They can avoid this by keeping things simple:
“We’re going to repeal the changes Trump made to your taxes. When you hear Republicans complain, that’s because the rich will pay more taxes. So if you didn’t like your taxes in 2019, vote for us and we’ll change them back. If you liked them, vote for the other guy.”
If tax reform is as big a disaster as everyone expects, they could pretty much campaign on this alone.
Frankly, I think the Dems should adopt one of those tax plans discussed earlier. Everyone pays no income tax under X dollars. Kick in a VAT.
The tax code is a fucking mess. Best to just redo it all.
Why, it’s been reformed? Fewer brackets, it’s super squeaky clean now.
@magnet I don’t know if that strategy will work. For tax year 2019, most income tax payers should see a tax cut (or even for tax year 2018), unless they’re in one of these unfortunate categories like grad students getting tuition remission as part of their deal (is that still in there BTW?). It’s not till at least 5 years out that things start going pear-shaped (apart from macroeconomic effects, of course).
This is a bad tax bill but it’s not catastrophic and it won’t have that much impact in the immediate term. One of the biggest potential short term issues will be impact on Obamacare. In the longer run, this bill moves us in exactly the wrong direction economically, further to the supply side when we have a demand problem, and furthering economic inequality.
You can’t win them all, and IMO this is not time to panic. The key IMO is still the upcoming 2018 midterms.
I mostly agree with Kyrios analysis. I’ll disagree with a few points. I do agree with quoted part.
I think it is pretty much a certainty that there will be changes between now and 2025 when the middle-class tax cuts run out. So making long-run predictions is kinda of pointless.
I predict a similar reaction to Obamacare it will be more popular over time, and especially popular when Democrats try to repeal it. For both bills, the opposition did a great job highlighting the problems, certainly better than the either side did highlighting the benefits. In a very real sense, this will be an entitlement similar to Obamacare, sure it is unpopular now. But in 2025 the Democrats face with rising middle-income tax or keeping will probably cave for the exact same reason the Republicans caved on ACA. The debt and deficit are abstract raising somebodies taxes, or taking away their healthcare subsidy is very tangible.
For the 70% of American who don’t itemize deduction, this is a tax cut, period A family of four making $55K or less pays no tax federal tax. There are tens of millions of households like this and despite the Democrats saying this only helps millionaire and billionaire and rich corporations, I think once they see hey I used to pay income taxes and no I don’t, I think it will prove popular.
Roughly 10-15 million households who currently itemize won’t under the new plan. This will happen for one of two reasons, either their main deduction(s) is eliminated or they just barely were able to exceed the standard deduction. For the latter group, their taxes will be lower and filing taxes will be easier, hard to imagine anybody many of them will object strenuously to the bill in 2020. Among, the first group there will be a fair number who owe more taxes, I can see why they’d be upset.
Finally, we have the 15% or so who, currently itemize and will continue to do so. The liberal Tax Policy had 85% winner and 15% losers for those making $50-100K, vs 66% winners and 34% losers for those making more than $1 million. There will clearly be winners and losers in this relatively small group. Among the rich losers, most of them probably live in blue states and weren’t voting for the GOP anyhow.
At the end of the day both ACA and the GOP tax reform, will cost the government between $1-1.5 trillion over ten years and add to our already huge debt. This concerns me greatly, but probably neither bill is going to destroy the US economy.
No, fuck that. You don’t get to compare this travesty of a tax bill to the ACA. No one even got to read the damn thing before they voted on it. This is ridiculous.
Spiro with your silver lining. And I think he might be right.
That’s not a fair comparison b/c the ACA actually produced something for the cost: an increase of coverage to about 30 million people, and a decline in medical bankruptcy of around 50% nationally. I personally feel that was well worth the cost. By contrast, this tax bill will cost $1 to 1.5 trillion after any “dynamic gains” from stimulus are factored in. Sure, there may be some efficiency in the reform of the deductions but not anywhere close to a trillion bucks worth. So basically, the ACA paid a trillion and got 30 million covered and reduced medical bankruptcies by half, whereas this bill will pay a trillion and accomplish… not much?
Won’t you think of the rich people??
Yes, the ACA benefitted millions of lower income people.
The vast majority of the new $1.5T bill from this tax bill is going to increase the wealth of the wealthiest people in the country.
Those two things are not the same.
I am sorry you don’t think letting the vast majority of American keep more of their money accomplishes anything.
The $1,182 a median income family saves in taxes may not mean a lot to you, and I’m sure there are plenty of people that would rather see that money spent for health care for themselves or even others. I’m also sure there are plenty of families, who have health insurance via there employer and would rather have the $1,182. The difference is providing a modest benefit to a large number of people or a larger benefit to a much smaller number of people
I’d be more enthused about Obamacare if there was strong evidence that providing health insurance, led to better health, longer live expectancy etc. but the evidence is mixed at best.
But that’s kind of a gross simplification.
I mean, I think you could get a middle class tax cut to pass without much grousing.
But getting rid of things like the AMT? Or the estate tax? Or lowering the top rates? Or specific deductions for private jets and crap like that?
Those things aren’t benefiting Americans as a whole. They are focusing A MASSIVE amount of revenue into the pockets of a very small number of rich donors.
And what’s going to happen is that they are then going to use this huge shortfall to argue that we should take away benefits from poor people. You know they will, man.
Don’t worry, Timex - all that wealth is going to trickle down to the 99%! That’s how things work, you see.
Look there are a bunch of things I don’t like about the tax plan including the estate tax and lowering the top rates (the house plan didn’t lower the top rates.), and the pass through, which I’d bet is open to tremendous abuse. I’m sure there is even more, crap that was slipped in to buy votes that I’ll like even less. (That’s one of the really bad things about partisan bills a few holdouts have huge leverage.).
But lets get real, the rich pay a huge proportion of the taxes. Federal income tax is quite progressive in this country, by far the most progressive tax we have. By removing millions of low and lower-middle income folks off the tax roll the plan makes the tax system more progressive, upper middle-income people more of the federal tax burden, lower income pay less. It’s true the 2/3 of the top 1% who get a tax reduction do a get a huge one. But, pretty much any tax cut is going benefit the rich in terms of how many dollars they save.
If you cut every bracket except the top one, those super rich folks would get exactly the same size tax cut as the richest person in the bracket below them.
There is just no reason to cut the taxes of billionaires. They not only have the most money, but their incomes are growing faster than anyone.
What is the justification for lowering federal revenue to give them billions of more dollars?
It just doesn’t make any sense.
The reasoning behind the tax plan is simple. The GOP have explicitly announced it, too, they admitted it publicly, but no one cares.
Congressional campaigns are backed by billionaire donors. Their business interests are also inextricably intertwined. The donors told the party they wouldn’t get another dime if they didn’t pass the bill to benefit those said donors. Congress fell all over themselves to obey their masters. That’s why they didn’t even bother to read the final draft. They are all bought and sold.
You do realize that the share of increase to the national debt is about $12,000 per family over 10 years (1.5 Trillion in debt divided by 125 Million households in the US) which works out to about $1,200 per year per family? Or in other words, the median tax benefit is fully offset by the increased debt. So that’s why I feel the bill does not produce a net gain.
In addition, by lowering taxes on large estates, corporations and high earners, the bill promotes further increase in both unequal bargaining power as well as concentration of wealth. Those two things are both bad for the bulk of the population and also bad for the long term health of the republic.
If we were lowering taxes without increasing the debt, then that would be a net stimulus that would be good. However, even then, the distribution of these tax cuts is all wrong.
You know what would actually work well right now?
1)Replace all the mish-mash of deductions and exemptions and crap with a tax credit per person that can be offset against all taxes, income, payroll, state and federal. This kind of credit is better than a deduction b/c deductions only benefit you to the percentage tax rate you pay. Right now, a deduction is worth about 15% of the deduction to a low earner and 39.6% of the amount to a higher earner. Let’s just replace that with a universal (non-refundable) tax credit. That would be even more efficient than the current deduction reforms, and far more egalitarian. Also, the tax credit should be larger than the value of deductions now, to soften the blow to people losing special exemptions. The cost of this could be offset by #3 below.
2)Reduce the corporate tax rate to 25% to 28% but keep the level of revenue steady by reducing the deductions and exemptions in the corporate tax code. This would remove the inefficiency of our current tax code and bring us in line with other developed nations.
3)To the extent that #1 above would cost revenue, make up for by phasing out the tax break for capital gains (in our wonderful system, income from investments is taxed at a max of 23.8% while income from labor is taxed at a max of 39.6%) over a period of 8 to 10 years. This by itself would be worth about $1 Trllion to $1.5 Trillion over 10 years. This would not affect most people b/c people with 401Ks are not subject to capital gains tax (they pay regular income tax upon withdrawal after retirement). If you don’t need the full $1.5 Trillion, then only partially phase out the capital gains tax equalization. (I’m actually in favor of capital gains tax equalization just on principal and as a liberal I would spend the excess on infrastructure.)
The net effect of these 3 things would be a revenue neutral tax reform that would promote efficiency, would start to slighter lessen the positive feedback loop of wealth concentration, and would bring our corporate tax code in line with world norms. Of course, my plan gores the oxen of people who hold large amounts of assets outside of 401Ks, but I cry a big fat tear for them.
I think the evidence is stronger than you but there is one area where the evidence is clear: the ACA benefitted poor sick people a great deal financially. The rate of medical bankruptcy dropped by half. Even if there was no net change in health, that by itself would be a good thing IMO.
I think if they had been, like, 20% less evil with this, I might well agree with you. See: the Bush tax cuts, which while they were not-great for the long term fiscal health of the country, gave a much more substantial portion to the middle class, and that part of it ended up sticking around after it was due to expire even with Democrats in office. Combine the backdoor ACA sabotage and the fact that the vast majority of the $$ won’t help anyone this side of Republican donors, and it really hurts the “stickiness” of the tax cuts. I could see an end-game that keeps the middle-class parts of the tax cuts and more than offsets it with a “reclamation” from the top 5%, in a campaign where income inequality is issue #1.
That’s almost hopeful? It ignores a lot of human suffering in between, though, assuming the ACA part stays in through the final version of the bill. And again, if we get a recession in between now and then, you’re really short on tools at that point: not much room to stimulate the economy, likely not much room to cut interest rates, and tax receipts drop off as the economy does. All of a sudden you’re in a position for some really crazy stuff (Great Recession 2.0 is only the starting point) - there’s some pessimism for you.