GOP Sets Table For Eliminating Deduction of State and Local Taxes
If SALT deductions are off the table for the House, then the tax cut bill cannot be rammed through the Senate without debate, right?
to be honest I'm not sure how those rules work.
Does it have to do with the bill's total cost/deficit effect?
mfpark said:
If SALT deductions are off the table for the House, then the tax cut bill cannot be rammed through the Senate without debate, right?
drummerboy said:
to be honest I'm not sure how those rules work.
Does it have to do with the bill's total cost/deficit effect?
mfpark said:
If SALT deductions are off the table for the House, then the tax cut bill cannot be rammed through the Senate without debate, right?
my understanding is that the bill has to be "revenue neutral" to go to a vote without debate.
Wathched a brief interview last night with a (R) from NY who said they had a meeting after the vote and he kind of implied, as mikescott had posted, that there will be a compromise on how much SALT deductions will be allowed. He stated he voted no yesterday and that he wants it all included, while other republicans wanted none. So in his words "We are just looking for the sweet spot that we can all live with. We all agree we need to get this passed this year, so we will compromise and it will get done before Christmas".
The question now becomes, what is the sweet spot?
The House passed the Budget as presented by the Senate, meaning that it was a "reconciliation" approval and therefore was not subject to debate or amendment by Democrats or even wayward GOP members. Some GOP representatives counted noses and figured they could vote against it without derailing the bill (all NJ GOP reps, for example, except Rodney the Weak); others voted for it saying it would allow the real discussion on tax reform to happen and they would weigh in at that time (Rodney the weak, again, claiming his yes vote would help his Appropriations Committee to get other things done).
Step Two is for the GOP to now come up with a tax reform plan that theoretically works within this budget approval. They say they are going to do this the old fashioned way--with full hearings in both chambers and lots of daylight, as opposed to the way ACA destruction was crafted in covert meetings in the Senate men's room. Don't bet the house (or senate) on this. It has already started out contentious, and it will only get far worse. And that is just the GOP side of the aisle weighing in.
They technically have authorization in the reconciliation bill to go until September 2018 (end of next fiscal year) to get the tax reform bill done, but they say they will have it ready for year end 2017 for Trump to sign. I would not bet lunch money on this one happening.
I think they will get some sort of tax reform passed before years end. They need to show something accomplished to their supporters.
Not saying it will be good, but I think they make it happen one way or another.
sigh.
The phrase "tax reform" is like the phrase "death tax". It is a deliberate attempt to frame a policy in a way that distorts its real intent. Every time it's used you're helping to promulgate propaganda.
What's on the table right now is a tax cut for the wealthy. Pure and simple. That describes it far more accurately than "tax reform".
Conservatives have been playing with language this way full bore since Newt came on board in the 90's, and they must have a grand old time and big old belly laugh every time they hear a liberal help them out, which is an awful lot.
http://www.wnyc.org/story/tax-reform?tab=transcript
==========================================================
BROOKE GLADSTONE: There are a couple of other words that we've heard a lot in the news this week pertaining to the Trump administration's announcement Wednesday outlining its proposal for tax cuts. It’s framed both in liberal and conservative media as tax reform or overhaul.
[CLIPS]:
FEMALE CORRESPONDENT: The president's broad brush plan for tax reform, they called it historic and the biggest ever.
MALE CORRESPONDENT: President Trump today taking the lead on tax reform, proposing a massive overhaul.
[END CLIP]
BROOKE GLADSTONE: But is it really that?
GEORGE LAKOFF: Not at all. The word “reform” assumes that there's something bad that needs to be made better and the reform would make it better. What George Bush did when he first came into office, he talked about tax relief.
[CLIP]:
PRESIDENT GEORGE BUSH: And starting in 2001, we delivered the largest tax relief since Ronald Reagan was in the White House.
[SOUND OF CLAPPING/END CLIP]
“Relief” says there’s something wrong going on here, people need relief from taxes and if you want higher taxes on anybody then you’re a bad guy.
BROOKE GLADSTONE: So what kind of word would you substitute for, say, “reform”?
GEORGE LAKOFF: We don’t have a simple word for it. The way to say it is it makes billionaires richer and everybody else poorer.
FYI...there's talk now of preserving the property tax deduction and only eliminating the income tax deductions.
Runner_Guy said:
FYI...there's talk now of preserving the property tax deduction and only eliminating the income tax deductions.
https://www.usatoday.com/story/news/politics/2017/10/25/deal-works-could-save-property-tax-deduction-some-key-house-chairman-says/800131001/
Right, as in, cave in to the National Association of Home Builders pressure but still screw over the northeast liberal high tax states (they are also pushing for the mortgage interest deduction to remain).
Paul Mulshine, of all people, said something interesting today in the Star Ledger. He pointed out that New Hampshire has very high property taxes and no income tax, so this new proposal benefits them significantly. Since property taxes and income taxes are fungibles--both used to fund the same things--then if the GOP goes along with the NAHB logic they should do the same with local income taxes.
One thing I hope does NOT come of this is for New Jersey to push more state funding into property taxes with lower income taxes, as NH does. This is totally regressive and will screw the middle class and retirees.
I actually think that decreasing the headline rate of corporate taxes and allowing repatriation is important to put us in line with other countries. So I have no issue there.
What is unconscionable is eliminating the estate tax.
https://www.bloomberg.com/news/articles/2017-10-31/is-the-death-tax-debate-finally-over
It brings in $18 billion currently but only 0.2% of all estates pay a federal tax. Given the threshold these are not one would reasonably call a "small business" owner.
I am curious about your comment about changing the "headline rate" on corporate taxes. I am unfamiliar with that term, but I assume it means the face rate or stated rate? If so, don't you think corporate bosses are savvy enough to know that the face rate has nothing to do with the effective rate? The effective US corporate tax rate, given all the state concessions and deductions and avoidance loopholes, is a lot lower than in many industrialized nations a lot lower than the face rate, and comparable to most of our main competitors and I am certain that they know this. Sure, Ireland and a few others are ridiculously low, but most are not.
So I would support the image of lowering the top rates provided we also close loopholes and deductions, and sadly that is not anywhere on the table at this time. Without fixing deductions and loopholes, the GOP plan is a real sham and will increase our deficit.
As for "repatriation", the GOP does not have the balls to do what needs to be done. Nor does the Democratic Party.
(Edited to correct for my own misconceptions)
I have no problem with reducing the nominal tax rate for corporations IF they eliminate all the BS loopholes which allow corporations to pay a very low effective tax rate on average.
ska said:
I actually think that decreasing the headline rate of corporate taxes and allowing repatriation is important to put us in line with other countries. So I have no issue there.
What is unconscionable is eliminating the estate tax.
https://www.bloomberg.com/news/articles/2017-10-31/is-the-death-tax-debate-finally-over
It brings in $18 billion currently but only 0.2% of all estates pay a federal tax. Given the threshold these are not one would reasonably call a "small business" owner.
whatever largesse this tax bill bestows on corporations, whether in a tax rate cut or with repatriation, it will do nothing but increase their already record profits and enrich their stockholders through buybacks.
I just can't believe they have the balls to say that cutting corp taxes will increase worker pay by $4000. Supply-side economics is nothing but a hodgepodge of claims that have only the barest connection to reality, but this claim is truly one for the ages.
Sadly, the Trump-horde believe it.
And the republicans love this game because when a democrat is elected again as president they will be forced to raise taxes to clean up the mess (again) and will be wrongly blamed/labeled.
this tax bill is a disaster UNLESS you are part of the 2%.
I'm a bit distressed at the the very meager pushback I'm seeing from the Dems on this. This cut will really be a disaster, probably worse than the Dubya cuts.
Anyway, I hope Ms Pelosi and Mr Schumer have something in their back pockets that they'll be pulling out to try and head this off.
mikescott said:
And the republicans love this game because when a democrat is elected again as president they will be forced to raise taxes to clean up the mess (again) and will be wrongly blamed/labeled.
this tax bill is a disaster UNLESS you are part of the 2%.
If corporations can increase their profits more in Ireland they will gladly do it.
Photos of golden showers
drummerboy said:
Anyway, I hope Ms Pelosi and Mr Schumer have something in their back pockets that they'll be pulling out to try and head this off.
I think ska means that so long as Ireland keeps corporate taxes really low they will continue to attract US corporations. What is forgotten is that even though capital is pretty fluid, sovereign nations can and do control its flow and tax it accordingly. There are a lot of ways the US can disadvantage corporations that are based elsewhere but generate enormous profits in the US--of course, that is protectionism, etc when looked at from some perspectives.
Maybe I’m missing something here but don’t we (especially here in NJ- Essex) save much more by preserving property vs. income?
As I understand it a family making $75k pays $3938 in state income tax, $150k- $8715. What’s the average property tax in SOMA- like $16k? It’s not even close as I see it. Now if you’re saying we shouldn’t give up anything, that’s a different argument (that I would support).
mfpark said:
Runner_Guy said:
FYI...there's talk now of preserving the property tax deduction and only eliminating the income tax deductions.
https://www.usatoday.com/story/news/politics/2017/10/25/deal-works-could-save-property-tax-deduction-some-key-house-chairman-says/800131001/
Right, as in, cave in to the National Association of Home Builders pressure but still screw over the northeast liberal high tax states (they are also pushing for the mortgage interest deduction to remain).
Paul Mulshine, of all people, said something interesting today in the Star Ledger. He pointed out that New Hampshire has very high property taxes and no income tax, so this new proposal benefits them significantly. Since property taxes and income taxes are fungibles--both used to fund the same things--then if the GOP goes along with the NAHB logic they should do the same with local income taxes.
One thing I hope does NOT come of this is for New Jersey to push more state funding into property taxes with lower income taxes, as NH does. This is totally regressive and will screw the middle class and retirees.
Not sure I follow you Red. My point is that if the property tax deduction is maintained, which it looks like it will be in the bill particulars about to be released, but the income tax deduction is eliminated then one approach to offset the huge federal tax increase to New Jerseyians who itemize would be to shift far more state revenue into the property tax category somehow and reduce state income taxes and sales taxes drastically. I can see this being seriously proposed by some.
But if this happens it will create an even more unfair distribution of the burdens of society, as the wealthiest will receive the most benefit from income tax cuts while folks on fixed incomes especially will get screwed royally on property tax increases.
My point was to compare the value received by a home owning taxpayer from income tax vs. property tax. It sounds to me like you are saying that in response to the scenario, the state will increase it's budgetary reliance on property taxes and thus increase it. I dont think that's realistic. The state or municipality still gets the same income and property taxes so their budgets should be unaffected. The only thing that is changing is the deduction taken against a federal tax by that taxpayer.
But its possible I'm not following you.
I think we're falling into their trap if we start talking about preserving either income tax or property tax deductions. We need to preserve both. And why not? As demonstrated here already, they go to the same place to pay for the same infrastructure and services. Why should it matter whether the check has "State Of New Jersey" or "Township of Maplewood" across the top?
Keeping the Property Tax deduction but eliminating the Income Tax reduction hurts renters including many senior citizens who have sold their houses and downsized.
The GOP attempt to eliminate the SALT deduction doesn't surprise me, but preserving the property tax deduction does.
If property taxes were deductible but income taxes weren't, then states will be incentivized to load up on property taxes and minimize income taxes. Since different towns are differently endowed with non-residential ratables, it would exacerbate a lot of intrastate inequality.
States would want to create statewide property taxes to replace non-deductible income taxes. This is hardly something Republicans should want.
For states that have low property taxes due to statutory or constitutional prohibitions property tax increases, like CA and MA, it would be chaotic as they attempt to figure out ways to move revenue sources onto property taxes.
Given the GOP's ideological predilections and geographic base, eliminating the SALT deduction isn't surprising, but why would they want to put a thumb on the scale for one kind of state/local tax over another?
The only reason the GOP would do this is just to get NJ & NY Republicans to support their plan.
It would be less bad if the GOP made all SALT taxes only 50% deductible or have some income ceiling for the deduction. Preserving the property tax deduction is the worst compromise I can think of.
-----
I agree with Red Barchetta that, in a way, keeping the property tax deduction and eliminating the income tax deduction would be less bad for NJ than the reverse. NJ's income taxes for low-income people are low and for middle-income people are only a little above average. In income taxes we not the outlier that we are on property taxes.
Red_Barchetta said:
Maybe I’m missing something here but don’t we (especially here in NJ- Essex) save much more by preserving property vs. income?
As I understand it a family making $75k pays $3938 in state income tax, $150k- $8715. What’s the average property tax in SOMA- like $16k? It’s not even close as I see it. Now if you’re saying we shouldn’t give up anything, that’s a different argument (that I would support).
mfpark said:
Runner_Guy said:
FYI...there's talk now of preserving the property tax deduction and only eliminating the income tax deductions.
https://www.usatoday.com/story/news/politics/2017/10/25/deal-works-could-save-property-tax-deduction-some-key-house-chairman-says/800131001/
Right, as in, cave in to the National Association of Home Builders pressure but still screw over the northeast liberal high tax states (they are also pushing for the mortgage interest deduction to remain).
Paul Mulshine, of all people, said something interesting today in the Star Ledger. He pointed out that New Hampshire has very high property taxes and no income tax, so this new proposal benefits them significantly. Since property taxes and income taxes are fungibles--both used to fund the same things--then if the GOP goes along with the NAHB logic they should do the same with local income taxes.
One thing I hope does NOT come of this is for New Jersey to push more state funding into property taxes with lower income taxes, as NH does. This is totally regressive and will screw the middle class and retirees.
NAHB. Period.
Same with Mortgage Interest deduction, which will remain.
Runner_Guy said:
The GOP attempt to eliminate the SALT deduction doesn't surprise me, but preserving the property tax deduction does.
tom said:
I think we're falling into their trap if we start talking about preserving either income tax or property tax deductions. We need to preserve both. And why not? As demonstrated here already, they go to the same place to pay for the same infrastructure and services. Why should it matter whether the check has "State Of New Jersey" or "Township of Maplewood" across the top?
it's this.
Eliminating these deductions is an attempt at really sticking it to states that try to raise revenue to provide services and pay public sector workers a fair wage. It's ideological for these Republicans. They hate that any states are trying to make life more livable for its residents. They'd like everyone to live in toxic hell holes with dirt roads and schoolbooks from 1970. F them. Why should it be any business of theirs what NJ or MA or CA or NY wants to pay its school teachers?
Eliminating these deductions is an attempt at really sticking it to states that try to raise revenue to provide services and pay public sector workers a fair wage. It's ideological for these Republicans. They hate that any states are trying to make life more livable for its residents. They'd like everyone to live in toxic hell holes with dirt roads and schoolbooks from 1970. F them. Why should it be any business of theirs what NJ or MA or CA or NY wants to pay its school teachers?
It's funny that you should mention dirt roads. Wisconsin is going back to some gravel roads to save money.
https://www.wpr.org/small-wisconsin-towns-paved-roads-return-gravel
wedjet said:
Eliminating these deductions is an attempt at really sticking it to states that try to raise revenue to provide services and pay public sector workers a fair wage. It's ideological for these Republicans. They hate that any states are trying to make life more livable for its residents. They'd like everyone to live in toxic hell holes with dirt roads and schoolbooks from 1970. F them. Why should it be any business of theirs what NJ or MA or CA or NY wants to pay its school teachers?
It's funny that you should mention dirt roads. Wisconsin is going back to some gravel roads to save money.
https://www.wpr.org/small-wisconsin-towns-paved-roads-return-gravel
It was no coincidence I chose that term. A lot of states are tearing up their roads because they don't have the funds to maintain them. It looked for awhile like we might have got to that point in NJ, with Christie refusing to sign off on a gas tax increase.
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I can't help but think that both the SALT and 401k deduction planks are head fakes so that when they end up not being implemented, people will be grateful to the R's largesse, and then more willingly accept the siht sandwich they planned on feeding us in the first place.