The TCJA, a Fixable Mistake
Aside from the most basic characteristic of all Repub "tax / economic policy", it being the wrong thing to do at the wrong time, the doubling of the Estate Tax and Gift Tax giveaway to further the "Dynasty Building For The Wealthy" Repub agenda and the cover it provided before its 2026 sunset for all but Trump Crime Family-type "businesses" to pay for it by cutting resources essential to producing broad and wide-range economic expansion and job growth rather than typical Repub Trickle-Down nothingness, proved it to be just another costly Do Nothing, Know Nothing Repub regressive economic blunder.
[B]BROOKINGS
A fixable mistake: The Tax Cuts and Jobs Act.
Sept. 25, 2019[/B]
[URL]https://www.brookings.edu/blog/up-front/2019/09/25/a-fixable-mistake-the-tax-cuts-and-jobs-act/[/URL]
[QUOTE]The Tax Cuts and Jobs Act of 2017 (TCJA, P. L. 115-97) was the largest tax overhaul since 1986. Rushed through Congress without adequate hearings and passed by a near-party-line vote, the law is a major legislative blunder badly in need of correction. The overall critique is simple: by providing large, regressive, deficit-financed tax cuts to an economy with low unemployment, rising long-term inequality, and high debt, the law was the wrong thing at the wrong time. It will take resources from future generations and from todays lower- and middle-income households to enrich todays well-to-do. It will take resources away from other badly needed social and economic priorities. The bill was so unpopular with the public that Republican members of Congress like Chris Collins and Lindsey Graham resorted to justifying their support by saying that their donors would cut off funding otherwise.[/QUOTE]
Only applies to 0. 2% of the US population
[QUOTE=Tiny12;2815196]When I wrote, "so when you hear someone say that the Republican tax cuts just helped the better off and didn't do jack for the workingman, realize he's full of it," I wasn't referring to you or other esteemed board members. Rather I was referring to politicians, the media, and partisan hired guns like William G. Gale, who wrote the Brookings piece.
The gift and estate tax levy is akin to what Nazis did to Jews before World War II, only applied instead to rich people. It entails taking 40% of everything that a person gives away or dies with, in excess of the exemption. Describing the increase in the exemption as a giveaway is baloney. You're justifying theft.
Furthermore you are wrong about the Qualified Business Income deduction. It sunsets on December 31, 2025.
As to your link, Gale is right in one respect. Republicans controlled the presidency, House and Senate in 2017 and 2018, and are reputedly the party of fiscal sanity. IMHO they should have cut spending. Certainly, given that the economy was in good shape, they should have managed to reduce the national debt as a % of GDP. Instead it grew marginally.
That said, the estimated $1.5 trillion cost of the TCJA over a 10 year period was peanuts compared to the $5 trillion+ in additional spending authorized by Democrats when they controlled the presidency, House and Senate in 2021 and 2022. I put cost in quotation marks, because leaving more money in the hands of the people and businesses is not a cost.
When Gale, in his 2019 piece, characterizes the TCJA as regressive, he's full of shit. At that point in time, you could have looked at the tax tables and known that. The marginal rates on people making $200,000 to $424,000 actually went up, from 33% to 35%.
At this point in time we have the benefit of more history, including IRS tax statistics for the year after the cuts took effect. You can pull them here:
[URL]https://www.irs.gov/statistics/soi-tax-stats-individual-statistical-tables-by-size-of-adjusted-gross-income[/URL]
Haskins (see link in my last post) simply compared 2018 tax paid to 2017 tax paid. If you're handy with Excel you can do the same thing in about 30 minutes. All the effects of the TCJA, not just the changes in the tax brackets, are manifested in the actual amounts of taxes paid. Thus say a wealthy businessman benefits from lower tax rates from the Qualified Business Income deduction. That's incorporated into the tax he paid in 2018. Maybe he owns stock in a company. The dividends are higher and the share price goes up because the corporate income tax was lowered, and, as encouraged by the TCJA, the company repatriated cash from overseas. He collects the dividends and sells the stock and that gain is incorporated in his 2018 income.
I don't see how you can argue with that, and if your man Gale revisited his 2019 piece, he'd have to eat crow.
History has proven Gale wrong in other ways. Here's a 2022 piece from an economist at the Federal Reserve,
[URL]https://www.dallasfed.org/research/papers/2020/wp2001#:~:text=The%20estimates%20imply%20a%20tax,cost%20of%20nearly%20%24158%20billion. [/URL]
The economist, Anil Kumar, estimates the TCJA resulted in 1.5 million more jobs. GDP at the end of 3 years was 1.23 percentage points higher than it would have been otherwise. The loss in tax revenue was 0.8% of GDP. Going past three years, undoubtedly GDP will continue to grow in excess of what it would have if we'd kept the pre-TCJA tax regime in place. Please note that 1.23% increase by 2020 is much higher than the 0.5% increase by 2028 quoted by your man Gale.
Furthermore, your man Gale was wrong about corporate tax revenues. Corporate tax revenues only fell by 2.3% for 2017 to 2018, and 6% for 2018 to 2019. The TCJA, with lower corporate rates, higher tax rates on foreign income, and provisions to encourage repatriation of cash from overseas, encouraged companies to invest in the USA instead of other countries. But it took some time for that to happen, and in 2022 corporate tax revenues were the highest since 2014.
[URL]https://fred.stlouisfed.org/series/FCTAX[/URL][/QUOTE]The estate tax of 10 million wasn't high enough, they needed to raise it, because so many of us are bequeathing 10 million dollars? Seriously? This is who our government prioritizes?
Interesting cuts wish list just to move the godawful TCJA closer to cost-neutral
[QUOTE=Tiny12;2815296]If I were dictator? I'd cut the military. We already spend more than the next highest 9 countries put together on defense. And move spending and taxation to the states and localities over time. The power of the purse and decisions on how to spend are best made closest to the people, not in Washington D.C. This would entail cuts in education, health, transportation, housing, labor, etc. Cut out most agriculture subsidies and corporate welfare. And with time replace Social Security and Medicare with something like what Singapore has, where individuals use their own accounts funded through payroll contributions to pay for retirement and, say, the first $10,000 of medical expense per year. That would be backed up with a safety net, including medical insurance. You'd keep expenditures at the federal level which make sense. I'd probably fund the NIH and pandemic preparedness expenditure at similar levels as you would if you were dictator, for example. And we do need a military, just a smaller one.
This left-of-center Tax Policy Center piece must be dated too, like the Brookings piece. They say, "Tax revenues will average just 16.7 percent of GDP from 2020 to 2024, according to CBO's latest projections. That's well below the 17.4 percent of GDP average from 1970 to 2019. " First of all, from an Excel download of the following data, the average federal receipts as a % of GDP from 1970 to 2019 were 17.0%. Federal receipts as a % of GDP in fiscal 2021 and 2022 were 17.4% and 19.2% respectively. Receipts in 2022 were in fact the second highest of any year since 1945, and the fourth highest in American history. And the only tax changes the Democratic government which controlled the presidency and Congress during 2021 and 2022 made didn't take effect until January 1, 2023. So tax revenues under the TCJA tax regime are far outperforming what the CBO predicted.
[URL]https://fred.stlouisfed.org/series/FYFRGDA188S[/URL]
Absolutely untrue. Please recall the Federal Reserve piece from 2022 that estimated the TCJA added 1.5 million jobs. Tax cuts create jobs. From Mertens and Ravn's classic paper, "A cut in the APITR (average personal income tax rate) raises employment, lowers the unemployment rate, and increases hours worked per worker. " Which makes sense. When the government's taking less of your paycheck, you're more motivated to work. There's probably some kind of multiplier effect too, where by leaving more money in the hands of the people to spend on consumption you end up growing employment.
[URL]https://discovery.ucl.ac.uk/id/eprint/1359910/1/aer.103.4.1212.pdf[/URL]
Well, the Trump family owns pass through entities like LLC's and Sub S Corporations. The tax breaks for those expires at the end of 2025. The permanent cuts for for C Corporations, and I don't believe they account for a significant part of the family's worth.
I believe in treating taxpayers equally so would agree with you about the special tax break businesses like Trump's received in the TCJA. Only large companies with either lots of employment expense or lots of depreciation expense received the benefit of the QBI deduction, and Trump's rental real estate businesses qualified. I also agree with you about the corporate shield and dodging taxes. It's nuts that Trump was able to bankrupt his Atlantic City operation, and as a result receive $900 million in carried forward tax losses that he used to shield income in future years. It was his bondholders that lost the money, and yet he still ended up with the tax deduction. There's a good NYT series on this if you're interested.[/QUOTE]Aside from the fact that my point has always been that the $Trillions+ Repub TCJA created FEWER jobs for America with it than without it, proven by your citation of it supposedly creating a paltry 1. 5 million jobs in an uncited or specified number of years vs the number of jobs that were created in that same span of years prior to the passage of it, now that we are down to what would need to be cut in order to pay the extraordinary deficit-ballooning cost of it, do you have any estimation of the millions upon millions of jobs that would be wiped out, what that would do to the economy and for how many years or decades should your dictatorial cuts wish list come true?
You have provided more proof for how and why Repub tax cuts / policy have been and still are disastrous for the USA economy. Maybe Repubs should all move to Singapore and live in Repub Nirvana bliss. Although I'm not sure how another primary goal of Repubs besides wiping out millions of USA jobs, crashing the USA economy and making already wealthy corporations even wealthier, namely to make sure every school child-hating loon is armed with a fully loaded AR-15, will go over with the Singaporeans.
Reparations incoming / outgoing
Interesting inititaive taken by California here:
[URL]https://edition.cnn.com/2023/05/08/us/california-reparations-task-force/index.html[/URL]
If it goes ahead, it would set a precedent for other states.
Caricom (an organisation of Caribbean nations) is also pressing Europe for reparations:
[URL]https://caricom.org/caricom-ten-point-plan-for-reparatory-justice/[/URL]