morpeth

Such partisan responses do nothing to further understanding, nor take into account neither party has a monopoly on hypocrites. As far as the "pretense" there are certainly Senators who believe in this approach, some who don't but feel it is better than the alternative, and yes probably a few who think about their re-election and whether this will boost their chances for re-election either from votes or money to buy votes. Most of these Senators on both sides of the aisle have limited understanding of economics but the justification I hear is the Reagan and Kennedy tax cuts, though I wrote I think the situation is distinctly different now than during those eras. Comments about the big bad republicans or big bad democrats to me is the whole lot should be thrown out with term limits.

I quite agree eliminating the deductions, if that included building in a better safety net for the poor and working poor would make more sense. I also agree this silly emphasis about reducing the bands as a way to "simplify" the tax code is rather silly by itself.

morpeth

I hadn't thought it that way, less insured means less subsidies anyway. I would love a Senator to introduce a bill that no Senator was allowed to have health insurance until they resolved this health insurance mess like every other industrialized country seems able to do- bet then they would find a solution quickly.

MidAtlantic

Some interesting examples of the impact of the tax plan in this article. Of course, it is possible to dream up an infinite number of scenarios, but these do not indicate more money to rich people.

How your taxes will change under the GOP tax plan depends on many factors - Dec. 18, 2017

Owen778

I only started paying attention to the details of the new tax bill once it looked almost certain to be signed by both the House and the Senate.

I generally like the articles put out by the Tax Foundation, since they tend to be fiscally liberal and in favour of simplifying the tax regime, while remaining neutral on social issues. They actually model changes as net positive for the economy and deficit, once growth is accounted for.
https://taxfoundation.org/final-tax-...ails-analysis/

This surprises me, though. Comments from the great majority of business leaders recently imply that most of the increased profits derived from reduced corporation taxes will be distributed to shareholders, not reinvested in businesses. This doesn't seem to be included in the analysis I linked, and it is something that will both reduce the economic impact and greatly increase the benefit for the top 1% income group.

Giantaxe

Exactly. We know from the Reagan tax cuts of the 1980's that "trickle down economics" is pretty much a fiction.

Giantaxe

There is no example in that article of "rich people".

https://www.bloomberg.com/news/artic...ers-study-says

https://www.bloomberg.com/view/artic...tax-reform-fog

Owen778

There is, $500k income is big in almost anyone's book. But it's to make the point that rich people who pay high state taxes will see a big federal tax increase. And the biggest benefits to the rich will come in the drop in corporation tax rates, both directly and indirectly through the stock market.

And yes, I can't see any justification for a tax break for real estate investors either, especially those with few employees. It's not like real estate investing is currently unprofitable.

Giantaxe

No, they won't, because under current tax law, above certain income levels, deductions are phased out:

https://www.williams-callan.com/blog...hase-out/37025

So if your income is above a certain level, you get a maximum of 20% of your deductions anyway, meaning the state and local tax deduction limitation makes a relatively small difference to them. But you do gain from other provisions in the tax bill, most particularly the lower top tax rate and the ability of higher income individuals to use "pass through" entities to shield 20% of their income from any taxation at all. As that Bloomberg article says about the top tax rate change:

"By itself, that change would save people $2,600 on every $100,000 of taxable income they earn above $600,000. (In 2015, about 18,000 top earners reported ordinary taxable income of more than $11.6 million on average, according to data from the Internal Revenue Service. Apply the proposed new top tax rate to those numbers, and the average one-year tax break for that group is more than $287,000.)"

Agreed. Bottom line is that this tax bill is a gift to the very wealthiest, i.e. the segment of the population that has seen the biggest increase in income/wealth accumulation anyway. Really, this is terrible public policy wrapped up as a "middle class tax cut".

Owen778

I agree, but I will point out that there are several restrictions on getting that 20% deduction. I expect that a lot of the advisors to the ultra-rich will find ways to still get the deduction, but investment income is specifically excluded.

Anian

It seems to assume that all benefits will go back into the US economy and completely ignores that the foreign investors will be taking at least some of their profits out of the US. Such a huge flaw when you consider that the flaw is multiplied for every successive year.

Giantaxe

Right, but I suspect there is going to be a wave of LLCs formed next year...

Owen778

I do agree with you that the corporate tax changes partly provide a benefit to foreigners, while changes to individual taxes would exclusively provide a benefit to US taxpayers. However, I also think your assumptions are flawed: If the tax changes make investing in the US more attractive, foreign money is likely to flow into the US on a net basis, not out of it, so helping the economy grow further.

Owen778

Undoubtedly. I don't see any justification for it myself. And that's true for many of the changes in the new tax plan that don't impact much of the overall population.

I do wonder if the economic models ignore likely changes in taxpayer behaviour, such as the increase in the use of pass-through corporations.

Giantaxe

I am going to bet that these changes increase the deficit by more than is projected. And then that will be used to cut "entitlements".

Hiro11

In my mind, cutting corporate taxes is unquestionably a great idea that's long overdue. The rest of this stuff I'm less sure about.