The republican President Donald J. Trump has been proclaiming that the current tax cut plans being developed by republican legislators in the US Congress, are actually a bad deal for the rich.
And which planet are we on, where the president thinks that Americans don’t get it, that they are being flim-flamed?
The US Senators are now working on an alternate tax cut proposal than the one being pushed by the US House of Representatives. The goal is to have their work product ready by the time the House passes its version of the tax cut law. Then both houses of the US Congress can endeavor to agree on a conference/ reconciliation package which can then be quickly passed to be signed by the president before Christmas 2017.
The US Senate has allotted itself to incur a $1.5 trillion price tag per current budget rules to pay for this bill. My guess is that the US Senate’s version will have enough gimmicks to create a tax proposal that keeps within this parameter but which allows for some concessions so that the leadership can count on a few more votes.
The middle class has been granted a nominal tax cut. For example, a family of four with an annual income of $59,000 would save that family about $1200.00. But there are a lot of sleight of hand maneuvers which dwindle down this supposed savings.
As per the 9/28/17 Hill report by Hunter Blair, “The most incredible part is how hard the plan tries to hide just how stingy it is to the broad middle class.”
“The plan includes a much-touted doubling of the standard deduction. If it stopped there, it would deliver a straightforward tax cut to the broad middle class. Instead, the plan also ends personal exemptions, which by itself largely neutralizes any potential tax cut for most middle-class families. On top of this, the plan raises the lowest tax bracket rate from 10 to 12 percent.”
“The plan also increases the Child Tax Credit. By itself, again, this would genuinely constitute a middle-class tax cut. But the authors couple it with the elimination of the personal exemption for dependents, which neutralizes this cut for most middle-class families.”
“On average, for households in the broad middle class, these changes will probably end up as a wash on net. The tax increase and ending of personal exemptions claws back most of what the doubled standard deduction would’ve given low- and moderate-income households, and the increased Child Tax Credit is clawed back with the elimination of personal exemptions for dependents.”
THE BELOW INFORMATION PERTAINS TO THE US HOUSE’S TAX PLAN MADE PUBLIC AT THE END OF SEPTEMBER 2017. THE SENATE’S BILL IS STILL OPEN FOR INPUT.
It is important for we who are part of the resistance to start contacting our senators to insist that at the very least, the tax cuts be legitimately more targeted to the middle class instead of another “smoke and mirrors” plan which is designed to be a pay back to “big money” donors.
TO FAX: Resistbot will do it all for you. Text “RESIST” to 50409 or message Resistbot on Facebook and it will walk you through the steps to fax your Senator and will tell you when your fax has been delivered.
The main US Senate phone line 202-225-3121 (202-224-3121) or YOU CAN FIND PHONE NUMBERS FOR EVERY SENATOR HERE. or U.S. Senate: Senators of the 115th Congress.
Remind the senators that we are aware of the US corporations being awash with profits and cash, but for the past decade, their executives have failed to share the spoils with their front line workers in the form of increased wages,increase in bonuses, increased benefits like helping young employees with paying off student loans. So the question is, how are these same companies’s actions going to be altered to be more generous to their employees by simply giving them more cash without any requirements?
And we are cognizant of the fact that most companies pay taxes at an average rate of under 19% because of loopholes instead of the advertised tax rate of about 35%.
As per a 1/ 20/ 2016 NY Times report by Adam Davidson, “But even if you accept all these reasons (companies sitting on large piles of cash), we are still left with an enormous puzzle. Companies like Google and GM are holding on to far more cash — many times more — than could possibly be explained by emergency funds and tax efficiencies and M.&A. intimidation put together. Lee Pinkowitz, a professor at Georgetown, told me that finance economists agree that there is a puzzle here but break into two distinct camps over the cause. One camp believes that a large cash hoard is a sign of an unhealthy company. Maybe its whole industry is doing so poorly that there is nothing worth investing in; maybe it’s because executives are up to something shady, stockpiling cash as a personal war chest to mask poor decision-making and protect their jobs (cash in the bank, suddenly deployed, can make a firm seem more profitable than it actually is). The other camp doubts that the free market could be allowing executives to hold all that cash if it were purely for their own benefit.” See: Why Are Corporations Hoarding Trillions? – The New York Times
The below fact checking report does not cover what the president frequently promised on the campaign trail over and over again, which was to end the “carried interest” loophole for hedge fund managers. This is complicated to explain in detail. But in short, the hedge fund managers are allowed to have part of their profits derived from investing other peoples monies, taxed as capital gains where the tax monies owed is significantly less than when the profits are taxed as income.
As per a November 2017 Bloomberg report by Rich Miller and Kyunglin Woo, “Amid all the controversy and questions surrounding President Donald Trump’s tax-reform blueprint, one thing seems pretty clear to most economists: It will increase the federal government’s budget deficits.”
Here is the rest of the story….
On November 9, 2017, Glenn Kessler of the Washington Post penned the following analysis, “Trump’s claim that the House GOP bill is ‘so bad for rich people.”
“The deal is so bad for rich people, I had to throw in the estate tax just to give them something.”
— President Trump, in reported comments to Senate Democrats, Nov. 7, 2017″
“We do not normally fact-check secondhand comments, but the White House does not dispute this phrasing. Moreover, it cries out for a fact check. Is there really nothing in the House GOP tax plan for the rich but repeal of the estate tax?”
“As we have noted, the wealthiest Americans pay most of the federal income taxes. So, naturally, any reduction in tax rates is going to mostly benefit wealthier Americans. The House plan does expand a child tax credit and double the standard deduction to shift some tax savings to working Americans. Even so, any broad-based reduction in taxes is still going to mostly benefit the wealthy.”
“According to Treasury Department data, the top 10 percent of income earners in 2016 paid 80 percent of individual income taxes. The top 20 percent paid 94.8 percent. The top 0.1 percent paid an astonishing 24.5 percent of taxes.”
“Second, what’s a definition of “rich”? As the New York Times Upshot reported, people define “rich” depending on how much money they make. A YouGov survey found that households earning between $30,000 and $60,000 believe “rich” was $394,000 — while households making above $120,000 thought it was $501,000. Given Trump’s claimed wealth, he might define “rich” as even higher.”
“Both the nonpartisan Joint Committee on Taxation (JCT) and the Tax Policy Center (TPC) have published analyses of how the tax cut would benefit taxpayers in the highest income brackets — $1 million a year or higher. As expected, they tend to do better than other income groups.”
“Here, TPC shows that by 2027 the top 0.1 percent ($5 million and above) would experience the biggest percentage change in after-tax income and the biggest change in the average tax rate. The top 1 percent (about $1 million) would get 47 percent of the total reduction in taxes.”
“The JCT analysis (which does not include the impact of the estate tax repeal) shows how the taxpayers with incomes over $1 million would see their tax cuts grow over the course of the tax bill, from 2019 to 2027, while all other income groups would see their tax cuts dwindle or even turn into tax increases. (This is because of expiring provisions for the middle class that Republicans claim would be retained in future tax bills.”
TPC came to a similar conclusion, showing the after-tax income went up for the top 0.1 percent over the course of the bill, while it shrank for every other income group.
“Not everyone in the upper echelon is a winner. TPC found that nearly 31 percent of the tax units in the top 0.1 percent would face a tax increase — but that’s about the same as every other income group except for the lowest-income taxpayers.”
“The rich do well.”
“Alternative Minimum Tax repeal. The AMT increasingly has snared families in the upper middle class, especially if they live in high-tax states or have many children. The House bill calls for eliminating the itemized deduction for state and local taxes (except property taxes), as well as the personal/dependent exemptions, which are key add-ons when calculating the AMT. So it’s possible that for many people it would be a wash, or even a net loser, depending on whether a tax filer lives in a state with high taxes.”
“But for the rich, the uber-rich, the AMT can be a real burden. In 2014, the top 400 taxpayers paid nearly $700 million because of the alternative minimum tax, nearly 2.5 percent of the total, according to IRS records.”
“Repealing the AMT would reduce revenue by nearly $700 billion over 10 years, according to the JCT.”
“New pass-through rate. This sounds arcane, but it could mean big gains for passive investors, including more than 500 Trump entities, according to our colleague Steven Mufson. The JCT says the provision, which will slash the top rate from 39.6 percent to 25 percent for pass-through entities, will reduce revenue by $448 billion over 10 years.”
“A host of small and medium businesses — including service providers such as doctors, lawyers, dentists, architects and accountants — would be blocked from obtaining any benefit. But it would be a boon for NFL owners and also Jeffrey P. Bezos, currently the world’s wealthiest man and owner of The Washington Post (which is part of a pass-through entity called Nash Holdings). The billionaire Koch Brothers would also benefit. Officially, the House bill would levy a 39.6 percent rate on incomes of couples over $1 million, but this provision would allow the rich to sidestep that rate and instead be taxed at a much lower rate.”
“Estate tax repeal. Trump suggested it was necessary because the rich do so poorly otherwise. As The Fact Checker reported, however, the estate-tax provision is more generous than Trump’s own campaign plan. That’s because it essentially allows heirs to avoid paying any taxes on gains in value that took place when an asset was held by a decedent. So potentially tens of billions of untapped capital gains would remain beyond the reach of the U.S. government. Repealing the estate tax, paid by just 5,500 estates a year, would reduce revenues about $35 billion a year after it takes effect in 2024, according to JCT.”