GOP Sets Table For Eliminating Deduction of State and Local Taxes

Some reactions:

Several influential business groups slammed the proposal.

The National Federation of Independent Business announced its opposition, citing restrictions lawmakers included on which small businesses can claim their lower tax rate on unincorporated "pass-through" firms. The issue has been one of the most difficult for lawmakers to work out, and could prove to be one of the most contentious going forward.

Though lawmakers would reduce the rate on those businesses to 25 percent, there would be limits on which firms could take advantage, provisions designed to avoid gaming by wealthy individuals.

Under the proposal, pass-throughs would get the lower rate on 30 percent of their profits, with the remainder taxed at ordinary income tax rates, though there would be circumstances in which businesses could qualify for a bigger share being subject to the special rate. That means, though, that some pass- throughs would actually pay more than 25 percent under the plan.

“This bill leaves too many small businesses behind,” said Juanita Duggan, the group’s president. “We believe that tax reform should provide substantial relief to all small businesses.”

The National Association of Home Builders said the legislation “eviscerates” housing tax benefits, and “abandons middle class taxpayers.”

The National Association of Realtors meanwhile has already begun lobbying against the proposal, running online ads in tax writers’ districts. “Don’t let tax reform become a tax increase for middle-class homeowners,” the ad says.

Other business groups embraced the plan, including the U.S. Chamber of Commerce and the Business Roundtable.

“This bold tax reform bill is exactly what our nation needs to get our economy growing faster,” said Neil Bradley, a senior vice president at the Chamber of Commerce. Said Jamie Dimon, head of JP Morgan Chase & Co. and the Business Roundtable: "We support this tax reform effort because it is good for all Americans."

So small business is against it and big business is for it. How surprising!

Republican pro-lifers tend to be pro-white.  

U.S. distribution of adopted children by race:

LOST said:

So what's the likelihood of this passing as is?

For example, how is this going to fly with the Republican "Pro-Life" base?

Runner_Guy said:

Wow. This is bad.

The Republicans promote adoption as an alternative to abortion, but they are getting rid of the adoption tax credit? 

And where are they going with this:

Runner_Guy said:


Making disabled people pay more is bad too. 

Kevin Drum has a good post on how the tax plan is a deliberate attack against blue states. Not only SALT, but the mortgage deduction change also hits blue states far more than red states.

http://www.motherjones.com/kevin-drum/2017/11/charts-of-the-day-how-republicans-are-using-the-tax-code-to-screw-blue-states/

and you know, the worst part of this proposal is how it will starve the government from spending on infrastructure, which we so desperately need.

Welcome to the land of 21st century dirt roads!

https://www.wpr.org/small-wisconsin-towns-paved-roads-return-gravel

annnd deletes the deduction for medical expenses.

https://www.google.com/search?q=what+does+republican+tax+proposal+do+about+medical+expenses&ie=utf-8&oe=utf-8

See Ryan smirk.  See the assortment of Montgomery Burnses behind him burp and grin.

These debates always anger me because it is always a debate about who wins and who loses.    We cannot afford to pass big tax cuts for anyone.  I'm all for simplifying the tax code, but revenue needs to go up.  We need to start reducing deficits and these schemes always start with tax cuts, but never proper revenue replacement.  They stir the pot, and end up with less in it.

yes, filmcarp, smoke and mirrors every time.  it's hard to know which is more maddening, the detailed flimflam of whatever is currently being considered, or the decades of Grover Norquist and his boys refusing ever to consider the welfare of the nation.

ml1 said:

it this passes, it might be the last straw for GOP House members in NY, CA, MA, NJ, etc.  Even the people in Monmouth County might vote for Democrats if they get screwed over this bad.

Got that right.

tom said:

Disney World belongs to the Disney Corporation. The National Parks belong to us. 

Thank you.  I've been having this vision in my head of "Trump Resorts at Yellowstone."

DottyParker said:

ml1 said:

it this passes, it might be the last straw for GOP House members in NY, CA, MA, NJ, etc.  Even the people in Monmouth County might vote for Democrats if they get screwed over this bad.

Got that right.

Yeah, sure. Just like people believed Obama was native born when his birth certificate was shown.

I said before, this tax "reduction" will not be really noticed until 2019 when people do their 2018 tax returns, after the 2018 elections. Clever.

Sorry for the cynicism.

Paul Ryan's own Wisconsin is in the top-third for taxes.  So are Ohio and Minnesota. It's possible that this bill will endanger Republicans outside of the high-income coastal blue states.  

But Massachusetts's last Republican Congress member is long-gone.  The last Republican Congressmembers from Massachusetts were elected in 1992.

It's extraordinary how many Republican-friendly interest groups (or "special interests") are pissed off about this.  Homebuildings, small business, private equity, and probably others.  Every deduction that the Republicans want to eliminate has some group whose self-interested group defending it.  

DottyParker said:

ml1 said:

it this passes, it might be the last straw for GOP House members in NY, CA, MA, NJ, etc.  Even the people in Monmouth County might vote for Democrats if they get screwed over this bad.

Got that right.

The Senate version of the tax bill, which will be released this afternoon, will restore the deduction for medical expenses, which the House version eliminated. Although the medical deduction is limited to medical costs exceeding 10% of adjusted gross income, its elimination would have hurt a lot of people who have high medical expenses, such as Alzheimer's Care Facilities. 

And isn't the AMT eliminated - which should help many upper middle class/wealthy individuals - even those who lose some of the State/local tax deductions.  

All of the sudden the hypocritical republicans do not care about the deficit.  This will increase it by over a trillion dollars in next 10 years.  These cuts make no sense.... and whomever wins the white house next will be forced to raise taxes  - which will insure they will be a one term president.  It should be illegal to have tax cuts without spending cuts or other sources of revenue.

And it will also make sense for many people to  set up a corporation since those taxes are being slashed so much.

A completely moronic tax bill with no regards for the future of this country. 

Make America Bankrupt -- the trump financial plan to wealth.

I'm considering paying our 1st and 2nd quarter property taxes before the end of the year, so that we can deduct them on this year's taxes. The Senate released it's version of the tax bill and no deduction for state and local taxes. 

The Senate version doubles the existing exemption for estate tax to $11 million for an individual, $22 million for a married couple, rather than eliminating the estate tax entirely. The Senate version also does not eliminate the deduction for medical expenses. 

cramer said:

I'm considering paying our 1st and 2nd quarter property taxes before the end of the year, so that we can deduct them on this year's taxes. The Senate released it's version of the tax bill and no deduction for state and local taxes.

Really smart move, reducing this years taxable income.

You got till the end December to see what is in the new tax law, if passed or not, and advantage can be then taken or not.

Yup.

Is this possible? I thought it was based on annual taxes? It’s based on taxes paid even if “pre-paid”?

BG9 said:

cramer said:

I'm considering paying our 1st and 2nd quarter property taxes before the end of the year, so that we can deduct them on this year's taxes. The Senate released it's version of the tax bill and no deduction for state and local taxes.

Really smart move, reducing this years taxable income.

You got till the end December to see if what is in the new tax law if passed or not and advantage can be then taken or not.

conandrob240 said:

Is this possible? I thought it was based on annual taxes? It’s based on taxes paid even if “pre-paid”?

BG9 said:

cramer said:

I'm considering paying our 1st and 2nd quarter property taxes before the end of the year, so that we can deduct them on this year's taxes. The Senate released it's version of the tax bill and no deduction for state and local taxes.

Really smart move, reducing this years taxable income.

You got till the end December to see if what is in the new tax law if passed or not and advantage can be then taken or not.

You can get a deduction for paying next year's taxes this year. 

"Even though real estate taxes may not be due until next year, you can pay them early and write off the entire expense this year. The IRS doesn't penalize you if you pay your property taxes early, and it allows you to take the entire tax deduction whether you pay early or on time. Shifting the tax deduction to this year lowers your taxable income for the year."

http://smallbusiness.chron.com/tax-advantages-paying-property-taxes-year-early-21437.html

awesome. Thanks for the tip!

Sanford may vote for the tax bill even though he admitted -

“Fundamentally, this is a corporate business tax bill. It’s what it really is,” Rep. Mark Sanford, R-S.C., told McClatchy.

As of Thursday afternoon, he was still undecided on how he would vote when the House bill comes to the floor next week.

http://www.mcclatchydc.com/news/politics-government/congress/article183763951.html

The House Bill just passed with 13 Republicans mostly from NY and NJ voting "No".

Some Northeast Republicans said ‘No.’

“I just have too many constituents who are going to see their taxes go up,” Representative Lee Zeldin, Republican of New York, who voted against the bill, said at a news conference. “You’re taking more money from a place like New York in order to pay for deeper tax cuts elsewhere,” Mr. Zeldin said.

Of the 13 Republicans who voted against the bill, nine were from New York and New Jersey: Mr. Zeldin, Dan Donovan, John J. Faso, Peter T. King, Elise Stefanik, Rodney Frelinghuysen, Christopher H. Smith, Leonard Lance and Frank A. LoBiondo. Three California Republicans voted against the bill: Darrell Issa, Dana Rohrabacher and Tom McClintock and one North Carolina Republican: Walter B. Jones.

Mr. Donovan, the lone House Republican from New York City, said he and his New York colleagues wanted to cut taxes.” But not on the backs of our constituents,” he said.

Knowing this would get passed makes their votes somewhat meaningless.

A politician may be "allowed" to vote against the party when a party vote can seriously hurt him or her. Hey look, I voted for you, my public. Remember me at election time.

This is allowed when a party has enough votes to be able to give some up.

If the vote was really tight, let's say there were almost as many Democrats as Republican, would they then have voted against the party?

I think so.  In some cases it is more important to go with the needs and interests of the voters who elected you than to go with the political party leadership.

BG9 said:


If the vote was really tight, let's say there were almost as many Democrats as Republican, would they then have voted against the party?

That would be a different scenario. The leadership would have had to change the Bill to get more votes.

All politics is local, after all.

BG9 said:

Knowing this would get passed makes their votes somewhat meaningless.

A politician may be "allowed" to vote against the party when a party vote can seriously hurt him or her. Hey look, I voted for you, my public. Remember me at election time.

This is allowed when a party has enough votes to be able to give some up.

If the vote was really tight, let's say there were almost as many Democrats as Republican, would they then have voted against the party?

The term of art is "catch and release."

I've seen and used the "catch and release" term before to describe the scenario where a Congressperson is allowed to vote against his party's legislation when his vote doesn't affect the outcome anyway.  I even wrote a Wikipedia article on "catch and release."  (the article has since been deleted)

It's too bad that "catch and release" has never caught on because it's a real practice in Congress and a major distinguishing factor between the party discipline that exists in the US and parliamentary systems.

It's unfortunate that there is no way for American voters to tell if a representative is actually voting against something out of conviction or with the approval of his or her party leadership.  

Even if they don't know the term "catch and release," voters realize that their "moderate" representative's "moderation" is ineffective, so punish moderates for the crimes of their party's leadership.   Hence, the growing rarity of moderates, since moderation often doesn't have a political payoff (this is more true of the House where members are obscure than Senate).

Then again, the punishment of fake moderates isn't entirely consistent, so by voting against the tax cut bill, the NY, NJ Republicans might still survive.

Since not all Republicans will electorally own this tax bill, Ryan & McConnell are not 100% sure that they will lose all of their New York, NJ  Republicans, hence, they advance a bill that is very extreme.

So, by letting Representatives fake moderation, we end up getting extreme bills, since a bill that passes by 1 vote is as legal as one that passes with 30.

I'd rather we had stricter party discipline and more moderate bills.

Stoughton said:

BG9 said:

Knowing this would get passed makes their votes somewhat meaningless.

A politician may be "allowed" to vote against the party when a party vote can seriously hurt him or her. Hey look, I voted for you, my public. Remember me at election time.

This is allowed when a party has enough votes to be able to give some up.

If the vote was really tight, let's say there were almost as many Democrats as Republican, would they then have voted against the party?

The term of art is "catch and release."