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Trump tax reform! Latest CBO update shows increase in deficit projections of 1T (1 Viewer)

Bottomfeeder Sports said:
So the states that are contributing the most already in federal taxes and taking the least in federal spending will no longer "be subsidized" by the leech states.
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It just removes the incentive many states have in levying huge state taxes because the Feds rebate those, to some extent.  It brings back Federal tax neutrality, which is a good thing - the States have a more even competition arena.  It also hits the rich in those states the hardest, so I don't think this will be the hot button reactionary talking point.

More than this (since it's complicated and most folks won't understand it),  the elimination of the estate tax will probably be the Democratic "unfairness" cry.  If the Republicans were smart this was included as a pure sacrificial lamb - letting go of this in a public way would do a lot to help pass the rest.  (I don't think Republicans are that smart).

 
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BeaverCleaver said:
An increase in the standard deduction and increasing the size of the child tax credit will be favorable. 
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It depends.  Increasing the standard deduction while eliminating personal exemptions could hurt families, Rough numbers a family of 4 has a total of $28,800 in standard deduction and exemptions under 2016 law.  Doubling the standard deduction and eliminating exemptions would provide total deductions of $25,200.  The question becomes how much is the child tax credit increased and at what income does it get phased out.

 
Tom Hagen said:
It depends.  Increasing the standard deduction while eliminating personal exemptions could hurt families, Rough numbers a family of 4 has a total of $28,800 in standard deduction and exemptions under 2016 law.  Doubling the standard deduction and eliminating exemptions would provide total deductions of $25,200.  The question becomes how much is the child tax credit increased and at what income does it get phased out.
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But to also offset those that are itemizing they may benefit from a lower tax rate which has not been spelled out yet. 

 
Sand said:
More than this (since it's complicated and most folks won't understand it),  the elimination of the estate tax will probably be the Democratic "unfairness" cry.  If the Republicans were smart this was included as a pure sacrificial lamb - letting go of this in a public way would do a lot to help pass the rest.  (I don't think Republicans are that smart).
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I haven't seen this addressed in the proposal but eliminating the estate tax and the step up in basis that goes with it is a massive tax increase on all but the very wealthy. 

 
Tom Hagen said:
I haven't seen this addressed in the proposal but eliminating the estate tax and the step up in basis that goes with it is a massive tax increase on all but the very wealthy. 
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I hadn't seen that - that's a huge detail that makes quite a difference in the calculations on whether this is a break for the wealthy or not.

 
timschochet said:
I don't expect this to pass. The Los Angeles Times put out a report, which I suspect will be the first of many, about how bad this is going to be for California. Sand's analysis was essentially correct; much like the healthcare bill, this bill is essentially a transfer of wealth from the big Democratic states to the smaller Republican states.

There's going to be tremendous pressure on California Republicans to resist this bill unless it is changed significantly. We may see some kind of tax cut come out of all of this, but I doubt it will look anything like what was presented yesterday.
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There will be talk about this in NY as well, but I suspect NY Republican congresspeople will buy in a lot easier.  There is a giant gap both economically and culturally between upstate (essentially everything other than NYC) and downstate (NYC + Long Island).  6 of NY's 9 GOP representatives are from upstate; the other 3 represent Staten Island and portions of Long Island.  I'm not lying when I say that if you separated upstate and downstate into 2 states, upstate would be a swing state just like PA and OH.  We're much closer, culturally, to the midwest than the east coast megalopolis.

Upstate GOP leadership, at least around here, love to paint NYC as a bogeyman.  Those downstaters stealing our tax dollars.  Governor Cuomo and NYC don't know what's best for Western NY.  All sorts of rhetoric, ignoring the fact that Buffalo and the rest of upstate are ridiculously subsidized by downstate taxpayers.  Chris Collins (NY-27 - Buffalo suburbs) was the first sitting house member to endorse Trump and has been gung-ho on the Trump train since the beginning.  Tom Reed (NY-23 - southern tier south of Buffalo and Rochester) will fall in line with whatever the GOP proposes.  I don't know about the other reps, but these two will be all-in on the wealth redistribution and painting the "coastal elites" as villains who should be giving us more money.

 
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timschochet said:
I don't expect this to pass. The Los Angeles Times put out a report, which I suspect will be the first of many, about how bad this is going to be for California. Sand's analysis was essentially correct; much like the healthcare bill, this bill is essentially a transfer of wealth from the big Democratic states to the smaller Republican states.

There's going to be tremendous pressure on California Republicans to resist this bill unless it is changed significantly. We may see some kind of tax cut come out of all of this, but I doubt it will look anything like what was presented yesterday.
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Yup.  Unless they dramatically rework this I just don't see how they get close to the votes they need. Too many ways for people to say no (favors the rich, penalizes those who pay higher state and local taxes, mushrooms the deficit, etc.) and the White House and GOP leadership have almost no leverage at the moment and no reason to think they'll get some any time soon.

 
Steve Tasker said:
There will be talk about this in NY as well, but I suspect NY Republican congresspeople will buy in a lot easier.  There is a giant gap both economically and culturally between upstate (essentially everything other than NYC) and downstate (NYC + Long Island).  6 of NY's 9 GOP representatives are from upstate; the other 3 represent Staten Island and portions of Long Island.  I'm not lying when I say that if you separated upstate and downstate into 2 states, upstate would be a swing state just like PA and OH.  We're much closer, culturally, to the midwest than the east coast megalopolis.

Upstate GOP leadership, at least around here, love to paint NYC as a bogeyman.  Those downstaters stealing our tax dollars.  Governor Cuomo and NYC don't know what's best for Western NY.  All sorts of rhetoric, ignoring the fact that Buffalo and the rest of upstate are ridiculously subsidized by downstate taxpayers.  Chris Collins (NY-27 - Buffalo suburbs) was the first sitting house member to endorse Trump and has been gung-ho on the Trump train since the beginning.  Tom Reed (NY-23 - southern tier south of Buffalo and Rochester) will fall in line with whatever the GOP proposes.  I don't know about the other reps, but these two will be all-in on the wealth redistribution and painting the "coastal elites" as villains who should be giving us more money.
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I would guess that fewer people in upstate NY itemize, so the deduction is less critical to them.  The downstate GOP ones will oppose though.  I know I have seen at least King and Donovan put out statements that they won't vote for it.

 
Don Quixote said:
I would guess that fewer people in upstate NY itemize, so the deduction is less critical to them.  The downstate GOP ones will oppose though.  I know I have seen at least King and Donovan put out statements that they won't vote for it.
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Makes more sense for downstate reps to oppose it.  Looks like Tom Reed hasn't commented on it publicly yet, but Collins was already quoted in Business Insider yesterday saying that eliminating the state/local tax deduction isn't a big deal for his district.  He's absolutely lock-step with whatever Trump says. 

But Republican Rep. Chris Collins of New York is not sweating the plan to scrap the state and local tax deduction in his state. Collins told reporters Wednesday he thinks the majority of taxpayers in his district would opt for the standard deduction, which would double under the new framework.

"I bet you 98% of the people in my district are gonna take the standard deduction," Collins said. "So they’re not gonna lose anything."

Collins added that the tax plan, which Trump touted on the road at a rally in Indiana Wednesday afternoon, is "so good on every front" that the state and local tax deductions was a concession he is willing to make.

"So I like what I see," Collins said. "I would, like everyone else, I’d rather see the state income tax and property tax staying in, but if 97 or 98 percent of New Yorkers are gonna take the standard deduction, it does not become a big deal."
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This would massively hurt the upper middle class "elite" in favor of getting rid of the estate tax, which only benefits like the richest 1/500th of the country.  

All while absolutely ballooning the federal debt.

 
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TobiasFunke said:
Yup.  Unless they dramatically rework this I just don't see how they get close to the votes they need. Too many ways for people to say no (favors the rich, penalizes those who pay higher state and local taxes, mushrooms the deficit, etc.) and the White House and GOP leadership have almost no leverage at the moment and no reason to think they'll get some any time soon.
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In the end my guess is that the business side of this passes in some fashion (god knows how they get it revenue neutral for reconciliation) and much of the individual stuff gets put off.  

 
Sand said:
I hadn't seen that - that's a huge detail that makes quite a difference in the calculations on whether this is a break for the wealthy or not.
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It does make all the difference but to be clear I haven't seen any indication of whether or not the step up in basis is at risk.  I was speculating.

 
elbowrm said:
This would massively hurt the upper middle class "elite" in favor of getting rid of the estate tax, which only benefits like the richest 1/500th of the country.  

All while absolutely ballooning the federal debt.
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But we all know that only the top 0.2% of the country actually creates jobs and wealth for the rest of the people.  The top 20% as a whole is pretty useless...

 
timschochet said:
I don't expect this to pass. The Los Angeles Times put out a report, which I suspect will be the first of many, about how bad this is going to be for California. Sand's analysis was essentially correct; much like the healthcare bill, this bill is essentially a transfer of wealth from the big Democratic states to the smaller Republican states.

There's going to be tremendous pressure on California Republicans to resist this bill unless it is changed significantly. We may see some kind of tax cut come out of all of this, but I doubt it will look anything like what was presented yesterday.
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https://www.bloomberg.com/news/articles/2017-09-26/trump-s-state-tax-plan-could-cause-headaches-for-52-republicans

Same in NY/NJ/CT, quote from Republican Peter King of Long Island:

But not if Representative Peter King of New York can help it. King, a Republican who represents Long Island, said he’ll oppose any attempt to repeal the state and local tax deduction, calling it “absolutely essential to my district.”

King is one of 52 Republicans -- more than enough to scuttle any bill that lacks Democratic support -- who hail from districts that use the state tax deduction disproportionately. He thinks enough of those Republican colleagues will band together to keep its repeal out of any comprehensive tax legislation this fall, complicating GOP plans.
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How can anyone approve a tax bill that benefits everyone except the voters of their district (and actually benefits everyone else at their expense)?

 
Steve Tasker said:
"I bet you 98% of the people in my district are gonna take the standard deduction," Collins said. "So they’re not gonna lose anything."
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I like how this is already moving from a tax cut for the middle class to lower and middle class families 'not losing anything'.  so we all stay basically the same but the wealthy pay a lower top rate and no estate tax?  no thanks

 
Outside of Wall Street Talking Heads, who clearly have a vested interest, I'm yet to see anyone say why this is so great.

Let's just be honest here, the deficit is meaningless to the Federal Government. Pretend that the government was a person and this individual was projecting their total debt to rise by about 50% over the next 10 years - Would anyone come along and say "hey, great job you're doing handling your money!!" ??? Instead of trying to solve this problem, we're going about making it worse... I know this probably sounds insane, but one day in the next 20, 30, 40, or 50 years, we'll default on our debt, then you'll see a real crisis. 

 
jomar said:
I like how this is already moving from a tax cut for the middle class to lower and middle class families 'not losing anything'.  so we all stay basically the same but the wealthy pay a lower top rate and no estate tax?  no thanks
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But the corporations are going to take all this money they save and reinvest it in people, it will trickle down...

:rolleyes:

 
fantasycurse42 said:
Outside of Wall Street Talking Heads, who clearly have a vested interest, I'm yet to see anyone say why this is so great.

Let's just be honest here, the deficit is meaningless to the Federal Government. Pretend that the government was a person and this individual was projecting their total debt to rise by about 50% over the next 10 years - Would anyone come along and say "hey, great job you're doing handling your money!!" ??? Instead of trying to solve this problem, we're going about making it worse... I know this probably sounds insane, but one day in the next 20, 30, 40, or 50 years, we'll default on our debt, then you'll see a real crisis. 
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I don't know enough about the government's economics re: debt default, but I think you're likely correct that any results of this tax reform - if passed - won't be fully understood until Trump is long out of office.

Marketplace on NPR was talking about this yesterday - apparently the only way that a tax bill can get through congress under reconciliation is if it is budget neutral.  And the only way to make something budget neutral with such sweeping changes is likely through assuming a 4-6% annual economic growth over a 20-30 year time horizon.  The economy hasn't grown at a 4% clip since the late 90s in the dot-com era; the last year of 4% growth per this chart was 2000.  The projections have to be extremely aggressive to pay off in the long-term (at least 20 years straight at a GDP growth rate target that we haven't hit in the past 17 years), or there are going to be serious changes from now until the actual plan is revealed.

 
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Steve Tasker said:
I don't know enough about the government's economics re: debt default, but I think you're likely correct that any results of this tax reform - if passed - won't be fully understood until Trump is long out of office.

Marketplace on NPR was talking about this yesterday - apparently the only way that a tax bill can get through congress under reconciliation is if it is budget neutral.  And the only way to make something budget neutral with such sweeping changes is likely through assuming a 4-6% annual economic growth over a 20-30 year time horizon.  The economy hasn't grown at a 4% clip since the late 90s in the dot-com era; the last year of 4% growth per this chart was 2000.  The projections have to be extremely aggressive to pay off in the long-term (at least 20 years straight at a GDP growth rate target that we haven't hit in the past 17 years), or there are going to be serious changes from now until the actual plan is revealed.
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The OMB director was talking about something more in the 3% range.  That is reasonable, though still a tad aggressive.  4-6% is fantasy, if NPR is right.  I'd put money on the OMB guy, but this thing is going to change anyway.

 
timschochet said:
I don't expect this to pass. The Los Angeles Times put out a report, which I suspect will be the first of many, about how bad this is going to be for California. Sand's analysis was essentially correct; much like the healthcare bill, this bill is essentially a transfer of wealth from the big Democratic states to the smaller Republican states.

There's going to be tremendous pressure on California Republicans to resist this bill unless it is changed significantly. We may see some kind of tax cut come out of all of this, but I doubt it will look anything like what was presented yesterday.
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I'm not so sure about that, he's come through with all of his other promises. 

 
I would think this kills charitable contributions too. I know only 30% of people actually itemize but I bet many people give because they hear a donation is tax deductible and they might itemize.  Increasingly the standard deduction puts that number way out there for all but the very rich. 

 
Sand said:
The OMB director was talking about something more in the 3% range.  That is reasonable, though still a tad aggressive.  4-6% is fantasy, if NPR is right.  I'd put money on the OMB guy, but this thing is going to change anyway.
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I think they were just speculating while reporting the news.  If OMB guy knows more about the nuts and bolts of the plan, whatever they are, like you had indicated, he's probably a better person to address it.

 
this is going to go absolutely nowhere....Trump is already undermining it....since when have Dem's become the fiscally conservative bunch that watch the deficit?  

 
Sheriff Bart said:
I would think this kills charitable contributions too. I know only 30% of people actually itemize but I bet many people give because they hear a donation is tax deductible and they might itemize.  Increasingly the standard deduction puts that number way out there for all but the very rich. 
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Yup, a lot of people will cut back significantly on their giving to non-profits simply because they won't get the deduction. 

 
BeaverCleaver said:
That's why it's called a child tax credit.
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jonessed said:
I'm not sure state/local taxes should be deductible.  Seems like that's not the federal government's problem.
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That's cool but then don't give the BS that the standard deduction and child tax credit is going to make up for the itemized deductions that I'll be losing which is what some republicans are saying.

It is stuff like this and what Trump’s chief economic adviser Gary Cohn said this morning on Good Morning America.  Cohn was asked point blank "if the wealthy will get a tax cut or not".   Cohn replied, and I quote, "The wealthy are not getting a tax cut under our plan".  Now everything that I have read is saying the rich and corporations are going to be the biggest beneficiaries of the preliminary outline released by the White House and you have this guy saying they aren't receiving ANY cut.

Look if the administration and republicans think that this plan is good for the country then fine but at least be honest about what it is.

 
Godsbrother said:
That's cool but then don't give the BS that the standard deduction and child tax credit is going to make up for the itemized deductions that I'll be losing which is what some republicans are saying.

It is stuff like this and what Trump’s chief economic adviser Gary Cohn said this morning on Good Morning America.  Cohn was asked point blank "if the wealthy will get a tax cut or not".   Cohn replied, and I quote, "The wealthy are not getting a tax cut under our plan".  Now everything that I have read is saying the rich and corporations are going to be the biggest beneficiaries of the preliminary outline released by the White House and you have this guy saying they aren't receiving ANY cut.

Look if the administration and republicans think that this plan is good for the country then fine but at least be honest about what it is.
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We really don't know who will benefit the most without the details.

 
jonessed said:
I'm not sure state/local taxes should be deductible.  Seems like that's not the federal government's problem.
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Being taxed twice on the same income should be the feds problem...or the states.  Im fine with that being a deduction.

I can agree that maybe remove the sales tax deduction...but not the state/local income tax deduction.

 
jonessed said:
Perhaps they know more about the details.
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Let's hope so but with this administration it seems like the president presents an outline and leaves it up to congress to work out the details.  Then when things fall apart he blames both parties for not getting it done.

 
Gary Cohn just said under the proposed tax reform, a family making $100K a year would have their taxes reduced by about $1000. What does that $1000 saved mean? (The following is an exact quote) "They can renovate their kitchen, they can buy a new car, they can take a family vacation, they can increase their lifestyle."

I really wish the next question from the press pool was, "Mr. Cohn, do you know how much goods and services cost?"

 
Godsbrother said:
Let's hope so but with this administration it seems like the president presents an outline and leaves it up to congress to work out the details.  Then when things fall apart he blames both parties for not getting it done.
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That's really not a bad strategy 

 
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