tax bill

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madhatter
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tax bill

Post by madhatter »

http://www.zerohedge.com/news/2017-12-1 ... l-tax-bill" onclick="window.open(this.href);return false;
Here is a full summary of what we know as of this moment is in the Republicans' final tax bill:

BUSINESSES

CORPORATE TAX RATE: Falls to 21 percent from 35 percent. The House and Senate bills, as well as Trump, had earlier proposed 20 percent. Going to 21 percent gave tax writers more federal revenue needed to make the tax cut immediate. U.S. corporations have been seeking a large tax cut like this for many years.
PASS-THROUGH BUSINESSES: Creates a 20 percent business income deduction for owners of pass-through businesses, such as sole proprietorships and partnerships. The House had proposed a 25 percent tax rate; the Senate, a 23 percent deduction.
CORPORATE MINIMUM: Repeals the corporate alternative minimum tax, which was set up to ensure profitable companies pay at least some federal tax.
INDIVIDUALS

TOP INDIVIDUAL INCOME TAX RATE: Falls to 37 percent from 39.6 percent. The House had proposed maintaining the 39.6 percent top rate and condensing the current seven tax brackets to four. The Senate had proposed cutting the top rate to 38.5 percent and maintaining the seven brackets.
PERMANENCE: The expectation is individual tax rates will snap back to current levels in less than 10 years. The individual tax rates in the House bill were permanent. The individual tax rates in the Senate bill would have expired after 10 years.
STATE AND LOCAL TAX (SALT): Both the House and Senate had proposed scaling back a popular individual deduction for state and local tax payments by limiting it to property-tax payments and capping it at $10,000. The compromise bill is expected to keep that cap, but also allow for continued deduction of state and local income tax payments.
MORTGAGE INTEREST: Caps the mortgage interest deduction at $750,000 in home loan value, down from the current $1 million. The House had proposed a $500,000 cap. The Senate bill left it at $1 million.
ESTATE TAX: Roughly doubles the exemption from the federal estate tax on inherited assets to about $11 million, but leaves the tax in place, mirroring the Senate proposal. The House bill had raised the deduction, but also entirely phased out the tax.
OTHER PROVISIONS:

OBAMACARE MANDATE: Repeals a federal fine imposed on Americans under Obamacare for not obtaining health insurance coverage. The House bill did not repeal the Obamacare individual mandate.
ANWR DRILLING: Allows oil drilling in Alaska's Arctic National Wildlife Refuge. The provision was sponsored by Republican Senator Lisa Murkowski of Alaska.
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Kpdemello
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Re: tax bill

Post by Kpdemello »

As is typical in politics, this tax cut was driven by political and personal motivations rather than looking at real economics.

The theory of supply-side economics is that high tax rates are regressive and cause business/people to stop producing once taxed at a certain level. However, the progression isn't linear. At a certain point, taxes are no longer regressive and do not really discourage growth. See Laffer Curve: https://en.wikipedia.org/wiki/Laffer_curve" onclick="window.open(this.href);return false;

A 35% corporate rate is not regressive, and the empirical data suggests that this tax reduction will not pay for itself with further growth. What is most likely to happen is a huge tax reduction for big corporations and wealthy individuals with little corresponding benefit for the average joe, followed by growing deficits.

In short, it's a really stupid idea.
madhatter
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Re: tax bill

Post by madhatter »

Kpdemello wrote:As is typical in politics, this tax cut was driven by political and personal motivations rather than looking at real economics.

The theory of supply-side economics is that high tax rates are regressive and cause business/people to stop producing once taxed at a certain level. However, the progression isn't linear. At a certain point, taxes are no longer regressive and do not really discourage growth. See Laffer Curve: https://en.wikipedia.org/wiki/Laffer_curve" onclick="window.open(this.href);return false;

A 35% corporate rate is not regressive, and the empirical data suggests that this tax reduction will not pay for itself with further growth. What is most likely to happen is a huge tax reduction for big corporations and wealthy individuals with little corresponding benefit for the average joe, followed by growing deficits.

In short, it's a really stupid idea.
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Kpdemello
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Re: tax bill

Post by Kpdemello »

An excellent, well thought out response!

Sorry but I had to vent, sometimes political policy is so utterly stupid it boggles the mind.
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Re: tax bill

Post by Bubba »

When can we expect Powdr to announce raises/bonuses for staff and increased investment at Killington as a result of their tax cut?
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boston_e
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Re: tax bill

Post by boston_e »

I'm withholding judgement until I see how this plays out for me.

First instinct is that changes to the SALT will hurt those of us who live in high tax states with higher home prices, but perhaps the lower tax brackets will offset that difference.

Also being self employed (one person business), I'll be interested to see if / how my accountant changes the way i structure my taxes etc under the new law and how it may all help or hurt me.

If nothing else, I'm sure the accountants will love the added billable hours they will get for making all needed changes! :lol:
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Kpdemello
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Re: tax bill

Post by Kpdemello »

I thought the same thing, Boston, but from what I read it looks like the local tax/state tax deductions aren't eliminated, they are just capped. Also in my case the new, higher standard deduction is likely going to be higher than my prior itemized deductions so I will likely see a small benefit.

But my complaint isn't tax breaks for the middle class, of which I am solidly a member. My complaint is massive tax breaks to wealthy individuals and large corporations who don't need it because those breaks won't be likely to create very much benefit for the economy as a whole and will almost certainly increase the deficit.
Last edited by Kpdemello on Dec 21st, '17, 09:43, edited 1 time in total.
madhatter
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Re: tax bill

Post by madhatter »

Kpdemello wrote:An excellent, well thought out response!well it did sum up your post perfectly...

Sorry but I had to vent, sometimes political policy is so utterly stupid it boggles the mind.
who pays the tax on a pack of cigarettes, the consumer or philip morris?


https://www.cbsnews.com/news/commentary ... s-tax-cut/" onclick="window.open(this.href);return false;

80% of households will benefit from this...
AT&T, Comcast giving $1,000 bonuses to hundreds of thousands of workers after tax bill
AT&T is paying bonuses of $1,000 to more than 200,000 U.S. employees.
AT&T's CEO said it was in response to tax reform.
The House of Representatives on Wednesday sent tax reform legislation to President Donald Trump, who is expected to sign it soon.

AT&T said in a press release Wednesday that it would give more than 200,000 of its U.S. workers who are union members a special bonus of $1,000. The company also increased its capital expenditures budget by $1 billion in the U.S.
Later in the afternoon, cable and media company Comcast NBCUniversal (CNBC's parent company) made a similar move: it announced it would give special $1,000 bonuses "ased on the passage of tax reform and the FCC's action on broadband." Those bonuses would apply to more than 100,000 employees that are eligible and not in executive roles.

The company also made a big spending commitment to bolster its broadband plants, television and film production, and theme parks, pledging an outlay of at least $50 billion over the next five years.


meanwhile chuck schumer cried while nancy pelosi rambled incoherently....

FYI you can always pay the old rate or even send in an additional contribution if you feel so inclined...
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Kpdemello
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Re: tax bill

Post by Kpdemello »

Mr. Hat I'm not sure how your above post addresses any of my concerns. The theory of this tax cut is that it will create economic growth. According to actual economics, it is not likely to do that. I'm not sure why it is inherently a good idea to give wealthy individuals and large corporations a large tax break when the end result will be larger deficits with little macroeconomic benefit.

Again my issue is not with tax breaks for the middle class. I like those because I'm a member. My problem is tax breaks for people who don't need them, at the cost of higher deficits.
madhatter
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Re: tax bill

Post by madhatter »

boston_e wrote:I'm withholding judgement until I see how this plays out for me.

First instinct is that changes to the SALT will hurt those of us who live in high tax states sounds like that's a problem for your state to resolve,
or you can always move..
with higher home prices, but perhaps the lower tax brackets will offset that difference.

Also being self employed (one person business), I'll be interested to see if / how my accountant changes the way i structure my taxes etc under the new law and how it may all help or hurt me.

If nothing else, I'm sure the accountants will love the added billable hours they will get for making all needed changes! :lol: very few in the middle class have or need an accountant...
its a 10k cap, if your state and local taxes are more than that you are the "rich" your party has been desperate to raise taxes on...wish granted...
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'exponential reciprocation'- The practice of always giving back more than you take....
Kpdemello
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Re: tax bill

Post by Kpdemello »

madhatter wrote:its a 10k cap, if your state and local taxes are more than that you are the "rich" your party has been desperate to raise taxes on...wish granted...
This part of it is actually a really good idea. There's no reason someone with a $2.3 million home should be able to deduct all of their real estate taxes.

The trouble with it might be if that cap doesn't have a inflation adjustment component. If it doesn't, in 20-30 years we will likely all be over it.
madhatter
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Re: tax bill

Post by madhatter »

Kpdemello wrote:Mr. Hat I'm not sure how your above post addresses any of my concerns. The theory of this tax cut is that it will create economic growth. According to actual economics, it is not likely to do that. I'm not sure why it is inherently a good idea to give wealthy individuals and large corporations a large tax break when the end result will be you know this how?larger deficits spend lesswith little macroeconomic benefit.

Again my issue is not with tax breaks for the middle class. I like those because I'm a member. My problem is tax breaks for people who don't need them, at the cost of higher deficits.
pretty sure everyone would like to keep more of their own money...who are you to deny them?...

seems a number of large corporations have responded positively to the tax bill already as I noted above...

when you want less of something you tax it...

there's plenty of data available to support the growth policy objectives...
AT&T is paying bonuses of $1,000 to more than 200,000 U.S. employees.

The company also increased its capital expenditures budget by $1 billion in the U.S.
Comcast NBCUniversal (CNBC's parent company) made a similar move: it announced it would give special $1,000 bonuses "ased on the passage of tax reform and the FCC's action on broadband." Those bonuses would apply to more than 100,000 employees that are eligible and not in executive roles.

The company also made a big spending commitment to bolster its broadband plants, television and film production, and theme parks, pledging an outlay of at least $50 billion over the next five years.

80% of households will see an increase in their bottom line

Wells Fargo, Fifth Third Bancorp unveil minimum wage hikes after tax bill passage
Fifth Third and AT&T are paying employees special bonuses after getting tax cuts under the Republican tax plan.
Wells Fargo said Wednesday that it would boost minimum wages for employees to $15 an hour, following Fifth Third's similar announcement.


that's not macro?

https://www.cbsnews.com/news/commentary ... s-tax-cut/" onclick="window.open(this.href);return false;

I'll agree it was political that EVERY democrat voted against tax breaks for the middle class, as noted by that right wing think tank CBS...

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madhatter
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Re: tax bill

Post by madhatter »

Kpdemello wrote:
madhatter wrote:its a 10k cap, if your state and local taxes are more than that you are the "rich" your party has been desperate to raise taxes on...wish granted...
This part of it is actually a really good idea. There's no reason someone with a $2.3 million home should be able to deduct all of their real estate taxes.

The trouble with it might be if that cap doesn't have a inflation adjustment component. If it doesn't, in 20-30 years we will likely all be over it.
I'm gonna go out on a limb and guess there will be numerous changes over that period as need dictates...
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madhatter
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Re: tax bill

Post by madhatter »

https://www.bizjournals.com/sanfrancisc ... fc-ba.html" onclick="window.open(this.href);return false;
Wells Fargo (NYSE: WFC) said Wednesday that it will raise minimum hourly pay for its employees to $15 per hour, citing tax changes.
Dallas-based AT&T (NYSE: T) said it will pay bonuses of $1,000 to more than 200,000 U.S. employees in response to tax reform legislation, which is heading to President Trump’s desk for his signature. The telecommunications giant also said tax reform will prompt the company to make $1 billion in capital investments in the United States.
Cincinnati-based Fifth Third Bancorp (NASDAQ: FITB) said it will pay bonuses to more than 13,500 employees and raise the minimum wage for its workers to $15 per hour.
Chicago-based Boeing (NYSE: BA) tweeted that the tax legislation is spurring the airplane maker to pour $300 million into “employee-related and charitable investment as a result of #TaxReform to support our heroes, our homes and our future.”
Once the president signs the tax legislation, Boeing said it will provide $100 million for employee-matching gifts, $100 million for workforce development, training and education and $100 million toward enhancing the company’s workplaces.

“On behalf of all of our stakeholders, we applaud and thank Congress and the administration for their leadership in seizing this opportunity to unleash economic energy in the United States,” Boeing President and CEO Dennis Muilenburg said in a statement. “It’s the single most-important thing we can do to drive innovation, support quality jobs and accelerate capital investment in our country.”
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Philadelphia-based Comcast (NASDAQ: CMCSA) said it will pay $1,000 bonuses to more than 100,000 eligible frontline and non-executive employees. With this week's tax changes and the FCC's repeal of net neutrality, Comcast NBCUniversal Chairman and CEO Brian Roberts said the company plans to invest more than $50 billion over the next five years to upgrade infrastructure to expand broadband capacity and boost its television, film and theme park offerings. The company, which anticipates the investments will create thousands of jobs directly and indirectly, said it will offer more details in its earnings report in January.

Western Alliance Bancorporation (NYSE: WAL), parent of the Bay Area's Bridge Bank, told the Wall Street Journal that it will boost pay and benefits, largely benefiting lower-paid employees.

Wells Fargo will be the biggest beneficiary of the tax overhaul among the nation's seven largest banks, according to an analysis by Goldman Sachs (NYSE: GS). The country's seven largest banks, not including Goldman itself, will enjoy on average a 14 percent increase in earnings from the new tax law. But Wells will make out the best with an 18 percent boost to earnings, primarily because it generates most of its earnings in the United States, Goldman said.

Wells Fargo also said it will target $400 million in expanded philanthropy to community and nonprofit groups in 2018. By comparison, Wells Fargo donated $281.3 million to 14,900 nonprofits nationwide in 2016. That figure includes $19.1 million the bank donated to Bay Area nonprofits in 2016, ranking Wells as the fourth largest corporate philanthropist in the region, according to San Francisco Business Times research.

Wells also said that starting in 2019, the bank will target 2 percent of its after-tax profits to corporate philanthropy.

Wells Fargo said its expanded philanthropy will include targeting $100 million in capital and other resources over the next three years to support diverse small businesses and $75 million in 2018 to its promote its program fostering home ownership and neighborhood revitalization in low- and moderate-income communities.

“We believe tax reform is good for our U.S. economy and are pleased to take these immediate steps to invest in our team members, communities, small businesses and homeowners,” Wells Fargo President and CEO Tim Sloan said in a statement. “We look forward to identifying additional opportunities for Wells Fargo to invest.”
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Kpdemello
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Re: tax bill

Post by Kpdemello »

Couple of things.

First, just because a couple of large corporations promised some things and claimed it was because of this tax break

1) ...does not mean that the overall tax bill will have a large macroeconomic impact. A few hundred thousand people with an extra $1,000 in their pockets will not make a hill of beans worth of difference in a multi muti trillion dollar economy with 300 million people in it.

2) ...does not mean that the spending they promised was a) actually due to this tax bill and b) actually going to happen. I believe CEOs of major corporations about the same extent that I believe politicians.

Second, I cited to a wikipedia article that contained loads of empirical data about cutting taxes and the resultant lack of economic growth. Meaning, governments have actually tried this before and it hasn't worked in many cases. Cutting taxes to increase growth only works in certain circumstances, and I don't think we are in those. We are already in a period of growth, and taxes are already in the area where they are not regressive. In Reagan's era, the highest tax bracket was more than twice what we have today, and the country was experiencing stagflation. That's why Reaganomics (arguably) worked. We are not in the same situation today.
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