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The GOP’s hidden 46% tax bracket

Regarding Trumps trickle-down claims that cutting taxes on the ultra-rich is best for our economy...

1. How more likely is it that an ultra-wealthy corporate executive, Wall Street financier, etc., will invest in productive areas of our economy, vs if the average American had those same dollars?
2. Given our current economy, are we hurting for big corporate earnings compared to middle class earnings?

So many of these Trump supporters and Republicans have been told all their life that it's only the business elite that creates the jobs and drives our economy, and that it's our duty as citizens to buy their stuff, and cut their taxes, so that you know...we will all flourish! Their biggest fear is that you'll realize you don't need them, it's the other way around.
 
Mach said:
Regarding Trumps trickle-down claims that cutting taxes on the ultra-rich is best for our economy...

1. How more likely is it that an ultra-wealthy corporate executive, Wall Street financier, etc., will invest in productive areas of our economy, vs if the average American had those same dollars?
2. Given our current economy, are we hurting for big corporate earnings compared to middle class earnings?

So many of these Trump supporters and Republicans have been told all their life that it's only the business elite that creates the jobs and drives our economy, and that it's our duty as citizens to buy their stuff, and cut their taxes, so that you know...we will all flourish! Their biggest fear is that you'll realize you don't need them, it's the other way around.
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Wow, do you really believe that a competitive tax rate will have no impact on jobs and our economy. Have you ever thought about why the Obama administration had to come up with wacky ways to stop corporate tax inversions? Have you ever thought that it might be possible if not probable that companies which have to keep foreign earnings offshore might bring back and invest that money here. Even if some of that money goes to dividends and buybacks that helps folks here as well.

Did you ever think that foreign companies might decide to build more factories in the world's largest economy if the profits produced by those factories were taxed at a competitive rate.

Maybe done of this will happen. For sure it won't happen if we do not try. The most important gap to fill is between workers with good jobs and the working poor. Let's concentrate on actions that have a chance to create decent working class jobs, rather than keeping the same policy of more people working as WalMart greeters and being angry at success.
 
washunut said:
Wow, do you really believe that a competitive tax rate will have no impact on jobs and our economy.
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Do you really believe if those same cuts were given to [everyone else], that the additional spending they would do would have no impact on jobs and our economy?

Cut corporate tax rates, that's fine, but where are you gonna make up that difference? Debt? Everyone else pays more? What's the opportunity cost of that?

Like always, it's letting the ultra-wealthy profit from the investment, and the risk/cost? Subsidized by everyone.
 
Mach said:
Do you really believe if those same cuts were given to [everyone else], that the additional spending they would do would have no impact on jobs and our economy?

Cut corporate tax rates, that's fine, but where are you gonna make up that difference? Debt? Everyone else pays more? What's the opportunity cost of that?

Like always, it's letting the ultra-wealthy profit from the investment, and the risk/cost? Subsidized by everyone.
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First of all something like 40% pay no Federal income tax. Now if you want to eliminate payroll taxes I am with you. Otherwise the tax cuts such as Obama implemented (pretty sure you did not lament the debt implications then) do not stimulate the kind of jobs I am talking about. Yes they add more WalMart greeters, not new factories in America.

My mom had a saying I use quite a bit:
Don't cut off your nose to spite your face.

I care more about uplifting the lower income working class to middle income earners than worrying about the Ultra rich as you call it. BTW these folks have paid ZERO taxes on most of their wealth. People like Bezos,Buffett,Zuckerberg,Gates have their wealth based on the stock they own. So unless someone really wants to tax the Ultra rich and tax the rising value of vested options (which neither party will do) these guys could care less.

As to the debt issue. You are correct it is a big problem. One way to mitigate that problem is with higher growth. Not sure you have expressed how that might happen if all we do is buy more goods made overseas.
 
washunut said:
First of all something like 40% pay no Federal income tax. Now if you want to eliminate payroll taxes I am with you. Otherwise the tax cuts such as Obama implemented (pretty sure you did not lament the debt implications then) do not stimulate the kind of jobs I am talking about. Yes they add more WalMart greeters, not new factories in America.
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I'd like to see evidence that increased corporate revenues as a result of consumer spending, is that dramatically different from increased corporate earnings due to lower taxes. Money is largely fungible.

So unless someone really wants to tax the Ultra rich and tax the rising value of vested options (which neither party will do) these guys could care less.
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https://www.cnbc.com/2016/05/02/bill-gates-calls-for-higher-capital-gains-taxes.html

Gates agrees that cap gains should be taxed higher.

As to the debt issue. You are correct it is a big problem. One way to mitigate that problem is with higher growth. Not sure you have expressed how that might happen if all we do is buy more goods made overseas.
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Higher growth is long term driven by innovation and I suppose these days in part by taking advantage of developing nations. Innovation occurs at all levels of our economy, from government directly, government funded research, public universities, private universities, corporations, and average people in their garage. It's not just corporate elites. Furthermore, why would a company that earns much of it's revenue off printer ink, for example, ever want there to be technology progress that results in inkless printers? Or why would a company buy all the epi-pen makers and then crank up the price on it? Out of a desire to innovate and grow the economy? What about the big tech companies, who find a small competitor with innovative IP that disrupts their business? I know first hand a number of times when they simply sue them. They claim infringement/theft, etc., tie them up with legal fees they cannot afford, and then offer to buy the company to stop the pain. Corporations are not saints out to grow our economy, they simply serve one of many functions in the economy, and like all aspects of our society, we have to be diligent about keeping them in check.

People in favor of foreign labor always say that as a result we get cheaper goods/services, and with that we're able to invest it elsewhere. Again, it's fungible...I invest, you invest, someone getting an education is investing, a corporation invests. Why is their investment on a pedestal?
 
Captain Adverse said:
Actually, I want the tax plan where there are no deductions.

Why, you may ask?

Because then average Joe Citizen, with a home mortgage, spouse and kids (or divorced spouse paying alimony and child support) and all the other accompanying expenses will not be given the "pacifier" of getting some back at tax filing time.

Instead, citizens will feel the burn of our over-bloated government spending, and get highly motivated to get rid of all the unnecessary agencies, giveaways, and government programs wasting money...by electing people to Congress who will do it or get the boot come next election.

Otherwise, IMO we will never see real tax and spending reform.
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Stop taking it out of every paycheck and turn it into a monthly bill that has to be paid like any other expense.

That'll never happen though, because so many people wouldn't pay and would have to have their wages garnished anyhow, it's probably easier to just garnish everyone's.
 
Mach said:
I'd like to see evidence that increased corporate revenues as a result of consumer spending, is that dramatically different from increased corporate earnings due to lower taxes. Money is largely fungible.
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Lower taxes drops the money right into corporate's pockets.

Increased consumer spending increases demand, which necessitates labor to fill that demand. Thus, money gets put into the economy and corporations earn it, instead of having it handed to them.
 
countryboy said:
Well, this should kill any further "tax cut for the rich" nonsense from the left. Of course, it won't.

It really is hard to believe the GOP has become this inept. They just closed the gap separating them from The Democrat Party a bit more. The two are becoming more indistinguishable every day. :doh

Biggest tax cut in history my arse. :roll:

https://www.politico.com/agenda/story/2017/11/02/the-gops-hidden-46-tax-bracket-000570
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A 6% increase on the 1.0 to 1.2 million range doesn't make this not a tax break for the ultra rich. Because math.
 
Hawkeye10 said:
Trumps theory is that they will take the windfall, all of it plus some of their own money, and invest in America.

You decide for yourself of course how likely that is too happen.
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Invest in another yacht maybe.
 
Mach said:
What I don't get is even Republicans on this forum admit that yes, Republicans are always about tax cuts to the rich. I mean, if there is one thing that unites them, one thing they can all agree on, one thing that makes all their shady dealings, all the divisiveness they sow with their fueling of social issue extremism, and all the criminal activity, etc., worthwhile, it's that at the end of the day they can get *enormous* tax breaks (relative to the rest of us). Follow the money right? Even Mitch M. said that (the united part) when he did some press for the tax plan.

And then here we have a post saying that Dems are stupid for claiming Republicans want tax cuts for the rich...when the plan clearly is weighted heavily, in every meaningful way, to the richest.

Give us tax-breaks for the rich (at the expense of everyone else) or give us death! That should be their new motto.
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it's difficult to pretend not to notice that modern Republican administrations generally mean tax cuts for the rich, wars on the credit card, risky under-regulated market gambling, and eventual economic collapse caused by said gambling. then people seem to finally get spooked enough to vote for the inept Democratic party, which comes in and stabilizes things long enough for everyone to forget and vote for another Republican trickle down war hawk.

when i was a Republican and then a libertarian, i used to rail against anyone who made this argument. however, the pattern is predictable enough. perhaps the current administration will defy this cycle. i certainly hope so, because our wagons are all hitched to this elephant whether we like it or not, and i certainly don't want to weather another economic collapse. the most recent one set my career back years.
 
It should be noted that even with the 46% surtax, numerous other changes could more than offset the impact of that surtax resulting in net tax benefits for the affected taxpayers. The Tax Policy Center (TPC) will issue a corrected distributional analysis (probably today or tomorrow). Based on the TPC's prior analysis (not the one that contained a modest error related to the additional child tax credit, the Joint Committee on Taxation's findings, and taking into consideration the elimination of personal exemptions/modestly increased child tax credit (which won't be indexed for inflation meaning it will diminish in real terms on account of inflation going forward, which represents a big move away from efforts to eliminate the impact of "bracket creep"), it is very likely that a disproportionate share of the individual tax reductions would accrue to those in the top 5%, top 1% and top 0.1% in terms of taxable income by 2027, by which time the legislation would have been fully implemented.

It is also likely that tax savings for those groups could be substantially larger as a share of taxable income than those for the middle class. Percentage of taxable income is a better measure than absolute dollar value, as even the same percentage of taxable income would yield a higher dollar-value tax savings for those with higher incomes. Bottom line: All things considered, the 46% surtax will likely be more than offset by the savings from other changes in the package.
 
Although under the plan, there is a peculiar piece where a married couple would face a 45.6 percent top rate on earnings between $1.2 million and $1.6 million, it still lowers taxes on the rich and the Republican Plan Would Raise Taxes on Millions. The idea that this is really a middle-class tax-cut and not a tax-cut for the rich is not only laughable but at odds with facts (presuming facts still matter.)

Nearly half of all middle-class families would pay more in taxes in 2026 than they would under current rules if the proposed House tax bill became law, and about one-third would pay more in 2018, according to a New York Times analysis, a striking finding for a bill promoted as a middle-class tax cut.
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washunut said:
Wow, do you really believe that a competitive tax rate will have no impact on jobs and our economy.
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Economists {smart people who study this stuff} have looked at this over decades and believe that the stated economic benefit of cutting taxes has a modest, at best, effect.
 
Captain Adverse said:
All I want is a tax system where I don't owe the Federal government anything come income tax filing time, and they don't owe ME anything.

How can we set that system up?
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That is matter of managing your W-4.
 
Helix said:
it's difficult to pretend not to notice that modern Republican administrations generally mean tax cuts for the rich, wars on the credit card, risky under-regulated market gambling, and eventual economic collapse caused by said gambling. then people seem to finally get spooked enough to vote for the inept Democratic party, which comes in and stabilizes things long enough for everyone to forget and vote for another Republican trickle down war hawk.

when i was a Republican and then a libertarian, i used to rail against anyone who made this argument. however, the pattern is predictable enough. perhaps the current administration will defy this cycle. i certainly hope so, because our wagons are all hitched to this elephant whether we like it or not, and i certainly don't want to weather another economic collapse. the most recent one set my career back years.
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The Republican theme is consistently to take from the poor and middle class and give it to themselves. The current proposed income tax receipts reduction is an excellent example. We don't have the monies in the coffers to give this group so they are taking it from those least able to defend themselves.
 
New tax reform details...

In terms of distributional effects, the Middle income quintile would experience a net 0.4% increase in after-tax income on account of the tax plan. The fourth income quintile would see a gain of 0.6%. However, the gains in after-tax income would be notably larger for taxpayers in the the top 5%, top 1%, and top 0.1% percentiles. Those gains would amount to 1.2%, 2.2%, and 2.6% of after-tax income respectively. All in all, 47.2% of tax benefits would flow to taxpayers in the top 1% of income percentile while 25.1% would accrue to those in the top 0.1% of income percentile.

In terms of tax units experiencing tax hikes, 30.9% of units (individual or joint returns) in the Middle quintile and 28.6% of those in the Fourth quintile would see tax hikes. In addition, 26.7% of those in the top 5%, 33.6% of those in the top 1%, and 30.8% of those in the top 0.1% income percentiles would experience tax hikes. Put another way roughly the same share of tax units in the Middle income quintile would see a tax increase as those with the top 0.1% taxable income.

In addition, the Tax Policy Center revealed that the 25% pass-through rate would benefit passive owners rather than active business owners. Currently, 90% of pass-through owners pay a tax rate of 25% or less under current law. Taxpayers who earn $260,000 or more per year and who are passive owners (not actively engaged in business) would benefit from the 25% top tax rate. However, those who are actively engaged in business with the same income threshold would be subject to a top 35.22% tax rate.

In short, pass-through owners who are engaged in productive activity e.g., running/managing companies, would face a higher rate than those who are not actively engaged. This tax treatment is the opposite of what one would expect if the legislation were intended to create incentives for more people to launch and/or manage companies. The proposed approach would have a lower multiplier (macroeconomic impact) than an alternative that would treat all such owners the same and/or extend the more favorable tax treatment to active owners.

Separately, the Congressional Budget Office (CBO) found that the House tax plan would lead to a 10-year increase in the nation's budget deficits amounting to $1.7 trillion. By 2027, when the tax plan was fully implemented, annual budget deficits would be approximately $205 billion higher than would otherwise be the case. The cumulative debt relative to GDP would be 6 percentage points higher by 2027 than would otherwise be the case.

CBO Report: https://www.cbo.gov/system/files/115th-congress-2017-2018/costestimate/hr1deficitsanddebt.pdf

Tax Policy Center's "Pass-Through" Assessment: The 25-Percent Rate for Pass-Through Businesses Helps Rich Investors, Not ?Small? Businesses | Tax Policy Center

Tax Policy Center's Analysis: http://www.taxpolicycenter.org/site...l_analysis_of_the_tax_cuts_and_jobs_act_1.pdf
 
donsutherland1 said:
In addition, the Tax Policy Center revealed that the 25% pass-through rate would benefit passive owners rather than active business owners. Currently, 90% of pass-through owners pay a tax rate of 25% or less under current law. Taxpayers who earn $260,000 or more per year and who are passive owners (not actively engaged in business) would benefit from the 25% top tax rate. However, those who are actively engaged in business with the same income threshold would be subject to a top 35.22% tax rate.

In short, pass-through owners who are engaged in productive activity e.g., running/managing companies, would face a higher rate than those who are not actively engaged. This tax treatment is the opposite of what one would expect if the legislation were intended to create incentives for more people to launch and/or manage companies. The proposed approach would have a lower multiplier (macroeconomic impact) than an alternative that would treat all such owners the same and/or extend the more favorable tax treatment to active owners.

Separately, the Congressional Budget Office (CBO) found that the House tax plan would lead to a 10-year increase in the nation's budget deficits amounting to $1.7 trillion. By 2027, when the tax plan was fully implemented, annual budget deficits would be approximately $205 billion higher than would otherwise be the case. The cumulative debt relative to GDP would be 6 percentage points higher by 2027 than would otherwise be the case.

CBO Report: https://www.cbo.gov/system/files/115th-congress-2017-2018/costestimate/hr1deficitsanddebt.pdf

Tax Policy Center's "Pass-Through" Assessment: The 25-Percent Rate for Pass-Through Businesses Helps Rich Investors, Not ?Small? Businesses | Tax Policy Center

Tax Policy Center's Analysis: http://www.taxpolicycenter.org/site...l_analysis_of_the_tax_cuts_and_jobs_act_1.pdf
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The pass through provisions are some of the dumbest policy proposals in recent decades. The bottom line for provisions like that is if it's hard to tell what the effects will be on an individual taxpayer, that uncertainty introduces loopholes clever planners can drive supertankers through with ease. And the "clarifying" provisions just create further loopholes as TPC describes. There is no way serious tax policy people would recommend those provisions. Who would recommend them are people tasked with writing rules to benefit the plutocrat investor class, which is no doubt who wrote them and why, not shockingly or coincidentally, the changes benefit them while doing little to nothing for actual "small businesses" and their owners.

It's like the GOP isn't even trying anymore to conceal that their tax plan is a giant gift to the donor class, services rendered, in return for their financial support of the GOP.
 
countryboy said:
Unlike you and your ilk, I will criticize when necessary. The rest of your post is partisan hackery, and not worthy of response.
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No it's not. You disagreeing with it doesn't make it partisan hackery. Hell, at least halfof what you post here is partisan hackery, and we don't call you on it.
 
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JasperL said:
The pass through provisions are some of the dumbest policy proposals in recent decades. The bottom line for provisions like that is if it's hard to tell what the effects will be on an individual taxpayer, that uncertainty introduces loopholes clever planners can drive supertankers through with ease. And the "clarifying" provisions just create further loopholes as TPC describes. There is no way serious tax policy people would recommend those provisions. Who would recommend them are people tasked with writing rules to benefit the plutocrat investor class, which is no doubt who wrote them and why, not shockingly or coincidentally, the changes benefit them while doing little to nothing for actual "small businesses" and their owners.

It's like the GOP isn't even trying anymore to conceal that their tax plan is a giant gift to the donor class, services rendered, in return for their financial support of the GOP.
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It's clear what the pass through provision is for. The House plan has a top-rate of 39.9%, which they put there to say, "SEE, we are taxing the rich!" However, those same rich taxpayers can, with the pass through provision, pretend they are businesses and get the lower 25%.

What we will find in a decade, is that the stated $1.5 trillion added debt was a fantasy and the actual increase in debt will be far more. Additionally, expect wider income inequality from this bill.

Anyone with eyes wide open should be noticing that the GOP and Trump, even though he talks 'populism,' always propose policies that benefit the wealthy at the expense of everyone else. So, why do down-on-their-luck voters prefer Republicans (even if they are likely pedophiles) over Democrats?
 
donsutherland1 said:
New tax reform details...

In terms of distributional effects, the Middle income quintile would experience a net 0.4% increase in after-tax income on account of the tax plan. The fourth income quintile would see a gain of 0.6%. However, the gains in after-tax income would be notably larger for taxpayers in the the top 5%, top 1%, and top 0.1% percentiles. Those gains would amount to 1.2%, 2.2%, and 2.6% of after-tax income respectively. All in all, 47.2% of tax benefits would flow to taxpayers in the top 1% of income percentile while 25.1% would accrue to those in the top 0.1% of income percentile.

In terms of tax units experiencing tax hikes, 30.9% of units (individual or joint returns) in the Middle quintile and 28.6% of those in the Fourth quintile would see tax hikes. In addition, 26.7% of those in the top 5%, 33.6% of those in the top 1%, and 30.8% of those in the top 0.1% income percentiles would experience tax hikes. Put another way roughly the same share of tax units in the Middle income quintile would see a tax increase as those with the top 0.1% taxable income.

In addition, the Tax Policy Center revealed that the 25% pass-through rate would benefit passive owners rather than active business owners. Currently, 90% of pass-through owners pay a tax rate of 25% or less under current law. Taxpayers who earn $260,000 or more per year and who are passive owners (not actively engaged in business) would benefit from the 25% top tax rate. However, those who are actively engaged in business with the same income threshold would be subject to a top 35.22% tax rate.

In short, pass-through owners who are engaged in productive activity e.g., running/managing companies, would face a higher rate than those who are not actively engaged. This tax treatment is the opposite of what one would expect if the legislation were intended to create incentives for more people to launch and/or manage companies. The proposed approach would have a lower multiplier (macroeconomic impact) than an alternative that would treat all such owners the same and/or extend the more favorable tax treatment to active owners.

Separately, the Congressional Budget Office (CBO) found that the House tax plan would lead to a 10-year increase in the nation's budget deficits amounting to $1.7 trillion. By 2027, when the tax plan was fully implemented, annual budget deficits would be approximately $205 billion higher than would otherwise be the case. The cumulative debt relative to GDP would be 6 percentage points higher by 2027 than would otherwise be the case.

CBO Report: https://www.cbo.gov/system/files/115th-congress-2017-2018/costestimate/hr1deficitsanddebt.pdf

Tax Policy Center's "Pass-Through" Assessment: The 25-Percent Rate for Pass-Through Businesses Helps Rich Investors, Not ?Small? Businesses | Tax Policy Center

Tax Policy Center's Analysis: http://www.taxpolicycenter.org/site...l_analysis_of_the_tax_cuts_and_jobs_act_1.pdf
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Excellent post. Thank you.

This part:
the 25% pass-through rate would benefit passive owners rather than active business owners.
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That sounds along the lines of 'investments shouldn't be taxed because it's double taxation' which I heard often in the past. I haven't heard that lately, instead we have the state and local tax deduction elimination being double taxation.
 
This is clearly a good time to invest in KY Jelly and Preparation H. The American people's asses is starting to look like a baboon's.
 
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