Trump tax plan?

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Tyler
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Re: Trump tax plan?

Post by Tyler » Wed Apr 26, 2017 7:13 pm

The bill needs to be passed via reconciliation, which to qualify means it must be scored by the CBO as reducing deficits. So I'll be interested to see the final accounting -- it's a balancing act.

Sure, most people will be really happy with a higher standard deduction. But on the other side, eliminating the deduction for state taxes is a big deal and will generate lots of new federal income, and eliminating most itemized deductions will also help fight the most prolific tax dodgers. And as for corporate taxes, plan on the deal being structured in a way to plausibly increase overall government revenue by encouraging economic growth.
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Re: Trump tax plan?

Post by Xan » Wed Apr 26, 2017 7:57 pm

Why have a standard deduction at all? It seems that if the point is to raise the amount of income that's tax-free, the best way to do that is to make the "standard deduction" ADDITIVE with itemized deductions rather than instead of them.

Raising the standard deduction as it is just penalizes charitable people.
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Re: Trump tax plan?

Post by Desert » Wed Apr 26, 2017 8:46 pm

The standard deduction really is weird, isn't it. What a strange set of rules.

Tyler, I agree that the best defense is likely to be a story about increased economic activity driven by reduced corp taxes. It's not the worst tax idea, but corporations already avoid most corp taxes, paying about a third of the advertised rate. So it's mostly theater for the masses, I'm afraid.
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Re: Trump tax plan?

Post by moda0306 » Wed Apr 26, 2017 9:51 pm

Desert wrote:The standard deduction really is weird, isn't it. What a strange set of rules.

Tyler, I agree that the best defense is likely to be a story about increased economic activity driven by reduced corp taxes. It's not the worst tax idea, but corporations already avoid most corp taxes, paying about a third of the advertised rate. So it's mostly theater for the masses, I'm afraid.
I've come to find itemized deductions far "weirder" than the standard deduction. While we could probably debate the deductibility of charitable contributions for days, it's just a weird bunch of random ins and outs that give people an adjustment to their "taxable income," none of which seem to have much moral or economic legitimacy when compared to other expenses we incur (medical, other losses).

I find it extremely frustrating watching the tax policy proposals. I feel like the debate happens on a similar level to how a couple of 9 year old girls would reinact a tea party. Pardon the political quasi-pun.
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Re: Trump tax plan?

Post by Desert » Wed Apr 26, 2017 10:01 pm

moda0306 wrote:
Desert wrote:The standard deduction really is weird, isn't it. What a strange set of rules.

Tyler, I agree that the best defense is likely to be a story about increased economic activity driven by reduced corp taxes. It's not the worst tax idea, but corporations already avoid most corp taxes, paying about a third of the advertised rate. So it's mostly theater for the masses, I'm afraid.
I've come to find itemized deductions far "weirder" than the standard deduction. While we could probably debate the deductibility of charitable contributions for days, it's just a weird bunch of random ins and outs that give people an adjustment to their "taxable income," none of which seem to have much moral or economic legitimacy when compared to other expenses we incur (medical, other losses).

I find it extremely frustrating watching the tax policy proposals. I feel like the debate happens on a similar level to how a couple of 9 year old girls would reinact a tea party. Pardon the political quasi-pun.
But why have a standard deduction at all? The brackets could simply be adjusted upwards a bit and we could delete several lines from the 1040.

I agree that the itemized deductions are also quite weird. Maybe all "deductions" should be eliminated.
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Re: Trump tax plan?

Post by moda0306 » Wed Apr 26, 2017 10:11 pm

Desert wrote:
moda0306 wrote:
Desert wrote:The standard deduction really is weird, isn't it. What a strange set of rules.

Tyler, I agree that the best defense is likely to be a story about increased economic activity driven by reduced corp taxes. It's not the worst tax idea, but corporations already avoid most corp taxes, paying about a third of the advertised rate. So it's mostly theater for the masses, I'm afraid.
I've come to find itemized deductions far "weirder" than the standard deduction. While we could probably debate the deductibility of charitable contributions for days, it's just a weird bunch of random ins and outs that give people an adjustment to their "taxable income," none of which seem to have much moral or economic legitimacy when compared to other expenses we incur (medical, other losses).

I find it extremely frustrating watching the tax policy proposals. I feel like the debate happens on a similar level to how a couple of 9 year old girls would reinact a tea party. Pardon the political quasi-pun.
But why have a standard deduction at all? The brackets could simply be adjusted upwards a bit and we could delete several lines from the 1040.

I agree that the itemized deductions are also quite weird. Maybe all "deductions" should be eliminated.
Standard deduction essentially exists as a "contributor to a 0% tax bracket," as does the exemptions and itemized deduction.

I don't consider that "weird." Almost every tax plan I've seen has an income level of what some sort of 0% tax bracket would be.
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Re: Trump tax plan?

Post by Marlb10 » Thu Apr 27, 2017 7:28 am

Don't you think keeping forums out of politics is a good idea?

I hate Trump though. Just saying.
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Re: Trump tax plan?

Post by Xan » Thu Apr 27, 2017 7:34 am

moda0306 wrote:Standard deduction essentially exists as a "contributor to a 0% tax bracket," as does the exemptions and itemized deduction.

I don't consider that "weird." Almost every tax plan I've seen has an income level of what some sort of 0% tax bracket would be.
Moda, I'm afraid I don't know what you mean by "contributor to a 0% tax bracket". Can you elaborate?
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Re: Trump tax plan?

Post by moda0306 » Thu Apr 27, 2017 8:36 am

Xan wrote:
moda0306 wrote:Standard deduction essentially exists as a "contributor to a 0% tax bracket," as does the exemptions and itemized deduction.

I don't consider that "weird." Almost every tax plan I've seen has an income level of what some sort of 0% tax bracket would be.
Moda, I'm afraid I don't know what you mean by "contributor to a 0% tax bracket". Can you elaborate?
Theoretically, one could design a tax code with a 0% tax bracket, which would perhaps calculate on the first, say, $20,000 of income.

But it's just semantics.

If I have no "0% tax bracket," and instead have one that starts at 10% or 15%, but instead have a "standard deduction" of $15k and an "exemption deduction" of $5k, I've essentially accomplished the same thing.

So essentially both create a floor of income that must be reached before one owes any income tax. Call it a "Make America Great Again Deduction" if you want. :)
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Re: Trump tax plan?

Post by Maddy » Thu Apr 27, 2017 8:51 am

The repeated reference to a 15 percent tax rate for "businesses" is puzzling. I assume this applies only to corporations?

What about deductions for businesses? The most essential function of a deduction, when it comes to businesses, is to ferret out what truly is "income." If somebody sells a widget for $100 but pays $60 for it and incurs another $35 in expenses to get it out the door (an increasingly troubling reality in today's economy), the gain is only $5. The long-established principle that only gains are taxable makes simplification a challenge, if not an impossibility.
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Re: Trump tax plan?

Post by Xan » Thu Apr 27, 2017 10:10 am

moda0306 wrote:
Xan wrote:
moda0306 wrote:Standard deduction essentially exists as a "contributor to a 0% tax bracket," as does the exemptions and itemized deduction.

I don't consider that "weird." Almost every tax plan I've seen has an income level of what some sort of 0% tax bracket would be.
Moda, I'm afraid I don't know what you mean by "contributor to a 0% tax bracket". Can you elaborate?
Theoretically, one could design a tax code with a 0% tax bracket, which would perhaps calculate on the first, say, $20,000 of income.

But it's just semantics.

If I have no "0% tax bracket," and instead have one that starts at 10% or 15%, but instead have a "standard deduction" of $15k and an "exemption deduction" of $5k, I've essentially accomplished the same thing.

So essentially both create a floor of income that must be reached before one owes any income tax. Call it a "Make America Great Again Deduction" if you want. :)
Oh okay. I agree with and understand that. But: why should that standard deduction be instead of, as opposed to in addition to, my itemized deductions?
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Re: Trump tax plan?

Post by bedraggled » Thu Apr 27, 2017 10:19 am

1) Do we still get a personal exemptio on Form 1040?

2) Have the taxable income ranges been announced, so we know to which amounts the new brackets apply? I could not find anything.
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