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Trump tax reform! Latest CBO update shows increase in deficit projections of 1 trillion over next 4 years, growth has failed to meet 3% goal. National Association for Business Economics: 84% of companies say tax reform has not caused them to alter plans.

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Interesting study on corporate taxes showed that companies paying the lowest effective rate also reduced their workforces the most. So where did the money go? Well more than a little bit went to their CEOs.

So please spare me the cutting corporate rates is good for workers or the economy. We are well past that point. Now it's just greed and I want more.

 

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6 minutes ago, NCCommish said:

Pretty much. It leads to rich people building huge houses which is why realtors love it and lobby to keep it. Most middle class filers don't even try to get it. And for those that do the return is minimal.

The reality is the actual return is to small to truly help the people it was aimed it, the middle class and those lower on the economic spectrum, and it's mostly become yet another giveaway to the wealthy 

Out here in CA it's actually quite significant even for modest homes.  For instance, my home is a little under 1200sqft and it's worth around $700k

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8 minutes ago, Dickies said:

Out here in CA it's actually quite significant even for modest homes.  For instance, my home is a little under 1200sqft and it's worth around $700k

You do realize part of the reason for that price is the perverse incentive of that tax break right? It leads to higher housing costs.

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By the way did you know small to medium businesses are expected to be spending over a trillion a year on healthcare by the late 2020s? If you really want to help businesses in this country, especially small business , support Medicare for All.

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Just now, NCCommish said:

You do realize part of the reason for that price is the perverse incentive of that tax break right? It leads to higher housing costs.

To some degree I am sure it plays a role, but I think this area being a desirable place to live is a bigger factor.  It would be a major burden on people taking it away right now.  Housing may be expensive, and salaries may be higher here, but I assure you there are people who live in million dollar homes who are not rich.

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3 minutes ago, Dickies said:

To some degree I am sure it plays a role, but I think this area being a desirable place to live is a bigger factor.  It would be a major burden on people taking it away right now.  Housing may be expensive, and salaries may be higher here, but I assure you there are people who live in million dollar homes who are not rich.

Then they aren't getting much. The savings rise in line with income. That's why so much goes to people making over 100k. Nearly 80%. And people who make more than 200k got nearly 35% of the credit. And even for that 200k earner we are still talking 5000 or so. Now 5 grand is a lot to me but it's 2.5 % of 200. Still nice to have but not life changing.

A home owner earning 40k gets about. 600 a year. And of course to get it they have to itemize so it's really less than that.

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And you know if you really want to help the working classes follow the NCC tax plan. The first 20800 of what you make is federal tax free no matter how much you make.. It isn't taxed to start with not you get it back. Then we cut pretty much all the loopholes out, especially for high earners, tax all income as income and set the top rate at 40% for those making more than 5 million a year. Broadens the base, is a progressive system and raises some nice revenue while making the system way less complex. Can do pretty much the same on the business side 

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Another reform I'd like to see is the inheritance tax. The average estate is under 200k. I would like to see the exemption lowered to 1 million per individual and 2.5 million per couple. This would mean the vast overwhelming majority of estates would never be taxed a dime. But it would still raise some nice revenue.

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On 8/30/2017 at 10:06 AM, Steve Tasker said:

From the Politico article - what is this in reference to?  MACRS depreciation and Section 179?  It's a little awkwardly-worded.

The article also goes on to hint, yet again, at a repatriation tax holiday, which was proven to be a failure when attempted during the mid-00s.  Companies brought funds back to the US at a lower tax rate, but for the most part did not return those funds to employees (in the form of higher wages) or increased capital expenditures to spur the economy.  He's doing a decent job of framing it as a positive for the economy, but there's a good chance it won't be unless protections are in place.

Do you have any information regarding this?  Didn't realize it was done before so recently.

proxy Tasker

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10 hours ago, NCCommish said:

Pretty much. It leads to rich people building huge houses which is why realtors love it and lobby to keep it. Most middle class filers don't even try to get it. And for those that do the return is minimal.

The reality is the actual return is to small to truly help the people it was aimed it, the middle class and those lower on the economic spectrum, and it's mostly become yet another giveaway to the wealthy 

what do you mean that most middle class filers dont even try to get the mortgage interest deduction if you pay a mortgage you get a statement about it at the end of the year from the old el banko and then you plug it in to your return i do not know anyone and i mean literally anyone who just skips it where are you getting this from i feel like i am in some bizzaro world with you guys about this one i mean i like you all but what you have been saying in here about this interest deduction is just counter to everything i live take that to the bank brohans 

Edited by SWC

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9 hours ago, NCCommish said:

The first 20800 of what you make is federal tax free no matter how much you make.

Why is $10/hr the cutoff?

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26 minutes ago, SWC said:

what do you mean that most middle class filers dont even try to get the mortgage interest deduction if you pay a mortgage you get a statement about it at the end of the year from the old el banko and then you plug it in to your return i do not know anyone and i mean literally anyone who just skips it where are you getting this from i feel like i am in some bizzaro world with you guys about this one i mean i like you all but what you have been saying in here about this interest deduction is just counter to everything i live take that to the bank brohans 

You have to itemize to take it. Only 32% of taxpayers itemize. Of those around 70% claim the deduction. So since lower income families are unlikely to get anything from itemizing they simply don't claim the credit.

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37 minutes ago, SacramentoBob said:

Do you have any information regarding this?  Didn't realize it was done before so recently.

proxy Tasker

Sure, I can dig up some stuff.  It depends on how you define success.  The government coffers were certainly enriched by companies repatriating earnings - the IRS collected taxes that otherwise would've been deferred indefinitely offshore.  But the real driver and selling point of the program was to provide an economic stimulus.  The theory is that firms bringing money back from offshore would stimulate the overall by economy by (1) increasing new hiring, (2) raising compensation for middle-class workers, (3) investing in new capital expenditures, or some combination thereof.  What really happened were larger stock buybacks, increased dividends, compensation packages for executives, etc.  The money being in the US economy is a good thing, but it was advertised as a stimulus for the middle class and perhaps didn't have the intended result.

Here is one study that analyzed results.  Some pertinent comments:

Quote

By using several proxies for growth and comparing multinational firms that chose to repatriate with those that did not take advantage of the act, Roy Clemons and Michael R. Kinney have shown that firms that chose not to repatriate had more growth investment opportunities in the United States and invested more in growth in the years following the holiday.15 It also has been shown that there was no statistically significant increase in spending in research and development, capital expenditures, and acquisitions among the repatriating firms. The only statistically significant increase in spending by those firms was in share repurchases, suggesting the repatriated funds merely replaced funds that had already been allocated for investment, and that those funds, now freed up, were returned to shareholders.16

A study of the effects of section 965 estimates that repatriating firms increased share repurchases by $60 billion more than non-repatriating firms, and demonstrates that that disparity cannot be explained by increases in earnings. The amount spent on share repurchases by the repatriating firms represents roughly 20 percent of all funds repatriated.17 3M, which repatriated $1.7 billion under section 965, increased its stock repurchases to about $2.4 billion in the 12 months ending June 2005, compared with roughly $1.5 billion in repurchases in the year prior. And Starwood Hotels & Resorts openly stated that while they intended to comply with the letter of the law, they would not comply with the spirit; the company announced a $1 billion stock repurchase plan on the same day they announced they would repatriate $550 million under the Jobs Act.

[. . .]

Another unintended effect of the passage of section 965 was the increase in the amount and rate of growth of foreign earnings permanently reinvested abroad. When Congress passed the Jobs Act, it warned that the tax holiday was a one-time event and should not be repeated, as doing so would encourage multinationals to keep earnings overseas in anticipation of future tax holidays, reducing real-time incentives to invest in jobs and growth in the United States.19 In fact, that anticipated effect has come to pass, as the permanently reinvested earnings (PRE) maintained abroad by companies that participated in the repatriation holiday has now likely grown to exceed the amount repatriated under the act, as shown in Table 1 above, based on a sampling of participating companies across several industries. Growth in accumulated PRE for specific repatriating companies before and after repatriation under the Jobs Act is also shown in the far right columns of Table 2. The current tax policy, which in essence punishes companies for repatriating earnings, and the expectation of periodic relief from that policy, has created a kind of moral hazard, unintentionally disincentivizing domestic investment.

 

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48 minutes ago, NCCommish said:

Another reform I'd like to see is the inheritance tax. The average estate is under 200k. I would like to see the exemption lowered to 1 million per individual and 2.5 million per couple. This would mean the vast overwhelming majority of estates would never be taxed a dime. But it would still raise some nice revenue.

I would totally support this.  I don't understand why Republicans are so adamant on raising the limit or eliminating it altogether.  Seems like something that would affect so few people and most people I would assume would gladly pay taxes to inherit $1M+ in assets.

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Here's a research paper from The National Bureau of Economic Research detailing more results with similar findings.  Abstract:

Quote

This paper analyzes the impact on firm behavior of the Homeland Investment Act of 2004, which provided a one-time tax holiday for the repatriation of foreign earnings by U.S. multinationals. The analysis controls for endogeneity and omitted variable bias by using instruments that identify the firms likely to receive the largest tax benefits from the holiday. Repatriations did not lead to an increase in domestic investment, employment or R&D -- even for the firms that lobbied for the tax holiday stating these intentions and for firms that appeared to be financially constrained. Instead, a $1 increase in repatriations was associated with an increase of almost $1 in payouts to shareholders. These results suggest that the domestic operations of U.S. multinationals were not financially constrained and that these firms were reasonably well-governed. The results have important implications for understanding the impact of U.S. corporate tax policy on multinational firms.

 

Even that staunch liberal organization, The Heritage Foundation, is critical of the idea of another repatriation holiday:

Quote

Congress passed the first repatriation tax holiday in 2004, accompanied by similar arguments regarding the expected surge in domestic investment. As expected, the tax holiday resulted in a large number of companies repatriating their earnings. According to a study by the Internal Revenue Service, 842 of the 9,700 businesses with foreign subsidiaries transferred a total of $362 billion from their foreign subsidiaries to their U.S. parent companies.[8]

The evidence clearly shows that these repatriated earnings did not increase domestic investment, job creation, or research and development (R&D).[9] As the authors of the leading paper on the subject concluded in 2010, “repatriations did not lead to an increase in domestic investment, domestic employment, or R&D.”[10]

[. . .]

If companies that repatriate earnings do not invest those earnings in additional productive capacity or additional R&D in the United States, what happens to the money? There are many possibilities, and each company has its own story. In some cases, companies “round-trip” the money: Able to finance their capital needs adequately at home, they repatriate the funds to the United States, thereby reducing the deferred tax liability on the parent company balance sheet (the tax windfall), and then ship the cash overseas again to wherever it is needed.

Some repatriating companies may use the cash to declare a special dividend, paying out cash to shareholders. Others may buy back shares, which is effectively the same thing. The Dharmapala study noted above found that more than half the repatriated earnings were paid out to shareholders. Another study found that a firm was more likely to repatriate earnings if it had more free cash flow relative to its investment opportunities—it was more likely to repatriate if it was less likely to be capital-constrained. This study further found that such companies were more likely to repurchase shares as a way of distributing its repatriated earnings than invest it in the U.S.[11]

[. . .]

The repatriation tax holiday proposal is built on three arguments, only two of which are explicit. The first argument is that many U.S. companies generate large amounts of foreign earnings through their foreign subsidiaries, on which heavy U.S. tax would be due if the funds were brought home. Of this, there is no doubt.

The second argument is that these companies would substantially increase their domestic investment if they could repatriate some of their already accumulated foreign earnings. This is unlikely, especially in light of the 2004 experience and the weakness of the nation’s economy today.

In between these two explicit arguments lies the third, implicit, argument that the companies in question have inadequate access to capital and that it is this lack alone that prevents companies from undertaking the full amount of investment they would prefer. There is no evidence that U.S. multinational corporations are capital-constrained today, just as there was none in 2004. Thus, since there is no domestic need for additional capital resources, the repatriation tax holiday would not produce a surge in domestic investment. Instead, it would likely have the same effects it did in 2004—backward-looking tax relief for international companies and their shareholders, but little in the way of new investment, economic growth, or job creation.

 

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10 hours ago, NCCommish said:

Then they aren't getting much. The savings rise in line with income. That's why so much goes to people making over 100k. Nearly 80%. And people who make more than 200k got nearly 35% of the credit. And even for that 200k earner we are still talking 5000 or so. Now 5 grand is a lot to me but it's 2.5 % of 200. Still nice to have but not life changing.

A home owner earning 40k gets about. 600 a year. And of course to get it they have to itemize so it's really less than that.

200k here is not rich, and if you make $40k you aren't owning a home.

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11 hours ago, NCCommish said:

Interesting study on corporate taxes showed that companies paying the lowest effective rate also reduced their workforces the most. So where did the money go? Well more than a little bit went to their CEOs.

So please spare me the cutting corporate rates is good for workers or the economy. We are well past that point. Now it's just greed and I want more.

This is the wrong way to interpret this.  The companies that have the lowest effective rates are generally the large corporations that have specific tax reduction strategies codified into law.  If we can somehow eliminate a lot of these and then reduce the rate we avoid this perverse incentive while allowing small companies to become much more competitive.  So that conclusion is simply wrong and bad for the country.  Small businesses paying 35% is insane - that has to be addressed.  

 

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14 minutes ago, Sheriff Bart said:

My guess is that they eliminate the mortgage interest deduction and cut corporate tax rates.

I don't think there's much chance of this.  I've heard that capping it is on the table, but eliminating it would have massive consequences.

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4 minutes ago, TobiasFunke said:

I don't think there's much chance of this.  I've heard that capping it is on the table, but eliminating it would have massive consequences.

I was just kidding.  All the experts say tax reform isn't happening but tax cuts could.

 

ETA  Of course a lot of this is coming from people inside the administration.  The same people that said a healthcare bill was going to pass.

Edited by Sheriff Bart
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54 minutes ago, Sand said:

This is the wrong way to interpret this.  The companies that have the lowest effective rates are generally the large corporations that have specific tax reduction strategies codified into law.  If we can somehow eliminate a lot of these and then reduce the rate we avoid this perverse incentive while allowing small companies to become much more competitive.  So that conclusion is simply wrong and bad for the country.  Small businesses paying 35% is insane - that has to be addressed.  

 

Over 70% of small businesses in the US are sole Proprietors they pay an average effective rate of 13.3%.

Small businesses run as Partnerships pay an average effective rate of about 23%..

Small business S Corp pay about 26% average effective rate.

So the 35% boogeyman is just that if you have a decent accountant it's pretty easy to not pay 35%.

 

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4 minutes ago, NCCommish said:

Over 70% of small businesses in the US are sole Proprietors they pay an average effective rate of 13.3%.

Small businesses run as Partnerships pay an average effective rate of about 23%..

Small business S Corp pay about 26% average effective rate.

So the 35% boogeyman is just that if you have a decent accountant it's pretty easy to not pay 35%.

 

Yea, I posted in another thread that the statutory rate is what is thrown around by Trump and the GOP, and it is indeed one of the highest in the world, but the rate that businesses actually pay is in line with what the rest of the world pays.  That said we still need reform IMHO.  Major corporations should not pay a lower rate than small business owners.

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34 minutes ago, Dickies said:

Yea, I posted in another thread that the statutory rate is what is thrown around by Trump and the GOP, 

Just as a somewhat related note, the DNC throws around the statutory 90% income tax rate that individuals used to pay.  That rate was almost entirely illusory.

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2 minutes ago, Sand said:

Just as a somewhat related note, the DNC throws around the statutory 90% income tax rate that individuals used to pay.  That rate was almost entirely illusory.

True, but effective tax rates are still much lower now on individuals than they were then

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30 minutes ago, Dickies said:

True, but effective tax rates are still much lower now on individuals than they were then

Corporations are taxed so low that they are providing a historically low amount of total tax revenue to the country despite the fact that the large corporations the Wall Street guys are showing record profits quarter-over-quarter so they're making out, the country is being starved and they want even more.

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1 hour ago, NCCommish said:

Over 70% of small businesses in the US are sole Proprietors they pay an average effective rate of 13.3%.

Small businesses run as Partnerships pay an average effective rate of about 23%..

Small business S Corp pay about 26% average effective rate.

So the 35% boogeyman is just that if you have a decent accountant it's pretty easy to not pay 35%.

 

I am curious how these numbers are calculated - do you have a source for this?

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35 minutes ago, Steve Tasker said:

I am curious how these numbers are calculated - do you have a source for this?

The numbers come from the small business administration but I'm on my phone so doing a link kind of sucks if I think about it later I'll try to put it in here

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22 minutes ago, Hilts said:

And again this kind of thing pisses me off.  Congress should have had a substantial plan in the bag and waiting.  Just like medical insurance reform, Congress has done nothing (and left it to the administration to do all the legwork).  

That said I look forward to hearing details when they come out.

Edited by Sand
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43 minutes ago, Sand said:

And again this kind of thing pisses me off.  Congress should have had a substantial plan in the bag and waiting.  Just like medical insurance reform, Congress has done nothing (and left it to the administration to do all the legwork).  

That said I look forward to hearing details when they come out.

These aholes had a secret plan for everything that was to be unveiled once Trump was elected. So when Munchin said today they have a detailed plan but it won't be released until mid September, well, it gave me a much needed laugh. 

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26 minutes ago, Sheriff Bart said:

These aholes had a secret plan for everything that was to be unveiled once Trump was elected. So when Munchin said today they have a detailed plan but it won't be released until mid September, well, it gave me a much needed laugh. 

They had a plan.  A grand plan.  

"Let's make sure we protest vote insurance reform, tax reform, immigration reform while Hillary is in office!"

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17 hours ago, Sand said:

And again this kind of thing pisses me off.  Congress should have had a substantial plan in the bag and waiting.  Just like medical insurance reform, Congress has done nothing (and left it to the administration to do all the legwork).  

That said I look forward to hearing details when they come out.

Very good point. Congress talked a big game past several years and ran explicitly on having plans. On the flip side, The White House says it has a goal or vision but lays no blueprint for Congress to follow.

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58 minutes ago, Sheriff Bart said:

 

Within the interview itself he very strongly implied it would, even if he was smart enough to hedge his bets with 'could' once. 

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6 minutes ago, Hilts said:

Within the interview itself he very strongly implied it would, even if he was smart enough to hedge his bets with 'could' once. 

If you buy a Powerball ticket you could be a multimillionaire.

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On ‎8‎/‎31‎/‎2017 at 0:41 PM, NCCommish said:

Corporations are taxed so low that they are providing a historically low amount of total tax revenue to the country despite the fact that the large corporations the Wall Street guys are showing record profits quarter-over-quarter so they're making out, the country is being starved and they want even more.

The fact that more people can't see this is just ####### mind-blowing.  

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The estimated amount of corporate money in overseas accounts is around 2.5 trillion dollars.  However Trump says he estimates it at 4 trillion. Why? Nobody knows!

 

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On 31/08/2017 at 2:18 PM, NCCommish said:

Over 70% of small businesses in the US are sole Proprietors they pay an average effective rate of 13.3%.

Small businesses run as Partnerships pay an average effective rate of about 23%..

Small business S Corp pay about 26% average effective rate.

So the 35% boogeyman is just that if you have a decent accountant it's pretty easy to not pay 35%.

 

So lower the rates, close the loopholes and fire all the accountants and attorneys.  Win-win-win.

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3 hours ago, Sheriff Bart said:

The estimated amount of corporate money in overseas accounts is around 2.5 trillion dollars.  However Trump says he estimates it at 4 trillion. Why? Nobody knows!

Standard government accounting.

 

10 minutes ago, SacramentoBob said:

So lower the rates, close the loopholes and fire all the accountants and attorneys.  Win-win-win.

FAIRTAX!  :P

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On 8/31/2017 at 3:05 PM, Sand said:

Just as a somewhat related note, the DNC throws around the statutory 90% income tax rate that individuals used to pay.  That rate was almost entirely illusory.

Of course.  Avoiding paying that tax rate helped drive the post war growth rates.   Confusing "cashing out" with "investment" has left most of our competitive edges crumbling since the early '60s.

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So now they're talking about funding this corporate tax cut with a tax on amounts we put in our 401ks?  He's really going to bat for the little guy on that one.

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16 minutes ago, elbowrm said:

So now they're talking about funding this corporate tax cut with a tax on amounts we put in our 401ks?  He's really going to bat for the little guy on that one.

Abolishing pretax savings would be a tremendous error

Edited by Slapdash

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