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.
 
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https://www.npr.org/2018/10/16/657790901/federal-deficit-jumps-17-percent-as-tax-cuts-eat-into-government-revenue

The federal deficit ballooned to $779 billion in the just-ended fiscal year — a remarkable tide of red ink for a country not mired in recession or war.

The government is expected to borrow more than a trillion dollars in the coming year, in part to make up for tax receipts that have been slashed by GOP tax cuts.
I'm confused. Is this the responsible party that is ballooning our deficit? That's not possible is it?

Senate Republican leader Mitch McConnell, R-Ky., called the growing deficit "very disturbing." He argued the problem is neither tax cuts nor beefed-up military spending, but rather the big three entitlement programs: Social Security, Medicare and Medicaid.
Oh wait nm, I see now.
 

Oye

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I read a post that they knew the taxes wouldn't pay for themselves as that they would just be a pretense to gut social security and medicare

I didn't give that much credence, mostly because I didn't know well enough

But McConnell's comment makes me wonder, how

Is this just general common knowledge?
 

coldseat

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I read a post that they knew the taxes wouldn't pay for themselves as that they would just be a pretense to gut social security and medicare

I didn't give that much credence, mostly because I didn't know well enough

But McConnell's comment makes me wonder, how

Is this just general common knowledge?
That was their obvious game plan all along. They didn't even bother to hide it. Yet, they will argue that it's entitlements and their lap dogs will eat it up. This is all you will hear about on conservative radio and tv if you cared to listen. The flock will follow along and argue for them on social media.

I really, really hate being this cynical. It's not anywhere near my natural disposition. I like to think of myself as a hopeful realist. But everything I see, over and over, is that the people of this country are by and larger not able to think critically. They let stupid and manipulative people convince them with stupid arguments. We are not as a society well educated or knowledgeable and it's starting to have very dire effects on everything.
 

Saint_Ward

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I read a post that they knew the taxes wouldn't pay for themselves as that they would just be a pretense to gut social security and medicare

I didn't give that much credence, mostly because I didn't know well enough

But McConnell's comment makes me wonder, how

Is this just general common knowledge?
I think it's pretty well established the Republican Party, since Obama was in office, to now, have developed a game plan of creating a problem to fix.

Break the ACA, make it painful, have to fix it. Well.. they were supposed to.

Make a bigger Federal Deficit, wait, we need to cut spending, but only the stuff the poor or old people get.. but not the current elderly, the future elderly. They don't vote.. screw em.

Let's get into a Tariff battle with a bunch of countries, then I'll re-sign an almost identical agreement (new NAFTA.. or USMCA), so it feels like I saved the day, when they really just got us slightly off of where we were before.
 

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To my knowledge, no major tax cut has ever generated enough growth to pay for itself completely. Not even Reagan's tax cut even after raising taxes 4 times after the cut ever balanced out. Yet we still hear people calling for it as if this is the time it will finally work. I know math is hard, but you really have to get involved and have at least a modest understanding of how our tax structure (actually, not theoretically) works. If tax cuts did work, I'd certainly be all on board. The best thing you can do is insist that the taxes collected work for you better than how they currently do right now.

Also, WE do not know how to spend our money better than the government. The government at least has laws that dictate how it must be spent, created by people who are held accountable if those laws fail to work as promised. There are experts who are held accountable if they fail to follow those laws. "People" on the other hand blow money on proven foolish things like lottery tickets, smartphones every 2 years, mortgages over what is affordable, gas guzzling cars they don't need, and they do it all on credit adding to the unnecessary expenses. The government might not do a good job of spending it, but WE are worse. We are better off putting our paycheck in a mayonnaise jar and burying it in the backyard than cashing it, myself included.
 

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https://www.yahoo.com/finance/news/solid-gdp-report-raising-red-151300159.html

  • The US economy expanded faster than expected in the third quarter, thanks to strong consumer spending.
  • Business investment, however, showed signs of stalling, even after the biggest corporate tax overhaul in 30 years.
  • Some economists see this as an early sign that company spending does not match the enthusiasm that some surveys of executives have found.
The US economy is still in high gear, thanks to consumers who still have the means to empty their wallets.

On Friday, the Commerce Department's advance reading on third-quarter gross domestic product showed that the US economy grew by 3.5%, marking the fastest back-to-back periods of growth since 2014.

While consumer spending soared, the timing of slowdowns in business spending and net exports in the past quarter raised concern among some economists about the durability of the economy's growth spurt.

Investment in fixed structures like factories contributed -0.04 percentage points to the GDP third-quarter growth figure, according to the early reading. Though a small decline, it was the first since the fourth quarter of 2015 and occurred after the most significant corporate tax overhaul in three decades.

"While it is still too early to come to conclusions on the relative effectiveness of the 2017 Tax Cuts and Jobs Act, there has to be some concern over this development," said Joe Brusuelas, the chief economist at RSM.

"The tax plan was essentially an enormous bet that a large, unpaid-for business tax cut would result in a significant increase in productivity-enhancing investment which would the boost the long-term US growth path. This data implies that, at least for now, such a boost is not in the cards."
 

Saint_Ward

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I forgot to add my opinion on that.

I"m not shocked. A lot of corporations were flush with cash and doing nothing with it. They got more cash, and they're not spending it like they said they would. Maybe it's just too early and they want to know for sure how much extra they will have. Maybe they're just greedy people.

Still waiting for wage jumps.

I'll see if our Bonuses are any different too. My guess is, it will just be tied to sales like normal, nothing extra.
 
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I forgot to add my opinion on that.

I"m not shocked. A lot of corporations were flush with cash and doing nothing with it. They got more cash, and they're not spending it like they said they would. Maybe it's just too early and they want to know for sure how much extra they will have. Maybe they're just greedy people.

Still waiting for wage jumps.

I'll see if our Bonuses are any different too. My guess is, it will just be tied to sales like normal, nothing extra.
Part of it may also be waiting a couple of more years to invest in automation with AI programming. I think what's clear is that they aren't too keen on investing in employees.
 
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superchuck500

superchuck500

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Evidence continues to show that CapEx, bonuses, and wage increases after the December 2017 corporate tax cut have been marginally improved. The bulk of the savings have gone to non-growth areas like buybacks.

 

Saint_Ward

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Our capital spending seems to be remodeling the building so far. It's been long overdue, so that's good economic stimulus. Just waiting for those wage increases...
 

coldseat

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Evidence continues to show that CapEx, bonuses, and wage increases after the December 2017 corporate tax cut have been marginally improved. The bulk of the savings have gone to non-growth areas like buybacks.

Why was it so hard to convince people that this is what would happen with those tax cuts? This was all predicted rather accurately prior to the tax cut. You would have thought there would have been more push back against it. And yet there are still Trump supporters out there that will say that the tax cut was good for the economy and for our pay checks, when those are only the crumbs that are left over. This is what is so frustrating about living in the fact free world that Donald pushes with his acolytes.

It would have been nice not to send the deficit spiraling out of control, while the economy was doing well, just to fund stock buy backs.
 
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superchuck500

superchuck500

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Why was it so hard to convince people that this is what would happen with those tax cuts? This was all predicted rather accurately prior to the tax cut. You would have thought there would have been more push back against it. And yet there are still Trump supporters out there that will say that the tax cut was good for the economy and for our pay checks, when those are only the crumbs that are left over. This is what is so frustrating about living in the fact free world that Donald pushes with his acolytes.

It would have been nice not to send the deficit spiraling out of control, while the economy was doing well, just to fund stock buy backs.
Yeah, it's disappointing that we didn't get more bang for that buck. I think that, deficit/debt aside, much of the rationale was strong. The repatriation component was well-intended and substantially successful. The accelerated depreciation on CapEx was an excellent way to incentive using the savings on growth . . . but then Trump launched his trade wars and it clouded everything.

Most legitimate corporations only launch CapEx programs when the business case is persuasive. And IMO Trump's trade policies caused forward thinking companies to be very cautious about CapEx in 2018 - we were already late cycle and it became impossible to make a business case 24 months out based on Trump's trade policy. It really had the perverse effect of disincentivizing growth projects.
 

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Why was it so hard to convince people that this is what would happen with those tax cuts? This was all predicted rather accurately prior to the tax cut. You would have thought there would have been more push back against it. And yet there are still Trump supporters out there that will say that the tax cut was good for the economy and for our pay checks, when those are only the crumbs that are left over.
Certainly to some extent because of "hate liberals".

If *our* side supports it, and *your* side opposes it, it must be great. And economic issues can be particularly challenging for many of us to coherently understand at a high level. There's no one perfect approach, no matter who is advocating for it.

Republicans have invested so much of their identity in ideas of small government and taxes are bad, that there are people who are harmed (or at least who don't benefit) by some of these policy initiatives, but they will dutifully support *their* side if it's perceived as a victory over their foes.
 

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Evidence continues to show that CapEx, bonuses, and wage increases after the December 2017 corporate tax cut have been marginally improved. The bulk of the savings have gone to non-growth areas like buybacks.

I will also point out on thing I didn't realize at first.

That's just the largest 5 tech companies (largest by cash on hand).

That may not be the best slice to use to talk about CapEx
 

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