Friday, November 3, 2017

GOP Releases New Tax Platform: More Class Warfare, More Redistribution & Greater Reliance on Fewer Americans to Foot the Bill

There certainly are some improvements in this plan but it really reminds me of the whole healthcare situation.  It's been watered down immensely from what was originally promised as it is nowhere near a revolutionary cut.  Instead, it does offer some quality cuts for folks making less than about $80,000 a year.  But on the whole, our tax code will continue to be overly complicated and chock full of loopholes and nuances designed to pick some winners and losers while funneling far too much money through Washington D.C.  Here is a smattering of some of the bad news from quality publications. 

From the Wall Street Journal:
The dispiriting news is on the individual side. The House would double the standard deduction to $12,000 for individuals and $24,000 for married couples. This would improve simplicity for millions, and it compensates for the bill’s elimination of the personal exemption. But nearly half of American filers already owe no income taxes, and the larger deduction would make the federal fisc even more dependent on a smaller pool of taxpayers. 
This is far better than the House bill’s new “family credit,” which increases the child credit to $1,600 from $1,000 in a forlorn attempt to appease the income redistributionists of the right like Senators Mike Lee and Marco Rubio. The credit would also offer an additional $300 for each parent and another $300 for each “non-child dependent.” The credits would phase out for married couples at $230,000 of income. Does anyone think a mid-level manager at J.P. Morgan deserves a subsidy to raise children? 
The House also gradually makes more of the $1,600 credit refundable. In other words, this will be a check in the mail for those who owe nothing in taxes, which discourages work. The family credits cost $640 billion over 10 years in lost revenue with zero growth payoff. To make up the difference, the House keeps the top personal rate at 39.6%, on top of the 3.8% ObamaCare surcharge that Republicans failed to repeal. This would become the fourth tax bracket and kick in at $1 million for couples—half that for individuals—with 12%, 25% and 35% brackets below. 
This top rate is a surrender to Democratic class warriors, though Republicans also fear that President Trump would sandbag them. No Members want to vote for a lower top rate and then have Mr. Trump tweet that they’re “mean,” as he did on health care. This is where presidential flightiness and lack of principle have a policy cost. Ideological surrender also gets Republicans nothing politically as Democrats are still attacking the House plan as a sop to the rich....  
The overall impact of the individual tax changes is little reform but more income redistribution. The long-term damage to the tax-cutting cause will also be considerable. Adding credits and deductions for individuals makes rate-cutting that much harder since the affluent pay the vast bulk of all income taxes. The divorce of “pass through” and personal income rates will also make it even harder to reduce individual tax rates below 39.6%—ever.
From Rand Paul via LifeZette
"For the individuals, it's not as good as I would like. I would like to see every individual up and down get a lower rate, and particularly on the top part of the spectrum because the top part of the spectrum pays most of the taxes," Paul continued. 
But the Democrats have been particularly effective in pushing the narrative that tax breaks for the wealthiest Americans disadvantage poorer Americans, and many Republicans have found themselves convinced by portions of these emotional arguments, Paul suggested. 
"We have to understand that the owners of our businesses — the people we work for — are richer than us. They pay more taxes," Paul said. "But if you lower their taxes, they will either buy stuff or hire more people. If you raise their taxes, it goes into the nonproductive economy, which is Washington, D.C., and it will be squandered." 
"So really, even if rich people get a tax cut, we should all stand up and cheer because it means more jobs for us because you're leaving more money in the private sector," Paul continued. "So I'm one of the few that will stand up on TV and say everybody's taxes should go down, including the wealthy."
And The GOP’s hidden 46% tax bracket from Politico:
House Republicans claim the tax plan they introduced Thursday keeps the top individual rate unchanged at 39.6 percent—the level at which it’s been capped for much of the past quarter-century. But a little-noticed provision effectively creates a new band in which income is taxed at over 45 percent.
Thanks to a quirky proposed surcharge, Americans who earn more than $1 million in taxable income would trigger an extra 6 percent tax on the next $200,000 they earn—a complicated change that effectively creates a new, unannounced tax bracket of 45.6 percent.
It hasn’t been advertised by Republicans, who have described their plan as maintaining the current top tax rate of 39.6 percent. And it goes against decades of GOP orthodoxy that raising taxes on the rich discourages work and reduces economic growth. Reached by phone, Steve Moore, a tax expert at The Heritage Foundation, said the surcharge was news to him. “I was just in a briefing with the White House on this,” he said. “They didn’t mention that. It seems kind of bizarre to me.” ...