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Senate Tax Cuts Explained in One Sentence.

CriticalThought

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[FONT=&quot]Under the new Senate bill, for example, the conservative Tax Foundation estimates the top 1 percent of taxpayers would see a 7.5 percent increase in after-tax income, versus less than 2 percent for the bottom 80 percent.[/FONT]

It is one thing to cut taxes for the wealthy, and quite another to raise taxes on the middle class to pay for tax cuts for the wealthy. I think when it is all said and done, that is what the GOP will have ultimately accomplished. Even for the middle class and working poor who initially pay a little less in the short term, it will be more than paid for through the higher interest rates and education costs they will face in the long run. There is nothing here that will promote wealth creation, innovation, intiative, or competition. This is nothing but a regressive redistribution of wealth.
 
It is one thing to cut taxes for the wealthy, and quite another to raise taxes on the middle class to pay for tax cuts for the wealthy.

Is that what you're saying is part of this proposal?

Tax cuts aren't "paid for."

I think when it is all said and done, that is what the GOP will have ultimately accomplished. Even for the middle class and working poor who initially pay a little less in the short term, it will be more than paid for through the higher interest rates and education costs they will face in the long run. There is nothing here that will promote wealth creation, innovation, intiative, or competition. This is nothing but a regressive redistribution of wealth.

Tax cuts aren't wealth redistribution either.

Whether this is "good" policy or not is debatable, as tax bills always are. What I think is missing is how exactly this ties to any of the principles that the GOP is trying to uphold. There doesn't seem to be a lot of coherent explanation or analysis about what the country needs in terms of tax policy right now or how these proposals accomplish that. Congress just seems to be executing their proposal behind closed doors and then unveiling it for the media to throw tantrums about.
 
Is that what you're saying is part of this proposal?

Tax cuts aren't "paid for."

They eliminated several tax deductions primarily beneficial to the middle class to try to balance off some of the lost revenue from the tax cuts. That is effectively the same.



Tax cuts aren't wealth redistribution either.

In this case I think it is. Without cutting spending, we are adding 1.5 trillion dollars to our debt. At the same time, we are vastly reducing the revenue the wealthiest have to pay while slightly reducing or even increasing what everyone else has to pay. If this were spending neutral, then tax cuts could not be argued to be wealth redistribution, but that is not the case.

Whether this is "good" policy or not is debatable, as tax bills always are. What I think is missing is how exactly this ties to any of the principles that the GOP is trying to uphold. There doesn't seem to be a lot of coherent explanation or analysis about what the country needs in terms of tax policy right now or how these proposals accomplish that. Congress just seems to be executing their proposal behind closed doors and then unveiling it for the media to throw tantrums about.

They have been very clear. They want to cut corporate tax rates, eliminate the AMT and estate tax, and create a pass through tax rate. All this will miraculously spur the economy to 5 percent GDP growth.
 
https://www.cnbc.com/2017/11/13/sen...-many-earning-under-200000-analysis-says.html
Senate tax bill would make taxes jump for many earning under $200,000, analysis says

  • The Republican Senate tax bill would increase taxes in 2019 for 13.8 million U.S. households earning less than a $200,000 per year, according to analysts.
  • About 10 percent of all taxpayers would face a tax increase of $100-$500 in 2019.
  • There also would be increases greater than $500 for a number of taxpayers, especially those with incomes between $75,000 and $200,000.
 
It is one thing to cut taxes for the wealthy, and quite another to raise taxes on the middle class to pay for tax cuts for the wealthy. I think when it is all said and done, that is what the GOP will have ultimately accomplished. Even for the middle class and working poor who initially pay a little less in the short term, it will be more than paid for through the higher interest rates and education costs they will face in the long run. There is nothing here that will promote wealth creation, innovation, intiative, or competition. This is nothing but a regressive redistribution of wealth.

Using the Tax Foundation’s Taxes and Growth (TAG) macroeconomic model, our analysis found that “the plan would significantly lower marginal tax rates and the cost of capital, which would lead to a 3.7 percent increase in GDP over the long term [and] 2.9 percent higher wages.

The TAG model estimates that the plan would result in the creation of roughly 925,000 new full-time equivalent (FTE) jobs, while increasing the after-tax incomes by 4.4 percent in the long run, meaning families would see an after-tax income boost of 4.4 percent by the end of the decade. The increase in family incomes is due in part from individual income tax reductions and the broader rise in productivity and wages due to economic growth. These estimates take into account all aspects of the Senate version of the Tax Cuts and Jobs Act, including changes to the individual and corporate tax codes.

Nothing?
 
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TAG is a dynamic scoring model that ALWAYS assumes tax cuts are good and will lead to economic growth.

http://itep.org/itep_reports/pdf/TFEconomics.pdf



There is always opportunity costs.

Such estimates are repeated elsewhere. Your claim is that "There is nothing here that will promote wealth creation, innovation, initiative, or competition. This is nothing but a regressive redistribution of wealth." Yet, various models agree that it would stimulate economic activity. For example

https://kotlikoff.net/sites/default/files/Simulating the Unified Framework Tax Reform Plan_0.pdf

The UF reform is projected to have significant positive macroeconomic effects. A high corporate
tax rate reduces the attractiveness of investment in the US. The UF plan’s major
reduction in the marginal effective corporate income tax rate – from 34.6 percent to 18.6
percent – induces, in our model, a large inflow of foreign investment. The result is an increase
in the U.S. capital stock that ranges from 12 to 20 percent, depending on the year
in question.
The inflow of foreign capital increases U.S. output and the productivity of U.S. workers.
Depending on the year, it raises GDP by 3 to 5 percent and real wages by 4 to 7 percent.11
Foreign countries see small decreases –typically 1 percent or less – in these measures due to
reduced investment.

And I dont see how it redistributes wealth, if it cuts everyones taxes. No wealth is being taken and given to others, thus no new redistribution is happening, just a little less of the massive progressive redistribution which is the status quo.
 
TAG is a dynamic scoring model that ALWAYS assumes tax cuts are good and will lead to economic growth.

http://itep.org/itep_reports/pdf/TFEconomics.pdf

There is always opportunity costs.

Yes, their model takes literally the Cheney maxim: Reagan proved deficits don't matter. It's built into their assumptions and they tell us this. So they don't model a reduction in spending or the effect on economic activity if there are spending cuts, and they do not model any negative effects of adding to the deficit, which makes it awfully easy to conclude that tax cuts miraculously stimulate growth, because all the effects are positive, for the long term and short term.

And they tell us this. Here is their explanation for this bill: https://taxfoundation.org/details-analysis-2017-senate-tax-cuts-and-jobs-act/

Towards the end is:

"Some economic models assume that there is a limited amount of saving available to the United States to fund new investment opportunities when taxes on investment are reduced, and that when the federal budget deficit increases, the amount of available saving for private investment is “crowded-out” by government borrowing, which reduces the long-run size of the U.S. economy. While past empirical work has found evidence of crowd-out, the estimated impact is usually small. Furthermore, global savings remain high, which may help explain why interest rates remain low despite rising budget deficits. We assume that a deficit increase will not meaningfully crowd out private investment in the United States.[5]"

In other analyses they make the approach even clearer, such as with the various GOP proposals during the campaign. The model hand waves any trade-off inherent in reducing government revenues. Pretty hackish approach if you asked me....
 
Such estimates are repeated elsewhere. Your claim is that "There is nothing here that will promote wealth creation, innovation, initiative, or competition. This is nothing but a regressive redistribution of wealth." Yet, various models agree that it would stimulate economic activity. For example



And I dont see how it redistributes wealth, if it cuts everyones taxes. No wealth is being taken and given to others, thus no new redistribution is happening, just a little less of the massive progressive redistribution which is the status quo.

Because you aren't accounting for how it is PAID for and if I get a $200 refund, that doesn't mean squat if I am going to have to pay far higher interest on loans, I watch my health care premiums jump as the mandate is repealed and millions of healthy people leave the insurance market, and any education plans I had go up in smoke as tuition rates suddenly shoot up and waivers and aid are cut. The tax code does not exist in a vacuum.
 
Nicholas Kristof was brilliant today with Billionaires Desperately Need Our Help!

Snippet:
...
Thank God for this lifeline to struggling tycoons. And it’s carefully crafted to focus the benefits on the truly deserving — the affluent who earn their tax breaks with savvy investments in politicians.
For example, eliminating the estate tax would help the roughly 5,500 Americans who now owe this tax each year, one-fifth of 1 percent of all Americans who die annually. Ending the tax would help upstanding people like the Trumps who owe their financial success to brilliant life choices, such as picking the uterus in which they were conceived.
...
 
It is one thing to cut taxes for the wealthy, and quite another to raise taxes on the middle class to pay for tax cuts for the wealthy. I think when it is all said and done, that is what the GOP will have ultimately accomplished. Even for the middle class and working poor who initially pay a little less in the short term, it will be more than paid for through the higher interest rates and education costs they will face in the long run. There is nothing here that will promote wealth creation, innovation, intiative, or competition. This is nothing but a regressive redistribution of wealth.

Trump's direction was to make it simple, make it big.

The Senate, both parties, decided to make it complex,

make it small,

create more favored groups again,

add a poison pill about Obamacare just in case there might have been a Democrat thinking about voting for it

and add one complexity after another to make it incomprehensible to anyone except the lobbyists bribing them.

Anyone who votes for an incumbent Senator in 2018 is an idiot.
 
Is that what you're saying is part of this proposal?

Tax cuts aren't "paid for."



Tax cuts aren't wealth redistribution either.

Whether this is "good" policy or not is debatable, as tax bills always are. What I think is missing is how exactly this ties to any of the principles that the GOP is trying to uphold. There doesn't seem to be a lot of coherent explanation or analysis about what the country needs in terms of tax policy right now or how these proposals accomplish that. Congress just seems to be executing their proposal behind closed doors and then unveiling it for the media to throw tantrums about.

What ties this to the base beliefs of all of our Legislators is that the lobbyists are offering and paying huge bribes.

The only core belief held by our legislators is the "belief" that they need to be bribed. The Lobbyists bribing them are the just the guys to buy their influence that they peddle illegally to the detriment of us, their constituents.

At the moment you understand that the only core belief held by our Congress and Senate is the belief that they are elite and we are trash, that is the moment you will grasp what motivates their actions.

Find out who is bribing them and suddenly their actions make sense. Absent a clear understanding of who is paying for their loyalty, their actions seem inconsistent at best and insane at worst.

As individuals, they are criminals and, as a group, a criminal syndicate.
 
They eliminated several tax deductions primarily beneficial to the middle class to try to balance off some of the lost revenue from the tax cuts. That is effectively the same.





In this case I think it is. Without cutting spending, we are adding 1.5 trillion dollars to our debt. At the same time, we are vastly reducing the revenue the wealthiest have to pay while slightly reducing or even increasing what everyone else has to pay. If this were spending neutral, then tax cuts could not be argued to be wealth redistribution, but that is not the case.



They have been very clear. They want to cut corporate tax rates, eliminate the AMT and estate tax, and create a pass through tax rate. All this will miraculously spur the economy to 5 percent GDP growth.

If the tax system had been reformed as it was under Reagan, the Economic growth would carry a huge dividend in increased tax revenue.

The idiotic, bought and paid for new mess constructed by our bribed puppets of the lobbies is not a reform. It's an enhancement of the pre-existing mess constructed by the same bought and paid for bribed puppets.

They have been tasked to make it simple and make it big. They have made it complex and made it small. Cowardly, visionless, plotting, conniving thieves working against the good of the country.

I have really enjoyed the current television show: Designated Survivor.
 
https://www.cnbc.com/2017/11/13/sen...-many-earning-under-200000-analysis-says.html
Senate tax bill would make taxes jump for many earning under $200,000, analysis says

  • The Republican Senate tax bill would increase taxes in 2019 for 13.8 million U.S. households earning less than a $200,000 per year, according to analysts.
  • About 10 percent of all taxpayers would face a tax increase of $100-$500 in 2019.
  • There also would be increases greater than $500 for a number of taxpayers, especially those with incomes between $75,000 and $200,000.

With respect, you will not be able to find an unbiased report on the impact of the tax proposals.
 
It is one thing to cut taxes for the wealthy, and quite another to raise taxes on the middle class to pay for tax cuts for the wealthy. I think when it is all said and done, that is what the GOP will have ultimately accomplished. Even for the middle class and working poor who initially pay a little less in the short term, it will be more than paid for through the higher interest rates and education costs they will face in the long run. There is nothing here that will promote wealth creation, innovation, intiative, or competition. This is nothing but a regressive redistribution of wealth.

What the left does not seem to grasp is, tax dollars are earned by the taxpayer. Tax dollars do not appear out of the void, but require effort by individuals who have to go to work and earn it. The government does not earn tax money, but takes that money like a mafia shakedown. If you don't pay tribute, the government mafia will send in the goons. Without the goons there is no way to steal the tax money.

A tax cut is a fancy way of saying the mafia decides to steal less. Instead of taking the entire content of your wallet, they give you back some of your own hard earned money. The thief does not give you anything if he steals less. They only shook you down less.

The value of lessoning the shakedown by government, is government will need to learn to function better with less. There will need to be less middleman skim by the swamp. This requires the government start to earn its keep. If we take today as a baseline, each dollar given back to the tax earned, combined with efficiencies in government, is equal to government earning value. This is when the mafia sends in the goons and they help you raise the barn.

One practical problem with this model is, the election process does not always lead to the most competent people in elected office. The election process is media driven; will spend millions and billions. Therefore the candidates require certain skills, more related to acting skills and theater, choreographed by the mass media.

An actor successfully playing the role of statesman might get him or her elected, due to its entertainment value. However this does not always translate into the practical skills needed to do the job. Few people can specialize in both skills at the same time. The TV doctor can be very convincing, but they cannot perform surgery in real life. This is what we have. The result is inefficiency in leadership and in their boot licking groupie appointments.

When the mafia is required to shakedown less, the actors playing the role of Statesment, fear looking incompetent. If the TV doctor was required to do real surgery on TV, he could jeopardize their viewership. So they start the "the play", called Feigned Outrage. They would much prefer do nothing but kick the can down the road, so they can act on the stage and nobody is the wiser. Tax cuts are a way to clarify to the tax payer that the people stealing your money are not all up to the job, and many need to be replaced.
 
Because you aren't accounting for how it is PAID for and if I get a $200 refund, that doesn't mean squat if I am going to have to pay far higher interest on loans, I watch my health care premiums jump as the mandate is repealed and millions of healthy people leave the insurance market, and any education plans I had go up in smoke as tuition rates suddenly shoot up and waivers and aid are cut. The tax code does not exist in a vacuum.

I find one point you brought up interesting.

Education costs have been rising like a rocket with the increasing subsidies given to higher education.

In the light of this, though, you think that cutting the number of dollars chasing education will increase the cost of education even more.

At the University of Minnesota in 1971, my first year of in state tuition was between $300 and $400. Books, room and board were extra. That has risen a tad since then.

It feels like if there is more money to pay to colleges floating around, more money will be demanded by the colleges to provide their services.

About $350 in 1971 compared to about $20,000 today? C'mon, man!

https://onestop.umn.edu/finances/cost-attendance
 
They eliminated several tax deductions primarily beneficial to the middle class to try to balance off some of the lost revenue from the tax cuts. That is effectively the same.





In this case I think it is. Without cutting spending, we are adding 1.5 trillion dollars to our debt. At the same time, we are vastly reducing the revenue the wealthiest have to pay while slightly reducing or even increasing what everyone else has to pay. If this were spending neutral, then tax cuts could not be argued to be wealth redistribution, but that is not the case.



They have been very clear. They want to cut corporate tax rates, eliminate the AMT and estate tax, and create a pass through tax rate. All this will miraculously spur the economy to 5 percent GDP growth.

Then -- let's cut spending.

Simple fix.
 
Nicholas Kristof was brilliant today with Billionaires Desperately Need Our Help!

Snippet:


I don't see the theft of wealth from anyone simply because of a life altering event, like death, to be a justifiable action by government.

However, there is a benefit to the rich regarding investment income on interest earned on products held for more than 3 years that seems unjustly low.

This is another of the various good ol' boy rewards bought from our bribed and kneeling legislators selling influence they do not own.

This will result in the cop and teacher couple raising two kids paying a higher rate than Warren Buffett.

We have 535 bribed criminals running the country.
 
What the left does not seem to grasp is, tax dollars are earned by the taxpayer. Tax dollars do not appear out of the void, but require effort by individuals who have to go to work and earn it. The government does not earn tax money, but takes that money like a mafia shakedown. If you don't pay tribute, the government mafia will send in the goons. Without the goons there is no way to steal the tax money.

A tax cut is a fancy way of saying the mafia decides to steal less. Instead of taking the entire content of your wallet, they give you back some of your own hard earned money. The thief does not give you anything if he steals less. They only shook you down less.

The value of lessoning the shakedown by government, is government will need to learn to function better with less. There will need to be less middleman skim by the swamp. This requires the government start to earn its keep. If we take today as a baseline, each dollar given back to the tax earned, combined with efficiencies in government, is equal to government earning value. This is when the mafia sends in the goons and they help you raise the barn.

One practical problem with this model is, the election process does not always lead to the most competent people in elected office. The election process is media driven; will spend millions and billions. Therefore the candidates require certain skills, more related to acting skills and theater, choreographed by the mass media.

An actor successfully playing the role of statesman might get him or her elected, due to its entertainment value. However this does not always translate into the practical skills needed to do the job. Few people can specialize in both skills at the same time. The TV doctor can be very convincing, but they cannot perform surgery in real life. This is what we have. The result is inefficiency in leadership and in their boot licking groupie appointments.

When the mafia is required to shakedown less, the actors playing the role of Statesment, fear looking incompetent. If the TV doctor was required to do real surgery on TV, he could jeopardize their viewership. So they start the "the play", called Feigned Outrage. They would much prefer do nothing but kick the can down the road, so they can act on the stage and nobody is the wiser. Tax cuts are a way to clarify to the tax payer that the people stealing your money are not all up to the job, and many need to be replaced.

The real problem is base line budgeting.

In normal times, that is, outside of the Obama years, if the Federal Government spending was frozen for two years, the budget would in most years be balanced.

However, because the Federal government is designed to just keep growing DESPITE THE FACT THAT EVERY OTHER OPERATION IN THE COUNTRY IS DOING MORE WITH LESS, in Washington, we just keep doing the same or less with more.

What's wrong with this picture?

Federal Receipt and Outlay Summary | Tax Policy Center
 
The real problem is base line budgeting.

In normal times, that is, outside of the Obama years, if the Federal Government spending was frozen for two years, the budget would in most years be balanced.

However, because the Federal government is designed to just keep growing DESPITE THE FACT THAT EVERY OTHER OPERATION IN THE COUNTRY IS DOING MORE WITH LESS, in Washington, we just keep doing the same or less with more.

What's wrong with this picture?

Federal Receipt and Outlay Summary | Tax Policy Center

The US population did not double between 1990 and 2005 (a mere 15 years) yet federal spending (adjusted for inflation) did.
 
Cutting spending means denying benefits to lobbyists that provide campaign cash to congress critters so that is very unlikely to happen.

A cut in spending would not so much affect most companies nor the rich who make donations. Lobbying is mostly more about regulation and laws than about subsidies. It is more the lower end of the population that would feel cuts. They would also be the main beneficiaries midterm. But the politicians that made those beneficial cuts would be gone, before the benefits appeard.
 
A cut in spending would not so much affect most companies nor the rich who make donations. Lobbying is mostly more about regulation and laws than about subsidies. It is more the lower end of the population that would feel cuts. They would also be the main beneficiaries midterm. But the politicians that made those beneficial cuts would be gone, before the benefits appeard.

The bulk of the federal income tax code defines deductions, credits and exclusions based on how and upon who that income was later spent. Each of these "special" perks has a cost to the rest of society as well as a lobbyist fan base who have provided congress critters with some serious campaign cash.
 
The US population did not double between 1990 and 2005 (a mere 15 years) yet federal spending (adjusted for inflation) did.

The inefficiency of our government is national embarrassment. If our legislators were honest people and our political parties worked for the good of the people, there would be no solving this mystery.

Luckily, our legislators are unrepentant thieves who steal anything and everything that is not nailed down and use our money to build their petty fiefdoms.

At least we know what's happening to the money. So, there's that...
 
The inefficiency of our government is national embarrassment. If our legislators were honest people and our political parties worked for the good of the people, there would be no solving this mystery.

Luckily, our legislators are unrepentant thieves who steal anything and everything that is not nailed down and use our money to build their petty fiefdoms.

At least we know what's happening to the money. So, there's that...

If a business doubled it sales/revenue in 15 years then we would call it highly successful and very efficient. What we have is a serious competition between the party for a bigger federal government and the party for a huge federal government yet some expect change. So long as congress critters enjoy a re-election rate in excess of 90% (and unlimited credit) then nothing is likely to change.
 
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