It's a good thing you put Tax reform in parenthesis,, I would have thought this was about another Hollywood sex scandal.

The shit that the press writes about as if it were important is fucking baffling.

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Civilize the mind, but make savage the body.

- Chinese proverb

Hard to blame them. They know their audience well.

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"The right to party is a battle we have fought, but we'll surrender and go Amish... NOT!" -Wayne Campbell

It is important. As pointed out in the article, the name given to a bill plays an important role in its popularity. That's not a great reflection on us, but I don't doubt the veracity of this particular White House poll.

It's news that major political players (Trump, Ryan, and Brady) are clashing (if true). That sets the stage for the very important negotiations that are being initiated.

They may think it's important. I just think it's funny. :-)

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"Politics is just show business for ugly people."

I want to try to avoid the politics angle on this, because I don't need an ulcer, but I think the clash is mainly over the pace of the introduction of cuts to the corporate tax rate as well as what income tax deductions are going to be eliminated.

Really, if we want to truly reform the tax code we should be looking at eliminating the mortgage interest deduction as well as the deduction for state and local income taxes. Of course, those are two major oxen that'll be gored if they're eliminated, so stand by for the fighting in Congress, is all I'll say.

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"Politics is just show business for ugly people."

I think if they are going to go with major changes like the elimination of the mortgage and state tax deductions, the best way to do that would be to phase the change over say 5-10 years. Trying to do it in one year would be a major blow to the real estate market and several state economies. If they phase it in, then people can adjust and plan.

details getting leaked...

https://www.usatoday.com/...deduction/823088001/

More leaks, can't verify accuracy, but seems plausible...

• 20% corporate rate (cut from 35%), permanent
• Income tax rates: 35% starts at $260,000 for married couples, $200,000 for individuals; 25% starts at $90,000 for couples, $45,000 for individuals
• Top rate remains the same -- 39.6% -- but income threshold is $1 million for married couples, $500,000 for individual
• Limits the home interest deduction to loans up to $500,000
• 10 percent global minimum tax on foreign subsidiaries (high profit)
• Expensing for business investment sunsets after five years
• $300 per person credit for filers and non-child dependents
• Child tax credit moves to $1,600
• Estate tax exemption doubles until 2024, at which point it would be repealed

If the $10,000 for property tax thing with no deductions for income tax is real, that seems odd. Can anyone explain why not just limit it to $10,000 in state and local taxes instead of favoring one type of state taxation over another?

Nothing like equal treatment under the law.

Really? You need to explain with more than a seven word talking point. I'll wait for the rest, but from what I have seen so far, this bill may be in trouble.

Good idea. Soft landings work best. :-)

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"Politics is just show business for ugly people."

This should be called the middle class death tax bill. It increases nursing home care net cost by ~20% by removing the medical expense deduction.

Not sure how swelling the high cost Medicaid ranks with this and cutting Medicaid by a trillion dollars in the budget is going to play out.

This also will impact a lot of middle income people whose health insurance premiums cross the 10% line.

Anyone know when this would cut in? As my parents POA this has a huge impact on their budget as we go negative every month til tax refund time since basically 95% of their budget is qualified medical expenses.

25% starts at $90,000 for couples, $45,000 for individuals


This alone will crush the middle class. I'm single and make about 60k ish a year. I really can't afford to live in Philly taking a hit like that, the 4.5% wage tax and 8% sales tax is bad enough. Guess I'll just job down and work more on the side for cash then, I have plenty of that kind of work available if I want it.

If any of you are building your life around a tax credit or deduction you are just stupid and will have to adjust.

I say crush all the sacred cows, from mortgage interest to property taxes to charitable deductions even IRA/401K. I participate in all of these but you can't get reform unless you simplify.

The goal of the tax code is to provide revenues to the treasury and not for every one's pet project.

Doesn't 25% start at $37K now?

The goal of the tax code is to provide revenues to the treasury and not for every one's pet project.

The goal of the tax code was originally to provide revenues to the treasury but now it's for every one's pet project and to satisfy the special interest groups lobbying on behalf of wealthy individuals and their corporations.

FIFY

Middle class has a much higher tax rate then 25% when you factor social security (6.2%) and medicare (1.45%). Add state and local and if you make $125,000 (limit where SS tax roughly stops) your effective tax rate soup to nuts is probably closer to 35% or higher in some high tax states.

Middle class or someone single making $60k in Philadelphia is screwed under any tax plan. You are in the worst income range, where SS tax and medicare tax account for 10%+ of your income. And the sad thing is you will probably get some type of reduced benefit or delayed benefit to SS if you are under 40.

Wanna borrow some of my body armor, buddy? You're gonna need it. ;-)

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"Politics is just show business for ugly people."

I say bull. Changing the mortgage deduction from $1.0 million to $500,000 will not impact your decision or the real estate market. Figure at most you lose $500,000 at 3.5% rate or $17,500, roughly $5,000 of tax savings. If you have a $1.0 million mortgage, you are probably in a fairly high bracket or should be in a fairly high bracket and the $5,000 will not move the dial in the housing market.

Good idea. Hard landings work best. ;-) ;-)

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"Politics is just show business for ugly people."

100% agree. The tax code should not impact how your allocate capital. Should you really get a mortgage deduction as an incentive to buy a bigger house than you can afford?

I have many clients who donate each year and could care less what tax bracket they are in. Losing the charitable deduction would not change their behavior. Their decision to gift is driven by their balance sheet not their bracket.

Yeah, well, I don't need it. I am so sick of everyone whining and complaining, everyone wants the govt to reform, but not if it goes after their personal goodies or if they don't benefit. So sick of it. Trumps plan is 1000 times better then the monstrosity of a tax code we have today. I was on a flight last night from PHL to BNA and a woman and I talked...she live in NJ and pays $30K in property taxes, on a similar priced home here in Nashville one would pay 25% of that number, their schools are not 4X better - no way she should get to deduct that much from her Federal taxes; I told her NJ ought to get their shit together and fund things differently.

A few years back, I had a down year in sales, still made over 100K...after I deducted all the goodies, my effective tax rate was 2%...it was simply ridiculous and I remember starting a thread here in the LR. And this year a much better year, my effective tax rate will be about 25-28% with all the same expenses. The tax code if an effing joke. Meanwhile, half the country pays nothing and yet many of those folks expect a freaking cut with they pay nothing or next to nothing and whine about those footing the bill getting more...

No landing! I've seen the tax code change dramatically over the last 30 years and investors seem to adapt. Rising rates will have more of an impact on the housing market than somebody losing $5,000 in tax benefit. Even the belief that rates are going to be higher will place an over hang of the housing market.

Which is why the House budget resolution last week passed to let them increase deficit spending by 1.5 trillion?

Yeah wake me up when the Republicans actually behave like the deficit hawks they pretend to be.

I don't have a problem with all deductions going away. Every earner needs to have some skin in the income tax game, in my opinion.

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"Politics is just show business for ugly people."

And don't forget social engineering.

Want to encourage home ownership? Mortgage Interest Deduction.

Want to encourage having kids? Child Tax Credit.

Want to encourage savings/investment? Lower capital gains tax.

Want to try to screw rich people? Estate tax.

Your analysis and math are pretty poor. 30-year rates are ~4%. The impact on a $1M loan would be 20K right there. Take a $1.25M house with $1M mortage. 2% property tax would create a deduction of 25K, but the limit will be 10K. Lost another 15K there (35K total). Pricey home, so assume that your marginal rate was 33. Tax hit is ~$11550/year (possibly higher, because many folks in this bracket are getting pushed from 33% to 35% in the new plan, a weird quirk in the bracket-cutting). It's about $1000/month.

Now, complaints about "fair" usually devolve into basic geographic/class envy. The basic nuts and bolts of this is that the $1000/mo. allowed a prospective buyer who could afford only $4K/month to afford $5K/month. The result is a fairly massive 20-25% reduction in housing values at the high end (not very high end, because the economics for multi-millionaires is different). That means a large amount of the economy is misallocated, and there will be a whole lot of extremely bad loans, and a significant recession in economic sectors tied to housing.

That's why major shifts should be done carefully and with some view toward creating a soft landing. I don't think this "plan" has much chance of passing. It seems to be a massive gain for large estate owners, folks making ~1M/year, corporations that don't presently avoid taxes aggressively. Otherwise, it is a small re-arranging of deck chairs for most folks in the middle, paid for on $1.5T line of credit, with a wan hope that this doesn't crash the housing sector.

Fixed it for you.

Want to encourage kids?
Want to encourage marriage?
Want to encourage hedge-fund managing?
Want to encourage renewable energy?
....

Complain about it or not, this "plan" only changes things a small amount.

While I might have exaggerated on the marginal impact and left out the property tax part of the analysis, I think you went the other way. Most of the people who have that high a property tax and in the tax range you are talking about tend to be in the AMT. I've never seen property values change because someone fell in the AMT and they lost their deduction.

Also, what percentage of people where real estate values are high relative to income have adjustable rate loans at less than 4%. Not sure how many are paying 4% for a 30 year mortgage? Haven't shopped mortgages in a long time.

Like I said before, rising interest rates will do more damage to housing prices than a change in the deduction amount.

You guys crack me up. Y'all sound like a bunch of rich white folks. ;-)

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"Politics is just show business for ugly people."

Now that's funny. We probably both don't have a mortgage, lived in the same house for 20 years, 0% bracket because we hold $5.0 million in muni bonds and all our equities are in retirement accounts that we haven't tapped yet. Typical white rich guys. Funny.

My kids already bleed me dry and now they are getting rid of personal exemptions so looks like my taxes are going up. This tax cut doesn't favor the middle class with large families at all.

I thought there was going to be some sort of family tax credit for earners making up to $230,000?

One thing this plan's going to do -- at least on the surface -- is whack folks in high-tax states (California, Massachusetts, New York, especially) pretty hard, as well as those with severe medical expenses.

Not saying he or the Republicans would stoop to such a thing (because he's a completely honorable guy, believe me ;-) but it almost looks like the Orange-Haired Wonder and his confederates in the House decided to throw the so-called high-tax "blue states" right under the 18-wheeled, double-decker super-turbocharged bus, maybe as payback for last year's election?

Hey, it's a thought. ;-)

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"Politics is just show business for ugly people."

Same thing they tried to do with the last iteration of their health care reform. Is anyone surprised?

Trumps plan is 1000 times better then the monstrosity of a tax code we have today

I'm a tax accountant in Canada and our Income Tax Act is worse than the U.S Tax Code but if you think Trump's cursory plan is going to make it smaller and less complex, you haven't been paying attention for the last 100 years or so. Every election in every country in the world has the same BS with politicians cryiing for simplicity, a return to common sense, less regulations and a system that is fair for everyone.

And in every country on earth, the tax systems get more complex, harder to understand and weigh far more in favor of the wealthy. It's just the way things go. Trumps beautiful tax plan that is being rushed through so they can get at least something passed, isn't going to be any different.

Of course not, folks don't "fall into the AMT", their overall income rises, such that they may have to pay it. BTW, the cost of the AMT for my household is ~$120/month. It is a mere fraction of the amounts that we are discussing (YMMV).


... which is why rates have moved so slowly, right? The point is not whether to change the laws, it is to do so in a way that isn't unnecessarily disruptive and recessionary.

This plan wouldn't impact my taxes much at all. It would have a huge impact on housing prices moving forward in the short and medium term, and that should scare folks who care about prosaic things like GDP and growth and the deficit.

Watch who you are calling white, Amigo.

I haven't seen a family tax credit. There are six exemptions in my household so this adds up quick at $4050.

Your getting confused...the tax code and what we spend are two different issues. We have a deficit because of entitlements that are built on every increasing demographics which stopped working 20 years ago and EVERYONE knew we were running up against a BRICK FUCKING WALL. And everytime someone suggested we reform these, they were crucified. They have to change if you want to balance the budget.

AND/OR you have to grow the economy which is one of the goals of this tax reform plan.

Don't buy into the lie.

I agree on the "move slowly" because after almost 10 years if the Fed upsets the apple cart and raises rates too fast, overvalued assets from real estate, stocks, bonds, etc are going to make a small change in CA housing prices seem like a blip.

I still believe your tax example impacts a small percentage of people who have shoe horned into a house too big for their income. First, the 4% is not an interest only loan and a portion is principle, lowering your example. Second, I see lots of CA returns and nobody I know is paying 2% of their home value in property taxes. For example, Atherton home pays $60,000 in property taxes and its well over $10.0 million in value.

Are you saying you believe this tax plan, if passed in its present form, would be revenue neutral due to increased GDP growth?

To me that's the biggest lie amid all the BS surrounding it.

I am talking about the principle's of the plan, but your right, after everyone whines (States with enormous state income taxes and high property taxes and then the Real estate lobbyists who want their business subsidized, etc, etc) then they keep a little here and a little there and before you know it, its not so simple anymore.

But as the outline of the plan was shared and even with changes, its better than our current tax structure.


Lets figure the right tax rate by income group and be done with it.

I'm not confused at all. It's the Republicans who keep going on about "but how are we going to pay for {whatever}". And then next thing you know they have a tax reform which *reduces the revenues going to the treasury* that you just mentioned and does not cover that reduction with corresponding program cuts. Instead they want to go with more deficit spending like they always do. And believe me, the only reason that 1.5 trillion number isn't higher is because of the reconciliation rules needed to get a 50 vote threshold in the Senate.

Now if you want to get into WHICH programs / entitlements to cut, sure, that's great. Too bad they aren't.

As for growing the economy, that's great too, but tax cuts for corporations and the wealthy never have this effect as much as people would like them to. Point to me one time in oh, the last 100 years, where tax cuts boosted the economy enough to go break-even without deficit spending or program cuts. Good luck. Trickle down economics is a farce that people need to stop falling for.

Okay, gringo. ;-)

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"Politics is just show business for ugly people."

Well said. And what's your platform for corps.?

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"The great pleasure in life is doing what people say you cannot do."

Fair Tax, baby. :-)

Replaces all existing income taxes as well as payroll taxes with a single consumption tax. Pay a 30% tax on purchases of all new goods and services, excluding certain necessities, due to a "prebate." That's like a refund and it's offered at the beginning of each month so that certain purchases are essentially tax free.

1. Eliminates taxes on payroll and income.

2. Taxpayers get to keep their entire paycheck.

3. Taxpayers are taxed on consumption of goods and services.

4. ALL taxpayers are subject to the tax.

5. Retailers would collect and remit taxes to the Treasury.

6. IRS is eliminated.

I can live with that. LOL!

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"Politics is just show business for ugly people."

Wait until the analysis is somewhat completed....if they can do with missing caps (I think). It will be another lie presented by trump and repubs.

A 20% drop in home prices impacts everyone who is planning on selling their home at some point, and it certainly would have an impact on the economy.

First: No, I already accounted for that. The example (1M mortgage of 4% on 30-year, house worth 1.25M, houshold in 33% tax bracket....) has an interest payment of ~3.3K/mo. Principal payments raise it to ~4.8K/mo. I am only counting deductibility of interest and property taxes.

Second: Of course not, Thanks Prop. 13! Do you know anyone who lives in Illinois or Texas or New Jersey or Wisconsin? Lots of states have taxes ~2%, and most places have wealthy enclaves with all sorts of folks shoe-horned in there. That's okay, some of them will make it up with tax rate cuts (most of them won't) Here:

Lets figure the right tax rate by income group and be done with it.

They are trying to rush some tax changes through up here too. They started a consulting period in the middle of the summer and they kept talking about "fairness" but really meant to say "let's create more tax revenue for the government and stick it to small businesses".

I also can't stand how income tax has grown. In 1917, our Income Tax Act was introduced as a temporary measure to raise tax for the war and the entire document was 4 pages. Today, it is the Act alone is 2,000+ pages (very fine print on large paper) plus an infinite array of Tax Interpretation Bulletins. I get daily tax updates including court cases, new tax proposals etc.

And in that 100 year period, every single government promised to simplify tax, make it less complicated so the average person could understand it and to make it fair to everyone. With every budget or attempt at reform, it becomes more complex and has different ways to reward special interest groups.

I just read that part of Trump's plan is to allow churches to get involved in politics and still maintain their charitable status. They are replacing a law implemented during the Johnson administration. That's a perfect example of how what first appears to be simple will end up having more rules and regulations with some groups benefiting and others not.

n=1. I closed on a 30 yr fixed at 3.25% a month ago. Original approval at 3.5%, but we paid for half a point.

I would be curious to see what this would look like when all forms of state tax are added up, at least those that are easy to calculate (as opposed to fees like DMV registration, license costs, etc.). In Michigan we have a 6% sales tax (groceries, classified medical goods, and personal services excluded...although it's rumored that this may grow to 7%), the eighth highest property taxes as a percentage of income, and an income tax of 4.25%, not including certain municipalities that charge city taxes. Texas is #6 for property taxes as a percentage of income, for example, but I would have a hard time believing that their overall effective tax is lower than Michigan's. It's a good thing that overall cost of living is reasonable in my area, because it otherwise feels like the taxes are a killer...which is another good justification for purchasing a lot of non-taxed items from online retailers who don't have a Michigan presence.

Wait until the analysis is somewhat completed....if they can do with missing caps (I think). It will be another lie presented by trump and repubs.

What about business owners? Do they pay tax on unsold items? What about resale to other businesses? What is a consumer item vs wholesale? Used goods? I could see a huge black market for stuff.

At least the Mexicans will love it. A wall won't even be needed anymore. You'll probably see lots of people emigrating to Mexico.

I would say the two obvious changes to the bill should be to eliminate the “marriage penalty” for the 35% bracket (why only that bracket?) and change the $10,000 property tax deduction to $10,000 state tax deduction (why single out one form of taxation over any other?).

Some Republicans in blue states immediately expressed their opposition to the bill.

“I cannot support the current version of the tax bill because it will increase taxes for many of my constituents to subsidize tax cuts for the rest of the country,” Rep. Peter T. King (R-N.Y.) said. “My job is to protect the taxpayers of Long Island and New York.”


amen amen amen

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"The great pleasure in life is doing what people say you cannot do."

Sorry, all you pendejo gringos have to stay here. My name is now Antonio, so I'll be set. ;-)

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"Politics is just show business for ugly people."

Now that I think about it, this would be the perfect way to get Mexico to pay for the wall.

Is that loophole for hedge fund managers being repealed?

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“Read the transcript.”

So, we're going to borrow our way to prosperity?

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“Read the transcript.”

No habla ingles. Gringo. ;-)

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"Politics is just show business for ugly people."

If you go down there, let me set you up con mi familia en Durango....

I count 27 'pubs in the House from NY, NJ and CA. I am pretty sure if any of them plan to ever get re-elected they are not voting for a tax bill that cuts exemptions for state/local taxes.

Add in Oregon/Minnesota/Iowa and a few others.

Carried interest holding period goes from 1 to 2 yrs as they said on tv this morning, but one expert panelist said it was basically bs and rep Kevin Brady did a lalala, whatever. 1 trillion goes to business over decade, 300 billion to individuals and 200 billion to large estates per general discussion. Really helping Main Street....drain the swamps what a joke! All aimed for oligarchy.

I have an aunt and an uncle who own a ranch outside Nuevo Laredo and my brother-in-law and sister-in-law have been missionaries, operating a school, outside Mexico City for 20 years now. I could always become a vaquero, or help my in-laws with the Bible thumping/teaching thing. Whichever one pays better. ;-)

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"Politics is just show business for ugly people."

Speaking of AMT, that's gone. That should make a lot of upper middle class taxpayers happy.

Planning on getting divorced and have to pay alimony? The plan eliminates the alimony deduction for new divorces (existing divorce agreements are grandfathered).

And you are not paying attention to what I am saying. You cannot take one statement I said without looking at all I have said on this issue...and this is why our country is so fucked.

Your right, what we actually need to do is increase taxes and increase complexity - that will fix out problems.

Honestly, I think the mortgage interest deduction should have been eliminated entirely. I realize there are some pricey home markets out there (and I still have an associate real estate broker's license, so I know a little about how the market operates) but some of that is due to how the deduction encourages rent seeking on the part of homebuilders, real estate brokers, mortgage brokers and lenders and it also encourages people to sometimes maybe buy more home than they should.

Many of these high-price locales also have far-too-restrictive rules for housing development, which has artificially pushed prices upwards. The Bay Area of California is one such spot. Seattle is another.

In San Francisco -- which also has rent control of apartments in buildings built before 1979, I believe -- there's little land left on which to build. That's a problem all around the Bay Area, where commute times can be quite long as people seek more affordable housing that's on available farther and farther away from the city. Add in zoning restrictions and a host of other housing development barriers (including some NIMBYism on the part of San Franciscans when it comes to affordable housing developments) and there's a perfect housing storm, so to speak.

Republican tax plan would hit Seattle, Eastside homebuyers dealing with pricey market | The Seattle Times

How Seattle Killed Micro-Housing | Sightline Institute

Seattle agrees to lower height limits of new houses on small lots | The Seattle Times

There's A Profoundly Simple Explanation For San Francisco's Housing Crisis | HuffPost

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"Politics is just show business for ugly people."

The mortgage interest deduction needs to go. I mean if this deduction is ok, why don't we add back credit card interest? So sick of all the sacred cows.

I didn't respond to you yesterday cause I decided to work, well, cause, I have to pay my taxes.

But, the Fair Tax is the purest and best idea on taxes I have ever heard. The only ones who will comment on it negatively are folks who haven't really studied it.

"Change is hard," as someone I don't know once observed. ;-)

I think a Fair Tax system could work but it would require some effort and some faith. And both of those seem to be in short supply when it comes to jettisoning this quite-frankly-insane tax system we currently labor under.

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"Politics is just show business for ugly people."

It should completely go, I agree.

Most democrats will be against this reduction from 1 mil to 500k big time. The expensive and heavily inflated markets are generally very liberal. The democrats will see this as a direct attack at them.

I think all deductions and credits should go, but it should be phased out over 10 years. Even the standard deduction, just replace that with a 0% tax bracket for the first $10,000.

Pretty much agree, the implementation is highly deflationary for housing markets (not just at the high end). They needed it, because the math didn't work out, but a sharp recession in housing isn't going to help balance out anything, and will blow a bigger hole than the Bush cuts. I've advocated for a reduction to 500K here, implemented gradually. The changes in deductions when implemented quickly will also slam churches/schools/non-profits.

OK, I will agree to the phasing over 10 years as a compromise, just to make some progress.

Why lower the 0% bracket to just 10K? This latest plan has it higher.

Whatever works. All the rates and brackets would have to be adjusted if all deductions are eliminated.

I also think the marriage penalty should be removed.

What about the deduction for charitable donations? That could potentially hurt a lot of charities. Even phased out.

If we change things to remove social engineering from government revenue generation there will be some losers. Lump large families, home owners, high tax states and electric car buyers in with charities. Phasing it in over a decade will avoid shocks but it will still hurt.

And that includes stripping tax exempt status from churches, etc? Not against that, just establishing the boundaries.

Fair question. The elimination of credits and deductions was only in respect to personal income taxes.

I don't have any firm thoughts on things like sales taxes, corporate taxes or how to handle non-profits.

Why lower the 0% bracket to just 10K? This latest plan has it higher.

I agree. 10k is about $5/hr @40hrs/wk. There are preschool teachers who make minimum wage or about $20k per year and I always found it crazy that they would have to pay anything while living on that tiny amount.

Sorry, please specifically define the "marriage penalty." There are a raft of marriage benefits/costs embedded in the tax code, and this new ""plan" pretty much keeps a web of policies.

Right now, ~30% file Sch A. If standard deduction is increased to $24k, that percent is going to drop a lot along with being able to deduct donations.

Wrong quote, but the marriage penalty I am talking about is this:
Once a couple starts to make $260,000 total, they are penalized for being married. Two unmarried people living together would be taxed less assuming equivalent incomes.

Change the 35% tax bracket to something like $150,000 for individuals and $300,000 for married couples and you eliminate the marriage penalty.

Yes, but the 401K deduction allows married couples to deduct 48K/year (over 50 years old), which is a single income earner penalty. This stuff is embedded everywhere. Additionally "Marriage penalty" would be far more accurately termed "two income family penalty". a single income earner gets a huge tax benefit by hitching up.

Well if we get rid of all deductions and credits, then we should get rid of join returns.

I give 10% to my church and this would continue as well as other giving...I think giving will stabilize and folks that only give because its a tax deduction don't make up that much at the end of the day.

I was reading yesterday somewhere that they are tinkering with S Corps. It appears that service base business will have to count all the income after expenses as salary, which means FICA taxes on the entire amount. I know many split the amount between salary and distributions now. This could be a pretty big tax hit to many small S-corps, like me.

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_________________________________
I'll be what I am
A solitary man

What about homes that have only one earner...? My wife stays home and has till now, not sure what she will do with all kids in college. I can't deduct 48K in 401K because she doesn't work. Yet she will need to eat when I retire, so this is penalty on families like ours. This is another reason why all deductions and credits need to go.

... or you wife could find a part-time job which offers a 401K plan and funnel 90% of her income into the plan, deferring all taxes. The 401K deduction is there to incentivize higher labor participation rates.

OK, looks like we got this all pretty much figured out.

We just need a volunteer to type it up and then we'll fire this off to Trump. We need a good sounding think-tank name so like the "American Heritage Lavender Room Enterprise for Tax Policy."

Stuff, indeed.

Think of the child tax credit more as a penalty for not having kids and it doesn't seem so fair.

Sin taxes on gambling, alcohol and tobacco? Who do you think pays the majority of those taxes?

Kahneman, Thaler et al have written lots of interesting stuff on taxes and behavioral economics.

but as this thread shows, i doubt we'll ever get significant buy-in on any plan.

Funny, I thought it was to help us fund our own retirement with pensions going away for most.

The marriage penalty is real, because I make a good living, my wife gets taxed at my highest rate on dollar one, whats the point of her working? In fact this is a disincentive for work force participation. While I get the strategy you suggest, its exactly that, a strategy organized around the tax code which has been my argument the last 24 hours on this thread...

Look, everything can be seen as an evil "strategy". Getting married places rich single folks in much better tax situations, whether you acknowledge it or not. The tax code SHOULD in some ways incentivize positive certain behaviors (or at the very least not disincentivize....).This includes charitable giving, getting married, having two incomes in a household, home ownership.... If a secondary income in a household were tax-free up to some level, that would simply be a more straightforward way to avoid the big hit on secondary incomes. It would still be an obvious convolution of the tax code, but it would (hopefully) lead to higher labor participation. I guess we can selectively slam portions of the tax code while not slamming others. Seems pointlessly ideological, why curse the dark when you can turn on a light switch? If your wife ends up working, find a place with a good 401K program. No need to thank me.... ;).

Well, how do you balance that against the spouse treatment for SS? You pay in the same as a single person and get 1.5x the benefits?

And people with massive medical bills.

This is the cruelest cut.

I agree something needs to be done about that. Medical bills aren't social engineering. But that solution should really should come out of a health care bill not a tax bill.

Yea people like me who have the misfortune of getting Cancer will have to file bankruptcy or lose everything they have.

Pulling the rug out from under people in the mean time seems cruel and disruptive.

This deduction was created during WWII and we’re just going to stop it with an empty promise to fix it in a healthcare bill?

Should a tax "reform" bill simply have a built-in $1.5T expansion of the deficit? (under the most optimistic scenarios)

I don't balance it, I agree, its wrong. I have pointed out multiple examples you are just looking at one. All these deductions end up with lobbyists and folks that simply can't live without them - I call BS on all of it. SSI and Medicare and how they are funded should be changed.

Pick a way to tax, either income or Sales tax. Then eliminate ALL deductions and credits. Lets get some transparency into who pays and what they pay. But here is the big problem and the lie - the middle class is the one getting the majority of the benefit. You get married and have a couple of kids and buy a home you pay next to NOTHING. I used an example from 4 years ago where I had a down year but still made over 100K - I ended up paying a 2% effective tax because of all the goodies.

WRONG. I get the "let's get simple" approach, but let's not get stupid. If one places the entire tax burden on one single area, one massively incentivizes tax avoidance in another area. Extremely high individual rates? Go corporate/pass-through (or off-shore). Sales tax? Black market! etc. There is a positive approach to having several smaller revenue streams to reduce the incentive for tax avoidance. That doesn't mean that there shouldn't be more transparency.

Regarding middle class tax levels, I agree, but you did pay payroll tax on that 100K, right? That matters, and cannot be ignored.

There is another positive aspect in that it doesn't make government revenue highly sensitive to fluctuations in any one area of the economy.

Those states whose revenue depended highly on sales tax experienced a lot of drama during the Great Recession as sales volume decreased but government expenditures remained relatively constant (or even increased with jobless claims). Those that depended on a mixture of property tax, income tax, and sales tax tended to have smoother sailing.

(I have no proof of this on hand, but have read it in several places.)

“It’s a layup,” Rep. Kevin Cramer (R-N.D.)


(Referring to how easy it's going to be to pass the bill.)

Really, dude? That's just giving locker room bulletin board material to the legions of swamp creatures about to crawl out of the swamp to try to carve out their own precious hunks of meat. Not to mention since now there's news that Trump has been lobbying to use the tax bill to kill "ObamaCare" that will reduce the likelihood of a single Democrat crossing the aisle, meaning the Senate will be at its very narrow margin of 2. Which we've seen is no sure thing.

I am not unreasonable...I can live with different streams, if they can be much more transparent. We could move to a national sales tax to cover Medicare and SSI and replace FICA taxes.

Not to change the subject, but this really is about income inequality, which in my mind is more a function of a modern economy with technology destroying many middle income jobs - but one half of the country simply has to have a villain - rich folks and its not about how they use the tax code its becoming more about how the poor and middle class use the code to pay little to no taxes.

I'm not a tax expert (though I think my wife and pay too much ;-), but it looks to me like almost everyone's going to have some skin in the tax game if this proposal can make it to the Orange-Haired Wonder's desk. Most of the sacred tax cows are going to be slaughtered or at least somewhat injured, in other words. These sacred cows all were born as the result of the progressive tax system we now have and the way in which it practically encourages carveouts and exemptions.

Like I've said: I'd like to see a Flat Tax or a Fair Tax. Obviously, that's not going to happen and this tax reform proposal is probably the best bet to get some actual reform of the tax system in place, something that's sorely needed.

We make too much income, the wife and I, at present to qualify to use it -- but I'd love to see the day when our tax filing requires only a postcard-sized form to complete.

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"Politics is just show business for ugly people."

The proposed plan is still very much progressive.

And sales taxes have plenty of their own carveouts. I'm not sure how one encourages that over any other plan.

Ok, what parts of the plan are going to grow the economy?

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“Read the transcript.”

Also 100-percent right about this one. Some include exemptions for so-called "necessities" and whatnot. Then there's the matter of making sure businesses collect and then remit taxes.

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"Politics is just show business for ugly people."

Looks like some colleges -- those with endowments greater than $100,000 per student... about 140 in total -- would be subject to a 1.4% tax on investment income. Stand by for a lot of squealing from much of the Ivy League. ;-)

“Deep within the plan — look here, on Page 75 — is the language that spells out which institutions would be affected. The bottom line: Only the most-affluent colleges need worry. Colleges would be subject to the tax, set at 1.4 percent of net investment income, only if their endowment assets total at least $100,000 per student.”

TaxProf Blog

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"Politics is just show business for ugly people."

Yep, there are a lot of bizarre "let's NOT simplify the tax code after all" things buried on there. Why is that there?

What will be louder, the squealing of some universities, or the deafening silence of folks who endlessly ride the high horse of "fair tax"? It seems like the goals of hitting major cut-offs for the super-wealthy (raise 39.6% rate to 1M, 20% corporate rate, ending estate tax, $1.5T deficit) creates a need to claw back revenue. Virtually all middle-class gains are funded by the increased debt.

Some analysis from Forbes:

"The analysis, issued today by the Tax Policy Center (a joint venture of the Urban Institute & Brookings Institution) projects that over the next decade the Trump/GOP plan would actually increase taxes on non-business individual income by $470 billion, while reducing taxes on business income by $2.6 trillion, and federal receipts from estate and gift taxes by $200 billion.

In dollar terms, 53% of the cut would go to the top 1% and 30% to the top 0.1% (those with expanded cash income of $3.4 million or more). Put another way, the top 1% would see an average $129,030 tax cut and the top 0.1% would save an average of $722,510, while those in the middle quintile would save an average of $660 per family.

Meanwhile, 12% of taxpayers—and more than a third of those making between $150,000 and $300,000 ---would pay more in 2018"