Tag Archives: United States Congress Joint Committee on Taxation

What Does The Tax Plan Look Like?

Posted on by

Investor’s Business Daily posted an article today detailing some of the impact of the new tax plan.

The article reports:

The Tax Policy Center (TPC), a liberal think tank, noted that more than 80% of Americans will get tax cuts under the plan just passed. And the benefits will go to every income group, not “billionaires.” This, by the way, is bolstered by other recent analyses by Congress’ Joint Committee on Taxation and by the widely respected nonpartisan Tax Foundation.

TPC estimates an average tax cut of about $2,140 per person. By the way, some 16% of the richest Americans — those in the top 0.1% of incomes — will face an average tax increase of $387,610.

Brian Riedl of the Manhattan Institute, further crunching the TPC numbers, found that while the top 1% of incomes now pay 27% of all federal taxes, they will get just 21% of the tax cuts. The bottom 80%, including the middle class, pays only 33% of all taxes, but will take home 35% of the tax cuts.

Of the 12% who will face tax hikes, they’re overwhelmingly among the rich — not the middle class.

So, no, it’s not “tax cuts for the rich.” That’s a totally bogus argument.

For that matter, so are the arguments that tax cuts tank the economy. History is replete with examples of why that isn’t true.

The article concludes:

…As history clearly shows, growth-oriented tax cuts such as these almost always have major benefits for the economy and for average workers. During the 20th century, big tax cuts in the 1920s (Harding, Coolidge), 1960s (Kennedy) and 1980s (Reagan) all yielded major growth dividends for the U.S. economy.

What’s more, those past major tax cuts were to varying degrees bipartisan. Sadly, not this time. Not one Democrat voted for them. Not one.

That’s why the Democrats and progressive left have become so utterly unhinged. They’ve failed to stop the one thing that might deny them a chance to retake both houses of Congress in the 2018 midterm elections: an economic boom.

When the economy really begins cooking, with the economy growing close to 3%, hundreds of thousands of new jobs being created and workers seeing more in their paychecks, how will they explain that to their constituents?

One of the things to remember here is the impact of cutting the corporate tax rate. Corporations don’t pay taxes–they pass them on to consumers and shareholders. When you lower the corporate tax rate, good things happen for consumers and shareholders. The other aspect of this is the relationship between the American corporate tax and corporate taxes in other countries. America had one of the highest corporate tax rates in the world. This high tax rate encouraged companies to locate their headquarters elsewhere. Lowering this tax rate makes America more competitive as a home base for businesses. The lower tax rate combined with the low cost of energy in America makes America a very attractive place to do business.

Time will tell what the impact of this tax plan will be. If all Americans do better under this tax plan, it will be difficult for Democrats to explain their opposition to it.

The Tax Bill Passed Last Night

Posted on by

This is the summary from Thomas.gov of the tax bill that passed the Senate last night.

H.R.1 — 115th Congress (2017-2018)

Introduced in House (11/02/2017)

Tax Cuts and Jobs Act

This bill amends the Internal Revenue Code to reduce tax rates and modify policies, credits, and deductions for individuals and businesses.

With respect to individuals, the bill:

  • replaces the seven existing tax brackets (10%, 15%, 25%, 28%, 33%, 35%, and 39.6%) with four brackets (12%, 25%, 35%, and 39.6%),
  • increases the standard deduction,
  • repeals the deduction for personal exemptions,
  • establishes a 25% maximum rate on the business income of individuals,
  • increases the child tax credit and establishes a new family tax credit,
  • repeals the overall limitation on certain itemized deductions,
  • limits the mortgage interest deduction for debt incurred after November 2, 2017, to mortgages of up to $500,000 (currently $1 million),
  • repeals the deduction for state and local income or sales taxes not paid or accrued in a trade or business,
  • repeals the deduction for medical expenses,
  • consolidates and repeals several education-related deductions and credits,
  • repeals the alternative minimum tax, and
  • repeals the estate and generation-skipping transfer taxes in six years.

For businesses, the bill:

  • reduces the corporate tax rate from a maximum of 35% to a flat 20% rate (25% for personal services corporations),
  • allows increased expensing of the costs of certain property,
  • limits the deductibility of net interest expenses to 30% of the business’s adjusted taxable income,
  • repeals the work opportunity tax credit,
  • terminates the exclusion for interest on private activity bonds,
  • modifies or repeals various energy-related deductions and credits,
  • modifies the taxation of foreign income, and
  • imposes an excise tax on certain payments from domestic corporations to related foreign corporations.

The bill also repeals or modifies several additional credits and deductions for individuals and businesses.

What Does The Senate Tax Bill Do?

Posted on by

Investor’s Business Daily posted an article yesterday detailing the tax cuts under the Senate Tax Bill currently being considered.

The article takes on some of the fiction about the bill currently being reported:

The Senate tax bill would reduce income taxes for people at every income level — even those who don’t pay taxes. That’s the official conclusion of the Joint Committee on Taxation. So why are Monday’s headlines screaming that the tax cuts would make the poor much worse off?

“Senate GOP tax bill hurts the poor more than originally thought, CBO finds.” That’s the headline in the Washington Post describing a Congressional Budget Office report released on Sunday.

The story claims that the “Republican tax plan gives substantial tax cuts and benefits to Americans earning more than $100,000 a year, while the nation’s poorest would be worse off.” Later, the Post story talks about the bill’s “harsh impact on the poor.”

The article explains why that story is false:

First of all, the CBO doesn’t describe the Senate bill as being “harsh” to the poor. That’s the spin put on by the reporter.

The report does, however, include a table that shows how the bill would affect federal revenues and spending by income group. And, indeed, it appears to indicate that those making less than $40,000 will take it on the chin, while those making more than $100,000 make out like bandits.

But note the word “spending” above. Since this is a tax-cut bill, why is “spending” part of the calculation at all?

That’s in there because the CBO includes the spending impact of the Senate bill’s repeal of ObamaCare’s individual mandate.

The CBO numbers assume that if the mandate is gone, people will drop their insurance. It does not consider the fact that many people pay the fine rather than the high cost of insurance. The tax bill returns the freedom to consumers to make their own choices about health coverage.

The article also includes a chart of tax savings (looking only at the tax cuts and savings in the tax bill):

If the tax cuts are passed, we can expect economic growth to return to our previous normal of about 3% (or more). We can expect people to leave welfare and join the work force because of a booming economy that results in higher wages. If the tax cuts fail, we can expect a Democratic Congress that will raise taxes, slow economic growth, and spend its time trying to impeach President Trump. It’s up to Congress to make the choice.