GOP’s new tax bill is so unpopular even they hate it

On Thursday, Republicans in the House of Representatives unveiled their much-anticipated tax plan — and it’s already wildly unpopular, according to Vanity Fair‘s Bess Levin
“The ungracefully titled Tax Cuts and Jobs Act,” Levin said, is “as ungainly and inequitable as the rushed process to write it.”

The proposed tax act is a last-ditch effort by the Trump administration and the GOP House to push through some kind of legislative achievement by the end of the year after their failure to repeal Obamacare, secure funding for Trump’s proposed border wall or fulfill any of the president’s other campaign promises.

However, like the failed Obamacare repeal attempts that came before it, the Tax Cuts and Jobs Act is a slapdash effort, cobbled together hastily and in secret, then foisted on the public with an urgent deadline — and about as little support.https://www.rawstory.com/2017/11/gops-new-tax-bill-is-so-unpopular-even-they-hate-it/

Yes, it's very unpopular. Problem is, the people who say it's unpopular are likely to benefit from it. People are silly. This bill would put more money back in the pockets of the lower, and lower-middle class, but folks just gotta gripe, ya know. Even if something would benefit them.

It's the nature of the sheeple.

HowardBThiname said:

Yes, it's very unpopular. Problem is, the people who say it's unpopular are likely to benefit from it. People are silly. This bill would put more money back in the pockets of the lower, and lower-middle class, but folks just gotta gripe, ya know. Even if something would benefit them.

It's the nature of the sheeple.

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What if they would rather not add trillions to the national debt rather than get a few hundreds bucks in tax credits?

iliveonramen said:

What if they would rather not add trillions to the national debt rather than get a few hundreds bucks in tax credits?

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Spending cuts are also on the table, so the "add trillions of dollars to the national debt" is premature. The economy always does better when consumers have more money to spend and the difference for many low- and middle-income families will be quite a bit more than "few hundred bucks."

Just goes to show how people don't take time to learn the facts for themselves, but rather, depend on emotionalism.

HowardBThiname said:

Spending cuts are also on the table, so the "add trillions of dollars to the national debt" is premature. The economy always does better when consumers have more money to spend and the difference for many low- and middle-income families will be quite a bit more than "few hundred bucks."

Just goes to show how people don't take time to learn the facts for themselves, but rather, depend on emotionalism.

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Until those cuts get put into some bill, what's premature is assuming they will offset the 1.5 trillion that is in that tax bill.

Also, it's hard to really rate the impact on middle and lower income Americans until those spending cuts are accounted for.

HowardBThiname said:

Yes, it's very unpopular. Problem is, the people who say it's unpopular are likely to benefit from it. People are silly. This bill would put more money back in the pockets of the lower, and lower-middle class, but folks just gotta gripe, ya know. Even if something would benefit them.

It's the nature of the sheeple.

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I'll take the standard deduction increase by itself even with the elimination of all deductions. Fair for everyone, equal tax cuts. And the corporate tax reductions. But there are other things in there I don't like, thus my no vote.

iliveonramen said:

What if they would rather not add trillions to the national debt rather than get a few hundreds bucks in tax credits?

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Because the debt doesn't matter.

HowardBThiname said:

Yes, it's very unpopular. Problem is, the people who say it's unpopular are likely to benefit from it. People are silly.

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Yeah, not so much.

A lot of the major tax cuts exclusively benefit the wealthy. Eliminating the estate tax, cutting corporate taxes, and the pass-through tax cuts will all only help the rich.

There's also a lot of really shady BS in this one. For example, under the current tax code, if you sell an asset to buy something in the same class, you get a tax break. E.g. if you sell a painting for $5 million, then spend $5 million on art, you don't pay the full capital gains tax. The plan is to kill this tax cut for everything except... wait for it... commercial real estate. Which just happens to be the President's primary business. HMMMMMMMMM.

Anyway.

Low income earners already get huge tax breaks. They won't see any major changes.

The issue is the middle class. Many middle class, particularly upper middle class, will be pushed into a higher tax bracket. Many also itemize deductions, and will wind up paying more in taxes, despite the higher standard deductible.

They're also talking about eliminating the state and property tax deductions, which basically amounts to double taxation. That, and eliminating the mortgage tax deduction, will really hit the middle class.

A more full analysis is in the works. Even before that's out, though, we know that it is the wealthy who will benefit, while the middle class is highly likely to get the shaft.

The idea that this will make taxes easier is laughable, by the way. You still have to calculate all the deductions, in order to figure out whether you're better off with the SD or itemization. Removing a handful of possible deductions and tax brackets doesn't do jack to make anything easier.

Visbek said:

Yeah, not so much.

A lot of the major tax cuts exclusively benefit the wealthy. Eliminating the estate tax, cutting corporate taxes, and the pass-through tax cuts will all only help the rich.

There's also a lot of really shady BS in this one. For example, under the current tax code, if you sell an asset to buy something in the same class, you get a tax break. E.g. if you sell a painting for $5 million, then spend $5 million on art, you don't pay the full capital gains tax. The plan is to kill this tax cut for everything except... wait for it... commercial real estate. Which just happens to be the President's primary business. HMMMMMMMMM.

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You're talking about a 1031 exchange, and from what I understand, that is not changing, although discussion was made about changing it earlier in the year. 1031s are only deferments, however, the tax on the sale is still due, but may be paid later so the capital can be reinvested. I'm pretty sure this is not changing in this bill.

Anyway.

Low income earners already get huge tax breaks. They won't see any major changes.

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This is true, they're not paying taxes already.

The issue is the middle class. Many middle class, particularly upper middle class, will be pushed into a higher tax bracket. Many also itemize deductions, and will wind up paying more in taxes, despite the higher standard deductible.

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The tax rate is being reduced for the brackets for the majority of what we consider middle-class. One of the biggest benefits is for pass-through businesses, those little guys who work for themselves, basically. The lady who takes in babysitting kids, etc. Those folks have a tougher time of it currently, because they have to come up with the other side of the FICA tax. A regular employee only pays half, and his employer kicks in the other half. That means an employee and a pass-through babysitter might both make 20K per year, but the employee will pay 6.20% of the net income on his tax return for SS and Medicare taxes. The babysitter will pay 12.40%.

The new bill limits the pass through businesses to a max of 25% tax, which will help those persons.

They're also talking about eliminating the state and property tax deductions, which basically amounts to double taxation. That, and eliminating the mortgage tax deduction, will really hit the middle class.

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The mortgage interest deduction is capped at 500K. The vast majority of homes owned by the middle class will never reach that amount so only the wealthy will feel that one. The state and property tax deductions are unlikely to stand, and, I agree that those should be kept.

A more full analysis is in the works. Even before that's out, though, we know that it is the wealthy who will benefit, while the middle class is highly likely to get the shaft.

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For all intents and purposes, it appears to be just the opposite right now.

The idea that this will make taxes easier is laughable, by the way. You still have to calculate all the deductions, in order to figure out whether you're better off with the SD or itemization. Removing a handful of possible deductions and tax brackets doesn't do jack to make anything easier.

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I have an accountant so that's not an issue for me, however, anyone can use on of those cheap tax-preparation software programs and it will do the comparison as well.

Is this tax bill dependent on the farce of“dynamic scoring”?

HowardBThiname said:

You're talking about a 1031 exchange, and from what I understand, that is not changing, although discussion was made about changing it earlier in the year. 1031s are only deferments, however, the tax on the sale is still due, but may be paid later so the capital can be reinvested. I'm pretty sure this is not changing in this bill.

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I am, and it is. Not a lot of other industries use it, but one is art sales. They've noticed the proposed change.
https://news.artnet.com/art-world/republican-tax-plan-collector-loopholes-1138556

The tax rate is being reduced for the brackets for the majority of what we consider middle-class.

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Not so much.

Single filers with incomes between $91k and $191k get a whopping 3% cut. Joint filers earning $153k to $233k get the same 3% cut. $150k household income is not middle class even in the most expensive states (What 'middle class' means in every US state - Business Insider). And those income earners are more likely to itemize than to take the standard deduction, especially due to larger mortgages and higher state taxes...

One of the biggest benefits is for pass-through businesses, those little guys who work for themselves, basically. The lady who takes in babysitting kids, etc.

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Not so much.

First, under current law, 70% of sole proprietors already pay a very low rate -- around 15%. This is because, despite paying higher FICA taxes, they can itemize tons of business expenses. This includes part of their housing (home office), transportation, medical expenses, and so much more. So, a 25% rate doesn't help them at all.

Second, it turns out that the top 1% of the self-employed earn $10 million/yr and up. They are the ones who will rock out if their tax rates get cut. They're the hedge funders, investment bankers, and *COUGH* real estate investors.

Third, Republicans realized that the 25% would create a massive tax loophole. A lawyer earning $400k per year, for example, could set herself up as an LLC or S-Corp, become a contractor for their current employer, and whammo get a huge tax break. So, they are proposing ridiculously complex rules to try and keep this in check.

For example, if you are an "active owner" -- i.e. you own and work at the business -- then the share of income that qualifies for the 25% tax rate is capped at 30% of income. If you are a "passive owner," then all your income is taxed at the lower rate. Ironically, this means that the people who are working hard on their businesses? Yeah, they don't get a break. It's the lazy owner, who does as little as possible for the business, who gets a big break.

Despite genuinely good intentions, this change won't help the hard-working small business owner. It's a break for the lazy inheritor.

I have an accountant so that's not an issue for me, however, anyone can use on of those cheap tax-preparation software programs and it will do the comparison as well.

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Sure they can. It just requires doing the same amount of work as we've always done. So no, this reform won't make tax preparation easy for the vast majority of filers.

Visbek said:

I am, and it is. Not a lot of other industries use it, but one is art sales. They've noticed the proposed change.
https://news.artnet.com/art-world/republican-tax-plan-collector-loopholes-1138556

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Okay, you are correct. I found that in the actual law, but I'm not so sure it will pinch anyone except the elite art collectors and it wasn't designed to be used in that fashion to begin with. The average person is not going to be flipping hundreds of thousands around in art, after all. 1031 exchanges were designed to help with expansion costs for business, and they do that quite well. But, as I said, the tax on those sales is just a deferment -- it will be paid one day.

Not so much.

Single filers with incomes between $91k and $191k get a whopping 3% cut. Joint filers earning $153k to $233k get the same 3% cut. $150k household income is not middle class even in the most expensive states (What 'middle class' means in every US state - Business Insider). And those income earners are more likely to itemize than to take the standard deduction, especially due to larger mortgages and higher state taxes...

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That 3% cut may not be huge, but it's something. It's relief for the taxpayer. Originally, the claim was made that only the wealthy would benefit. But 3% of 100K is $3,000 and that will be a welcome relief to a middle class family.

Not so much.

First, under current law, 70% of sole proprietors already pay a very low rate -- around 15%. This is because, despite paying higher FICA taxes, they can itemize tons of business expenses. This includes part of their housing (home office), transportation, medical expenses, and so much more. So, a 25% rate doesn't help them at all.

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This is also semi-correct. Pass throughs can take many overhead deductions, and some, sure, will be able to get their income down to a low level through those. They'll still get the 3% cut, which will help them. And, I realize that by the time they reach a certain amount of income, they typically incorporate so at that point, pass-throughs will convert. The 25% will still help the self-filers who should be hiring accountants - but don't. They don't really know the extent of how accumulated depreciation will help them. The ones who use the tax software will likely benefit. To some extent as long as they make enough net.

Second, it turns out that the top 1% of the self-employed earn $10 million/yr and up. They are the ones who will rock out if their tax rates get cut. They're the hedge funders, investment bankers, and *COUGH* real estate investors.

Third, Republicans realized that the 25% would create a massive tax loophole. A lawyer earning $400k per year, for example, could set herself up as an LLC or S-Corp, become a contractor for their current employer, and whammo get a huge tax break. So, they are proposing ridiculously complex rules to try and keep this in check.

For example, if you are an "active owner" -- i.e. you own and work at the business -- then the share of income that qualifies for the 25% tax rate is capped at 30% of income. If you are a "passive owner," then all your income is taxed at the lower rate. Ironically, this means that the people who are working hard on their businesses? Yeah, they don't get a break. It's the lazy owner, who does as little as possible for the business, who gets a big break.

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That seems as though it "might" be a loophole but I think it's a stretch to imagine that wealthy SEOs will start billing themselves as independent contractors. And there are other downsides to doing that, including less legal protection for the earner. While it might happen, I think it'd be on a limited scale, and I don't think we'd see a lot of trouble.

Right now, we have the mortgage deduction that allows folks to buy and sell their personal residences and not realize capital gains. That sure helps the little guy, but savvy homeowners have been moving up every couple of years - abusing the system. They're getting huge tax cuts that the little guys don't even understand. I don't see your scenario being abused to any greater extent.

Despite genuinely good intentions, this change won't help the hard-working small business owner. It's a break for the lazy inheritor.



Sure they can. It just requires doing the same amount of work as we've always done. So no, this reform won't make tax preparation easy for the vast majority of filers.

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I still think you're grasping at threads instead of looking at the overall picture. You've pointed out minutia - not big looming problems.