Author Topic: Tax Reform a Negative?  (Read 1695 times)

zephyr911

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Tax Reform a Negative?
« on: December 04, 2017, 02:59:32 PM »
I've read differing arguments on the impact of tax policy changes for years, and I'm curious what people here think. The party pushing tax 'reform' now claims it will accelerate economic growth. A lot of analysis seems to indicate a short-term improvement followed by a decline in reinvestment (because profit-taking becomes more attractive) which leads to recession.

Is anyone rethinking their AA due to the potential changes, for this or other reasons?
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EfficientEngineer

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Re: Tax Reform a Negative?
« Reply #1 on: December 04, 2017, 03:40:41 PM »
I think incentivizing businesses to invest in your native country is beneficial to you.  Creating conditions conducive to business will lead to growth but I don't necessarily agree with you that eventually it will devolve into more and more profit taking.  In a free market there would be competition, the company that decided to start taking more profit and giving it to executives of shareholders would begin to fall behind the companies that took that money and used it for R&D.  Eventually the companies growing and innovating would outpace the profit takers.

I hope that the lowering of the corporate taxation is not phased out and is permanent.  Stable policy is conducive to business, anything fickle and businesses won't fully embrace it.

As for my asset allocation, I'm 100% in equities and won't be changing that (super long investing horizon) and a lot of my holdings are conservative blue-chips.

ILikeDividends

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Re: Tax Reform a Negative?
« Reply #2 on: December 04, 2017, 04:12:09 PM »
On the individual side, I think it's pretty much just a shell game that, without future changes, will probably net out to about +/- neutral over the whole ten years, depending on where you are in terms of annual income, and depending on whether that income is derived from your labor or from investments.

On the corporate side, companies currently paying the top marginal rate, mostly smaller companies (but not exclusively so), could see dramatic improvements and potentially create a lot more jobs, depending on their available growth opportunities.

Larger international companies who, on average, currently pay about 24%.  I don't see such dramatic potential there, even if they can pull in cash from overseas at a lower rate.  Access to capital is not a problem for them right now.  If they had jobs to create, and opportunities to invest in faster growth, they would have already done that.

For them, I think the most likely scenario is to pay down debt, buy-back stock, distribute it in dividends, or just bank it.  All of which would be more beneficial to investors rather than to wage-earners or to incremental increases in employment.

Having more cash has never been a rationale for handing out raises (except maybe for executives). Wages are driven by whatever competitive salaries and other benefits can be offered to attract and retain the talent needed to run/grow the business, and no more.
« Last Edit: December 04, 2017, 05:12:26 PM by ILikeDividends »

robartsd

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Re: Tax Reform a Negative?
« Reply #3 on: December 04, 2017, 05:37:36 PM »
I have no problem with lowering the corporate income tax rates. I think it should be paid for with an increase in LTCG/QD taxes (I honestly think these should be taxed as ordinary income). The argument for LTCG/QD taxes being lower has always been coroprate income taxes. The net result would be less tax revenune from foreigners investing in US business and more tax revenue from US investors investing in foreign businesses.

ILikeDividends

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Re: Tax Reform a Negative?
« Reply #4 on: December 04, 2017, 05:48:47 PM »
I have no problem with lowering the corporate income tax rates.
I definitely agree with that.  And I'll raise you one better.  I would have no problem with a 0% corporate tax for public companies.

I think it's a myth to think public corporations pay any taxes whatsoever, even now.  Investors and the consumers of their goods and services are the ones who ultimately end up paying it, in terms of the prices they pay, the throttled value of their stock holdings, and the double-taxation of dividends.
« Last Edit: December 04, 2017, 06:03:10 PM by ILikeDividends »

toganet

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Re: Tax Reform a Negative?
« Reply #5 on: December 05, 2017, 08:55:02 AM »
I have no problem with lowering the corporate income tax rates.
I definitely agree with that.  And I'll raise you one better.  I would have no problem with a 0% corporate tax for public companies.

I think it's a myth to think public corporations pay any taxes whatsoever, even now.  Investors and the consumers of their goods and services are the ones who ultimately end up paying it, in terms of the prices they pay, the throttled value of their stock holdings, and the double-taxation of dividends.

I agree here to a point -- I think the reason that public corporations pay so little tax is that they are incentivized to avoid it, and make use of the tax system's built-in deductions, credits, and loopholes to achieve as close to 0% tax as possible.  Lowering the initial tax to 0% would remove their incentives.

This is, for some, the point -- avoid "social engineering" , "free markets" etc. 

I see the tax code (and other regulations) as our tools for setting the rules of the market so that the outcome is closer to what is best for the country / world as a hole.  It's never perfect, will have success and failure, and need to be adjusted over time -- but we need to steer the invisible hand a bit to avoid undesirable swats.

anisotropy

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Re: Tax Reform a Negative?
« Reply #6 on: December 05, 2017, 11:10:53 AM »
I have no problem with lowering the corporate income tax rates.
I definitely agree with that.  And I'll raise you one better.  I would have no problem with a 0% corporate tax for public companies.

I think it's a myth to think public corporations pay any taxes whatsoever, even now.  Investors and the consumers of their goods and services are the ones who ultimately end up paying it, in terms of the prices they pay, the throttled value of their stock holdings, and the double-taxation of dividends.

hi what? wmt paid 64B since 2008. you can spin it as they don't pay enough or their fair share, but I wouldn't say they don't pay any taxes whatsoever. all together, the public corps still account for a sizeable chunk of the total govt tax revenue.

Here's a list of their effective tax rates:
https://www.marketwatch.com/story/these-companies-may-enjoy-a-windfall-under-trumps-tax-plan-2017-09-29

to answer the op, yes, this tax "reform" will make us tons of money in the short term, but the long term effect is going to be pretty ugly, especially for someone making less than 120k a year.
« Last Edit: December 05, 2017, 11:26:16 AM by anisotropy »

neil

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Re: Tax Reform a Negative?
« Reply #7 on: December 05, 2017, 12:07:15 PM »
The point being made is the tax is essentially passed to customers.  A company would expect a certain amount of raw profit regardless of whether the tax was there or not to be willing to do business; and hypothetically removing taxes would eventually lead competitors to lower prices as they go to war over market share.  It's not instantaneous but it goes somewhere eventually - reduction in price, distributed to investors, capital reinvestment, sitting in a bank (which is fractionally lent out), whatever.

I believe over time the money does pass through, but the direction and magnitude are basically impossible to predict - but it does go somewhere.  But to believe this, I also believe in the reverse - the deficit and extra borrowing becomes a future cost.  I wouldn't do this on my personal finances, so I don't want the government doing it to me either.  So for me, the bill as a standalone measure is a waste of energy, and it is entirely fair to argue about the philosophy of redistribution since that is all it does.

I would probably accept redistribution consequences of a simplification bill, but I don't see how this bill makes anything simpler.  I still need to spend energy on tax planning and fill out a 1040 in April.

ILikeDividends

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Re: Tax Reform a Negative?
« Reply #8 on: December 05, 2017, 12:17:40 PM »
I have no problem with lowering the corporate income tax rates.
I definitely agree with that.  And I'll raise you one better.  I would have no problem with a 0% corporate tax for public companies.

I think it's a myth to think public corporations pay any taxes whatsoever, even now.  Investors and the consumers of their goods and services are the ones who ultimately end up paying it, in terms of the prices they pay, the throttled value of their stock holdings, and the double-taxation of dividends.

hi what? wmt paid 64B since 2008. you can spin it as they don't pay enough or their fair share, but I wouldn't say they don't pay any taxes whatsoever.
You missed my point, so I apparently failed to articulate it well enough.

Yes, WMT wrote checks for 64B in taxes since 2008.  But where did they get the money to pay that tax?  They got it all from us.  So WMT, and every other taxable corporation, is basically just a thinly disguised tax-collector getting even more taxes from us than we already pay for ourselves.  It's built into the prices of everything we buy.

I take that back.  It's a very well disguised tax-collector, because there is no practical way to actually account for how much tax we pay, in total; both directly and indirectly.

The politicians spin it into an "us vs them" debate to blind us into not seeing that after we pay our own taxes, we are then ultimately the ones who fund the corporate tax payments, too.  Corporations don't need shelter, sleep, food, etc.  It's just us.  There is no flesh and blood "them." Corporations exist only in the law, not in the physical world.

« Last Edit: December 05, 2017, 12:41:44 PM by ILikeDividends »

anisotropy

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Re: Tax Reform a Negative?
« Reply #9 on: December 05, 2017, 12:29:11 PM »
I see. You are right that it is all "us".

harvestbook

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Re: Tax Reform a Negative?
« Reply #10 on: December 05, 2017, 02:30:49 PM »
I suspect, as with most things in life, the outcome will not be exactly what "everyone thinks." All the pundits have been saying the market will take off on tax reform, and now that it is here, the market declines on the news. Same as with Brexit and the Trump election, only the opposite--what "everyone knew" didn't happen at all. I wouldn't be at all surprised if this is the start of a correction.  I'm just sticking with what I was already doing and figure things will probably work out somehow in the long run.

saijoe

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Re: Tax Reform a Negative?
« Reply #11 on: December 05, 2017, 03:15:24 PM »
As a concept, taxes need to be reformed.  They're too complicated now and the proposed "reform" is also too complicated.  If it's more than 10 pages of regulations, it's too complicated.  But past that, here are a couple of my thoughts:

- I am all for the "flat" or "fair" tax.  Everybody needs to pay in (they need skin in the game).  I have been making pretty good money the last few years and I can assure you that I have paid in my fair share.  If there are truly ~50% not paying any income taxes, that needs to change. 

- I have always leaned conservative, but along with the tax cuts, you have to incorporate spending cuts.  And yes, let's cut everything by the same percentage.  The military can suck it up and the entitlements can suck it up too.  If we are truly mustachian, we believe that we can't spend beyond our means and that debt is a "hair on fire" emergency. 

Both of these are pie in the sky.  The Republicans are no longer conservative.  They'll cut taxes in hopes that it will spur economic activity, and it probably will.  But that activity won't offset the overspending (military, walls, etc.) and the debt will continue to soar.  The Democrats at least tell you they're going to (over)spend.  Man I wish Libertarianism would catch on more. 

GreenEggs

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Re: Tax Reform a Negative?
« Reply #12 on: December 05, 2017, 08:57:32 PM »
How about 0% taxes for anybody, and the government can just print up however much they need?

Every dollar would be equally devalued, regardless of who's holding them.

I'm sure that's too simple to work. 

ILikeDividends

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Re: Tax Reform a Negative?
« Reply #13 on: December 05, 2017, 09:06:49 PM »
How about 0% taxes for anybody, and the government can just print up however much they need?

Every dollar would be equally devalued, regardless of who's holding them.

I'm sure that's too simple to work.
Simple to implement, yes.  But that's one definition of monetization.  It's not a tax.  It would not generate any revenue for the government to spend on social or defensive services. It theoretically might play a part in some other economic system, but it wouldn't work in a predominantly capitalistic system.

Non-monetary assets (real estate, gold, commodities, etc, non-productive assets) would appreciate as a result of currency devaluation, and only the owners of those assets would benefit from such a scheme.

It would drive investors into non-performing assets, and skew the preference in equity investments towards those companies that can exploit those kinds of assets. Wage earners would resemble a slave workforce more than they do already, as all of their expenses increase in counter-parity with the rate of currency devaluation.

Without specific laws to prevent it, wage earners would fall behind rapidly, because all wage earners would be equally competitively disadvantaged in bargaining for a compensatory wage in what would essentially devolve into a static or contracting economy.  That would increase the social burden of supporting ex-workers who can't be supported by a government having no revenue, which would be a further drag on that kind of economy.

National defense would be a separate but entirely relevant question.  How would that be funded without having an actual tax?
« Last Edit: December 06, 2017, 01:55:27 AM by ILikeDividends »

maizeman

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Re: Tax Reform a Negative?
« Reply #14 on: December 05, 2017, 09:27:31 PM »
Is anyone rethinking their AA due to the potential changes, for this or other reasons?

Running up the national debt makes it more likely we'll see significant inflation at some point when the government finally cannot support the debt and needs to inflate it away as a percent of GDP. So I'd be wary of investments in long term fixed interest debt. ... but I already hold essentially no bonds, so I'm not sure what actionable investment changes I can make as a result of my belief in the long term consequences of this action.
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chasesfish

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Re: Tax Reform a Negative?
« Reply #15 on: December 06, 2017, 05:25:45 AM »
For most individuals, its a non issue.  The best chart I can find so far has it being a 1-2% change in net taxes one way or another for almost all individuals.

Its big for domestic corporations, it puts the tax rate closer to parity with the rest of the world. 

Economic growth vs. deficit is a real issue that only time will tell.

I love all the stories that say "this is wildly unpopular".  Duh.   When one political party shuts out the other and passes something, the opposing party can only sit there and lob grenades all day and tank the idea.  Who would have thought people/shareholders keeping more of their money would have opposition?  Its the same thing that happened with the ACA, why on earth would eliminating pre-existing conditions and lifetime caps have opposition?  Its because one side got shut out and got to lob grenades at the idea for a month or two.  Facts don't matter if you 1) Got shut out of the process 2) Want to raise money for reelection.

Did I mention I hate politics?
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toganet

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Re: Tax Reform a Negative?
« Reply #16 on: December 06, 2017, 07:23:26 AM »
Its the same thing that happened with the ACA, why on earth would eliminating pre-existing conditions and lifetime caps have opposition?  Its because one side got shut out and got to lob grenades at the idea for a month or two.  Facts don't matter if you 1) Got shut out of the process 2) Want to raise money for reelection.
Except that it's not.

From the article (quoting the NY Times):
Quote
In June and July 2009, with Democrats in charge, the Senate health committee spent nearly 60 hours over 13 days marking up the bill that became the Affordable Care Act. That September and October, the Senate Finance Committee worked on the legislation for eight days its longest markup in two decades. It considered more than 130 amendments and held 79 roll-call votes. The full Senate debated the health care bill for 25 straight days before passing it on Dec. 24, 2009.

Did I mention I hate politics?
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talltexan

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Re: Tax Reform a Negative?
« Reply #17 on: December 06, 2017, 07:32:44 AM »
- I am all for the "flat" or "fair" tax.  Everybody needs to pay in (they need skin in the game).  I have been making pretty good money the last few years and I can assure you that I have paid in my fair share.  If there are truly ~50% not paying any income taxes, that needs to change. 

- I have always leaned conservative, but along with the tax cuts, you have to incorporate spending cuts.  And yes, let's cut everything by the same percentage.  The military can suck it up and the entitlements can suck it up too.  If we are truly mustachian, we believe that we can't spend beyond our means and that debt is a "hair on fire" emergency. 

Agreed that people value more what they spend on. But a high proportion of the 50% of people who pay zero Federal Income Tax still pay the payroll tax and pay into Medicare. The ones who don't pay those--older retired folks living off of investments--would have paid their share in earlier years. And, yes, Mustachians ought to be sympathetic to those folks :-)

I understand the frustration among frugal people that our public sector cannot seem to get its house in order. Balancing the budget would, by itself, not be a sign that we were spending on the correct priorities, however. Neither would the blanket percentage cut you propose. Society has given certain missions to government over time, (national defense, education, law enforcement, security for people who experience income loss) and the resources we provide for each mission should be designed for success in that mission, not based on arbitrary constraints.

boarder42

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Re: Tax Reform a Negative?
« Reply #18 on: December 06, 2017, 07:37:18 AM »
I may drop some more money into REITs b/c this tax plan helps real estate alot.

You would even be able to borrow money to invest in a REIT now and deduct your interest charges. 

They have lowered the top rate tax on RE to be 25% and not tax it like income.

So you could borrow money to put into a REIT similar to how leverage in the buying properties works to accelerate FIRE as it did for our own ARS.  I may start another topic about this as the tax plan develops.  Seems like a good opportunity to leverage money but be much better diversified than single property ownership and with no leg work. 
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EfficientEngineer

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Re: Tax Reform a Negative?
« Reply #19 on: December 06, 2017, 04:16:13 PM »
I may drop some more money into REITs b/c this tax plan helps real estate alot.

You would even be able to borrow money to invest in a REIT now and deduct your interest charges. 

They have lowered the top rate tax on RE to be 25% and not tax it like income.

So you could borrow money to put into a REIT similar to how leverage in the buying properties works to accelerate FIRE as it did for our own ARS.  I may start another topic about this as the tax plan develops.  Seems like a good opportunity to leverage money but be much better diversified than single property ownership and with no leg work.

Please do start another topic on this.  I'd be very interested in learning more about it.

moof

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Re: Tax Reform a Negative?
« Reply #20 on: December 06, 2017, 04:26:34 PM »
Is anyone rethinking their AA due to the potential changes, for this or other reasons?
No, but I am rethinking my belief that Medicare and Social Security will still be in on piece by time I need them.

The tax scam is the first step in a two step process.  Cut tax revenue and claim it will pay for itself is step one.  Next up will be to use the next recession or fiscal crisis to claim that the newly exploding national debt is unsustainable and we need "Entitlement Reform".  Most folks have had this future need of "Entitlement Reform" drilled into them without understanding that it means slashing benefits like Medicare and SSA.

Expect one or both of these programs to get slashed, means tested, or otherwise hobbled in the relative near future.  It is the explicit stated goal of these scum bags to make sure government does not work for the people (by sabotage when necessary, as has been on full display lately), so that the voters won't care when major functions of government get dismantled since after all it was a broken wasteful program wasting hard earned tax payer money.

Slow2FIRE

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Re: Tax Reform a Negative?
« Reply #21 on: December 06, 2017, 07:05:40 PM »
I have no problem with lowering the corporate income tax rates.
I definitely agree with that.  And I'll raise you one better.  I would have no problem with a 0% corporate tax for public companies.

I think it's a myth to think public corporations pay any taxes whatsoever, even now.  Investors and the consumers of their goods and services are the ones who ultimately end up paying it, in terms of the prices they pay, the throttled value of their stock holdings, and the double-taxation of dividends.

0% corporate tax + normal income tax on any transfer of wealth from a corporation to a person.  Stock options, LTCG, Dividends, wages, RSUs, ESPP, corporate housing, corporate car - put it all on the same income tax rates.

moof

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Re: Tax Reform a Negative?
« Reply #22 on: December 06, 2017, 08:47:29 PM »
I have no problem with lowering the corporate income tax rates.
I definitely agree with that.  And I'll raise you one better.  I would have no problem with a 0% corporate tax for public companies.

I think it's a myth to think public corporations pay any taxes whatsoever, even now.  Investors and the consumers of their goods and services are the ones who ultimately end up paying it, in terms of the prices they pay, the throttled value of their stock holdings, and the double-taxation of dividends.

0% corporate tax + normal income tax on any transfer of wealth from a corporation to a person.  Stock options, LTCG, Dividends, wages, RSUs, ESPP, corporate housing, corporate car - put it all on the same income tax rates.

Works for me.  Id argue for a lower tax rate on earned income, higher for all passive income sources.

ILikeDividends

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Re: Tax Reform a Negative?
« Reply #23 on: December 06, 2017, 09:53:26 PM »
I have no problem with lowering the corporate income tax rates.
I definitely agree with that.  And I'll raise you one better.  I would have no problem with a 0% corporate tax for public companies.

I think it's a myth to think public corporations pay any taxes whatsoever, even now.  Investors and the consumers of their goods and services are the ones who ultimately end up paying it, in terms of the prices they pay, the throttled value of their stock holdings, and the double-taxation of dividends.

0% corporate tax + normal income tax on any transfer of wealth from a corporation to a person.  Stock options, LTCG, Dividends, wages, RSUs, ESPP, corporate housing, corporate car - put it all on the same income tax rates.
Consider a manufacturer and its supply chain.  All of those suppliers pay a tax that is built into the cost of their goods that they pass on down the supply chain.   All of those taxes are aggregated into your end-consumer price.

It's not called a VAT in the USA, but that's essentially what it is.  Then you come along and have to pay that VAT with after-tax dollars, with sales tax on top of that; all of which is ultimately funded by you, the end consumer.

Listen, if we as individuals have to pay 90% of our sweat-equity in taxes in order to fund our government, then that's what we have to do.

But it's extremely deceptive and self-serving for the politicians to hide that fact from us by layering tax upon tax using devisive rhetoric to fool us into paying that without taking a stand and admitting that that's what they're doing.

If we're going to be taxed, we should at least know what that tax is, at an individual level, and at least have an opportunity to ratify or reject it.  We should at the very least know what that incremental revenue is going to be used for.

The notion that low income folks don't pay tax is pure bunk.  They pay it with every purchase that they make.  They just don't know that's what's happening, so they keep voting for the party that keeps raising their effective tax burden.

And before anyone accuses me of partisanship, my opinion is that both parties are equally guilty of playing this game, and both are recalcitrant in fixing what's broken.  I'm not a fan of either party.

Deception is the true power of politics.
« Last Edit: December 07, 2017, 01:28:20 AM by ILikeDividends »

Slow2FIRE

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Re: Tax Reform a Negative?
« Reply #24 on: December 07, 2017, 12:34:02 AM »
I agree, the tax shell games are annoying and are just ripe for inducing more corruption.

chasesfish

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Re: Tax Reform a Negative?
« Reply #25 on: December 07, 2017, 05:46:05 AM »
I love reading all the comments.  This really isn't an earth-shattering change.  Some of it I agree with, most I disagree with.

Remember Hauser's law:

https://en.wikipedia.org/wiki/Hauser%27s_law

I believe the gubment will get their money one way or another.
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chasesfish

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Re: Tax Reform a Negative?
« Reply #26 on: December 07, 2017, 06:00:28 AM »
Its the same thing that happened with the ACA, why on earth would eliminating pre-existing conditions and lifetime caps have opposition?  Its because one side got shut out and got to lob grenades at the idea for a month or two.  Facts don't matter if you 1) Got shut out of the process 2) Want to raise money for reelection.
Except that it's not.

From the article (quoting the NY Times):
Quote
In June and July 2009, with Democrats in charge, the Senate health committee spent nearly 60 hours over 13 days marking up the bill that became the Affordable Care Act. That September and October, the Senate Finance Committee worked on the legislation for eight days its longest markup in two decades. It considered more than 130 amendments and held 79 roll-call votes. The full Senate debated the health care bill for 25 straight days before passing it on Dec. 24, 2009.

How many Republicans voted for the ACA?  The Democrats had more time in 2009 because they held a supermajority in the Senate until Kennedy passed away.    I actually think this tax bill was rushed so quickly *because* Republicans saw if you shut out one side, the other can do extreme damage if they lob grenades for months.  Hell, Massachusetts elected a Republican in a special election and have taken control of the House/Senate on the back of running against the ACA.   

The thing that gets under my skin with politics that I've observed for a long time is this concept of "Its only wrong until your side does it".   Both sides are so incredibly guilty of it.   Both sides can't even agree on something as basic as sexual assault and are protecting or accepting of sexual predators if it means power.

Unpopular Opinion:  Carter, Reagan, Clinton, and Bush had their differences politically, but were leaders.  The country needs to get back to electing governors with years of executive level, public leadership experience.  I blame the last decade and how divided the country is on a lack of leadership.  A junior senator and a 2nd generation real estate business owner do not have the experience of a governor. 



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Car Jack

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Re: Tax Reform a Negative?
« Reply #27 on: December 07, 2017, 06:38:28 AM »
The goal of the tax bill was simple and singular.  The goal is for the Trump administration and Congress to say "We passed a tax bill just like Trump promised".  It did not matter what the bill said. 

On the business side, a few observations.  Many local companies have manufacturing in Ireland and ship products in various states of completion back and fourth, doing accounting tricks to make it look like things coming to the US is of little value and things going to Ireland is of great value.  In all honesty, the entire product is completely built in Ireland.  It's a big smoke and mirror game to get 12.5% corporate tax rate.  With the US going to 20%?  Well, is 20% more than 12.5%?  Uh, my 3 engineering degrees might help, let me do Maxwell's equations.

My own employer bought a company a year ago for $2B borrowing the money here.  Offshore, we have $2B.  Our CEO has already said that if they calculate that it's advantageous, they'll bring the money back here and put it directly to the loan.  Companies like Coke and several others have said that they'll bring back money to pay dividends and do stock buy backs.  Companies are NOT going to create jobs.  They are NOT going to increase pay.  They'll continue to do what the Evil Empire has been doing for 20 years (big tech company I used to work for) in opening up design engineering centers in China and India and closing them all over the US.

If you're not at least in the 1%, you're in the "being screwed" end of the equation.

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Re: Tax Reform a Negative?
« Reply #28 on: December 07, 2017, 08:22:29 AM »
Just curious, what's so wrong with stock buybacks, dividend increases, or repayment of corporate debt?  All of those things increase the value of the FI crowd's index fund holdings
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YttriumNitrate

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Re: Tax Reform a Negative?
« Reply #29 on: December 07, 2017, 09:13:02 AM »
Getting rid of the penalties for not having health insurance seems to be the first step in bringing down Obamacare, so I might say that it could be time to up my investments in health insurance companies. However, my shares of United Healthcare are up 595% since Obamacare was signed into law...so that might not be the best strategy.

chasesfish

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Re: Tax Reform a Negative?
« Reply #30 on: December 08, 2017, 05:11:12 AM »
Getting rid of the penalties for not having health insurance seems to be the first step in bringing down Obamacare, so I might say that it could be time to up my investments in health insurance companies. However, my shares of United Healthcare are up 595% since Obamacare was signed into law...so that might not be the best strategy.

Unfortunately there were never "real" penalties, that's where the ACA was failed from the beginning.   They ramped up slowly and 2/3rds of the uninsured were just granted hardship waivers, thats why premiums kept increasing so quickly and insurers were dropping out of markets.  I'm VERY disappointed by both parties in their handling of this, they were very close to making the US have a Swiss style medical system which produces high quality outcomes for lower costs.

https://www.healthcare.gov/health-coverage-exemptions/hardship-exemptions/
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talltexan

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Re: Tax Reform a Negative?
« Reply #31 on: Today at 09:55:47 AM »
Just curious, what's so wrong with stock buybacks, dividend increases, or repayment of corporate debt?  All of those things increase the value of the FI crowd's index fund holdings

Shareholders indeed benefit from all of this (disclosure: I am a shareholder of many publicly traded companies).

But there are many middle class households who benefit little from the increase in share values but who benefit greatly when they can find a job, and these actions are all signs that the company cannot find a productive investment that will increase long-term earnings and add employees. These middle class households are receiving a lot of messaging from the Republican party that they will be more likely to find new jobs as a result of the tax bill because it will increase the resources large companies put into new investments.

SeattleCPA

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Re: Tax Reform a Negative?
« Reply #32 on: Today at 11:28:56 AM »
I have no problem with lowering the corporate income tax rates. I think it should be paid for with an increase in LTCG/QD taxes (I honestly think these should be taxed as ordinary income). The argument for LTCG/QD taxes being lower has always been coroprate income taxes. The net result would be less tax revenune from foreigners investing in US business and more tax revenue from US investors investing in foreign businesses.

There's actually another argument for LTCG... they may represent years and years, decades even, of income that gets counted all at once in a bunch. That spiking radically jacks the tax burden someone pays.
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