If you disapprove of this mess of a tax plan, you’re a) not alone, and b) not a House/Senate Republican

December 1st, 2017 at 9:53 am

Over at WaPo.

Most of the numbers on showing whose taxes go up under this plan focus on years from now, when it’s fully phased in. For example, by 2027, 70% of households with incomes below $200K (that’s about 150 million) either face tax increases or not much change at all.

But as I show in the piece, referencing some useful analysis by the WSJ, some families that lose deductions (state/local, medical expenses) get dinged right away.

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23 comments in reply to "If you disapprove of this mess of a tax plan, you’re a) not alone, and b) not a House/Senate Republican"

  1. Whatever says:

    People might be surprised that actually calling their senator works. It works. People from all sides of this issue should call their senators to stop this disaster.


  2. D C Sessions says:

    it does not seem to me much of a reach to believe that people’s hard-nosed disdain for this plan could be channeled into support for an agenda around taxes, jobs, wages, college, health care, housing, education and infrastructure that truly represented their needs and wants.

    Only if they can convince the voters that those jobs etc. only go to “white Christians.”


    • Maggie Mahar says:

      D.C.-

      Yes, many people who are not happy with this tax plan would support all of those things.

      But they’ll have to understand that:

      a) in order to be able to afford universal health care, everyone will have to contribute to the pool by buying health insurance (as everyone does in Europe, paying for much of the insurance through their taxes). Alternatively, we could hike the penalties for
      those who choose not to buy insurance.

      b) fFr universal health care to be affordable, the govt will have to regulate the prices that drug-makers, device-makers, hospitals & specialists can charge.

      c) All of the other needs that you mention will require $$–which probably means
      raising taxes on the upper/middle class (roughly families earning more than $150,000). while also close some loopholes that favor wealthy investors & businesses.


  3. Smith says:

    You’re full of it. Obama and Clinton (Hillary) both favored lowering the corporate rate, although they conditioned this on closing some loopholes. In principle, they agreed with Trump. As George Will used to say on This Week With David Brinkley, given the choice between a Republican and a Republican, people will choose the Republican. He attributed the phrase to someone, but I don’t recall if he cited Truman in 1952:

    https://www.trumanlibrary.org/publicpapers/index.php?pid=1296
    “I’ve seen it happen time after time. When the Democratic candidate allows himself to be put on the defensive and starts apologizing for the New Deal and the fair Deal, and says he really doesn’t believe in them, he is sure to lose. The people don’t want a phony Democrat. If it’s a choice between a genuine Republican, and a Republican in Democratic clothing, the people will choose the genuine article, every time; that is, they will take a Republican before they will a phony Democrat, and I don’t want any phony Democratic candidates in this campaign.”

    Also, it’s hypocritical to say the tax cuts must be paid for, but increased social and infrastructure spending that Krugman and Summers advocate to offset sec stag don’t. It’s a $20 trillion economy, so $200 billion deficit adds an extra 1% a year, which at full capacity adds 1% additional inflation. Fortunately due to the weak recover during the Obama years (whosever fault it was) estimates vary from a few percent to ten percent under capacity.


    • Smith says:

      It is a testimony to Clinton’s (HIllary) political acumen that she managed to be both too liberal, favoring increased immigration and globalization, and too conservative, new taxes only on incomes greater than $5 million, and financial transaction tax (or maybe no Fin Trans Tax, see link below).

      https://www.cnbc.com/2016/07/22/hillary-clintons-financial-transaction-tax-why-it-may-not-work.html

      Also, ask yourself how the Republicans are able to get anything done with 52 Senators, when the Democrats seemed powerless with (60 until Kennedy replaced in special election) 59, 53, and 55 for the first six years of Obama’s term.

      Are the Democrats really that inept, or is it that they benefit from just making a show of opposition, to satisfy the base, but allow the Republicans to win, and the Democrats keep their rich donors, corporate sponsors, and upper class liberal urban and suburbans to prosper? The Dem pols can have it all, living the American dream.


    • Another Matt says:

      Hold on, didn’t they favor lowering the nominal corporate rate but increasing the actual rate paid to match nominal by closing loopholes? The second part of this is a pretty big deal, isn’t it? There’s always the question of whether they’d be able to follow through, of course.


      • Smith says:

        That business about increasing the low actual rate is a lot of bull, and illogical. Because corporations are getting away with murder, we’re going to legalize their foul crime by still allowing them to pay less than they should, but making it easier for them to do that? Makes no sense.
        There is also this stupid ill informed message that the neo liberal economic advisors to Obama and Clinton gave about nominal corporate rates being too high, and not competitive with European countries and Japan. Totally false. It’s within a few points of Germany, France and Japan. Note that Germany has multiple levels and of corporation tax, and you have to add them (but for all that’s without including regressive sales tax like VAT) The U.K. has lower corporate rates, but they also have much higher personal rates, higher inequality than most of Europe, a conservative government, and Brexit.

        Why not just close the loopholes? Make the political argument against corporations not paying their taxes and workers having to pay. It’s easy. The Democrats don’t do it because they solicit corporate money, and individual donors who work for large corporations. It’s not illegal for Democrats to do this, it’s just wrong. The press and the left don’t call them out on this or challenge them, usually they are inept.
        The Democrats could win without corporate money, but it would be harder, and they would have to think differently, and come up with issues instead of advertising. Too many are comfortable and lazy and set in their ways and too many economic advisors to the party are the same way or just inept (to be sure, present company excepted).


    • Druid says:

      Jared is one of the good guys, and he left the Obama administration because I presume he didn’t agree with Obama’s decisions.

      Jared is definitely a good guy fighting a system that seems to be collapsing in front of our eyes.


      • Smith says:

        Jared is one of the good guys, but you have to play by the same rules you set for others. If tax cuts and deficits and future costs are ok for one team they have to be ok for the other.
        The problem with the cuts is not the size, the deficit, future expiration, or the need of economic stimulus. Why then are we seeing arguments over these points? They are not even winning arguments because they can’t be explained easily. It’s trillion over ten years which is fine. It’s deficit financed, also ok. It creates future costs, as if anyone who has a credit card, a car loan, or student debt doesn’t take that deal every time.
        What I don’t see is real argument against the cuts, which is that corporations and rich people already have too much money. I’m not going to give them more. In fact, while they’re rolling in it is the time to lower the deficit and reduce the debt. Some of that we’ll also use to create jobs with government spending, because the private sector continues to ship jobs overseas.
        See? It isn’t hard to argue for sensible policy without resorting to the same tactics Republicans used against the stimulus. Note the one difference now and then, it’s ok to lower the deficit when the country isn’t facing a depression.


        • Another Matt says:

          I haven’t found the answer on this yet, so maybe you can help. About half the articles I’ve read say it adds $1-$1.4 trillion to the national debt, and the other half say it adds that much to the budget deficit by the end of ten years. Those are very different. I saw a summary of the CBO score, and it wasn’t clear whether the yearly “added deficit” figure compounded on the previous year’s or if that was simply over current baseline.


          • Smith says:

            No, the tax cut is not phased in 1/10 each year, nor is it like a balloon payment growing much larger 10 year out. Just the opposite for this one due to the dubious sunset provisions. Dubious because there will be pressure to extend them just like Obama and the Democrats did for 80 percent of the Bush cuts. Not that you couldn’t engineer cuts phased in, or jumping. For example, part of the Bush cuts did have a big phase in feature where at one point, for one year, the estate tax disappeared.
            Anyway, your confusion is caused by opponents of the cuts who struggle to come up with a big enough number to scare people. $1 trillion is just such a figure. The $100 billion dollar a year cost is not. It’s $19 trillion economy, a $3.5 trillion federal budget, a $500 billion dollar deficit, a $15 trillion dollar public debt, I think. You can google all these figures to check them.
            For sure $1-$1.4 trillion is definitely a cumulative figure of ten years and not an additional 1 year deficit number.
            The type of arguments being used are the same type liberals deplore when used against them. They are also way too complicated to be effective and miss the central point because most Democratic pols are happy to see the Republicans do their dirty work for them, cut taxes for the rich and corporations.


  4. Smith says:

    Also if you have a problem with tax cuts, maybe you should have brought that up with Obama when his stimulus was 1/3 tax cuts.
    http://www.politifact.com/truth-o-meter/statements/2010/feb/10/jon-stewart/stewart-claims-stimulus-bill-one-third-tax-cuts/
    It might be argued that most of the Trump tax cuts go to the rich but that’s a different argument, not about tax cuts, but instead about their targets, about who gets paid off. Big surprise true Republicans skew cuts to big corporations and the rich.
    But yet again it’s hypocritical to complain about his when the Obama and the Democrats retained 80 percent of the Bush tax cuts, which despite the top 1 percent’s loss of their share of the cut, still overwhelmingly favored the rich. This history included Minority Leader Schumer’s insistence that the threshold for cuts get raised from $250,000 to $400,000 (for joint returns). One can argue over Republican threats to stall the recovery, but this was after the 2010 midterms where Democrats took a drubbing by not making extension of the tax cuts an issue. They thought letting them expire was politically inconvenient, but cynically the politicians themselves and their donors benefited greatly from the higher end of the cuts.
    This blog is still plagued by bias painting Republicans totally bad, and Democrats totally good. As such, you seem to blind to what the tax cuts really do. An extra $200 billion can increase inflation, create a bubble, or boost the economy, and at the same time exacerbate inequality.
    The big question is really inflation-higher interest rates-bigger trade deficit triggering a recession, vs more yacht sales a la Krugman’s full employment economy
    https://krugman.blogs.nytimes.com/2013/01/20/inequality-and-recovery/
    Hard to envision serious bottlenecks in the yachtsy economy. Please discuss.


  5. Smith says:

    When last I checked, prior to Trump, the Democrats had control of the White House for 16 of the last 24 years, Senate 12 out of 24, and though the House only 6. That’s a pretty even split, even while inequality rose beyond what rich Reagan conservative backers could ever imagine. One can’t attribute rising inequality to a disproportionate influence from control of the House, because Democrats held control for 38 years prior including the 12 preceding years relative to the most recent 24 year span, 1980 to 1992 when inequality began it’s momentous climb. Please thank Tip O’Neal for his critical assist in destroying the New Deal tax framework that kept the rich in check. When this blog advocates restoring the post WWII tax rates, we’ll know they’re serious about restoring levels of Post WWII equality. Taxes and equality. How is that not obvious one affects the other? Piketty agrees with me, by the way, it’s not a radical thought.


  6. Smith says:

    150 million is the number of personal tax returns filed, not the number of households, which is 125 million.
    https://www.irs.gov/statistics/filing-season-statistics
    https://www.statista.com/statistics/183635/number-of-households-in-the-us/


    • Smith says:

      If one is taking the erroneous count of 150 million households to mean the number in 2027, that figure is still way off. Since 2009, population growth has slowed from 1 percent a year to .7 percent. Even 1 percent leaves you with 139 million, and the .7 percent yields 134 million.
      This is not opinion, why is the 150 million not correctly identified as tax returns instead of households? Lots of other information depends on knowing approximately how many households there are, and not some mislabeled figure that is 20 percent larger (for 2017) or 12 percent larger (for 2027).

      The mislabeled data is coming from Chye-Ching Huang, Deputy Director, Federal Tax Policy, Center on Budget and Policy Priorities,
      https://www.cbpp.org/blog/jct-millions-of-households-face-tax-increase-or-no-tax-benefit-under-senate-gop-bill
      “About 149.8 million households with incomes below $200,000 — or roughly 70 percent of households with incomes below $200,000 — would either lose or gain little from the Senate bill (see Table 2):”
      https://www.cbpp.org/chye-ching-huang
      Table 2 gives source of data as JCTD-17-54, and there is even a link to the report from her cbpp page.

      The Republican led committee is not the guilty party here as the data is clearly labeled tax returns.
      https://www.wsj.com/public/resources/documents/JCT-distribution-of-tax-returns-D-17-54.pdf
      JOINT COMMITTEE ON TAXATION
      November 27, 2017
      D-17-54
      A DISTRIBUTION OF RETURNS BY THE SIZE OF THE TAX CHANGE FOR
      THE “TAX CUTS AND JOBS ACT,”
      AS ORDERED REPORTED BY THE COMMITTEE ON FINANCE ON NOVEMBER 16, 2017

      The data is clearly labeled “Percentage of Returns”

      Tax returns do not equal households. Aside from it being disconcerting that economic analysis is so unfamiliar with basic ballpark estimates of the U.S. demographics and economic data, it has significant consequences for the public’s understanding of economic conditions.
      Biggest example is the oft cited median income around $55,000, and now it’s $59,000 but this is household income, often more than one earner. Actual median income of a person is in the neighborhood of $35,000 , big difference when considering the level of wages, stagnation, minimums, tax rates, inequality, everything. (and that’s before considering the shape of the curve skewed well to the left of the median).
      It also appears the 150 million probably came from the current number of tax returns, so that the equivalent figure for households of 125 million make the 150 number twenty five percent larger than it should be.


      • Smith says:

        Where does the number 183.5 million taxpayers come from?

        https://www.cbpp.org/blog/jct-millions-of-households-face-tax-increase-or-no-tax-benefit-under-senate-gop-bill Table 1.
        2025, millions of filers
        The last column is labeled:
        “Total filers in income category”
        And the last row shows:
        “Total, All Taxpayers 183.5”

        These figures are not in the ballpark, here’s data from 2011, figure A, page 2
        projects for Individual total 156,420,300 in 2018
        https://www.irs.gov/pub/irs-soi/12rswinbulreturnfilings.pdf

        But actual filings in 2015 were lower at 150,493,263
        https://www.irs.gov/pub/irs-soi/15in11si.xls
        https://www.irs.gov/statistics/soi-tax-stats-individual-statistical-tables-by-size-of-adjusted-gross-income#_grp1

        It gets better (or worse one might say) as only a bit under 100 million actually have taxable returns and could be considered “taxpayers” (filing requirements are responsible for the other third of returns).

        But what about joint returns where multiple tax payers are represented by one return? This data, (though a bit outdated in my source) could add another 20 percent as for example number of returns filed in 2012 was 143 million vs 150.5 million 2015
        “44 percent of filers with a federal income tax liability were married couples. If that figure held for 2010, then about 122 million Americans paid federal income tax.”
        https://www.forbes.com/sites/deloitte/2017/10/26/advancing-the-digital-audit/#5ff5b03f6d33

        I suppose it’s possible to reach 183 million by considering the 150 million plus tax filers and adding 23 million additional tax payers included in joint returns (1/2 of 44 percent so as not to double count, and using the 99 million with taxable returns as indicated in the source cited), yielding 173 million and then projecting to 2027 gets you to 187 million, thus overshooting the mark with this bogus concocted figure.

        Again, disconcerting to see an easily checked, basic data figure, widely discrepant from reality. What does this say about hard to catch data errors? Because things like productivity, growth, wages, inflation, are often measured in fractions of a percent change, or less for monthly projections, and second order metrics (monthly change of rates) even more sensitive to small differences.


        • Smith says:

          I also have a problem with analysis that has to reach for the sunset (auto expiration) provision to show a disadvantage. Obama proved the sun never sets on the tax cut empire. Argue over the bogus nature of the sunset and or its effect of deficit. Or highlight the fact your being tricked because the corporate tax cut is permanent, and the people tax cut isn’t. Framing the argument by displaying the effects of not having the cut doesn’t make sense. Otherwise, you’re really saying the tax cuts need to be made permanent. You can’t say you’re better off with no tax cut vs a temporary one.


        • Smith says:

          https://www.cbpp.org/blog/jct-millions-of-households-face-tax-increase-or-no-tax-benefit-under-senate-gop-bill Table 1 and Table 2 are showing in the neighbor hood of 40 million tax filers with incomes over $100,000 in 2025 and 2027. If only. Try about half that number.
          Problem with total number of tax filers (150 million not 180).
          Problem with calling tax filers tax payers (only 99 million are taxable)
          Problem with calling tax filers households. (Only 46% joint returns)
          Problem with number of households (125 million tops)


        • Smith says:

          Here is roughly where the 183 figure in 2027 million comes from, with a nice breakdown of categories for 2016.
          Tax Units 172
          Tax Filers 145
          Tax Payers 95
          They are 2011 figures and estimates fro 2016 are a bit off (99 paying customers reached already in 2015, eh, returns)
          Still, “Tax payers” and “Tax Filers” is a misnomer because those numbers represent returns, of which a large percentage are joint returns, 44 percent for Tax Payers for example.
          http://www.taxpolicycenter.org/model-estimates/tax-units-zero-or-negative-income-tax/tax-units-zero-or-negative-income-tax
          Tax Units is a term used by JCT (Joint Committee on Taxation, U.S. Congress).
          Also, it’s dubious to include the 45% not paying taxes as not benefiting from the tax cut. Of course they don’t because they don’t pay any taxes in the first place (and don’t get me started on the EITC boondoggle that Republicans and conservatives love, Speaker Ryan included).

          If you are still unclear, this note from Forbes might help. The 76 million not paying taxes includes filers, people on joint returns, and those not even filing.
          https://www.forbes.com/sites/beltway/2015/10/06/new-estimates-of-how-many-households-pay-no-federal-income-tax/#242281da61cb
          Oct 6, 2015 Roberton Williams Contributor
          New Estimates Of How Many Households Pay No Federal Income Tax

          Again, tax units are not households.


  7. cawley says:

    I think smith makes some excellent points. It would be interesting to see JB’s response.


  8. Smith says:

    Bad data, mislabeled data, misleading data emanates from misinterpretation of Tax Policy Center, Urban Institute & Brookings Institution
    http://www.taxpolicycenter.org/publications/why-some-tax-units-pay-no-income-tax/full
    page 9, Table 4, for example shows the 76 million tax units that don’t pay taxes.
    What’s tax unit? Near as I can make out, it’s a person who isn’t claimed as a deduction on someone else’s tax return. What isn’t a tax unit? That I’m more clear about. It’s not a household and it’s not a taxpayer.
    I’m guessing (because it doesn’t seem to say anywhere) that 76 million plus 100 million paying customers (taxpayers) is over the 150 million tax filers because 26 million don’t bother or are not required to file.
    Does it all add up? Maybe, take 122 tax payers (that’s 100 million returns plus 22 million on joint returns which 44% of all returns, half the 44 not to double count) plus 76 million paying no taxes of which only 50 million file returns as reported by IRS, and 25 million that we trust the Tax Policy Center to derive accurately) and we’re in the neighborhood of 200 million. Children and young adults are typically claimed as dependents, and sure enough the under 25 crowd constitutes about 1/3 of the U.S. population. 1/3 of 323 million is 106 added to the 200 million above and we are in the ballpark of total population U.S.

    Again, tax units are not households, they are not tax filers, and they are not taxpayers.


    • Smith says:

      *What’s a tax unit?


    • Smith says:

      Wait, the 76 million tax units are more likely not entities not filing returns, but similar to taxpayers, of the 50 million filing but not paying taxes if half are joint returns, there’s your 25 million that gets you to 76 trombones.


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