GOP Tax Plan

[Gilligan]

So we have seen that excessive taxes on the wealthy don't work, because they can afford to find ways of not paying. And we have seen that excessive tax breaks on the wealthy do not work, because it doesn't trickle down.

So what's the (reasonable) answer? Lots of flat tax/fair tax style proposals seem great, but they are NEVER given any credence in DC because they don't allow wealthy donors to cheat as effectively (I.E. better to have 39% taxes that I don't actually have to pay then 15% taxes that I do).

The bright spot I see in it all is a dramatic reduction in corporate income tax rates. The rest of it, involving individual rates, is just noise as far as I'm concerned. And they are not even proposing any significant reductions for the wealthiest tax payers.

 

[Chris0nllyn]

Sure. I'm just saying that their current evaluation is like trying to complain because a car won't go if you don't take into account the tires.

Well, a Democrat requested it likely knowing full-well dynamic scoring wouldn't be included in the estimate.

 

[SamSpade]

because they don't allow wealthy donors to cheat as effectively (I.E. better to have 39% taxes that I don't actually have to pay then 15% taxes that I do).

And I simply cannot find evidence that wealthy people "get away" with paying a lot less - because of this ---

We know how much any given strata of taxpayers make - say, the top 1% or top .1 %. We know their income - mostly.
We also know how much they PAY in taxes - as a whole.
Now, none of them will pay 39% because of the progressive nature of the tax brackets - your first x amount taxed at such and such a level, but numerically the higher you go, that little difference becomes insignificant.

And what you find is, while the strata as a group doesn't pay EXACTLY the taxation level - it's usually close. And predictable.

Basically - we DON'T have a whole pile of rich folks dodging taxes completely. Fact is, they're paying most of them. If the top 10% of taxpayers dodged their taxes completely, this nation would be royally screwed, because they're paying 70% of all the taxes.

Here's a nice page illustrating what I am saying - look at Table 1.

https://taxfoundation.org/summary-latest-federal-income-tax-data-2016-update/

And as you can see as expected - each strata designated pays a higher and higher portion of their income in taxes.

Ok - so you might think YEAH but it ain't 39% or 35 or 33. Right. But then you must account for just how many people actually FALL into those higher brackets.
See, the top 10% of filers - by AGI - the bottom of that stratum is around 133k - putting them in the 25% bracket.
Looking at THIS table :

https://taxfoundation.org/how-many-taxpayers-fall-each-income-tax-bracket/

THAT puts a lot of the top 10% in that last large bar graph.

It really only gets dicey when you're talking strictly about the REALLY REALLY rich. Like - the top 0.1%

 

[Clem72]

We know how much any given strata of taxpayers make - say, the top 1% or top .1 %. We know their income - mostly.

It really only gets dicey when you're talking strictly about the REALLY REALLY rich. Like - the top 0.1%

So the top 0.1, or 0.001 or whichever it turns out to be was entirely who I was speaking about. People who make their income primarily through investments and rent seeking (actual rents, intellectual property, etc.) and other untraceable means.

As the last two large dumps of off-shore banking data have shown, it's trivially easy for wealthy (truly wealthy, not mom&pops deli owner millionaires) to hide how much they make, and how much should be subject to taxes.

And even if they don't hide their income, I am of the opinion that a dollar earned sitting on your ass shouldn't be taxes less than a dollar earned busting your ass. But for whatever reason, we decided that passive income should be taxed less (probably because the rich folks making the rules get all their money from passive income).

 

[SamSpade]

But for whatever reason, we decided that passive income should be taxed less (probably because the rich folks making the rules get all their money from passive income).

The idea being that there's much less reason to invest money - and thus grow the economy - if it's still going to be taxed the same.
If you're going to tax income that has already been taxed once - a second time when it's making money again - then the prudent thing to do would be to not bother at all.

 

[GURPS]

- then the prudent thing to do would be to not bother at all.

:shrug:



I wouldn't bother

 

[Clem72]

The idea being that there's much less reason to invest money - and thus grow the economy - if it's still going to be taxed the same.
If you're going to tax income that has already been taxed once - a second time when it's making money again - then the prudent thing to do would be to not bother at all.

And that, is a load of horse #### and you (should) know it. If you have enough disposable income sitting around that you would make enough money off of investments to be subject to significant taxes, you are not going to "not bother at all" if it is taxed.

A good portion of my retirement portfolio pays out dividends, and because they are ordinary dividends (not qualified dividends) I pay income tax on that income. The fact that I have to do so hasn't kept me (or millions of other people) from investing in those stocks/mutual funds, or forced me to stuff the money in my mattress.

But if I sell those stocks and make a profit, I will only have to pay up to 20% of it in taxes because it is a capital gain.

Regardless, the argument that someone wouldn't invest money because they might have to pay at most an extra 19% is foolish. If there is ANY money to be made, people will invest (even if they only make 1% after taxes/inflation), because not doing so would mean they lose potential earnings.

It might make it more profitable for them to invest in other ways, but those other ways would also stimulate the economy. But the argument that investors would simply sit it out is wrong as proven by many many other countries that tax investment income as normal income and yet still have thriving investors/financial markets.

Or, they cou

 

[Clem72]

:shrug:



I wouldn't bother

And leave money on the table? You're an idiot, or a liar. And judging by what I have heard of your business prowess, I suspect I know which one.

 

[SamSpade]

And that, is a load of horse #### and you (should) know it. If you have enough disposable income sitting around that you would make enough money off of investments to be subject to significant taxes, you are not going to "not bother at all" if it is taxed.

I suppose that is a BIT of hyperbole. I think FIRST - I would put my money where it ISN'T going to be taxed, if I had THAT much (which I don't).
I would then choose to put my money where it will be taxed less - which is what we're talking about.
If it is taxed more - a lot more - my first inclination would be to just spend it because I'll be dead in a few years anyway.

I put money into retirement funds only because of - well - fear.
Truth be told, I'm going to be carrying DEBT into retirement and it might be better to fix that NOW, but that's another matter.

The larger part of my statement is still true - if it is taxed LESS, it does encourage people to put their money there.

 

[Clem72]

The larger part of my statement is still true - if it is taxed LESS, it does encourage people to put their money there.

Sure. But I suppose my question is why does it need encouragement. Why isn't income = income. Why is it okay to take 39% of the profits from an auto mechanic but not acceptable to take the same amount from a CEO who is paid in vesting stock options (when they sell of course)? Why would you only take 20% of profit made from royalties on an album sales (requiring no additional work), but take 39% from a live performance of the same music?

If all income is taxed alike, people will still have money to invest and investments will still pay out better than mattresses. And why artificially encourage people to invest in a stock market (with cheaper taxes) instead of, say, encouraging them to start new businesses or become venture capitalists?

 

[SamSpade]

And why artificially encourage people to invest in a stock market (with cheaper taxes) instead of, say, encouraging them to start new businesses or become venture capitalists?

Risk, maybe? Perhaps some bureaucrats decided it's better for people to invest in a business that is working than one that may or may not succeed?
A more reliable revenue stream? (That's a guess).

I don't craft tax laws. My guess is they've "evolved" and therefore have NO cohesive, over-arching agenda.
You want to encourage this or discourage that, you offer tax breaks or deductions or create "sin" taxes or gas taxes.
What you GET is a mess of many groups who have an interest in this or that.

I think somewhere, folks in Washington are reluctant to give up their leverage over what people do, and thus are against just making taxes --- simple.
Don't states do something like this - come to New York and not pay taxes for ten years with your business? Stuff like that?
How else can you persuade business - or people - unless you can manipulate taxes?

So stuff like the Fair Tax? Won't happen as long as tax laws can be used to manipulate.

 

[GURPS]

And leave money on the table? You're an idiot, or a liar. And judging by what I have heard of your business prowess, I suspect I know which one.

you don't know what you are talking about

 

[awpitt]

Has anyone seen info on whether the house/senate is proposing that this tax reform take affect on January 1, 2018 or will it be retroactive to January 1, 2017?

 

[Ken King]

Has anyone seen info on whether the house/senate is proposing that this tax reform take affect on January 1, 2018 or will it be retroactive to January 1, 2017?

HR1 has an effective date for tax years after Dec. 31, 2017, now what the Senate comes up with and whether the House and Senate go to committee to work out the differences, is anyone's guess.