The GOP Tax Reform/Cuts Plan
I have to agree with SKA that the lawsuit is a distraction. We don't need Cuomo, Brown and Murphy doing more self-serving press conferences Rather, we need some or all of the 6 senators and 90 HR members from the 3 states to form a coalition for tax purposes to at least try to negotiate a better bill. As a factual matter, it is correct that the republicans don't need any votes but that does not mean that they would not welcome them so that they can say it was bipartisan effort. Moreover, I don't think it's acceptable for the democrats to say that "they don't need us" so we are not going to try to help our constituents. I fear that (and both sides are guilty of this) instead of trying to enact fair legislation for constituents, every issue has to be used as a wedge issue in the "next election". I may be showing my age, but it used to be commonplace for bi-partisan deals to be cut but now it seems that members are too afraid of offending either their hard-right or hard-left bases, as the case may be.
Grambling said:
I have to agree with SKA that the lawsuit is a distraction. We don't need Cuomo, Brown and Murphy doing more self-serving press conferences Rather, we need some or all of the 6 senators and 90 HR members from the 3 states to form a coalition for tax purposes to at least try to negotiate a better bill. As a factual matter, it is correct that the republicans don't need any votes but that does not mean that they would not welcome them so that they can say it was bipartisan effort. Moreover, I don't think it's acceptable for the democrats to say that "they don't need us" so we are not going to try to help our constituents. I fear that (and both sides are guilty of this) instead of trying to enact fair legislation for constituents, every issue has to be used as a wedge issue in the "next election". I may be showing my age, but it used to be commonplace for bi-partisan deals to be cut but now it seems that members are too afraid of offending either their hard-right or hard-left bases, as the case may be.
Please explain the mechanism by which Paul Ryan and Mitch McConnell allow this coalition to put their proposal to a vote.
The Bill has actually passed both Houses and gone to Conference. The votes for final approval have been counted by McConnell and Ryan. They have made every adjustment they need to keep their members on board.
It would take a miracle for the Democrats or even the Republicans from high tax States to get the Bill changed. But, hey, it's Chanukah, a celebration of a miracle.
The New York Times has a front-page article today about the concerns of Livingston homeowners with the loss of the SALT deduction. It cites Moody's Analytics, which places Essex County at the top of its list of places whose housing markets would suffer the most under the Republicans' tax bill.
“No one gets creamed more than New Jersey from this tax bill,” said Mark Zandi, chief economist for Moody’s Analytics. He said the state was particularly vulnerable because its homes are expensive, its property taxes are the highest in the nation and it also has a high state income tax."
“It’s going to put really severe fiscal pressure on local governments, and they’re going to be between a rock and a hard place,” Mr. Zandi said."
Short of kidnapping, the train to stop the bill has sailed. I do mostly agree with Grambling that maybe the Democrats played it wrong earlier in the process. Had they said, OK we know you REALLY want corporate tax cuts and we will let that go through with 60 votes if you make the individual portion fairer to our constituents. Republicans might have gone for it because with 60 votes in the Senate there would have been more flexibility as to the vote. But the Democrats saw that the Republicans total opposition during the ACA process worked VERY well for them in future election cycles and are banking to benefit in the next election cycle (likely accurately). All is good for parties, bad for the country.
LOST said:
Runner_Guy said:
Does anyone have a legal theory as to how NJ could triumph in the Courts to maintain the SALT deduction?
In other words, what would be our leg to stand on?
Equal Protection of the Laws. For those who would point out that Equal Protection of the Law is a requirement of the States for citizens within that State under the 14th Amendment I would point you to the following Unanimous SCOTUS Opinion
https://en.wikipedia.org/wiki/Bolling_v._Sharpe
I did not know of Bolling v. Sharpe. It's an interesting case.
Paul Mulshine, who is a pro-SALT deduction conservative, suggested that Comptroller of the Treasury of Maryland v. Wynne might apply, since it was about the constitutionality of Maryland counties not granting deductions for taxes paid to other jurisdictions for Maryland county income taxes.
In an ideologically mixed 5-4 opinion (the majority was Alito, joined by Roberts, Kennedy, Breyer, Sotomayor), the SCOTUS said that Maryland's counties had to grant deductions for taxes paid to other jurisdictions, since to not to this would be double-taxation.
However, the SCOTUS majority said that the reason double-taxation was unconstitutional was that it would restrict interstate trade which would violate the "Dormant Commerce Clause."
If it is the federal government that is not granting deductions, there might not be a relevance to interstate trade.
It's intriguing to consider what the Republicans would have done if any Democrats had been willing to go along with a large tax cut.
One one hand, some Republicans consider getting a large majority on a bill as overbidding at an auction, and would rather pass the most conservative bill possible 51-50 or 218-217 than a moderate-conservative bill at 60-40 or 261-174.
On the other hand, Mitch McConnell himself recognizes the value of legislation getting that "bipartisan" label, hence his all-out opposition to the ACA. If McConnell wanted the Congressional Republicans and Trump to be more popular, it would have paid off for them to seek a few Democratic supporters.
It would have taken presidential leadership to pressure the Congressional Republicans to compromise at all and Trump doesn't have that maturity or sense of political strategy.
ska said:
Short of kidnapping, the train to stop the bill has sailed. I do mostly agree with Grambling that maybe the Democrats played it wrong earlier in the process. Had they said, OK we know you REALLY want corporate tax cuts and we will let that go through with 60 votes if you make the individual portion fairer to our constituents. Republicans might have gone for it because with 60 votes in the Senate there would have been more flexibility as to the vote. But the Democrats saw that the Republicans total opposition during the ACA process worked VERY well for them in future election cycles and are banking to benefit in the next election cycle (likely accurately). All is good for parties, bad for the country.
The current political environment is toxic. If a Republican compromises he will be primaried by someone who will take the negative (from a Republican perspective) part of the compromise and take it out of context (the fact that it was a compromise to get something good from the Republican perspective) and likely win the primary. And Democrats now need to worry about the same in reverse from a candidate more "progressive". So it is better for everyone in the party out of power at the moment to oppose everything that is moving to provide cover from being primaried.
I love this idea the Republicans were open to including Democrats. You have to ignore actual Republican actions from 2010 onwards to make this sound plausible.
PVW said:
I love this idea the Republicans were open to including Democrats. You have to ignore actual Republican actions from 2010 onwards to make this sound plausible.
and the tax cut is just the prelude to cutting Medicare and Social Security. If you're the Democrats you don't want to participate in any aspect of this scam.
The other thing people are overlooking is that for quite a while it was looking as though the tax bill wouldn't get through the Senate. I didn't think it was a bad strategy for the Democrats to refuse to throw Republicans a life preserver on this bill if it was going to sink on its own.
I can't even believe that people are talking about scenarios where the Republicans would work with Dems to get this thing passed. While at the same time saying that taking it to the courts is a fantasy.
Have they been sleeping the past few years?
ml1 said:
PVW said:
I love this idea the Republicans were open to including Democrats. You have to ignore actual Republican actions from 2010 onwards to make this sound plausible.
and the tax cut is just the prelude to cutting Medicare and Social Security. If you're the Democrats you don't want to participate in any aspect of this scam.
The other thing people are overlooking is that for quite a while it was looking as though the tax bill wouldn't get through the Senate. I didn't think it was a bad strategy for the Democrats to refuse to throw Republicans a life preserver on this bill if it was going to sink on its own.
Leaving the fantasies of "bipartisanship" and going back to the topic of taxes, here's another reminder of the essential bankruptcy of American "fiscal conservatism":
The Organization for Economic Co-Operation and Development (OECD), a group of 35 wealthy countries, ranks its members by overall tax burden—that is, total tax revenues at every level of government, added together and then expressed as a percentage of GDP—and in latest year for which data is available, 2014, the United States came in fourth to last. Its tax burden was 25.9 percent—substantially less than the OECD average, 34.2 percent. If the United States followed that mean OECD rate, there would be about an extra $1.5 trillion annually for governments to spend on better schools, safer roads, better-trained police, and more accessible health care.
From an article in The Atlantic noting that the simplest reason for our terrible infrastructure is that we simply refuse to pay for it.
nohero said:
Runner_Guy said:Do you have stats supporting your statement. Here's a table of who gets Social Security, by state. I think if you were correct, the percentage of those on Social Security and over 65 in NJ would be a lot lower. Also, fwiw, a higher percentage of those over 65 receive Social Security in NJ than in, say, Florida, which suggests that they're retired.
Also, the stats you see about federal spending as a ratio of federal taxes include things like Social Security and Medicare. Since NJ, due to its own policy decisions, is an inhospitable place to retire to, we don't get a lot of Social Security and Medicare money.
https://www.ssa.gov/policy/docs/statcomps/oasdi_sc/2016/table01.html
When I talked about how NJ's federal spending deficit is partly due to Social Security and Medicare I was thinking of this article from City Journal.
After I saw your response I looked up Social Security spending per capita by state and found that indeed, NJ's retirement benefits per capita are the 12th lowest in the US. (some of the states that get less retirement benefits per capita have their number skewed downward by having very young populations. Utah, whose birthrate is the country's highest, has retirement spending per capita is the lowest in the US.
Since Social Security is 26% of the federal budget and Medicare is 15% of the budget, those two items alone are big contributors to why NJ's federal receipts are so low compared to the federal taxes it pays.
If you factor in military and veterans spending, that accounts for still more of NJ's deficit.
Re: Medicaid
I don't want to get out of my depth here, but I believe the formulas for Medicaid are actually favorable to New Jersey (and New York.)
Some Medicaid formulas are dollar for dollar state:federal matches, so NJ's ability and willingness to spend more on Medicaid increases our federal grants per capita. There are also cost-of-living formulas in Medicaid that benefit New Jersey. There are also various minimum federal share requirements that benefit NJ (ie, NJ's FMAP is the 50% minimum, whereas if the FMAP were based purely on wealth it would be lower.)
Although NJ's income is the 2nd highest or 3rd highest in the US,according to the Kaiser Foundation the federal share of Medicaid spending is actually 60.6% only the 17th lowest in the US. (Virginia has the lowest federal share at 50.2%. I do not know enough about Medicaid to explain why NJ's total share isn't 50%, since that's our FMAP.)
Although NJ's 60.6% federal share is lower than the 75-80% shares that New Mexico, Kentucky, Arkansas, West Virginia, Oregon, Nevada, and Arizona get, in relation to New Jersey's wealth, it's generous and New Jersey has to sacrifice a lot less income than poorer states do.
To look at it in absolute dollars, due to NJ's willingness and ability to tax itself for Medicaid and acceptance of Medicaid expansion, it actually gets more Medicaid money than larger, poorer states. According to Kaiser, in 2016 NJ got $8.8 billion for Medicaid. That's more than North Carolina and Georgia.
New York State is really the titan of federal Medicaid money. In the recent past it got more money than California, although by now it is #2. Anyway, although NYS has only 6% of the US population, it gets 10% of Medicaid money. ($34.4 billion out of $349 billion)
(NJ's Medicaid share is approximately equal to our share of the overall population, but our poverty rate is the 6th lowest, so even getting near parity with our share of the population is actually an example of us getting more federal money per poor resident)
As a New Jerseyan I really wish we got more money (and I loathe the small-state minima in block grants), but we are not treated quite as unfairly as is depicted.
This was always going to get through the Senate. It was just a matter of what vile crap the bill would contain.
ml1 said:
PVW said:
I love this idea the Republicans were open to including Democrats. You have to ignore actual Republican actions from 2010 onwards to make this sound plausible.
and the tax cut is just the prelude to cutting Medicare and Social Security. If you're the Democrats you don't want to participate in any aspect of this scam.
The other thing people are overlooking is that for quite a while it was looking as though the tax bill wouldn't get through the Senate. I didn't think it was a bad strategy for the Democrats to refuse to throw Republicans a life preserver on this bill if it was going to sink on its own.
Why would any sane person want to put their name, address, social security number and income on a postcard and drop it into a mailbox?
Maybe they meant a postcard stuffed into an envelope. Which is so much easier than stuffing a 1040EZ into an envelope.
But Barnum's law prevails: there is still a sucker born every minute.
conandrob240 said:
even NY has much more reasonable property taxes
It varies a lot. The NYC area has high taxes.
Runner_Guy said:
nohero said:When I talked about how NJ's federal spending deficit is partly due to Social Security and Medicare I was thinking of this article from City Journal.
Runner_Guy said:Do you have stats supporting your statement. Here's a table of who gets Social Security, by state. I think if you were correct, the percentage of those on Social Security and over 65 in NJ would be a lot lower. Also, fwiw, a higher percentage of those over 65 receive Social Security in NJ than in, say, Florida, which suggests that they're retired.
Also, the stats you see about federal spending as a ratio of federal taxes include things like Social Security and Medicare. Since NJ, due to its own policy decisions, is an inhospitable place to retire to, we don't get a lot of Social Security and Medicare money.
https://www.ssa.gov/policy/docs/statcomps/oasdi_sc/2016/table01.html
After I saw your response I looked up Social Security spending per capita by state and found that indeed, NJ's retirement benefits per capita are the 12th lowest in the US. (some of the states that get less retirement benefits per capita have their number skewed downward by having very young populations. Utah, whose birthrate is the country's highest, has retirement spending per capita is the lowest in the US.
Since Social Security is 26% of the federal budget and Medicare is 15% of the budget, those two items alone are big contributors to why NJ's federal receipts are so low compared to the federal taxes it pays.
If you factor in military and veterans spending, that accounts for still more of NJ's deficit. ...
So the whole "inhospitable place to retire" thing had nothing to do with it.
nohero said:
Runner_Guy said:
nohero said:When I talked about how NJ's federal spending deficit is partly due to Social Security and Medicare I was thinking of this article from City Journal.
Runner_Guy said:Do you have stats supporting your statement. Here's a table of who gets Social Security, by state. I think if you were correct, the percentage of those on Social Security and over 65 in NJ would be a lot lower. Also, fwiw, a higher percentage of those over 65 receive Social Security in NJ than in, say, Florida, which suggests that they're retired.
Also, the stats you see about federal spending as a ratio of federal taxes include things like Social Security and Medicare. Since NJ, due to its own policy decisions, is an inhospitable place to retire to, we don't get a lot of Social Security and Medicare money.
https://www.ssa.gov/policy/docs/statcomps/oasdi_sc/2016/table01.html
After I saw your response I looked up Social Security spending per capita by state and found that indeed, NJ's retirement benefits per capita are the 12th lowest in the US. (some of the states that get less retirement benefits per capita have their number skewed downward by having very young populations. Utah, whose birthrate is the country's highest, has retirement spending per capita is the lowest in the US.
Since Social Security is 26% of the federal budget and Medicare is 15% of the budget, those two items alone are big contributors to why NJ's federal receipts are so low compared to the federal taxes it pays.
If you factor in military and veterans spending, that accounts for still more of NJ's deficit. ...
So the whole "inhospitable place to retire" thing had nothing to do with it.
If NJ kept more of its retirees, the amount of federal money coming from Social Security and Medicare would be higher. NJ would still have a significant tax:federal spending deficit, but it wouldn't be quite as large as it is now.
See tables A-5 and A-7 in this "Rankings & Estimates" document from the National Education Association. You'll see that NJ, paradoxically, is below average in both the percentage of people aged 0-18 and 65+. The former is due to a below-average birthrate, the latter is due to net outmigration. (if NJ's life expectancy weren't above average, the percentage of people 65+ would be even lower)
Actually, having fewer children further reduces NJ's federal spending since it reduces NJ's federal education grants.
The percentage of New Jerseyans who are 18-65 is the 10th highest in the US, ie, prime working age. Having so many workers relative to students and retirees is yet another reason NJ does so badly in federal spending.
----
I have seen some charts that show NJ at the bottom of the country in terms of federal spending as a percentage of local and state spending.
I think that federal spending per capita is the more valid comparison because the denominator is controlled by state and local spending in percentage-based comparisons, but, for what it's worth, the Tax Foundation actually has NJ's federal spending equaling 27.3% of state revenue.
That's the 39th lowest in the US, but it isn't the bottom of the country either, and the reason it's a low percentage is that NJ's state spending is so high.
So the House "passed" the Bill but because of Senate rules they have to re-vote tomorrow!
Geniuses!
https://www.politico.com/story/2017/12/19/congress-tax-bill-votes-304908
According to Maddow on MSNBC the recent changes to the Bill increases the % of tax breaks going to the very rich from about 60% to 83%. Income inequality is already off the rails. This will make it worse.
A man who ran on the slogan "Make America Great Again" is happily presiding over the beginning of the end of America as a great Nation. Someday it will be one of the greatest ironies of History.
Runner_Guy you really don't get it. Yes, we have an FMAP of 50%, but a higher percentage of MA contributions from the Feds, at least in part, due to the Medicaid expansion under the ACA. So, yes, we here believe (like NY) that people should have access to health care and we're willing to put up a lot of local dollars for it. In response, the red states, that suck off the public teat, want to knock out the SALT deduction to bring our local spending down. In other words, we should all become uneducated and uninsured dolts like they are.
The thing our local NJ legislators do have control over is the 10k cap on property taxes than can be deducted from state income taxes. Don't know what the ultimate economic affect would be from abolishing or raising the cap.
Phil Murphy is on CNBC right now talking about the cap on the SALT deduction. Over a quarter of NJ taxpayers would see a tax increase - an average of $2500.
"New Jersey was never a low tax state. It was a good value for your money state."
Has anyone looked in to prepayment of property taxes? I.e. prepay 2018 taxes before the end of this year so they can be deducted before the 10k cap takes effect next year. I saw some articles about this.
louie_1001 said:
Has anyone looked in to prepayment of property taxes? I.e. prepay 2018 taxes before the end of this year so they can be deducted before the 10k cap takes effect next year. I saw some articles about this.
eta - Also pay the fourth installment of NJ estimated tax before the end of the year instead of waiting until January, 2018.
Be careful, property taxes and state income taxes are NOT deductible for AMT purposes. Paying more property taxes in 2017 (by prepaying 2018 property taxes) may cause folks to be subject to the AMT.
louie_1001 said:
Has anyone looked in to prepayment of property taxes? I.e. prepay 2018 taxes before the end of this year so they can be deducted before the 10k cap takes effect next year. I saw some articles about this.
"THE PREPAY FEATURE HAS BEEN ENABLED ON THE VILLAGE TAX PAYMENT WEBSITE.
Please be advised that you may now prepay your 2018 taxes on our website beyond the first quarter that is coming due in February. Due to many inquiries received in my office regarding the upcoming new tax regulation and requests to prepay some part of 2018, we have asked our software company to make the feature available for anyone interested in paying more than just the first quarter. If your taxes are paid from escrow through your mortgage company, you might want to talk to them first and arrange with them not to pay your upcoming taxes. I hope this will help answer many of the questions we have been getting."
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Equal Protection of the Laws. For those who would point out that Equal Protection of the Law is a requirement of the States for citizens within that State under the 14th Amendment I would point you to the following Unanimous SCOTUS Opinion
https://en.wikipedia.org/wiki/Bolling_v._Sharpe