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/beltwa...r-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...s-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.
 

Saint_Ward

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https://www.yahoo.com/news/average-tax-refunds-down-8-054836423.html

The general public is laser focused on their refund amount and refund vs owing.

I really wish they'd also include if their overall tax burden went down or up. Because, this does show something about expectations and people being poor savers. Also, some companies just didn't withhold the right amounts.

I really doubt a single person, who saw their paycheck rise due to less tax withholding, thought to save that money, in case they had a tax bill at the end of the year. I know I didn't. Of course, I didn't owe anything, so my gambit worked (or lack of awareness.. whatever).

As usual, expect a lot of misguided anger out there and bad data to really analyze the issue. But, perception is what matters, right Mr. President?
 
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superchuck500

superchuck500

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Today's Wash Post: Most people that are seeing smaller refunds probably saw greater take-home pay that they're not accounting for. But some people are seeing greater overall tax liability due to the treatment of certain items like a reduced deduction on the federal return to account for state income tax paid in the tax year. Also changed on items like unreimbursed business expenses can have particular impact on a taxpayer that has a lot of those.

Recall that the reduction in deductibility of state tax was viewed as highly political - as residents of states with higher tax rates (i.e. often blue states) are hit harder by the change than residents of states wit lower tax rates (often red states). But if you're in one of those high state-tax rates, you might actually see greater federal liability on the balance under the new rules.

https://www.washingtonpost.com/busi...d55b6451eb4_story.html?utm_term=.9c9a4f04da47
 
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I came out ahead. I took 2017 total tax divided by taxable income vs 2018. I ended up paying 2.69% less marginal rate.

Extra money is nice, but I know it’s just adding to the public debt.
 

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