Changing the tax code creates winners and losers. And remember, for Republicans, the poor and the middle class are always to be the losers. The Wealthy need their tax cut, and Goshdarnit, someone has to pay for it. So, this time, Republicans are going to eliminate the deductions for mortgage interest and state and local taxes, giving every middle class family faces a massive tax increase. At the same time, they are actually raising taxes on the bottom bracket (i.e. the poor and lower middle class) from 10% to 12%.
Josh Barro explains why a middle-class tax payer is an almost certain loser under the Republican proposal:
Some of these deductions would be eliminated. And while Republicans like to misleadingly claim their plan would “double the standard deduction,” these itemizing taxpayers would lose the ability to take the personal exemption for themselves or their spouses, subjecting an additional $8,100 of their income to tax.
While these taxpayers would lose key tax benefits, rich taxpayers would come out ahead.
The rich would benefit from a new preferential rate for business income — while high-income workers could pay tax at rates as high as 35%, business owners would have tax on their profits capped at 25%.
When George W. Bush and his Republicans in Congress passed their tax cut proposal in 2001, they made sure to just make it an across the board cut so that they would not be pasted with the charge of raising taxes on the poor and middle class to pay for a tax cut for the rich. Sure, the wealthy got the biggest tax cut, but no one saw their taxes rise in real terms. So even though it was unfair and unwise, it wasn’t a monstrous theft from the middle class and the poor.
People say that passing this Middle Class Tax Increase (and I will be calling it that from now on and so should you and all Democrats, liberals and progressives) is going to be no easier than passing their Repeal and Go Fuck Yourself plan. Why? Because they, the Republicans, are trying to take something away from you. And people get upset when that happens. They wanted your healthcare, and now they just want your money.
Fake news.
They are leaving the mortgage deduction as is. Do the math on raising the rate from 10% to 12% on incomes < 100,000 vs an additional $12000 in deductions. Note the increase in the child tax credit you conveniently forgot to mention. You will find in most cases lower middle class taxpayers will benefit from this.
State tax deductions will be negotiated back in and there will also probably be a higher tax rate above 35% for high income earners. These will be the giveaways to get the package through.
Passes the Senate 54-46 with Stabenow, McCaskill, Manchin, and Heitkamp voting for it in addition to all the Republicans. You read it here first.
I’m not sure how you’re doing the math on this, or what math you’re doing since there are so many details missing. Add to that the Republicans are lying again. They are claiming that the wealthy don’t get a tax cut and that this will be revenue neutral.
I agree, it won’t be revenue neutral. It will be revenue positive.
Define wealthy.
There’s no financial math where you reduce revenues by giving it back to wealthy people that ends up with additional revenue. NONE.
I don’t need financial math to know that if the GDP goes up a few tenths of a percent it will drown out any revenue loss due to lowering the rates on the wealthy. There just aren’t enough them for a small change in rate to have much of an impact.
This doesn’t look like leaving the mortgage deduction as is:
“Married taxpayers would have to have at least $24,000 in combined mortgage interest and charitable deductions to get any benefit at all from itemizing, something that has charities and real-estate agents concerned.
“It keeps the mortgage deduction in name, but in practice only people with very large charitable contributions or million-dollar homes will benefit from it,” Mr. Polsky said”
Article was behind the paywall, but from the sentence you quoted I think Mr. Polsky is disproving your comment about the rich paying less at the expense of the middle class and proving my point about the lower middle class benefiting from this tax plan…
Taxpayer “A” – Homeowner, small mortgage (let’s say $1,000/month) – currently deducts $12000/yr for his/her mortgage, maybe a little bit more for charity, state/local taxes, etc., let say $15,000/year in deductions. Now gets an additional $9,000/year in deductions. Does not lose any deduction based on state/local taxes.
Taxpayer “B” – Homeowner, large mortgage (let’s say $3,000/month) – currently deducts $36,000/yr for his mortgage, maybe a lot more for charitable deductions, state taxes, etc. Let’s say $50,000/yr in deductions. He stays where he is for the most part, probably actually loses a little due to not being able to deduct state/local tax.
Which taxpayer benefits and which is most likely to be middle class? Which taxpayer is most likely “wealthy” by almost anyone’s definition?
You deduct the interest on your mortgage, not the entire mortgage payment. So what do we know here? You are not qualified to have this conversation.
Right. I kept reading that reply and scratching my head.
I think you both know full well what I meant. Of course the amounts given were interest amounts.
And of course that brings us to taxpayer “C” – rents his/her house apartment. This taxpayer gets a huge tax cut. Is taxpayer C more likely to be wealthy or lower middle class?
This is why San Fran Nan and Crybaby Chuck are squealing so loudly about “tax cuts for the rich”. Trump already exposed Democratic vulnerabilities on economic issues in the lower middle class in the 2016 election. This just pours fuel on that fire.
By the time this passes nobody will care about travel bans, twitter wars with NFL/NBA crybabies, or statues of Confederate generals.
That’s just nonsense. It is a massive giveaway to rich people in order to bankrupt the country. They are doing what Kansas tried to do on a larger scale. Massive new debt, massive new deficits, no new business. Because business is not run on tax cuts.
You say that but aren’t providing any data to back it up.
And if you don’t think companies look very closely at tax rates before making investment decisions you are kidding yourself.
C’mon, you are smarter than that.
i am in business. And make spending decisions on the daily. I add staff and equipment because I need it. Not because the taxes are friendly. Every business works this way. The only thing at stake in this package is the pass through rate, which is how wealthy people get their money out of businesses.
White House economic adviser Gary Cohn told ABC News that he can’t guarantee that taxes won’t go up for some middle-class families under the administration’s sweeping tax overhaul. Said Cohn: “There’s an exception to every rule. I can’t guarantee anything. You can always find a unique family somewhere.” They admit it, xyz.
He is being honest. Some upper middle class taxpayers probably will pay more. I am fine with that. Are you?
I would be fine with it if everyone above the upper-middle-class was paying more. They won’t.
That you are fine with it anyway says everything about you that needs to be known.
Actually they probably will. If you read carefully the plan allows for the possibility of additional upper brackets. Dems (rightly) will insist on this and Trump will allow it to get the package passed.
I think we are all missing the forest for the trees however. To me the key is the dramatic reduction in business tax rates. BMW and Mercedes are building plants in North Carolina and Alabama, Foxconn is building iPhones in Wisconsin, and we have become a net exporter of petroleum products even before this package passes.
2Q GDP growth over 3% confirmed, watch it climb even further when this passes. Must have waved a magic wand or something like that.
The benefit of business tax rate reductions redound to shareholders and mostly the wealthier ones. There’s no real effect on business improvement — c.f. Kansas
There are an awful lot of “shareholders” in today’s economy. How about everyone with a 401K or pension plan for starters.
Ask the state of Illinois about the “effect on business improvement” of taxes. Ask them why Wisconsin is cleaning their clock right now with regards to business growth.
the 401k or pension plan holders are not the same as specific stock investors. And since the stock markets have been growing anyway, this won’t change that. This Wisconsin? or This Wisconsin?
You can drink all of the Kool Aid you want, but you don’t change the math.
“Since the stock markets have been growing anyway, this won’t change that”.
Pretty in depth analysis there.
Much of the growth is due to anticipation of Trump’s tax cuts.
Right. Like it has been anticipating Trump tax cuts since 2009. You still can’t change the math. And nor do you understand a thing about how business investment works. You’ve just got the Trump koolaid basically ready to make us into Kansas.
WTF are you talking about? Wisconsin is last in the nation in business startup activity.
http://www.jsonline.com/story/money/2017/05/18/third-straight-year-wisconsin-ranks-last-business-startup-activity/328803001/
Also, please explain the benefit to the economy of people having more money in a 401K that they can’t touch for decades.
You don’t actually know anything, do you? You just wave pom poms.
The strength of the market and the 401K are indicators of the economy’s performance. When the market is healthy and growing it spurs investment, growth of existing companies, and startups of new companies.
I haven’t seen a cogent argument from you yet on this board.
The market is not much of an indicator of the strength of the economy, as any real financial person can tell you. It is why the WSJ, the FT and other “market” outlets spend so much time on other indicators. The only investment you see from that market is that from IPOs. Other than that, you are watching people get rich from trading those stocks. What did I tell you about not having the tools for this conversation?
OH and Foxconn? They conned the people of Wisconsin out of $3 Billion for their plant. Provided they build it, of course.
No, they aren’t indicators of that, sorry. And it’s not my job to educate you. Anyone who knows the subject knows you don’t know it. I don’t care what you do with that knowledge, but arguing pointlessly with people who know more than you doesn’t seem like much of a career.
Ever heard of Foxconn? They are about to build a 10 billion dollar plant there. It’s not just about startups.
No, it’s not, but Foxconn was given the henhouse by Walker. You know, the kind of corporate handout everyone crucifies Markell for.
You don’t know any more about this than you hear in the news.
What’s honest about it is that he can’t guarantee that everyone will get the tax cuts they are promising. Except for the very wealthy who are set to get their money back under any circumstance of this bill. Meaning that any claim to maintaining the progressivity of the tax code is a bold-faced lie.
Ok, So what is the Demo’s tax plan?
Lazy clown. Look it up yourself. Hint: It raises taxes on the wealthy instead of cuts them.
That’s Bernie’s plan. He couldn’t even sell that to Democrats.
And Bernie should pay his own bills first.
Figures. Alby go back into your whole!
Bruce Bartlett knows more about tax policy (and math) than xyz ever will:
I helped create the GOP tax myth. Trump is wrong: Tax cuts don’t equal growth.
Choice:
“We saw another test of the Republican tax myth in 2013, after President Barack Obama allowed some of the Bush tax cuts to expire, raising the top income tax rate to its current 39.6 percent from 35 percent. The economy grew nicely afterward and the stock market has boomed — up around 10,000 points over the past five years.”
Grew nicely? Didn’t you mean to say “weakest recovery ever”? Didn’t you mean to say 8 years of < 3% GDP growth?
See, this is how I know you are utterly innumerate. Bartlett is making specific points with real data and your best shot is worn out talking points. What’s even worse is that you don’t know better than to wield that lame assume shit among people who will see right through it.