Current Events > If you're wondering what drove the trump rally, it's the GOP tax plan.

(+) Yeah! (+)

They've only now 'released' a plan, but it's been known and talked up for a long time that it would be a corporate focused bill that would not really help normal americans but instead the donors to superPACs that got the current government elected.

This is what the nonpartisan tax policy center has said in their analysis of the plan:

Three-quarters of the tax cuts would benefit the top 1 percent of taxpayers and the highest-income taxpayers (0.1 percent of the population, or those with incomes over $3.7 million in 2015 dollars) would experience an average tax cut of about $1.3 million, 16.9percent of after-tax income. Households in the middle fifth of the income distribution would receive an average tax cut of almost $260, or 0.5 percent of after-tax income, while the poorest fifth of households would see their taxes go down an average of about $50, or 0.4 percent oftheir after-tax income. In 2025, the top 1 percent of households would receive nearly 100 percent of the total tax reduction.

As the tax plan is not budget-neutral, it dramatically increases the national debt.

(Also, people in the top quintile would see their taxes raised. I'm OK with paying higher taxes to help the poor, but not to help the rich.)

Between repealing AMT, cutting corporate rates, removing the estate tax entirely, and lowering rates, there's a clear target constituency, and it's a very small one. Investors.

I don't know why I didn't see it the day he was elected. The rally that followed was not driven by significantly higher earnings (in fact earnings now are only slightly higher than they were in 2014). valuation multipliers are insanely high. It's driven by political expectations of a humongous tax cut that will increase corporate profits (thereby slashing the multiplier) and allow investors to take profits at much lower costs.

Reference of SPX growth vs fwd earnings growth:

https://insight.factset.com/hubfs/Resources%20Section/Research%20Desk/Earnings%20Insight/EarningsInsight_092917.pdf

Full analysis of GOP tax plan:

http://www.taxpolicycenter.org/publications/analysis-house-gop-tax-plan/full

If this tax plan falls through, I expect the US stock market to plummet in a very severe way. Passage is already priced in. Investors assume it is happening.
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Darkman124 posted...

there's a clear target constituency, and it's a very small one. Investors

Koch brothers and friends?

Yeah, it amazes me how transparent this is, but people still run with the Trump and the rust belt narrative.

Hope it doesn't pass, though I am conflicted because I had the same thoughts:
Darkman124 posted...

If this tax plan falls through, I expect the US stock market to plummet in a very severe way. Passage is already priced in. Investors assume it is happening.

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courier_nv posted...

Koch brothers and friends?

among others, yes. at this stage they do not really act in the interests of a constituency so much as a fundraising base.

http://www.chicagotribune.com/news/nationworld/politics/ct-gop-donors-health-care-taxes-20170626-story.html

At least one Koch official warned that the Republican Party's House majority could be in jeopardy if the GOP-led Congress doesn't follow through.

"If they don't make good on these promises ... there are going to be consequences, and quite frankly there should be," said Sean Lansing, chief operating officer for the Koch network's political arm, Americans For Prosperity.

Deason, who is keeping the "Dallas piggy bank" closed for now, said he was recently approached by Rep. Mark Meadows, R-N.C. and Rep. Jim Jordan, R-Ohio, about hosting a fundraiser.

"I said, 'No I'm not going to because we're closing the checkbook until you get some things done,'" Deason said, noting he's encouraged nearly two dozen major Texas donors to follow his lead.

"There is urgency," said AFP president Tim Phillips. "We believe we have a window of about 12 months to get as much of it accomplished as possible before the 2018 elections grind policy to a halt."

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Darkman124 posted...

repealing AMT, cutting corporate rates, removing the estate tax entirely, and lowering rates,

all sounds fantastic

FLUFFYGERM posted...

all sounds fantastic

only if you:

1) dont care about the national debt
2) care only about tax policy from a single ideological perspective and not a 'how does this impact me' perspective,

or

3) are extremely rich

i've got enough investments that the net effects of these tax cuts would probably boost my wealth significantly more than they'd raise my taxes (the GOP plan to kill the deduction for state income tax is a fairly brutal electoral tool that operates on the principle of 'fuck upper middle class voters from blue states, we can give them up')

for me it's mostly about the debt effect and how that would impact longer-term policy since it can't be repealed before 2020.
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wait a second we care about national debt now?

and maybe those upper middle class voters from blue states are just going to have to learn to live with their state tax instead of being subsidized by deductions.

FLUFFYGERM posted...

wait a second we care about national debt now?

republicans certainly did until they were elected to the majority

fundamentally both parties do from the perspective of 'national debt is opportunity cost for policies that i want'

when dems spend on the poor and raise debt, it makes it harder for GOP to justify tax cuts. and vice versa.

that's what we really mean when we harp about debt.

of course, to pass with budgetary reconcilation, a tax reform has to be budget neutral. this one is not.

FLUFFYGERM posted...

and maybe those upper middle class voters from blue states are just going to have to learn to live with their state tax instead of being subsidized by deductions.

or they'll successfuly put heavy pressure on their elected officials to oppose the bill

https://www.washingtonpost.com/news/wonk/wp/2017/09/13/gop-split-in-battle-over-business-tax-breaks/

http://www.washingtonexaminer.com/gop-will-revise-plan-to-end-state-local-tax-deductions-that-split-the-party/article/2636392

yeah looks like that one.

i tend to think this bill has no future without stripping the state tax deduction, though. it's going to require over three trillion in extra budget room for that.
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Why do you expect a plummet?
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FLUFFYGERM posted...

wait a second we care about national debt now?

and maybe those upper middle class voters from blue states are just going to have to learn to live with their state tax instead of being subsidized by deductions.

it impacts upper middle class voters in every state, though, as well as Republican voters in blue states:

https://specials-images.forbesimg.com/files/2017/18/59c0181d0aa7f1_99711728.jpg

blue states happen to have a lot more of those kind of people than red states, but many of the areas impacted are red districts within blue states
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Soooo does this mean I should wait to buy stock?
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Did the income thresholds get released or are they assuming what they will likely be?
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Not necessarily. That's the popular idea to throw around but no one actually knows.
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i love to see poor, working class folks defend shit like this because the GOP told them to
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Balrog0 posted...

FLUFFYGERM posted...

wait a second we care about national debt now?

and maybe those upper middle class voters from blue states are just going to have to learn to live with their state tax instead of being subsidized by deductions.

it impacts upper middle class voters in every state, though, as well as Republican voters in blue states:

https://specials-images.forbesimg.com/files/2017/18/59c0181d0aa7f1_99711728.jpg

blue states happen to have a lot more of those kind of people than red states, but many of the areas impacted are red districts within blue states

that's fine by me, people should feel the weight of their obligations to their state and federal governments. we should end all deductions.

Where are people going to learn that trickle down is literally economic voodoo. Look at what just happened in Kansas and we are going to try it on a national scale now.
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FLUFFYGERM posted...

that's fine by me, people should feel the weight of their obligations to their state and federal governments.

I concur, idgaf about the upper middle class and fully support them paying more in taxes (though, like Darkman, not necessarily to pay for tax cuts for even richer folks)

It's just overly simplistic to portray it as a blue state issue. imo
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Balrog0 posted...

FLUFFYGERM posted...

that's fine by me, people should feel the weight of their obligations to their state and federal governments.

I concur, idgaf about the upper middle class and fully support them paying more in taxes (though, like Darkman, not necessarily to pay for tax cuts for even richer folks)

It's just overly simplistic to portray it as a blue state issue. imo

where did i portray it as a blue state issue

i was just responding to darkman's complaint about blue state upper middle class voters

idgaf if they (or red state upper middle class voters) feel the burden of their obligations

where did I say you portrayed it that way? I'm just adding context. the perception is just that blue states are the high tax states, which is true to some extent but we can also see it is a fairly significant for red states in the southwest and the bible belt, plus swingier states like Colorado and Ohio
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anyway, we should get rid of all deductions and exemptions for everybody

no point in having them

FLUFFYGERM posted...

where did i portray it as a blue state issue

i was just responding to darkman's complaint about blue state upper middle class voters

idgaf if they (or red state upper middle class voters) feel the burden of their obligations

the point is, GOP house reps DO care because those are their constituents

actually this is a great highlighting of the gap between house and senate, as the GOP senate typically would not see significant constituent backlash since they're not really from many blue states
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Darkman124 posted...

FLUFFYGERM posted...

where did i portray it as a blue state issue

i was just responding to darkman's complaint about blue state upper middle class voters

idgaf if they (or red state upper middle class voters) feel the burden of their obligations

the point is, GOP house reps DO care because those are their constituents

actually this is a great highlighting of the gap between house and senate, as the GOP senate typically would not see significant constituent backlash since they're not really from many blue states

simple solution - get rid of all deductions and exemptions across the board and make a flat tax of 30% for everyone

FLUFFYGERM posted...

simple solution - get rid of all deductions and exemptions across the board and make a flat tax of 30% for everyone

that would be a massive tax hike on everyone

including the super rich
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Darkman124 posted...

FLUFFYGERM posted...

simple solution - get rid of all deductions and exemptions across the board and make a flat tax of 30% for everyone

that would be a massive tax hike on everyone

including the super rich

so what?

so i'm not really sure what problem you think it is solving

the problem of taxes being too hard?
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taxes aren't too hard at all. it's just going to eliminate a lot of the unfairness you're complaining about, esp with regards to the GOP targeting blue state middle class tax payers.

and i think 30% is a fair number, if you make a decent amount of money you're already going to take home 30% less than what you earned when all is said and done.

Giant_Aspirin posted...

i love to see poor, working class folks defend shit like this because the GOP told them to

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FLUFFYGERM posted...

taxes aren't too hard at all. it's just going to eliminate a lot of the unfairness you're complaining about, esp with regards to the GOP targeting blue state middle class tax payers.

and i think 30% is a fair number, if you make a decent amount of money you're already going to take home 30% less than what you earned when all is said and done.

You don't understand how taxes work.

Leave.
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Drpooplol posted...

FLUFFYGERM posted...

taxes aren't too hard at all. it's just going to eliminate a lot of the unfairness you're complaining about, esp with regards to the GOP targeting blue state middle class tax payers.

and i think 30% is a fair number, if you make a decent amount of money you're already going to take home 30% less than what you earned when all is said and done.

You don't understand how taxes work.

Leave.

Do you? I mean I took plenty of economics classes and finance classes in college, I invest and read a lot on taxes and I certainly understand the broad strokes but I don't think I fully understand how taxes work.
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drpoop is a cpa, so he probably does understand taxes
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What I'm interested to see is (if it passes) how this will affect states with high income taxes and states without it.

I could see a lot of people flocking to Washington, Texas, and Florida because of these changes.
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Balrog0 posted...

drpoop is a cpa, so he probably does understand taxes

i did not know that.
question withdrawn.
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Drpooplol posted...

What I'm interested to see is (if it passes) how this will affect states with high income taxes and states without it.

I could see a lot of people flocking to Washington, Texas, and Florida because of these changes.

you can choose to deduct sales taxes instead of income taxes, can't you?

I dont make enough to itemize so I'm not sure
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KILBOTz posted...

Balrog0 posted...

drpoop is a cpa, so he probably does understand taxes

i did not know that.
question withdrawn.

If you have any questions I would gladly answer what I can.
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i am curious to see if they kill state income tax deductions but not sales tax deductions

that'd be super silly

Drpooplol posted...

If you have any questions I would gladly answer what I can.

can my wife deduct hotel expenses when she travels for training related to her small business (1099 income paid) dance teaching business?
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Balrog0 posted...

Drpooplol posted...

What I'm interested to see is (if it passes) how this will affect states with high income taxes and states without it.

I could see a lot of people flocking to Washington, Texas, and Florida because of these changes.

you can choose to deduct sales taxes instead of income taxes, can't you?

I dont make enough to itemize so I'm not sure

yes. i think you can either have a system generated number for your sales tax estimate or you can itemize your sales tax. when I bought my car, did a major home remodel and a few other giant purchases i was able to itemize my sales tax but normally it is just an estimate based on your income that you itemize (not sure if that is the right term there).
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KILBOTz posted...

Balrog0 posted...

Drpooplol posted...

What I'm interested to see is (if it passes) how this will affect states with high income taxes and states without it.

I could see a lot of people flocking to Washington, Texas, and Florida because of these changes.

you can choose to deduct sales taxes instead of income taxes, can't you?

I dont make enough to itemize so I'm not sure

yes. i think you can either have a system generated number for your sales tax estimate or you can itemize your sales tax. when I bought my car, did a major home remodel and a few other giant purchases i was able to itemize my sales tax but normally it is just an estimate based on your income that you itemize (not sure if that is the right term there).

yes it's either or. but the discussion is mostly about state income tax atm
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Balrog0 posted...

Drpooplol posted...

What I'm interested to see is (if it passes) how this will affect states with high income taxes and states without it.

I could see a lot of people flocking to Washington, Texas, and Florida because of these changes.

you can choose to deduct sales taxes instead of income taxes, can't you?

I dont make enough to itemize so I'm not sure

Correct, and I don't know if this new tax plan eliminates that (I don't think it does and assume it won't for this post). The issue is that states without income taxes almost universally have much higher sales taxes. SO one can reduce a large amount of new of tax liability by moving to a state where

1) you don't have income taxes
2) The higher sales taxes would already be deducted because of these changes.
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makes sense, I'm just operating under the assumption it would eliminate both
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Drpooplol posted...

Correct, and I don't know if this new tax plan eliminates that (I don't think it does and assume it won't for this post). The issue is that states without income taxes almost universally have much higher sales taxes. SO one can reduce a large amount of new of tax liability by moving to a state where

1) you don't have income taxes
2) The higher sales taxes would already be deducted because of these changes.

on top of this, sales taxes are highly regressive so the net effect would hit lower earners more
Balrog0 posted...

makes sense, I'm just operating under the assumption it would eliminate both

idk if we can make that assumption. bill is ultra-partisan, and a favorable treatment of red state tax laws would not be something i'd put past the senate
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Darkman124 posted...

Drpooplol posted...

Correct, and I don't know if this new tax plan eliminates that (I don't think it does and assume it won't for this post). The issue is that states without income taxes almost universally have much higher sales taxes. SO one can reduce a large amount of new of tax liability by moving to a state where

1) you don't have income taxes
2) The higher sales taxes would already be deducted because of these changes.

on top of this, sales taxes are highly regressive so the net effect would hit lower earners more

Right, but I don't this would affect state migration, because the majority of people who change states more often are high earners, iirc.
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Drpooplol posted...

Right, but I don't this would affect state migration, because the majority of people who change states more often are high earners, iirc.

no but it would encourage more states to embrace sales taxes as higher earners moved out of income tax states and into sales tax states

i'm looking at it from a longer term view
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Darkman124 posted...

Drpooplol posted...

Right, but I don't this would affect state migration, because the majority of people who change states more often are high earners, iirc.

no but it would encourage more states to embrace sales taxes as higher earners moved out of income tax states and into sales tax states

i'm looking at it from a longer term view

oh right right, I totally agree. And the states who don't will be left in the dust.
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Drpooplol posted...

FLUFFYGERM posted...

taxes aren't too hard at all. it's just going to eliminate a lot of the unfairness you're complaining about, esp with regards to the GOP targeting blue state middle class tax payers.

and i think 30% is a fair number, if you make a decent amount of money you're already going to take home 30% less than what you earned when all is said and done.

You don't understand how taxes work.

Leave.

what part of what i said means i don't understand taxes? the part about how people with decent incomes are effectively giving up 30% of their earned income to taxes when all is said and done?

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another facet of eliminating the state/local deduction is that it favors the provision of services through charity rather than through public entities

so I imagine we would see a higher rate of charter school growth at the margin, etc.
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FLUFFYGERM posted...

what part of what i said means i don't understand taxes? the part about how people with decent incomes are effectively giving up 30% of their earned income to taxes when all is said and done?

pretty much, yeah.
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Drpooplol posted...

FLUFFYGERM posted...

what part of what i said means i don't understand taxes? the part about how people with decent incomes are effectively giving up 30% of their earned income to taxes when all is said and done?

pretty much, yeah.

so if an unmarried single filer makes 110k, what is their total tax rate when including all federal, fica, medicare, state, etc? assuming a state that has a 3 to 5 percent state income tax, with 2 federal allowances and 2 basic allowances at the state level. no dependents.

what is their total take home pay?

Darkman124 posted...

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FLUFFYGERM posted...

, what is their total tax rate when including all federal, fica, medicare, state, etc?

FLUFFYGERM posted...

get rid of all deductions and exemptions across the board and make a flat tax of 30% for everyone

its almost like you know that youre trolling

fun to watch
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