Last week at the Reagan Ranch - Rancho del Cielo, in Santa Barbara, California some magic was brewed up culminating with Republican House Ways and Means Committee Chairman Kevin Brady releasing the newest pie in the sky Republican tax plan — which Brady says is designed to lower tax rates and close loopholes (yeah right).
Barring the discovery of magic unicorn horns and pixie dust this plan is certain to bankrupt the treasury and lead to massive increases in the deficit, and/or kill hundreds of important programs while allowing Billionaires to keep their loot and to bequeath yachts, private islands and dachas to their children, grandchildren, third wives, and mistresses.
Of course we should just trust these guys to completely rewrite of the nation's tax code because — as the great pretender might say - some of them are ‘nice people.’ The theory behind this tax cut plan is that it will magically result in phenomenal growth — and restoration of US manufacturing - which is sure to happen when Billionaires no longer pay inheritance estate or gift taxes and the 1 percenters don’t pay the minimum tax — everything will be just fine. The Brownbacking of America will look just like the Kansas miracle — only bigger www.latimes.com/...
These are their talking points - what the Repubs claim their wish list of Tax policy changes will accomplish.
- Consolidate the system down to three tax brackets, and lower the top individual income tax rate to 33 percent.
- Simplify tax filing for families by creating a larger standard deduction and a larger child and dependent tax credit.
- Make it easier to pay for college by streamlining the maze of education tax benefits.
- Eliminate the alternative minimum tax so you don’t have to do your taxes twice a year. (WARNING_this is tax welfare for the working rich)
- Reward work by improving the Earned Income Tax Credit.
- Encourage charitable giving by providing a real tax incentive (Warning — some of these ‘charities’ are political fronts).
- Help families plan for retirement by reforming savings provisions.
- Stop overtaxing “Made in America” products so that our manufacturers can compete (Corporate tax welfare won’t bring back manufacturing or lost manufacturing jobs)
- Repeal the death tax so that the loss of a family member will no longer be taxable. (WARNING, this is a bogus straw man)
- Restructure the IRS around three major units: one for individuals and families, one for businesses of all sizes, and one that provides an independent “small claims court” approach to resolving routine disputes quickly.
- Install a new commissioner, subject to term limits, who will be required to administer the new tax code with fairness and keep the politics out of the IRS. (as long as they get to pick em - this guy is gonna be a God)
- Cut down on IRS intimidation by creating an Office of Dispute Resolution to serve as an independent arbiter to protect your rights and resolve disputes in a timely manner.
The Alternative Minimum Tax
In 2015, 4.4 million individual payers paid $26.4 billion in AMT, and of that, $22.5 billion was paid by those with $250,000 or more adjusted gross income. The AMT is designed to prevent wealthy taxpayers earning from $200,000 to $500,000 per year, from paying little to no federal tax. Eliminating the AMT will be a windfall for the working rich. Maybe some of them will buy a boat, more exotic sushi or some new Jimmy Choos with their tax savings — but the treasury will suffer — less money means more borrowing or big program cuts. Everything but Defense will suffer.
Some critics of the AMT complain that it is a blunt instrument — hurting some taxpayers more than others. For example, an unmarried woman with children and income of $100,000 might be subject to AMT because it disallows the deductions for her children. While, a childless investor with millions of income in tax-free bonds avoids the AMT which doesn’t tax that type of income.
The obvious solution is not to kill the AMT but to fix the disparities.
The Inheritance Estate and Gift Tax
The estate and gift tax exemption from federal income tax is currently $5.45 million per individual. So a married couple can give away 11 million without the recipients paying a dime in federal income tax on those gifts. www.forbes.com/... Must be nice.
The straw man in this argument is that family farms and farmers are hurt when children can’t inherit farms without having to sell land to pay inheritance taxes — but this is completely bogus. Estate planning and tax policy allowing gifts of nearly 11 million per means few ‘family farm’ should be hurt by these taxes. Billionaires on the other hand — might take a hit — as they should.
About 11,300 estate tax returns were filed for people who died in 2013, of which only 4,700 were taxable, less than 1 in 550 of the 2.6 million people who died in that year. For decedents in 2017 (with an exemption of $5.49 million), the Tax Policy Center estimates there will be only about 11,300 estate tax returns filed, of which 5,500 will be taxable. Estate tax liability will total $19.9 billion after credits. www.taxpolicycenter.org/...
Within my lifetime, the marginal tax rate on the rich has gone from 91 percent, that was the tax rate owed on a person's income over $300,000 — to the current 39.6 percent federal-tax-rates.insidegov.com/... . The rich have had a long smooth and very profitable ride on the tax cut train. No wonder they donate big money to politicians, it pays reliable dividends year in and year out.
Four parts of the cray cray new tax overhaul plan will have huge impacts on the Treasury — to the tune of 6+ Trillion fewer dollars over 10 years. www.taxpolicycenter.org/...
Killing the AMT will cost $413 billion, the reduction to three tax brackets $1.49 trillion and increasing the standard deduction $1.68 trillion while the corporate tax reductions would cost 2.7 trillion. We’re talking serious money folks — money we won’t have for education, parks, environmental protection, roads and bridges, healthcare, food safety, product safety, basic research.
Why in heaven's name would anyone trust this president and his enablers to undertake so momentous a project as the total revision of the federal tax code at this moment in history.
Cause there are some ‘nice folks’ — successful people — who reliably vote for and donate to Republicans — and this year they really really need some new Jimmy Choos, a second vacation home and bigger yachts. Oh, and maybe, just maybe the R’s have the votes to get away with it. Do they need a better reason.