Republican Tax Plan 2017

[djadziadax]

One thing that makes me uncomfortable with long term economic projections is how easily they can be disproved by tweaking just one of the variables in the model. Especially when citing exact numbers rather than giving range of possible outcomes. Economists are wrong all the time, sometimes they are wrong really big.

http://www.nytimes.com/2009/09/06/magazine/06Economic-t.html

One of those currently is with the deficit projections being thrown around is the 1.5 trillion in deficit.  The CBP/JCT use static scoring for the next 10 years, which seems crazy to me. Using a dynamic scoring is more in line with reality (you have to account for varying growth and just uncertainty in business and individual behavior in the next 10 years). NY Times give a good example of how different models produce different deficit outcomes based on using different assumptions. Economics is not a hard science - economist have been wrong multiple times (refer to Krugman above).

https://www.nytimes.com/interactive/2017/11/28/us/politics/tax-bill-deficits.html


Quoted - "They (Republicans) have argued that economic growth spurred by the cuts would make up for the difference in tax revenue, eventually reducing the deficits. But there is no consensus among economists about the amount of growth that would occur, and few estimate that the bill would generate enough economic growth to offset the drop in tax revenue." This is what gets me to be skeptical of long term economic projections...Also, re-read Krugman above.

If you read the Tax Foundation report, on p15 they address this uncertainty of the future (it being the future!). Quote:

"Uncertainty in Modeling Estimates
There are three primary sources of uncertainty in modeling the provisions of the Senate’s version
of the Tax Cuts and Jobs Act: the significance of deficit effects, the timing of economic effects, and
expectations regarding the extension of temporary provisions.
Some economic models assume that there is a limited amount of saving available to the United States
to fund new investment opportunities when taxes on investment are reduced, and that when the
federal budget deficit increases, the amount of available saving for private investment is “crowdedout”
by government borrowing, which reduces the long-run size of the U.S. economy. While past
empirical work has found evidence of crowd-out, the estimated impact is usually small. Furthermore,
global savings remain high, which may help explain why interest rates remain low despite rising
budget deficits. We assume that a deficit increase will not meaningfully crowd out private investment
in the United States.5"

We are also forced to make certain assumptions about how quickly the economy would respond to
lower tax burdens on investment. There is an inherent level of uncertainty here that could impact the
timing of revenue generation within the budget window.

Finally, we assume that temporary tax changes will expire on schedule, and that business decisions
will be made in anticipation of this expiration. To the extent that investments are made in the
anticipation that temporary expensing provisions might be extended, economic effects could exceed
our projections.

Thoughts?

[TheAnonOne]

Being from MN, I for one am a bit displeased with the complete loss of the SALT deduction.

The "property" tax deduction is a side-show, at least for MN. The income tax deduction loss probably means a net tax increase for a large chunk of MN residents(at least in the metro area)

[sokoloff]

I can't speak to your company's specific scenario, however if something isn't as encouraged as it was before you're going to get less of it.

Of course! In this case, I don't see anything in the changes to suggest that R&D expenses are not deductible ("a write-off"). That was all I was claiming.

[JLee]

Being from MN, I for one am a bit displeased with the complete loss of the SALT deduction.

The "property" tax deduction is a side-show, at least for MN. The income tax deduction loss probably means a net tax increase for a large chunk of MN residents(at least in the metro area)

New Jersey, checking in....less than 1% behind MN on income tax combined with the highest property taxes in the country.

I'm glad I don't own here.

[sherr]

One of those currently is with the deficit projections being thrown around is the 1.5 trillion in deficit.  The CBP/JCT use static scoring for the next 10 years, which seems crazy to me. Using a dynamic scoring is more in line with reality (you have to account for varying growth and just uncertainty in business and individual behavior in the next 10 years).

They did not just do a static analysis. The JCT also released a dynamic analysis that found that the plan would increase the deficit by about $1 Trillion for ten years:
https://www.jct.gov/publications.html?func=startdown&id=5045

The non-partisan Tax Policy Center estimates in their dynamic score that a stronger economy would offset about 1/6th of the $1.5 T deficit (leaving $1.25 T remaining):
http://www.taxpolicycenter.org/publications/macroeconomic-analysis-tax-cuts-and-jobs-act-passed-senate-finance-committee/full

And the conservative-leaning Tax Foundation found in their dynamic score of the House version that it would add $1.98 T (static) - $0.9 T (new revenue) = ~ $ 1 Trillion dollars in new deficit over ten years.
https://taxfoundation.org/2017-tax-cuts-jobs-act-analysis/

Saying "economics isn't a hard science" and "but they could be wrong" - while true - only goes so far. When all of the estimates from all of the most competent and knowledgeable people are in about the same place, that's probably a pretty good indication that the reality is somewhere around there. What's the alternative? To give up entirely on evidence-based decision making and just choose to believe whatever we want?

And part of the reason that scoring has been rough is because the bill has been changing constantly, on a daily or hourly basis. They passed it at 2AM with hand-written changes in the margins for crying out loud. How is anyone supposed to do an in-depth analysis of that?

One thing that makes me uncomfortable with long term economic projections is how easily they can be disproved by tweaking just one of the variables in the model.

There you go with a Scott Adams-esque incorrect usage of the word "disprove" again. "Tweaking" variables and showing that the models come to different conclusions doesn't "disprove" anything. Often we have very good ideas of what those variables should be, and often we know how the variables tend to related to each other so tweaking one isolation might not be valid. This is the same nonsense that Adams rants on about when he's "disproving" Climate Change.

Your 2009 article is talking about the 2008 housing collapse. Which sure, there were bad economic projections involved. There was also a systemic effort to mislead and defraud the public. Hopefully that's not a great comparison to make to the Republican tax bill.

To me the bottom line though is that "well economists can be wrong so we can just ignore them" cannot be the bottom-line conclusion we jump to. You disagree with their findings? Fine, publish a better paper explaining your methodology and why it's superior. But don't just jump straight into anti-intellectual know-nothingness to justify your party's actions.

[sokoloff]

Being from MN, I for one am a bit displeased with the complete loss of the SALT deduction.

The "property" tax deduction is a side-show, at least for MN. The income tax deduction loss probably means a net tax increase for a large chunk of MN residents(at least in the metro area)

New Jersey, checking in....less than 1% behind MN on income tax combined with the highest property taxes in the country.

I'm glad I don't own here.

You're still paying the NJ property tax (as part of your rent).
In your case though, it will remain deductible on your landlord's schedule E, line 16.

[ZiziPB]

One of those currently is with the deficit projections being thrown around is the 1.5 trillion in deficit.  The CBP/JCT use static scoring for the next 10 years, which seems crazy to me. Using a dynamic scoring is more in line with reality (you have to account for varying growth and just uncertainty in business and individual behavior in the next 10 years).

They did not just do a static analysis. The JCT also released a dynamic analysis that found that the plan would increase the deficit by about $1 Trillion for ten years:
https://www.jct.gov/publications.html?func=startdown&id=5045

The non-partisan Tax Policy Center estimates in their dynamic score that a stronger economy would offset about 1/6th of the $1.5 T deficit (leaving $1.25 T remaining):
http://www.taxpolicycenter.org/publications/macroeconomic-analysis-tax-cuts-and-jobs-act-passed-senate-finance-committee/full

And the conservative-leaning Tax Foundation found in their dynamic score of the House version that it would add $1.98 T (static) - $0.9 T (new revenue) = ~ $ 1 Trillion dollars in new deficit over ten years.
https://taxfoundation.org/2017-tax-cuts-jobs-act-analysis/

Saying "economics isn't a hard science" and "but they could be wrong" - while true - only goes so far. When all of the estimates from all of the most competent and knowledgeable people are in about the same place, that's probably a pretty good indication that the reality is somewhere around there. What's the alternative? To give up entirely on evidence-based decision making and just choose to believe whatever we want?

And part of the reason that scoring has been rough is because the bill has been changing constantly, on a daily or hourly basis. They passed it at 2AM with hand-written changes in the margins for crying out loud. How is anyone supposed to do an in-depth analysis of that?

One thing that makes me uncomfortable with long term economic projections is how easily they can be disproved by tweaking just one of the variables in the model.

There you go with a Scott Adams-esque incorrect usage of the word "disprove" again. "Tweaking" variables and showing that the models come to different conclusions doesn't "disprove" anything. Often we have very good ideas of what those variables should be, and often we know how the variables tend to related to each other so tweaking one isolation might not be valid. This is the same nonsense that Adams rants on about when he's "disproving" Climate Change.

Your 2009 article is talking about the 2008 housing collapse. Which sure, there were bad economic projections involved. There was also a systemic effort to mislead and defraud the public. Hopefully that's not a great comparison to make to the Republican tax bill.

To me the bottom line though is that "well economists can be wrong so we can just ignore them" cannot be the bottom-line conclusion we jump to. You disagree with their findings? Fine, publish a better paper explaining your methodology and why it's superior. But don't just jump straight into anti-intellectual know-nothingness to justify your party's actions.

In fact, Republicans went out of their way to discredit the Joint Committee on Taxation just because they didn't like the results of their analysis:

https://www.nytimes.com/2017/12/04/us/politics/republicans-joint-committee-on-taxation-estimate.html?hp&action=click&pgtype=Homepage&clickSource=story-heading&module=first-column-region&region=top-news&WT.nav=top-news

[JLee]

Being from MN, I for one am a bit displeased with the complete loss of the SALT deduction.

The "property" tax deduction is a side-show, at least for MN. The income tax deduction loss probably means a net tax increase for a large chunk of MN residents(at least in the metro area)

New Jersey, checking in....less than 1% behind MN on income tax combined with the highest property taxes in the country.

I'm glad I don't own here.

You're still paying the NJ property tax (as part of your rent).
In your case though, it will remain deductible on your landlord's schedule E, line 16.

Of course (and 18% of my rent is deductible from my state taxes as a property tax allowance). I can't deduct it from my federal taxes so the loss of the deduction doesn't matter to me.

[sokoloff]

Of course (and 18% of my rent is deductible from my state taxes as a property tax allowance).

There's a similar provision in MA. I'm pretty sure it's designed to catch landlords who might otherwise "forget" that they had a rental property... ;)

[Wrecks]

Being from MN, I for one am a bit displeased with the complete loss of the SALT deduction.

The "property" tax deduction is a side-show, at least for MN. The income tax deduction loss probably means a net tax increase for a large chunk of MN residents(at least in the metro area)

New Jersey, checking in....less than 1% behind MN on income tax combined with the highest property taxes in the country.

I'm glad I don't own here.

You're still paying the NJ property tax (as part of your rent).
In your case though, it will remain deductible on your landlord's schedule E, line 16.

Of course (and 18% of my rent is deductible from my state taxes as a property tax allowance). I can't deduct it from my federal taxes so the loss of the deduction doesn't matter to me.

Unless you work for an active pass through that has to cut expenses to pay excess federal tax.

[MDM]

One report I read of last minute amendments said that there is an exemption from the endowment tax that is specific to one (well connected) college in Michigan.

Well, not exactly: http://thefederalist.com/2017/12/02/senate-democrats-blatantly-lied-hillsdale-college/.

Section 13701 of the Senate tax bill (at pages 288 to 292), imposes a 1.4-percent excise tax on the yearly earnings of large private college endowments. An amendment by Sen. Toomey and Sen. Ted Cruz of Texas applied the tax only to schools that have more than 500 students and an endowment worth at least $500,000 per student, and which take federal money. Those last four words are key. Despite having nearly 1,500 students, like the other half-dozen schools, Hillsdale does not take federal money.

Not that senate republicans don't also blatantly lie.... ;)

[djadziadax]

One of those currently is with the deficit projections being thrown around is the 1.5 trillion in deficit.  The CBP/JCT use static scoring for the next 10 years, which seems crazy to me. Using a dynamic scoring is more in line with reality (you have to account for varying growth and just uncertainty in business and individual behavior in the next 10 years).

They did not just do a static analysis. The JCT also released a dynamic analysis that found that the plan would increase the deficit by about $1 Trillion for ten years:
https://www.jct.gov/publications.html?func=startdown&id=5045

The non-partisan Tax Policy Center estimates in their dynamic score that a stronger economy would offset about 1/6th of the $1.5 T deficit (leaving $1.25 T remaining):
http://www.taxpolicycenter.org/publications/macroeconomic-analysis-tax-cuts-and-jobs-act-passed-senate-finance-committee/full

And the conservative-leaning Tax Foundation found in their dynamic score of the House version that it would add $1.98 T (static) - $0.9 T (new revenue) = ~ $ 1 Trillion dollars in new deficit over ten years.
https://taxfoundation.org/2017-tax-cuts-jobs-act-analysis/

Saying "economics isn't a hard science" and "but they could be wrong" - while true - only goes so far. When all of the estimates from all of the most competent and knowledgeable people are in about the same place, that's probably a pretty good indication that the reality is somewhere around there. What's the alternative? To give up entirely on evidence-based decision making and just choose to believe whatever we want?

And part of the reason that scoring has been rough is because the bill has been changing constantly, on a daily or hourly basis. They passed it at 2AM with hand-written changes in the margins for crying out loud. How is anyone supposed to do an in-depth analysis of that?

One thing that makes me uncomfortable with long term economic projections is how easily they can be disproved by tweaking just one of the variables in the model.

There you go with a Scott Adams-esque incorrect usage of the word "disprove" again. "Tweaking" variables and showing that the models come to different conclusions doesn't "disprove" anything. Often we have very good ideas of what those variables should be, and often we know how the variables tend to related to each other so tweaking one isolation might not be valid. This is the same nonsense that Adams rants on about when he's "disproving" Climate Change.

Your 2009 article is talking about the 2008 housing collapse. Which sure, there were bad economic projections involved. There was also a systemic effort to mislead and defraud the public. Hopefully that's not a great comparison to make to the Republican tax bill.

To me the bottom line though is that "well economists can be wrong so we can just ignore them" cannot be the bottom-line conclusion we jump to. You disagree with their findings? Fine, publish a better paper explaining your methodology and why it's superior. But don't just jump straight into anti-intellectual know-nothingness to justify your party's actions.

Sherr, why do you read so much Scott Adams? You dont have to ignore economist, just remember that they are not hard scientist. They don't deal with the laws of physics, and with repeatable phenomenon.

Have have you read anything by Nassim Taleb? I would recommend his books for a just a different point of view. He specifically addresses economics as a discipline that is guilty of much sin with examples which may satisfy you. But it just takes perusing the news circa Sept 2008, as Krugman points out, to see how wrong economic predictions could be. That is what I want to point out. Some skepticism about a profession which has been wrong on multiple occasion, is healthy.

My SO is a physical science researcher, that deals with models and academic papers on a daily basis on topics of the immutable laws of physics. Stuff you read about in the newspapers, like front page.  He care naught for politics. He is constantly complaining of how papers get published in NATURE where data is used to fit a model, not the other way around, on a REGULAR basis. In the hard sciences...I have little hope for social sciences like economics.

If you know someone like that ask them about how models are build. It may be eye opening.

[DarkandStormy]

http://billmoyers.com/story/republicans-tax-plan-looting-treasury/#.WiW1dR_NrcI.facebook

House Majority Leader Paul Ryan (R-WI) touted a letter signed by a number of economists who supposedly supported the House bill, but Lee Fang reported for The Intercept that it included signatures by people who don’t exist or who say they never signed anything of the sort, as well as “office assistants, ex-felons and a sprinkling of real economists.” Meanwhile, a survey of 38 academic economists conducted by the University of Chicago’s Initiative on Global Markets found that 37 of them expect the bill to blow up federal deficits, and the 38th “misread the question,” according to The Washington Post.

The GOP is so desperate to make their plan look plausible they're forging signatures of economists claiming to have supported their plan.

[sherr]

Sherr, why do you read so much Scott Adams?

Mostly so I can recognize the bad reasoning and point it out when alt-righters parrot it back.

You dont have to ignore economist, just remember that they are not hard scientist. They don't deal with the laws of physics, and with repeatable phenomenon.

Have have you read anything by Nassim Taleb? I would recommend his books for a just a different point of view. He specifically addresses economics as a discipline that is guilty of much sin with examples which may satisfy you. But it just takes perusing the news circa Sept 2008, as Krugman points out, to see how wrong economic predictions could be. That is what I want to point out. Some skepticism about a profession which has been wrong on multiple occasion, is healthy.

My SO is a physical science researcher, that deals with models and academic papers on a daily basis on topics of the immutable laws of physics. Stuff you read about in the newspapers, like front page.  He care naught for politics. He is constantly complaining of how papers get published in NATURE where data is used to fit a model, not the other way around, on a REGULAR basis. In the hard sciences...I have little hope for social sciences like economics.

If you know someone like that ask them about how models are build. It may be eye opening.

So then do you actually have a suggestion besides anti-intellectual know-nothing non-evidence-based whatever-I-want-to-be-true-is-true decision making? No? Okay, get back to us when you do.

Taking projections with a grain of salt is fine and reasonable. Rejecting them outright because you don't like the conclusion and "they might be wrong" is not.

[RangerOne]

One of those currently is with the deficit projections being thrown around is the 1.5 trillion in deficit.  The CBP/JCT use static scoring for the next 10 years, which seems crazy to me. Using a dynamic scoring is more in line with reality (you have to account for varying growth and just uncertainty in business and individual behavior in the next 10 years).

They did not just do a static analysis. The JCT also released a dynamic analysis that found that the plan would increase the deficit by about $1 Trillion for ten years:
https://www.jct.gov/publications.html?func=startdown&id=5045

The non-partisan Tax Policy Center estimates in their dynamic score that a stronger economy would offset about 1/6th of the $1.5 T deficit (leaving $1.25 T remaining):
http://www.taxpolicycenter.org/publications/macroeconomic-analysis-tax-cuts-and-jobs-act-passed-senate-finance-committee/full

And the conservative-leaning Tax Foundation found in their dynamic score of the House version that it would add $1.98 T (static) - $0.9 T (new revenue) = ~ $ 1 Trillion dollars in new deficit over ten years.
https://taxfoundation.org/2017-tax-cuts-jobs-act-analysis/

Saying "economics isn't a hard science" and "but they could be wrong" - while true - only goes so far. When all of the estimates from all of the most competent and knowledgeable people are in about the same place, that's probably a pretty good indication that the reality is somewhere around there. What's the alternative? To give up entirely on evidence-based decision making and just choose to believe whatever we want?

And part of the reason that scoring has been rough is because the bill has been changing constantly, on a daily or hourly basis. They passed it at 2AM with hand-written changes in the margins for crying out loud. How is anyone supposed to do an in-depth analysis of that?

One thing that makes me uncomfortable with long term economic projections is how easily they can be disproved by tweaking just one of the variables in the model.

There you go with a Scott Adams-esque incorrect usage of the word "disprove" again. "Tweaking" variables and showing that the models come to different conclusions doesn't "disprove" anything. Often we have very good ideas of what those variables should be, and often we know how the variables tend to related to each other so tweaking one isolation might not be valid. This is the same nonsense that Adams rants on about when he's "disproving" Climate Change.

Your 2009 article is talking about the 2008 housing collapse. Which sure, there were bad economic projections involved. There was also a systemic effort to mislead and defraud the public. Hopefully that's not a great comparison to make to the Republican tax bill.

To me the bottom line though is that "well economists can be wrong so we can just ignore them" cannot be the bottom-line conclusion we jump to. You disagree with their findings? Fine, publish a better paper explaining your methodology and why it's superior. But don't just jump straight into anti-intellectual know-nothingness to justify your party's actions.

Sherr, why do you read so much Scott Adams? You dont have to ignore economist, just remember that they are not hard scientist. They don't deal with the laws of physics, and with repeatable phenomenon.

Have have you read anything by Nassim Taleb? I would recommend his books for a just a different point of view. He specifically addresses economics as a discipline that is guilty of much sin with examples which may satisfy you. But it just takes perusing the news circa Sept 2008, as Krugman points out, to see how wrong economic predictions could be. That is what I want to point out. Some skepticism about a profession which has been wrong on multiple occasion, is healthy.

My SO is a physical science researcher, that deals with models and academic papers on a daily basis on topics of the immutable laws of physics. Stuff you read about in the newspapers, like front page.  He care naught for politics. He is constantly complaining of how papers get published in NATURE where data is used to fit a model, not the other way around, on a REGULAR basis. In the hard sciences...I have little hope for social sciences like economics.

If you know someone like that ask them about how models are build. It may be eye opening.

Economics is definitely science, and just like physics with enough baseline assumptions, they can model some outcomes very accurately. However also just like physics modeling a large enough system becomes difficult simply because of computational limitations and possible holes in theories guiding the models.

The biggest hole in most economic models has been the old theory on rational actors. I doubt I am fully using the correct terminology of the field. But we had a long standing theory that individuals always act as a rational economist would expect them to act in their own best interest.

More modern economic theories however are starting to integrate the reality that people simply do not act in their best interest economically even most of the time.

When you use potential flaws in an economics model to point out why we shouldn't hold a tax plan to their findings you are making, I don't think that is a great argument to try to make. What needs to be asked is why our government is pushing a plan that has no demonstrable evidence of a positive outcome.

So far I have not heard a single study come out which supports most of the claims which the Republicans are making. If people really think government is flawed and should run more like a business I can tell you flat out not a single major corporation would ever approve a course of action that didn't have substantial evidence that it would achieve a desired outcome. This is why we have market research. Its never perfect but if you can't even achieve reasonable evidence that things will likely workout then you don't push a plan like this.

If I wanted to be cynical I would say they now there are a few likely outcomes from this plan. Such as the need to cut major medical programs as government revenue contracts. But they wont use those in their political narratives because they are unpopular with the public. Things that are popular like boosting average pay or increasing growth back to level of a bygone era are all much more pleasant but also are very thinly supported.

[Wise Virgin]

Today the national debt is at a frightening level and will exponentially increase.

The math for paying it off does not work. Maybe 10 years and a trillion dollars or so ago we would've had a chance to do something meaningful about it, except, well, Iraq War and great recession. This debt will never be paid off and it will eventually have to be settled by devaluation of the currency or the sale of hard assets.

Or we can try to grow economically, and buy ourselves time, and possibly reorganize and reprioritize.

This Republican tax plan should be viewed as more than a tax plan, it's also a geopolitical power maneuver to keep us relevant and check the influence of competitors. Similar to "Star Wars."

This is complete nonsense. In order for "growing economically" to "buy us time" before the debt day-of-reckoning, the tax plan would have to reduce the deficit. Even given Republicans most optimistic (to put it charitably) assumptions about how much this will grow the economy, this plan increases the deficit in a time of relative prosperity. Never mind what it'll do in the next economic downturn. This can only possibly make the crisis bigger and sooner.

Sure the corporations may be sitting pretty thanks to their next-to-non-existent (since the bill leaves all their loopholes their tax rate will be in the teens or possibly single-digits) tax rate - and have plenty of money to relocate to wherever they want - but the country will be in ruins.

Have you considered the repatriation of overseas cash element in this bill? Do you think any of that cash would repatriate under the current tax system? It is being parked out of the country right now for a reason.

Also, I would invite you to consider that this bill is an instrument of foreign policy. There are coming international realignments of influence - best current example, Saudi Arabia. Thinking about this matter in simple US-centric or partisan ways is not optimal.

The most important element of all is the one most seem oblivious to: the animal spirits. People are really sick of sitting around obsessing about what the Federal Reserve is going to do. They want to spend.

There are some huge efficiencies still to be discovered, especially in the central two-thirds of the United States, and as we are a mature capitalist economy, the big money is to be made in efficiencies and consolidation, not from virgin natural resources any more.

[maizefolk]

Just chiming in the economics models issue. There are certainly lots of problems with economic models (RangerOne points out a big one with the assumption that human beings will make rational choices, although behavioral economics is starting to address that one), or really ANY models trying to make predictions 10 years into the future.

However, it's not enough to say economic models aren't perfect. If you want people to discount the outcomes of economic forecasts in making decisions about whether a given piece of legislation is a good or bad idea, you have to propose some BETTER way of predicting the economic impact of that same piece of legislation.

Otherwise what you're saying is "The forecast says there is a 90% chance of 4-6 inches of rain tomorrow and I'm planning to spend the whole day outside, but I'm not going to bring a raincoat or umbrella because weather forecasts aren't an exact science."

[Abe]

Summary so far:

No one knows what the heck is going on, especially the Senators who just voted, and no one can predict the long-term effects of this tax bill with any degree of certainty (other than it will worsen the deficit because 2 +2 = 4 still).

Correct?

Anyone know about changes in long-term gains? Sorry if someone answered, I couldn't tell from the bill. I'm sure it'll all be different in two days anyway...

[sol]

Summary so far:

No one knows what the heck is going on, especially the Senators who just voted

Well they kind of know.  They know that Republicans want to add trillions to the national debt and raise taxes on the middle class in order to give tax breaks to millionaires and corporations.  They're just a little fuzzy on the details of how to best do that.

[bdylan]

Summary so far:

No one knows what the heck is going on, especially the Senators who just voted

Well they kind of know.  They know that Republicans want to add trillions to the national debt and raise taxes on the middle class in order to give tax breaks to millionaires and corporations.  They're just a little fuzzy on the details of how to best do that.

Just because you keep saying this doesn't make it true.  According to the Tax Policy Center (liberal think tank) every single income quintile will receive a tax break on average.  (http://www.taxpolicycenter.org/publications/distributional-analysis-tax-cuts-and-jobs-act-passed-senate/full).  The people that won't are rich people (though not stratospherically rich) in high tax states with huge mortgages.   

[Debts_of_Despair]

Now our idiot governor is threatening to sue the feds over legislation that will save most people money.

https://www.nytimes.com/2017/12/04/business/economy/tax-bill-new-york.html

I keep hearing these sob stories from people with insane property taxes but no one wants to answer WHY NY, CA, IL, etc have such high taxes.  Time for local politicians to start doing their job and reel in costs.

[radram]

Summary so far:

No one knows what the heck is going on, especially the Senators who just voted

Well they kind of know.  They know that Republicans want to add trillions to the national debt and raise taxes on the middle class in order to give tax breaks to millionaires and corporations.  They're just a little fuzzy on the details of how to best do that.

Just because you keep saying this doesn't make it true.  According to the Tax Policy Center (liberal think tank) every single income quintile will receive a tax break on average.  (http://www.taxpolicycenter.org/publications/distributional-analysis-tax-cuts-and-jobs-act-passed-senate/full).  The people that won't are rich people (though not stratospherically rich) in high tax states with huge mortgages.   

Outside of the fact that we are talking about estimates and "truth" in the same sentence, I believe your own source proves Sol's point.

The ENTIRE sentence you paraphrased: "We find the bill would reduce taxes on average for all income groups in both 2019 and 2025 (emphasis mine).

Three sentences later: Compared to current law, 7 percent of taxpayers would pay more tax in 2019, 10 percent in 2025, and 48 percent in 2027 (again emphasis mine).

Is your claim that the 48% is rich with huge mortgages?

[sol]

Summary so far:

No one knows what the heck is going on, especially the Senators who just voted

Well they kind of know.  They know that Republicans want to add trillions to the national debt and raise taxes on the middle class in order to give tax breaks to millionaires and corporations.  They're just a little fuzzy on the details of how to best do that.

Just because you keep saying this doesn't make it true.  According to the Tax Policy Center (liberal think tank) every single income quintile will receive a tax break on average.  (http://www.taxpolicycenter.org/publications/distributional-analysis-tax-cuts-and-jobs-act-passed-senate/full).  The people that won't are rich people (though not stratospherically rich) in high tax states with huge mortgages.   

I'm sure you already know this, but the tax cuts on individuals are a temporary gimmick to help get the bill passed.  In the long term, this bill is a tax increase.  It has to be, to pay for the tax cuts for corporations.

Don't be fooled by temporary provisions that are set to expire.  Look at the big picture to see the real intent.

[bdylan]

Summary so far:

No one knows what the heck is going on, especially the Senators who just voted

Well they kind of know.  They know that Republicans want to add trillions to the national debt and raise taxes on the middle class in order to give tax breaks to millionaires and corporations.  They're just a little fuzzy on the details of how to best do that.

Just because you keep saying this doesn't make it true.  According to the Tax Policy Center (liberal think tank) every single income quintile will receive a tax break on average.  (http://www.taxpolicycenter.org/publications/distributional-analysis-tax-cuts-and-jobs-act-passed-senate/full).  The people that won't are rich people (though not stratospherically rich) in high tax states with huge mortgages.   

I'm sure you already know this, but the tax cuts on individuals are a temporary gimmick to help get the bill passed.  In the long term, this bill is a tax increase.  It has to be, to pay for the tax cuts for corporations.

Don't be fooled by temporary provisions that are set to expire.  Look at the big picture to see the real intent.

Ok -- so, we all agree that this bill cuts taxes for the middle class through 2027.

I guess you're worried that Democrats will be in power in 2027 and allow middle class tax cuts to expire?  Not something I'm worried about personally, and history seems to be on my side (see the 2012 fiscal cliff deal.)

[sol]

I guess you're worried that Democrats will be in power in 2027 and allow middle class tax cuts to expire? 

I find it amazing that you have already, pre-emptively, blamed democrats for potentially, in the future, maybe NOT changing a republican tax bill.

Let's review.  The republican tax plan is designed to raise personal income taxes paid by most Americans.  In order to trick poor people into voting for higher taxes on themselves, it offers them a temporary tax cut up front which will then phase out into a tax increase over time.  This is the Republican plan, written without any Democrats and passed without any Democratic votes, and yet you're blaming Democrats for the way Republicans have written their law. 

That's some hardcore tribalism right there.

The scenario you've described would not be "democrats letting middle tax cuts expire" it would be "the republican tax plan going exactly as republicans want it to go."  Republicans want to raise taxes on all but the richest Americans, in order to help pay for tax cuts for the richest Americans.  It's a fundamentally redistributive tax plan, from the poor to the rich, which also happens to add trillions more of Republican national debt.

Republicans had a genuine opportunity here to reform the tax code.  They could have shown some of that fiscal responsibility they're always talking about.  They could have actually cut taxes on the middle class.  Instead they did neither, and squandered their opportunity. 

Maybe in a few decades we'll get Democratic full control of the entire government again, and they can try to pass tax reform that actually accomplishes what everyone says they want, but seemingly refuses to do.  God forbid the two parties actually work together on this one, despite their agreement on what the reform should look like.

[simonsez]

Right, the states with the residents that disproportionately pay to float the federal government and transfer money to low-tax states should get their acts together.

Here are the top 15 most dependent states per https://wallethub.com/edu/states-most-least-dependent-on-the-federal-government/2700/

1. KY
2. MS
3. NM
4. AL
5. WV
6. SC
7. MT
8. TN
9. ME
10. IN
11. AZ
12. LA
13. SD
14. MO
15. OR

From the last election, that's 2.75 blue states and 12.25 red states.  Maine is responsible for the partials.  It seems like an ironic correlation that the red states would be more likely to require federal assistance.  FWIW the bottom 5 (all blue) of that dependency list are:
46. CA
47. IL
48. NJ
49. MN
50. DE

Time and time again I have to tip my hat to the Republican sales job that keeps them in office even though their constituents are more likely, on average, to need federal assistance of some form even though that is in opposition to some of the Party's core values.

[Wrecks]

The people that won't are rich people (though not stratospherically rich) in high tax states with huge mortgages.

You're describing the class of people who actually spend tremendous amounts of money. You know, the ones who actually drive the economy. These are the people who by and large work hard for their money, and that money is being siphoned out their pockets to give to the ultra wealthy and corporations, who have no need for more money and certainly aren't going to spend it.

I am one of those people. And I've already cut my spending back significantly.

[Wrecks]

Right, the states with the residents that disproportionately pay to float the federal government and transfer money to low-tax states should get their acts together.

Here are the top 15 most dependent states per https://wallethub.com/edu/states-most-least-dependent-on-the-federal-government/2700/

1. KY
2. MS
3. NM
4. AL
5. WV
6. SC
7. MT
8. TN
9. ME
10. IN
11. AZ
12. LA
13. SD
14. MO
15. OR

From the last election, that's 2.75 blue states and 12.25 red states.  Maine is responsible for the partials.  It seems like an ironic correlation that the red states would be more likely to require federal assistance.  FWIW the bottom 5 (all blue) of that dependency list are:
46. CA
47. IL
48. NJ
49. MN
50. DE

Time and time again I have to tip my hat to the Republican sales job that keeps them in office even though their constituents are more likely, on average, to need federal assistance of some form even though that is in opposition to some of the Party's core values.

Fun fact: NYC residents get 55 cents back on every tax dollar sent to the Federal government--EVEN AFTER they deduct their high state and local taxes.

This bill will only exacerbate that.

Maybe, just maybe, our local taxes wouldn't have to be so high if we got more of that government cheese like the red states. Hmmm.

[DarkandStormy]

https://www.cbsnews.com/news/u-s-corporations-earn-record-high-profits-pay-record-low-taxes/

U.S. corporations earn record high profits, pay record low taxes

U.S. businesses have amassed an overseas cash hoard of $2.4 trillion because they aren’t paying their fair share of taxes, according to two think tanks. But that view is at odds with how Republican Presidential nominee Donald Trump and fiscal conservatives see it. They say the U.S. corporate tax rate is too high.

Like most issues regarding taxation, this one has no shortage of opinions, especially because many U.S. companies don’t pay the 35 percent rate, thanks to loopholes and other tax breaks.  A 2013 Government Accountability Office report estimated the levy that businesses actually paid -- also called the effective tax rate -- at 10.6 percent. At times, some Fortune 500 companies have wound up paying little at all in U.S. income taxes.

Further proof that trickle down is BS.  Corporations already have plenty of cash to hire workers.  So how is this tax cut, which is supposed to give corporations more cash, going to result in the hiring of more workers?

[RangerOne]

If I weren't buying a home this would be large tax break, depending on the final version of course. Given that I am the Senate plan would be at about parity, but not itimizing. The current plan saves me slightly more in most cases.

[Malloy]

The most important element of all is the one most seem oblivious to: the animal spirits. People are really sick of sitting around obsessing about what the Federal Reserve is going to do. They want to spend.

Tell me more about these animal spirits...

[Debts_of_Despair]

Now our idiot governor is threatening to sue the feds over legislation that will save most people money.

https://www.nytimes.com/2017/12/04/business/economy/tax-bill-new-york.html

I keep hearing these sob stories from people with insane property taxes but no one wants to answer WHY NY, CA, IL, etc have such high taxes.  Time for local politicians to start doing their job and reel in costs.

Right, the states with the residents that disproportionately pay to float the federal government and transfer money to low-tax states should get their acts together.

Understood, but what does that have to do with a large state and local tax burden?  Surely it doesn't give them the right to levy more taxes.

[Milizard]

Now our idiot governor is threatening to sue the feds over legislation that will save most people money.

https://www.nytimes.com/2017/12/04/business/economy/tax-bill-new-york.html

I keep hearing these sob stories from people with insane property taxes but no one wants to answer WHY NY, CA, IL, etc have such high taxes.  Time for local politicians to start doing their job and reel in costs.

Right, the states with the residents that disproportionately pay to float the federal government and transfer money to low-tax states should get their acts together.

Understood, but what does that have to do with a large state and local tax burden?  Surely it doesn't give them the right to levy more taxes.

It alleviates some of the effects of the higher cost of living in these areas that make these higher salaries, which get taxed at higher and higher rates, necessary.

[seattlecyclone]

Now our idiot governor is threatening to sue the feds over legislation that will save most people money.

https://www.nytimes.com/2017/12/04/business/economy/tax-bill-new-york.html

I keep hearing these sob stories from people with insane property taxes but no one wants to answer WHY NY, CA, IL, etc have such high taxes.  Time for local politicians to start doing their job and reel in costs.

Right, the states with the residents that disproportionately pay to float the federal government and transfer money to low-tax states should get their acts together.

Understood, but what does that have to do with a large state and local tax burden?  Surely it doesn't give them the right to levy more taxes.

What does a state raising money internally to pay for its residents' needs have to do with its reliance on the federal government?

All else being equal, a state that receives less federal funding must make up for that with higher local taxation in order to provide the same sorts of services that the states with more federal funding are able to provide.

[simonsez]

Now our idiot governor is threatening to sue the feds over legislation that will save most people money.

https://www.nytimes.com/2017/12/04/business/economy/tax-bill-new-york.html

I keep hearing these sob stories from people with insane property taxes but no one wants to answer WHY NY, CA, IL, etc have such high taxes.  Time for local politicians to start doing their job and reel in costs.

Right, the states with the residents that disproportionately pay to float the federal government and transfer money to low-tax states should get their acts together.

Understood, but what does that have to do with a large state and local tax burden?  Surely it doesn't give them the right to levy more taxes.

What does a state raising money internally to pay for its residents' needs have to do with its reliance on the federal government?

All else being equal, a state that receives less federal funding must make up for that with higher local taxation in order to provide the same sorts of services that the states with more federal funding are able to provide.

Aye, but the ceteris is definitely not paribus with these tax plans.

[JayhawkRacer]

Being from MN, I for one am a bit displeased with the complete loss of the SALT deduction.

The "property" tax deduction is a side-show, at least for MN. The income tax deduction loss probably means a net tax increase for a large chunk of MN residents(at least in the metro area)

New Jersey, checking in....less than 1% behind MN on income tax combined with the highest property taxes in the country.

I'm glad I don't own here.

You're still paying the NJ property tax (as part of your rent).
In your case though, it will remain deductible on your landlord's schedule E, line 16.

Could someone buy a house under an LLC and rent it out to themselves (allowing the LLC to deduct the property tax)? Or would the rules regarding LLCs disallow that because it's obviously not a business expense?

[accolay]

The debt is going to increase anyway. You know that, right?

This Republican tax plan should be viewed as more than a tax plan, it's also a geopolitical power maneuver to keep us relevant and check the influence of competitors. Similar to "Star Wars."

So, the debt is going to increase anyway, so give the wealthiest more money? That makes no sense.

Neither does that last quoted statement. What about the tax plan is going to keep the United States relevant exactly?

Reduction in the corporate rate and repatriation of funds held out of the country.

As a thought experiment, imagine yourself as a competitor to the United States, as things are now, and alternatively as they would be under the new plan. Which do you like better?

I was traveling and did not have time to reply.

What!? What are you talking about? Repatriation of funds? I think I understand that you prescribe to the theory that corporations will somehow be investing, expanding and hiring with extra money they will receive from this tax bill. Nonsense. This doesn't happen. Our economy is fairly strong, we are employed as a country. In short, we don't need a stimulus now. We should be paying off debt instead of making it.

What's going to happen? The Fed is going to raise interest rates to stave off inflation. Corporations will be rich while we go into a downturn, but regular people the Republicans always say they care so much about will get screwed. They're going to gut Obamacare, social security, Medicaid and Medicare. Their wet dream will become reality.

EDIT: My post was in limbo.

[PathtoFIRE]

How about instead of giving more money to corporations and the ultra rich, and instead of "paying down debt", we make concrete investments in the future and shore up neglected infrastructure?

[ixtap]

How about instead of giving more money to corporations and the ultra rich, and instead of "paying down debt", we make concrete investments in the future and shore up neglected infrastructure?

I would like to put some to paying down debt and some to infrastructure. Wasn't infrastructure a campaign promise?

[BTDretire]

One example of benefit (sparked by a conversation with a colleague) - this plan would be of some benefit to a lot of singles who rent - think of our of college grads. They don't itemize usually and don't make tons. So doubling standard deduction is a boon.
 
But overall is a marginal benefit for most - 1-2K better off...its not all that great, but not terrible.

In my case with a family of four, I gain $12k for the standard deduction, but I lose 4 x $4,050 (2017)
or $16,200 for the personal exemptions.
 In just a few years, I won't have the two kid deductions, Then I'd gain $12k and lose $8,080, coming out ahead, at least on those two changes.
A married couple over 65yrs old get a slightly larger Standard deduction of $14,600.
 That couple gains $9,400 and loses $8,200, for a $1,200 reduction of AGI. Unless there is a senior exemption to the standard deduction change. I see where simplification is happening.

[index]

The asinine thing about this whole tax bill is it is essentially a stimulus put on when the indices are at all time highs and full employment.  Taxes and interest rates should be increased when times are good to save money for those times when the economy enters a recession. Reagan cut taxes in '81 to provide a stimulus to the economy. It worked wonderfully. Only problem is the federal government never removed the stimulus. If the country enters a recession, the government has no arrows in its quiver to stimulate the economy. The fed is still practicing QE albeit at a slower pace and the fed funds rate is at 1.25%. This means the next recession is going to last longer and increase the debt at a greater rate than the last if the two recessions were equal. We are getting to a point where minor recessions could be debilitating for a number of years. Not good for those looking to FIRE.   

[accolay]

How about instead of giving more money to corporations and the ultra rich, and instead of "paying down debt", we make concrete investments in the future and shore up neglected infrastructure?

"concrete investments" no pun intended, I'm sure.

We could actually do both, but you would need a government that would make that a priority.

It's ok, the infrastructure will catch up eventually
]https://www.mprnews.org/story/2017/12/05/small-towns-face-crisis-of-aging-water-sewer-pipes[url][/url]

[RangerOne]

How about instead of giving more money to corporations and the ultra rich, and instead of "paying down debt", we make concrete investments in the future and shore up neglected infrastructure?

We don't have money for that.

Seriously, I would have thought that with a real estate developer in the White House, this would at least be a consideration, and something that could plausibly get bi-partisan support (even if it's not either party's first priority).

Trump doesn't know what he is doing and Republicans are 100% not on board with major infrastructure spending. However i wouldn't rule it out because Trump is very petty and he is clearly willing to fight his own party to please his base.

However if the media doesn't call him out on it, or he doesn't think it will gain him praise, it wont matter to him.

[RangerOne]

One example of benefit (sparked by a conversation with a colleague) - this plan would be of some benefit to a lot of singles who rent - think of our of college grads. They don't itemize usually and don't make tons. So doubling standard deduction is a boon.
 
But overall is a marginal benefit for most - 1-2K better off...its not all that great, but not terrible.

In my case with a family of four, I gain $12k for the standard deduction, but I lose 4 x $4,050 (2017)
or $16,200 for the personal exemptions.
 In just a few years, I won't have the two kid deductions, Then I'd gain $12k and lose $8,080, coming out ahead, at least on those two changes.
A married couple over 65yrs old get a slightly larger Standard deduction of $14,600.
 That couple gains $9,400 and loses $8,200, for a $1,200 reduction of AGI. Unless there is a senior exemption to the standard deduction change. I see where simplification is happening.

One real major change also comes from the minor bump to the bracket cutoffs and the senate plan flat out cuts every tax tier by 2.5 or 3%. If the final bill keeps that it makes a big difference in the short term. Overall it could make it easier to stay out of the 25%/22% bracket with enough deductions.

[sol]

One real major change also comes from the minor bump to the bracket cutoffs and the senate plan flat out cuts every tax tier by 2.5 or 3%. If the final bill keeps that it makes a big difference in the short term. Overall it could make it easier to stay out of the 25%/22% bracket with enough deductions.

The bracket bumps are temporary.  They adjusted the inflation adjustments to brackets so that they grow more slowly, so everyone's marginal rates will creep up over time.

And remember that ALL of the other personal tax reductions are temporary.  The "doubled" standard deduction is temporary.  The increased child tax credit is temporary.  But the loss of personal deductions and exemptions is permanent.  Your taxes will go up when the bill is fully phased in!

The temporary doubling of the standard deduction means anyone who takes the standard gets a tax cut in 2018.   Most of them don't know the republicans want the doubled standard deduction to disappear in a few years.

For people who itemize the situation is more complicated, but most (~60%) will get a tax cut in 2018.

But that's because most people that itemize have children, and will get the new expanded child tax credit.  Which is only partially refundable, and which will also expire once the bill is fully phased in.  At least up front, though, having more kids means you'll get a bigger tax cut in 2018.

Here's a decent summary of the impacts on different kinds of tax filers:  https://www.nytimes.com/interactive/2017/11/28/upshot/what-the-tax-bill-would-look-like-for-25000-middle-class-families.html

[madamwitty]

Here's a decent summary of the impacts on different kinds of tax filers:  https://www.nytimes.com/interactive/2017/11/28/upshot/what-the-tax-bill-would-look-like-for-25000-middle-class-families.html

Interesting analysis! But scrolling down to the bottom and looking at the effect on taxes in 2027, I don't understand why it shows such small numbers for the increase in taxes. The worse case is a family with $640 increase in taxes, whereas the worst case for 2018 is an increase of $3,780. If only the "good stuff" is expiring (doubled standard deduction, more generous child credit, lower tax rates) then why are taxes looking better for many folks in 2027 compared to 2018? What am I missing?

[Wise Virgin]

The debt is going to increase anyway. You know that, right?

This Republican tax plan should be viewed as more than a tax plan, it's also a geopolitical power maneuver to keep us relevant and check the influence of competitors. Similar to "Star Wars."

So, the debt is going to increase anyway, so give the wealthiest more money? That makes no sense.

Neither does that last quoted statement. What about the tax plan is going to keep the United States relevant exactly?

Reduction in the corporate rate and repatriation of funds held out of the country.

As a thought experiment, imagine yourself as a competitor to the United States, as things are now, and alternatively as they would be under the new plan. Which do you like better?

I was traveling and did not have time to reply.

What!? What are you talking about? Repatriation of funds? I think I understand that you prescribe to the theory that corporations will somehow be investing, expanding and hiring with extra money they will receive from this tax bill. Nonsense. This doesn't happen. Our economy is fairly strong, we are employed as a country. In short, we don't need a stimulus now. We should be paying off debt instead of making it.

What's going to happen? The Fed is going to raise interest rates to stave off inflation. Corporations will be rich while we go into a downturn, but regular people the Republicans always say they care so much about will get screwed. They're going to gut Obamacare, social security, Medicaid and Medicare. Their wet dream will become reality.

EDIT: My post was in limbo.

I'm pretty sure you didn't actually do the thought experiment. Too bad, we could have discussed your insights.

The Fed will be stocked with doves and follow an accommodative policy, I think the signs are clear.

Unusual solutions to long-standing problems will be proposed, from unexpected sources.

Your disaster scenario seems like it came straight out of the media. Personally I avoid regular news and opinion media, I like business news better. I notice the businesspeople in interviews are animated, bullish, full of plans, and look like they are finally having a good time. None of them are frightened of the Fed.

[Wise Virgin]

The most important element of all is the one most seem oblivious to: the animal spirits. People are really sick of sitting around obsessing about what the Federal Reserve is going to do. They want to spend.

Tell me more about these animal spirits...

https://en.wikipedia.org/wiki/Animal_spirits_(Keynes)

[accolay]

I'm pretty sure you didn't actually do the thought experiment. Too bad, we could have discussed your insights.

The Fed will be stocked with doves and follow an accommodative policy, I think the signs are clear.

Unusual solutions to long-standing problems will be proposed, from unexpected sources.

Your disaster scenario seems like it came straight out of the media. Personally I avoid regular news and opinion media, I like business news better. I notice the businesspeople in interviews are animated, bullish, full of plans, and look like they are finally having a good time. None of them are frightened of the Fed.

Well, it's not that you don't trust media, it's that you only trust the media you've chosen to trust. What if an opinion is from an actual economist? Does that count?

Moving on: it's not my disaster scenario. It's basically most economists' scenario.
Is Forbes too media-y for you?
https://www.forbes.com/sites/johntharvey/2017/12/02/economists-say-the-trump-tax-plan-will-have-disastrous-consequences/#4319f3a44209

How about Business Insider?
http://www.businessinsider.com/trump-gop-tax-plan-tax-economist-says-senate-bill-crazy-stupid-2017-11

Bloomberg?
https://www.bloomberg.com/news/articles/2017-09-28/most-economists-agree-trump-tax-plan-will-widen-budget-deficit

Unsure what the WSJ says, since I don't have a subscription and libraries are closed right now. I'd label that as a biased source however, considering the owner.

The reason they look so happy is because they're going to making money hand over fist off of this giveaway to them. It wont stimulate an economy that doesn't need stimulating. It wont show up other countries. It's going to make the people who own and run the companies rich. It does not trickle down. I'm sorry.

Edit to fix quote.

[Mr Mark]

The high level tax plan is doing exactly what the Republicans wanted.
1/big tax cut for their donors and the rich shareholding class
2/ penalise democratic strongholds (NY and Cali) that have high state and city taxes.
3/ensure nasty side effects on blue collar republicans and middle class don't get noticed until after 2018 and 2020 elections
4/ increase deficit but blame entitlements and democrats.  Slash Medicaid and future SS to 'fix'

Looks like they will get away with it.