Next on 'Trump Agenda': Taxes [Update with 2018 tax data] (1 Viewer)

superchuck500

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Some financial observers think that the effort for tax reform will be 'easier' than repeal/replace because 'everyone [in the GOP] is in favor of tax cuts.' While that is essentially true, the revenue component can be tricky. The Freedom Caucus and other budget hawks have been beating the drum of fiscal responsibility for many years and they aren't going to simply cut taxes on the back of deficit spending. The revenue side of the equation has to make sense.

In addition, if the GOP intends to use the reconciliation process for the tax bill to avoid Senate filibuster, it has to be revenue neutral. This was going to be challenging anyway, and now without the tax savings that a repeal of ACA would have brought, it makes it an even tougher nut to crack.

Finally, the GOP will need to figure out where the tax proposal is coming from. Trump is likely going to want it to come from the executive (Treasury or White House), especially after getting burned on the ACHA, which came from the House. But Trump doesn't like to give public support to specific plans - he has refused to be pinned down on aspects of tax reform and his support to the ACHA came late and without a command of the bill's particulars. Further complicating the matter is Trump's leadership style, where he likes to have different power centers, with overlapping areas of focus, and all reporting to him directly. This makes a singular effort with unified support difficult.

As Forbes put it today, it isn't going to be easy and could likely be more difficult that healthcare:

Following the collapse of the House GOP health plan, President Trump and many congressional Republicans say they will pivot to tax reform. Passing that initiative, they insist, will be easier. For example, on Friday Treasury Secretary Steve Mnuchin put it this way: “In a way, it is a lot simpler. In health care, it’s a much, much more complicated issue.”

Mnuchin and others could not be more wrong. If lawmakers think rewriting the nation’s health laws are hard, just wait ‘til they tackle full-blown tax reform. There is a good reason why a major rewrite of the tax code has not happened for more than three decades.
https://www.forbes.com/sites/beltway/2017/03/27/no-tax-reform-is-not-easier-than-rewriting-the-health-law/#8c6f2925262a



For a detailed account of how the process is setting up and how the fissures from healthcare are going to carry over to tax, from the Washington Post: https://www.washingtonpost.com/news/wonk/wp/2017/03/27/divisions-threaten-trumps-hope-of-winning-his-next-big-legislative-battle-taxes/?hpid=hp_hp-top-table-main_wb-taxes-1145a:homepage/story&utm_term=.98e542572fd0


A revenue-neutral simplification of the tax system that lowers corporate tax and brings "repatriation" of off-shore funds would be a big success for all involved, and if they do it smartly, it could be a significant benefit to the economy. Right now, there's not a lot of reason to be optimistic.
 

efil4stnias

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its why when politicians stump around on "tax reduction" i take it with a grain of salt.

Its so very complicated that in the end, the only true beneficiaries are those in revenue brackets that i will never attain.

Its the issue of "can you please all brackets"? - i dont think so.
 

Saint_Ward

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The fight will be on personal income taxes. I think corporate taxes can get a deal done, just as long as they don't strip too much. Might even get Democrats on board.
 

efil4stnias

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The fight will be on personal income taxes. I think corporate taxes can get a deal done, just as long as they don't strip too much. Might even get Democrats on board.
the issue with corp taxes is the money offshore.

what rate would be satisfactory to have these billion dollar companies to do away with that shelter and bring the revenue home?

it would have to be substantial imo.

And then you would have to weigh the loss on current/future reported revenue taxation vs what the increase would be by lowering rate enough to entice them to stop sending billions offshore.

lots of math there.

Personal taxes is a mine field.
 
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superchuck500

superchuck500

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The fight will be on personal income taxes. I think corporate taxes can get a deal done, just as long as they don't strip too much. Might even get Democrats on board.
The problem with corporate tax (and any of it really - but particularly with corp) is the revenue neutrality. There's talk of a big swing, taking the top bracket down from 35 to 20 or even 15 percent. Sure, people can get on board for that . . . but how do you replace the revenue? That's where there will be winners and losers and that's where the fight is. Right now, the only serious proposal to fund that gap is the border adjustment - but there is already substantial opposition to that, even within the GOP. Most don't think it would pass the Senate on simple majority.

So if you can't find meaningful revenue, you're only talking about a few percentage points. I have read that there's likely enough agreement on eliminating some deductibles and on hedge fund "carry" tax that it could justify bringing the rate down from 35 to around 28 percent.

But as Efil points out, is 28 percent enough to remove the incentive to invert or otherwise move offshore? Probably not.
 

steno2

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the tax system does actually need to be updated. the world is growing smaller.

Hope he includes a heavy exit tax on all companies offshoring and exploiting cheap labor in places like Thailand...
 

guidomerkinsrules

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had there been any indication that they have the wherewithal to wade through the slog that is complicated debate/legislation like this?

none of them were hired to possess this skill set - there's no reason to belieeve they have it
 

coldseat

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I'd like to know what their goals are with this tax reform/cut and what it is they're trying to accomplish other than just the ubiquitous "lowering taxes".

I don't doubt that anybody disagrees that are tax system needs reform, but that is a huge jobs that would take both parties to accomplish. Since republicans won't talk to democrats or include their proposals, I'd like to know what it is they think they can do with whatever it is they want to accomplish. And then I want to know how whatever it is they're going to propose will accomplish that and not make things worse.

I'm not in favor of cutting taxes for the sake of cutting taxes. We already deficit spend and the debt is growing ever larger. We don't need to add tax cuts for no reason to make this worse. But if they lower the tax rate while closing loopholes, I'd be in favor of that.

Also, haven't we tried to stop inversion before and to entice companies to bring their money back home? Did that have any type of effect on the economy?
 

LAhotsauce

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As far as the Corp tax rate, why do folks love to repeat the nominal rate of 35% when the average effective rate is no where near that? I do believe what actually gets paid is around 10 - 15%.

If anything, bringing the nominal rate down while eliminating loop holes/deductions will only raise that effective rate. There will be no long term repatriation of funds. At least nothing that sustains under new said tax codes.
 
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superchuck500

superchuck500

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You mean the inheritance tax?

Yea, that's way way way down my list of concerns.
The estate tax that taxes estates over $5.5M for individuals or $11M for estates with marital trusts. I actually wouldn't mind seeing this addressed but it's certainly not a high priority.
 

Richard

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About five to six weeks into the work on the tax structure, Trump will announce a great bill that will soon be introduced in Congress and assert that we will all love it.

Then he'll say,"Now, I have to tell you, it's an unbelievably complex subject," he added. "Nobody knew taxes could be so complicated."

 

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