain tax benefits and the way the brackets are now indexed (change made in bill).

Naturally incomes at the top brackets see the biggest gains which continue to be enjoyed after taxes rise on regular folks. The idea that this is a middle class cut is the biggest lie of all.

Finally, let's also acknowledge these guys ninja added repeal of the individual mandate to offset cuts. CBO analysis shows that many young healthy folks will forgo insurance, raising prices on people who want insurance and pricing out many people as well. There is some analysis that shows the tax savings is overstated by the GOP, but stay tuned if you're into this stuff.

There is a lot more analysis that backs up the small amount of stuff shared here and there is a lot of fault in this bill. But the big thing to know is the GOP is fucking lying about the effects of their plan, people know it and it's unpopular and they don't give a shit. Satisfying donors through a regressive plan that distributes wealth upwards is the only goal and they think you're too dumb to know the difference.

It's also worth mentioning the process is the GOP is going through to pass this thing is completely incompetent. This bill is enormous and far reaching. It will touch every individual and every business and have a large impact on healthcare. To do this in 6 weeks is completely absurd. Experts with large complicated models cannot run them fast enough to keep up the changes, never mind deeply understand the impacts this will have on our economy.

A vote is coming up so we need a thread on this! Discuss!
 
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At this point if anyone believes anything that Trump says they are just straight fucking retarded, believing anything that the GOP leaders are saying is almost as ignorant. These people have puppet strings attached to them and the millions upon millions of dollars poured over them by the corporations and 1% is proof.
This and any tax bill needs to be vetted by the cbo rigorously and thoroughly and with out time constraints on them to do so. Only then should it be put forward for vote.
 
At this point if anyone believes anything that Trump says they are just straight fucking retarded, believing anything that the GOP leaders are saying is almost as ignorant. These people have puppet strings attached to them and the millions upon millions of dollars poured over them by the corporations and 1% is proof.
This and any tax bill needs to be vetted by the cbo rigorously and thoroughly and with out time constraints on them to do so. Only then should it be put forward for vote.
Of course, but that is not what they're doing. I believe they know the results will be bad, the bill is unpopular and the more information that comes out showing it's redistribution effects on after-tax income and impact on deficits the harder it could be to pass (or the steeper the political consequences will be). Regular people don't think big corporations and high income earners need a break. So they're ramming this thing through. Disgraceful.
 
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Small correction in the OP. It's not only incompetence on behalf of the GOP, it's actually negligence to proceed without fully understanding the bill.
 
Those following "tax reform" or better described as tax cuts know that the GOP and our President are selling the bill as a big boost for the middle class and reform that would drive tremendous economic growth. Trump has gone as far as to claim that he will personally pay much more under the plan and that his wealthy friends are not happy with him. GOP Senators and House members are claiming that the middle class will see savings near $2k on average.

It's a big fat lie.

First, let's look at what some CEOs are saying about tax cuts and what their plans are for investment.

https://www.washingtonpost.com/news...doing-what-hed-expect/?utm_term=.389a909865b2

Out of a group of CEOs only a handful raised their hands when asked if they will utilize tax cuts on capital expenditures. Not the result Cohn was looking for (embarrassing).

Here is a piece that illustrates many CEOs intend to repurchase shares of stock or distribute to shareholders.

https://www.accountingtoday.com/art...mises-undercut-by-ceo-plans-to-help-investors

Are there companies that will hire and invest in equipment? Yes. As a result of tax cuts? Very unlikely that is a significant number of companies.

Here are the distributive effects of the plan put out by the JCT:

https://www.cbpp.org/research/feder...-bill-skewed-to-top-hurts-many-low-and-middle

Yesterday Senators talked about adding a tax trigger which is not reflected since details have been withheld from the public, but that would only eliminate any of the economic benefits the GOP is claiming would be gained from the bill. It will be interesting to see who's taxes will go up as a result of the trigger.

From that piece analysis shows that many after-tax incomes for middle and low income earners will actually rise by 2021, and many more by 2027 due to sunsets of certain tax benefits and the way the brackets are now indexed (change made in bill).

Naturally incomes at the top brackets see the biggest gains which continue to be enjoyed after taxes rise on regular folks. The idea that this is a middle class cut is the biggest lie of all.

Finally, let's also acknowledge these guys ninja added repeal of the individual mandate to offset cuts. CBO analysis shows that many young healthy folks will forgo insurance, raising prices on people who want insurance and pricing out many people as well. There is some analysis that shows the tax savings is overstated by the GOP, but stay tuned if you're into this stuff.

There is a lot more analysis that backs up the small amount of stuff shared here and there is a lot of fault in this bill. But the big thing to know is the GOP is fucking lying about the effects of their plan, people know it and it's unpopular and they don't give a shit. Satisfying donors through a regressive plan that distributes wealth upwards is the only goal and they think you're too dumb to know the difference.

It's also worth mentioning the process is the GOP is going through to pass this thing is completely incompetent. This bill is enormous and far reaching. It will touch every individual and every business and have a large impact on healthcare. To do this in 6 weeks is completely absurd. Experts with large complicated models cannot run them fast enough to keep up the changes, never mind deeply understand the impacts this will have on our economy.

A vote is coming up so we need a thread on this! Discuss!
Just wanted to reply and say thanks for the well made post. I'm going thru the links.
 
Just wanted to reply and say thanks for the well made post. I'm going thru the links.
Thanks man. Please criticize or add to my criticism if you see any! There's a ton to discuss for business geeks like myself.
 
I think the best summary of this I've read is as follows:

There was a plan, a decent one, to cut the corporate tax rate. But for some reason, the GOP decided to try and overhaul the entire tax code instead of just cutting the corporate tax rate.

It's yet another example of how they are truly not governing from any sense of direction. If we really needed the tax system overhauled they would have put together a better plan and would have been working on it long enough to have something really solid. This looks and feels like exactly what it is.

An attempt to cut the corporate tax rate but avoid the potential backlash of cutting corporate rates and not personal ones. But if cutting corporate rates is a good thing (and it probably is) then there's no need to add this extra bullshit that, imho, doesn't actually help the nation.
 
I think the best summary of this I've read is as follows:

There was a plan, a decent one, to cut the corporate tax rate. But for some reason, the GOP decided to try and overhaul the entire tax code instead of just cutting the corporate tax rate.

It's yet another example of how they are truly not governing from any sense of direction. If we really needed the tax system overhauled they would have put together a better plan and would have been working on it long enough to have something really solid. This looks and feels like exactly what it is.

An attempt to cut the corporate tax rate but avoid the potential backlash of cutting corporate rates and not personal ones. But if cutting corporate rates is a good thing (and it probably is) then there's no need to add this extra bullshit that, imho, doesn't actually help the nation.
Absolutely agree. Corporate tax reform if done on it's own could have been done in a bipartisan way too, taking a lot of pressure off for the GOP to get a "win". Even if it only added 10 or so Democrats.

It also seems like guys like Rubio are pushing back a little on the size of the corporate cut (support 25% but 20% is too steep).
 
Absolutely agree. Corporate tax reform if done on it's own could have been done in a bipartisan way too, taking a lot of pressure off for the GOP to get a "win". Even if it only added 10 or so Democrats.

It also seems like guys like Rubio are pushing back a little on the size of the corporate cut (support 25% but 20% is too steep).
I remember reading somewhere that the effective corporate tax rate was already something close to 25% so if true wouldn't Rubio's proposal be effectively a net 0 change to the corproate tax rate?
 
I remember reading somewhere that the effective corporate tax rate was already something close to 25% so if true wouldn't Rubio's proposal be effectively a net 0 change to the corproate tax rate?
The top marginal rate is 35%, so maybe you read something about effective rates? It of course only affects the very big, profitable companies that are not keeping profits outside of the US or companies like GE that use credits to pay next to nothing.
 
You're looking at the tax cuts in the short term. Even if some corporations admit they wont use the savings initially for growth, in the long run they will (because growth is one of the most important factors to running a company).

Most top corporations have exact ratios for what stakeholders should make vs. revenue to maximize profits vs growth. They try not to go over or under those ratios.
 
Good read.

https://mobile.nytimes.com/2017/11/...ll.html?referer=https://t.co/Fuw4OwAlX1?amp=1

WASHINGTON — In pitching the $1.5 trillion tax overhaul, Steven Mnuchin, the Treasury secretary, has said repeatedly that the plan will pay for itself through a surge of economic growth and that over 100 people in Treasury are “working around the clock on running scenarios for us.”

Mr. Mnuchin has promised that Treasury will release its analysis in full. Yet, just one day before the full Senate prepares to vote on a sweeping tax rewrite, the administration has yet to produce the type of economic analysis that it is citing as a reason to pass the tax cut.

Those inside Treasury’s Office of Tax Policy, which Mr. Mnuchin has credited with running the models, say they have been largely shut out of the process and are not working on the type of detailed analysis that he has mentioned. An economist at the Office of Tax Analysis, who spoke on the condition of anonymity so as not to jeopardize his job, said Treasury had not released a “dynamic” analysis showing that the tax plan would be paid for with economic growth because one did not exist.

Instead of conducting full analyses of tax proposals, staff members have been running numbers on individual provisions or policy ideas, like lowering the tax rate on so-called pass-through businesses and figuring out how many family farms would benefit from the repeal of the estate tax. Activity has picked up more recently as Treasury has sought to provide technical assistance to the Joint Committee on Taxation and the Congressional Budget Office for their estimates.

A Treasury official said that there was not sufficient time to produce a full analysis with growth and revenue estimates of the final bill, which the Senate Finance Committee passed before Thanksgiving. The official pointed to a letter sent this week to Mr. Mnuchin by nine top conservative economists detailing how the Republican tax bills could bolster economic growth, saying that reflected the findings of its own economic models.

The lack of any formal assessment of the bills’ economic effect from the administration comes as Republicans barrel ahead with a plan that is expected to add $1.5 trillion to the deficit at a time when the federal debt has already topped $20 trillion. Deficit hawks, including lawmakers like Senators Bob Corker of Tennessee and Jeff Flake of Arizona, have been asking for analyses that show how the plan will avoid ballooning the deficit, which reached $666 billion, or 3.5 percent of gross domestic product, for fiscal 2017.
 
The top marginal rate is 35%, so maybe you read something about effective rates? It of course only affects the very big, profitable companies that are not keeping profits outside of the US or companies like GE that use credits to pay next to nothing.
Yeah as I said I was referring to the effective corporate tax rate. It was some paper which was comparing the marginal and effective corporate tax rate of the US to other countries and found that while the former was higher than most the latter ranked pretty low.
 
You're looking at the tax cuts in the short term. Even if some corporations admit they wont use the savings initially for growth, in the long run they will (because growth is one of the most important factors to running a company).

Most top corporations have exact ratios for what stakeholders should make vs. revenue to maximize profits vs growth. They try not to go over or under those ratios.
Do you think adding $1.5T in deficits over 10 years and a much bigger number going forward to get some small, long term growth?

Edit: @PolishHeadlock makes a really good point below.
 
Yeah as I said I was referring to the effective corporate tax rate. It was some paper which was comparing the marginal and effective corporate tax rate of the US to other countries and found that while the former was higher than most the latter ranked pretty low.
Gotcha (sorry I missed that). Yes, of course the lowering of the top rate to 25% instead of 20% would help less companies.
 
You're looking at the tax cuts in the short term. Even if some corporations admit they wont use the savings initially for growth, in the long run they will (because growth is one of the most important factors to running a company).

Most top corporations have exact ratios for what stakeholders should make vs. revenue to maximize profits vs growth. They try not to go over or under those ratios.

You're assuming that corporations currently have capital problem but that doesn't seem to be a widespread problem.
 
Good read.

https://mobile.nytimes.com/2017/11/...ll.html?referer=https://t.co/Fuw4OwAlX1?amp=1

WASHINGTON — In pitching the $1.5 trillion tax overhaul, Steven Mnuchin, the Treasury secretary, has said repeatedly that the plan will pay for itself through a surge of economic growth and that over 100 people in Treasury are “working around the clock on running scenarios for us.”

Mr. Mnuchin has promised that Treasury will release its analysis in full. Yet, just one day before the full Senate prepares to vote on a sweeping tax rewrite, the administration has yet to produce the type of economic analysis that it is citing as a reason to pass the tax cut.

Those inside Treasury’s Office of Tax Policy, which Mr. Mnuchin has credited with running the models, say they have been largely shut out of the process and are not working on the type of detailed analysis that he has mentioned. An economist at the Office of Tax Analysis, who spoke on the condition of anonymity so as not to jeopardize his job, said Treasury had not released a “dynamic” analysis showing that the tax plan would be paid for with economic growth because one did not exist.

Instead of conducting full analyses of tax proposals, staff members have been running numbers on individual provisions or policy ideas, like lowering the tax rate on so-called pass-through businesses and figuring out how many family farms would benefit from the repeal of the estate tax. Activity has picked up more recently as Treasury has sought to provide technical assistance to the Joint Committee on Taxation and the Congressional Budget Office for their estimates.

A Treasury official said that there was not sufficient time to produce a full analysis with growth and revenue estimates of the final bill, which the Senate Finance Committee passed before Thanksgiving. The official pointed to a letter sent this week to Mr. Mnuchin by nine top conservative economists detailing how the Republican tax bills could bolster economic growth, saying that reflected the findings of its own economic models.

The lack of any formal assessment of the bills’ economic effect from the administration comes as Republicans barrel ahead with a plan that is expected to add $1.5 trillion to the deficit at a time when the federal debt has already topped $20 trillion. Deficit hawks, including lawmakers like Senators Bob Corker of Tennessee and Jeff Flake of Arizona, have been asking for analyses that show how the plan will avoid ballooning the deficit, which reached $666 billion, or 3.5 percent of gross domestic product, for fiscal 2017.
It's disgraceful to vote on something before one of the leaders of the bill can even put out his own analysis.
 
I remember reading somewhere that the effective corporate tax rate was already something close to 25% so if true wouldn't Rubio's proposal be effectively a net 0 change to the corproate tax rate?

I'd like to see a source on that effective tax rate.

I've remember a similar article but that article said that bonus depreciation was a driver but depreciation has not effect on tax rates.

There are a lot of bad tax articles written by people that don't have the proper background to be analyzing it.
 
Yeah as I said I was referring to the effective corporate tax rate. It was some paper which was comparing the marginal and effective corporate tax rate of the US to other countries and found that while the former was higher than most the latter ranked pretty low.
Our effective rate is like 17% for corporations. Right in line with Germany, UK, France, etc. It's not actually high. Corporations' effective rates will be negative now. Some already manage to go years without paying. I think I read a good breakdown on Boeing once. They made billions and billions in profits, and paid no taxes because of accounting shenanigans.
 
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I'd like to see a source on that effective tax rate.

I've remember a similar article but that article said that bonus depreciation was a driver but depreciation has not effect on tax rates.

There are a lot of bad tax articles written by people that don't have the proper background to be analyzing it.

Our effective rate is like 17% for corporations. Right in line with Germany, UK, France, etc. It's not actually high. Corporations effective rates will be negative now. Some already manage to go years without paying. I think I read a good breakdown on Boeing once. They made billions and billions in profits, and paid no taxes because of accounting shenanigans.

https://americansfortaxfairness.org/tax-fairness-briefing-booklet/fact-sheet-corporate-tax-rates/
 
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