The Built-In Instability of the G.O.P.’s Tax Bill – By REBECCA KYSAR and LINDA SUGIN – NYT

“Republicans are on the verge of achieving their decades-long goal: an overhaul of the tax code. But the system they have built will not last.The plan’s instability is partly a result of the process Republican Party leaders chose to make it happen. Reconciliation, which allows escape from the Senate filibuster, means that Republicans did not have to reach across the aisle. Not a single Democrat supported the legislation.

This choice has consequences. For one, the exclusion of Democrats means that there is no buy-in from the minority party that will one day, perhaps soon, be in the majority again. This dynamic is worsened by the fact that the tax legislation pits blue states against red through the limitation of the state and local tax deductions. In the end, Republicans have chosen policies that are more extreme than they would have if they had worked with Democrats.”

DL:  Well done. Here are the top comments which I endorse:

mancuroc is a trusted commenter rochester 12 hours ago

“Republicans are on the verge of achieving their decades-long goal: an overhaul of the tax code.”

Yes it is a decades-long goal. No it isn’t an overhaul – it’s a heist that moves massive amounts of wealth to the top.

Reply 376 Recommended

ChristineMcM is a trusted commenter Massachusetts 10 hours ago

“These policies not only face the risk of being undone by a future Democratic majority, but also could indeed prove to be so lopsided as to alienate the more centrist of Republicans. Worse, Republicans now aim to take advantage of the instability they’ve created by cutting so-called entitlements like Medicare down the line, burdening the poor and the middle class.”

Actually, they kick the middle and lower classes three ways: first by raising taxes on those who might have itemized deductions in high tax states; second, making them pay the penalty for fixing deficits the GOP created in the first place; and third, making sure their “cuts” such as they are are temporary.

Once the understaffed, underfunded IRS sets these 1000 pages into rules and regulations, I believe they’ll find a ton of stuff that sets off unintended consequences.

By then of course, Democrats may take back the house and face the dirty job of fixing the GOP’s messes (which they always do).

But now, at least, Republicans can’t call Democrats the “tax and spend” party. No, the real truth is more like the “clean up party, ” fixing the messes created by the “Cut and spend” Republicans, who are gambling that the Dems will be blamed once the economy tanks.

It might be hard to prove given how this unilateral bill was rammed through without Democrat participation or votes.

And if Congress thinks all will be fogotten, I can assure them, we won’t let the public forget.

Reply 346 Recommended

Bruce Rozenblit is a trusted commenter Kansas City, MO 11 hours ago

The line being touted by the Republicans is that the temporary nature of the individual tax cuts exists only because of the rules of reconciliation. They are laying the groundwork for blaming the tax cut expiration on the Democrats if they don’t make them permanent next year.

How stupid do they think we are? If these cuts are made permanent, then the deficit will be much larger than the forecasted 1.5 trillion. Why don’t they increase the corporate rates in 2025 and then make the individual rates permanent? By then, if their supply side magic works, corporations will be so wealthy, they can afford to pay more in taxes. The public will have financed their growth with debt and deserves to be paid back.

But no. The deficit most likely explode under this bill. It will be much higher than forecast. That is because of the many new loopholes they opened up that are yet to be fully exploited. Give the accountants six months to launch their plans.

They also keep saying that the increased profits will be reinvested which will grow businesses. Here we go again. It is demand that grows business, not supply. Investments are always made in response to demand. All the GOP did was to dramatically boost profits with the stroke of a pen. You don’t make more widgets if you can’t sell them. If you make more money on the widgets you sell, you stick the money in your pocket.

This is going to blow up. The Democrats should prepare to assess blame on where it belongs, the GOP.

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Opinion by David Brooks | The Workers Paradise

From the comments section, the top comment, and my rebuttal.

JBC

Indianapolis 16 hours ago

The tax revenue lost by the 7% difference between 21 and 28 is sizeable, and Obama never would have placed the impact of any corporate tax cut on the backs of the middle class and those with even lower incomes. Do not act like this is no big deal Mr. Brooks. It is.

David Lindsay Jr.

Hamden, CT

Bravo David Brooks. Keep writing, and don’t let the detractors get you down. I’m disappointed that 698 commenters endorsed JBC. The problem with the JBC critique is that Brooks is just right that the world is going towards a 20% or lower corporate tax. But progressive, steep income taxes, and vat taxes, make up the difference, so that other developed countries have plenty to spend on social services for the middle and lower classes. We also spend more on military than these other counties, and fight in poorly thought out wars, which are wasteful. The problem with the GOP tax bill is not the 20% corporate rate, but almost all of the rest of it. They were supposed to get rid of all the loopholes, so that corporations would have to pay 20%. David is the author of “The Tay Son Rebellion, Historical Fiction of Eighteenth-Century Vietnam”, and blogs at TheTaysonRebellion.com.

Passing Through to Corruption – by Paul Krugman – NYT

“Unless something drastic happens, this will be the week Republicans ram through a tax cut that adds more than a trillion dollars to federal debt while undermining health care for millions. They will do so by violating all previous norms for major legislation, having held not a single hearing and rushed to a vote before the new senator from Alabama could be seated.The question is, why are they doing this? For this bill isn’t just a policy crime; it also seems to be a political mistake. It will, however, be good, one way or another, for the bank accounts of quite a few Republican members of Congress. Is that why it will pass?

About the politics: Normally, politicians willing to add a trillion dollars to the debt can hand out enough goodies to make their plans popular, at least for a while. The George W. Bush tax cuts heavily favored the rich over the middle class, but they contained enough clear middle-class tax cuts to have broad public approval, at least at first.This bill, however, faces heavy disapproval. Ordinary voters may not be able to parse all the details, but they have figured out that this bill is a giveaway to corporations and the wealthy that will end up hurting most families. This negative view isn’t likely to change.”

Tax Bill Lets Trump and Republicans Feather Their Own Nests – The New York Times

“To understand the cynicism and mendacity underlying the Republican tax bill, look no further than a provision that would benefit President Trump and other property tycoons that is in the final legislation Congress is expected to vote on this week.

The provision would allow people who make money from real estate to take a 20 percent deduction on income they earn through limited liability companies, partnerships and other so-called pass-through entities that do not pay the corporate tax. The beneficiaries would also include members of Congress like Senator Bob Corker, who last week decided he would vote for the bill even though Republican leaders did nothing to address his concerns about an exploding federal deficit.

The biggest winners would be people like Mr. Trump, his family and similarly advantaged developers who make tens or hundreds of millions of dollars every year on swanky office towers and luxurious apartment buildings. An earlier version of the bill passed by the Senate provided a 23 percent deduction but put limits on its use that would prevent wealthy developers from profiting from it. The House version would simply have reduced the rate at which pass-through income is taxed.”

DL: Much uglier than simply pigs at a trough.

A Tax Plan to Turbocharge Inequality- in 3 Charts – by David Leonhardt – NYT

“The Republican tax bill is an audacious attempt to accelerate the economic trends of the last half-century.If you’re a fan of these trends — rapidly rising inequality and stagnant middle-class incomes — you should love the bill. If you’re not a fan, you can at least take comfort in knowing that you’re in the majority of Americans, as polls consistently show.

Over the last few decades, the rich have not only enjoyed the largest pre-tax raises, by far. They have also received big tax cuts. The middle class and poor, meanwhile, have suffered from slow-growing incomes — and from overall tax rates that are higher today than in the mid-1960s.The first part of that story is widely known. The rich have gotten richer, for a whole variety of reasons.”

DL: Great piece. It looks like this tax plan will help progressive environmentalist and their friends on the left, to take over congress in the next, or next couple of elections.

And exellent comments, such as:

Ron Cohen

is a trusted commenter Waltham, MA 17 hours ago

Contempt for the poor and middle class starts with Republican donors, the very rich. Why do the rich care so much? After all the tax cuts are modest relative to their immense wealth. Is it really about money? Or is it something deeper, more visceral, a need to dominate and impoverish everyone else?

The great English historian, R.H. Tawney, in his magisterial work, “Religion and the Rise of Capitalism” (1926), tells us that by the mid 1600’s, most English Puritans saw in poverty “not a misfortune to be pitied and relieved, but a moral failing to be condemned, and in riches, not an object of suspicion … but the blessing which rewards the triumph of energy and will.”

This ideal of individual morality, derived from Calvin, has been with us ever since. But it has surfaced with renewed zeal in our time, with men like the Koch bothers, Robert Mercer, Art Pope and Sheldon Adelson determined to spend whatever it takes to replace democracy as we know it—a leveling force—with a fascistic, plutocratic model of government.

For these billionaires, however, religion is not the motivator. Rather, it’s how they see themselves, their self image, that drives their lust for power, their need to dominate. They are the “makers,” deserving, while the rest of us are “takers,” undeserving and cadging off their efforts. Identity politics isn’t just for Democrats anymore.

For a penetrating interpretation, see George Monbiot’s short but defining piece in The Guardian: http://tinyurl.com/p5dg6b5

Ed Schwab

Alexandria, VA 13 hours ago

One way to deal with the problems of Social Security and the high payroll taxes is by recycling taxes that many Social Security recipients pay on their benefits. AS you may know, many social security beneficiaries pay no taxes on their benefits. However, there are many like me who pay quite a bit. My wife and I pay about $7,000 a year.

SS benefits are taxed only when recipients receive more in retirement income from other sources than they receive in SS benefits. Taxes are paid under a complex formula from 0% to 80% depending on how SS income compares to other retirement income. My pension income is about 20 times my SS benefit. That means I and my wife pay income taxes on 80% (the max percentage) on our SS benefits.

I don’t mind paying that amount, but I object to where it goes. It goes into the general fund just like other taxes. It seems to me that the better way would be to recycle it into social security. There are millions of us who pay taxes on our social security. The problems of the fund would be relieved a lot if our taxes went back to social security rather than into the general fund. When my wife and I pay back almost 20% of what we get to the government, it seems like that money should go to replenish the SS fund.

NYT Pick

MC

Upstate New York 5 hours ago

This tax bill for the rich is so appalling. Not only have payroll taxes not been addressed, but also every person will lose the personal exemption of $4,100 for themselves and for every member in their household.

It doesn’t matter that the standard deduction has doubled to $24,000 because if you are a family of three, you lose $12,300 in person exemptions. Therefore, doubling the standard deduction is a wash. But, if you’re a family of four or more, chances are very good you will pay more in taxes.

Why hasn’t the media explained to the public this MAJOR lose of the personal exemption of $4,100 per person? This vital fact has been ignored. Most middle class people will gain nothing. In fact, most of us will pay more. And every additional dollar we pay will go in the pockets of the 1%.

This tax bill is so shameful and such a sham.

 

How Republicans Learned to Sell Tax Cuts for the Rich – by Isaac Martin – NYT

“If anyone still believed that the Republican Party had become a party of economic populism, the tax bill that the party is set to pass in Congress will burst their bubble. This bill raises taxes on the poor and cuts taxes on the rich. Most of the American people disapprove.

Senate Republicans negotiated in secret at top speed, and then passed the bill at 1:50 a.m. on a Saturday, as if to minimize public scrutiny. The original American populists were the men and women of the Populist Party who demanded open government and income taxes on the rich; this tax bill is exactly the sort of thing that made them howl in outrage.But the Republican tax strategy has roots in the American populist tradition, too. That strategy is to disregard experts and rile up the base with tax policy arguments that would not survive professional scrutiny.

Populists did this on behalf of the poor. But the man who first put this strategy to work for rich people was Andrew Mellon, the millionaire who became secretary of the Treasury after World War I. Poor veterans of the war were clamoring for expensive public benefits. Rich men wanted their income taxes rolled back.Mellon squared the circle by inventing a supply-side argument: Cutting income tax rates would actually increase tax revenues. In particular, he said, cutting the top income tax rates would encourage rich people to pull their money out of tax shelters and invest in creating jobs. Or, as Treasury Secretary Steven Mnuchin has said of the current Republican tax plan, cutting income taxes “will pay for itself with growth.” “

It Started as a Tax Cut. Now It Could Change American Life. – By PETER S. GOODMAN and PATRICIA COHEN – NYT

“If the tax bill widens inequality, local communities will likely find themselves with fewer resources to aim at helping struggling people.

A key feature of the Senate bill is the elimination of a federal deduction for state and local taxes. Conservative groups like the Heritage Foundation and American Legislative Exchange Council have sought to end the deduction as a means of reining in government spending.In high-tax states like California, New York, New Jersey and Connecticut — where electorates have historically shown a willingness to finance ample safety-net programs — the measure could change the political calculus. It would magnify the costs to taxpayers, pressuring states to stay lean or risk the wrath of voters.

Some see in this tilt a reworking of basic principles that have prevailed in American life for generations.”

David Lindsay Jr.: Great article by PETER S. GOODMAN and PATRICIA COHEN. I am alarmed, that for two nights, The News Hour on Public Television has been absorbed in the nonsesense of Donald Trumps rude tweets and lies. It appears that Trump has brilliantly occupied the press with silly discussions of his embarrassing behavior, taking up their time and energy, when they should be focused on this bait and switch tax cut, which transfers enormous wealth from the middle class to the wealthiest Americans, mostly the top 5%. My strong advice to TV news orgatizations, bareley mention the rude, lying billionaire in the White House, and focus on what economists and analysts are decrying with regards to this new congressional tax bill, which is the real short term threat to our American values and a strong, healthy middle class.

Here are the two top comments, which are fine, and I also endorse.

Sledge

Worcester 2 hours ago

As a tax attorney for almost 50 years, this bill breaks my heart. The callousness of our Republican leaders and the outright lie that this bill will help anyone but the rich is disheartening. The driving force in our economy has been the consumer, not business expansion. There’s not much (if anything) in this tax bill that will give the consumer more money to spend. And if you add in the erratic behavior of our President, you have to wonder whether this country can sustain itself, both economically and socially.

Stephen Kurtz

is a trusted commenter Windsor, Ontario 2 hours ago

The age of the robber baron was replaced by Theodore Roosevelt’s “Square Deal”. The excesses of the “Roaring Twenties” were tempered by FDR’s “New Deal.” The progress in Civil Rights and Medicare was achieved by LBJ’s “Great Society”. If the Republicans pass this so-called “tax cut” we will be rolling back all of the progress we have made since 1901 in order to create a less perfect union for the benefit of the one percent.

How Tax Bills Would Reward Companies That Moved Money Offshore – The New York Times

“Over the past few decades, some of the largest companies in the United States made a big bet: By stashing hundreds of billions of dollars of profits offshore, they could slash their taxes and bolster their profits.

It would take a generation to see if the strategy would fully pay off, because the law allowed companies only to defer the taxes on overseas earnings, not to permanently avoid them. Would they ever be able to bring the profits back to the United States without incurring huge tax bills?Some 20 years after the tax-avoiding technique became widespread, it is poised to pay off in a big way. The Republican tax bills making their way through the House and Senate would allow companies to bring nearly $3 trillion in profits home, at greatly reduced tax rates.”

Opinion | ‘Only Morons Pay the Estate Tax’ – NYT

“So who actually does pay estate tax?

1. The top 0.2 percent. Some 11,300 American estates — about 0.2 percent — are estimated to be subject to the estate tax this year. The top tenth of income earners pay nearly 90 percent of estate taxes collected, and about one fourth of that total is paid by the richest 0.1 percent. The tax itself has been whittled down significantly. Until 2001, it applied to inheritances starting at $650,000 for an individual. Today, an inheritance must be larger than $5.49 million for an individual or $10.98 million for a couple for their heirs to be liable for any estate tax at all. Opponents of the tax say it taxes earnings twice. But more than half of the biggest estates consist of unrealized capital gains — like stocks that have appreciated without being sold — that have never been previously taxed.”

A Boondoggle Masquerading as Tax Reform – The New York Times

 

“After months of secret negotiations, the Trump administration and congressional leaders have come up with a tax plan — sort of. What they have really come up with is a wish list of tax cuts for the wealthy, with lots of “we’ll get back to you on that” promises where the details are supposed to be.

This much is clear: The tax “framework” published by Republican leaders on Wednesday would greatly increase the federal deficit, would not turbocharge economic growth and could leave many middle-class families worse off by ending deductions they rely on. It would do little or nothing to improve the lot of the working class, a group President Trump says he is fighting for. It would instead provide a windfall to hedge fund managers, corporate executives, real estate developers and other members of the 1 percent. And can it be just a happy coincidence that Mr. Trump and his family would benefit “bigly” from this plan?

On income taxes, the framework calls for reducing the top tax bracket to 35 percent, from 39.6 percent, which would benefit people earning $418,400 a year or more. It would also raise the rate for people in the lowest bracket to 12 percent, from 10 percent. Republicans say they will offset that particular burden by roughly doubling the standard deduction to $24,000 for a couple ($12,000 for a single person). In addition, the proposal would eliminate most itemized deductions except mortgage interest and charitable donations. This could greatly hurt middle-class families in New York, California and other states with high local and state taxes that the families will no longer be allowed to deduct from federal taxes.”