Patterico's Pontifications

11/3/2017

No on a “Tax Cut” Bill That Raises Taxes

Filed under: General — Patterico @ 10:00 am



The “tax cut” bill that emerged yesterday appears to be a disappointment. I say “appears to be” because I am basing my analysis on imperfect summary descriptions that I see online; the true effect on me will be hard to assess until I do my next tax return. The details of the plan are listed here. But we do know this: there is nothing bold about the tax bracket reductions. It is simply a fiddling with marginal rates, as always happens when we are promised “reform.” And that makes the bad parts even worse.

What are the bad parts? Among them is the elimination of a deduction for state and local taxes:

Retains the mortgage interest and charitable deductions, as well as the property tax deduction (capped at $10,000), but repeals the remainder of the state and local tax deduction and other itemized deductions.

The reaction of people who live in states with a small income tax is elation. Ha ha, we’re sticking it to California and New York! Look: if we had genuine tax simplification and across the board tax cuts, I’d cheer. If we combined the elimination of state and local tax deductions with sweeping cuts in all brackets (necessarily accompanied by spending cuts) such that every American still received a tax cut, then I would be in favor of that.

That’s not what’s happening. Instead it’s just a chance to pick new winners and losers. And as one of the losers, I object. A “tax cut” plan that raises my taxes is crap. And that’s not all. Then we have this:

Caps the mortgage interest deduction at $500,000 of principal for new home purchases.

Again: I am actually for the elimination of the mortgage interest deduction, in theory. It serves to increase home prices and distort the market for housing. But as a big beneficiary of this deduction, there is no way I am going to support its elimination unless there are large cuts that offset the hit I will take.

Now, this particular provision appears to apply only to prospective sales, so it won’t cost me money right out of the gate. And the doubling of the standard deduction will cushion the blow for many. But for many people, possibly including us, what it will do is ensure that we will never sell our home. First, my home’s resale value will take a hit, because purchasers won’t be able to deduct all their interest. Second, if I am understanding the plan correctly, by selling our home we will be limiting the amount of interest we can deduct, because our next home would be a “new home” subject to the caps, while our current home isn’t. If you want to put the brakes on home sales and create an artificial housing shortage, this looks like a great way to do it.

Finally, and really most important, there is zero here about reducing spending. And we just hit $20 trillion in national debt. So now I’m giving more money to a government that won’t reduce spending.

A tax cut plan should cut taxes. Because I am not confident this one would, and because there is nothing here about reducing spending, I am opposed.

[Cross-posted at RedState and The Jury Talks Back.]

185 Responses to “No on a “Tax Cut” Bill That Raises Taxes”

  1. There is also a change in how the cap gain exclusion on home sales works, with it being phased out once one’s AGI passes $500K for couples. Not sure how that works as cap gains are part of the AGI, but it doesn’t sound good for folks selling a long-held house in CA at retirement.

    Kevin M (752a26)

  2. You expect something better from mcconnell, the tax exemptions had to go to fit the
    procrustean cbo which will make up phony numbers anyway.

    narciso (d1f714)

  3. Yes its much of the same foolishness from 1986, don’t worry corker and flake will kill it

    narciso (d1f714)

  4. Agree with your analysis. There is no reform in the tax plan. No simplification. It’s still a complicated train wreck of code. Nothing to address out of control spending either.

    Dejectedhead (81690d)

  5. Caps the mortgage interest deduction at $500,000 of principal for new home purchases.

    I’m unclear on what this means, and it’s not explained any further at the link. I always thought “interest” and “principal” were two different things when it came to loans.

    Does this mean you can’t deduct more than $500K of interest payments in a year? Or that the original loan can’t be greater than $500K?

    Seriously, I don’t know what this means.

    Chuck Bartowski (bc1c71)

  6. And you’re right about the brackets. They come down about 3 points for most people, but their larger deductions go away. The increase in the standard deduction is supposed to take care of that, but the repeal of the personal deduction zeros that out.

    The real tax cut is for the corporate rate, from 35% to 20%. The middle class, and especially the upper-middle class will pay more. Maybe if the corp rate was cut from 35% to 25% they could make it more interesting to the rest of us.

    Kevin M (752a26)

  7. I think it means you can only deduct interest on $500k of the mortgage. If so (and I’m not sure that is correct), then only half the interest can be deducted on a $1M mortgage. This would impact places like California and New York City far more than rural areas, where home prices are less, but it would make the “get even” crowd happy.

    DRJ (15874d)

  8. Surprise, surprise. Our host is against Trump’s tax cut proposal. It’s not good enough. Maybe the Senate will improve it.

    ropelight (e67740)

  9. Does this mean you can’t deduct more than $500K of interest payments in a year? Or that the original loan can’t be greater than $500K?

    It means that the interest payments on the portion of the loan above $500K are not deductible. Also not deductible is ANY interest on a second mortgage/LoC or any mortgage on a second house.

    Kevin M (752a26)

  10. The second, Chuck. If you borrow $500,001.00, you cannot deduct the interest on the loan. But I’ll bet there will be ways around it, like there have been with the FannieMae limit. Get one qualifying loan for up to $500K and a junior for the balance.

    nk (dbc370)

  11. Closing loopholes is like a bear trap

    narciso (d1f714)

  12. Ok, Kevin could be right, too.

    nk (dbc370)

  13. DRJ, too. Accountants will be happy — this will help them pay their mortgage.

    nk (dbc370)

  14. And the idea of cutting rates in exchange for ending deductions is a cynical lie. They did this in 1986, cutting rates, and no sooner was the ink dry that the Democrats were talking about raising marginal rates back to where they were, or higher.

    At one point (circa 1983) the TOP marginal rate was 28%.

    The Dems have a ratchet attitude. They have no problem raising taxes on the “rich” alone (as if income = wealth). But if you simply try to repeal their lopsided tax increase it is “cutting taxes for the rich”.

    Kevin M (752a26)

  15. 6, make it high 20s corporate for me to even think about it. This is nothing but “get even with the coastals”.

    urbanleftbehind (5eecdb)

  16. BTW, the cap does NOT cover refis. Presumably this means you could refi and consolidate your nondeductible LoC and/or cash out to pay off your second house mortgage and you’d be golden.

    Kevin M (752a26)

  17. Note: My mortgage is already under $500K, but the cap gains exclusion change worries me as I have quite a bit of equity (coastal LA house held for 20 years) and when I retire out of CA, I’d prefer to take most of it with me.

    Kevin M (752a26)

  18. Just so I’m clear on the author’s position, a tax cut that greatly improves the US’s inane corporate tax structure is unacceptable unless he gets sufficient goodies out of it too. This is a real thing that an actual adult put his name on?

    Selfish. Greedy. Completely disinterested in anything that doesn’t put cash in one’s own wallet. Is this a Pelosi guest-post?

    As a Californian who will also get whacked by this, nothing will improve conservative’s fortunes in this state faster than forcing people to actually pay their state income tax rate- and not hide from it by deducting it from your fed bill. If this bill only did this, it would be an obvious yes for any conservative in California whose primary objective wan anything other than bashing Trump.

    Bill Kilgore (b84dca)

  19. Elimination of the SALT deduction is GREAT. Not because it benefits me (it won’t), but because it makes things “fairer” in the scheme of Federal Income Taxation.

    Why should people in California and NY, who pay high state and local taxes, get to lower their federal income taxes because of it? Why do they get to pay less to the Feds? It is essentially shifting Federal Income Tax revenues to the those States.

    People who live in Texas and Nevada (States with no State income tax) have to pay more to the Feds? I call BS.

    No, I say eliminate the SALT deduction and let those people see the full impact that high state income taxes has on them personally. Or they can move to Texas.

    They want all the things the state and local taxes pay for in NY and Cal, they can pay full freight for them. Why should I subsidize those things?

    albert (3304c6)

  20. But for many people, possibly including us, what it will do is ensure that we will never sell our home.

    This is my takeaway as well.

    felipe (b5e0f4)

  21. The change that upsets me the most is actually a pretty small one.

    Under the current tax code, if your medical expenses are more than 10% of your AGI, you can deduct those expenses. That deduction is eliminated.

    The number of people who actually use this deduction is very, very small. Eliminating it has a negligble effect on tax expenditures.

    But the people who use this deduction have insanely high medical expenses and are incredibly dependent on it. There are people using this deduction who *will not be able to afford health care* if it is repealed.

    Repealing it has a negligible positive benefit and an insanely high cost to the people dependant on it. It’s mean spirited for no real reason.

    aphrael (e0cdc9)

  22. I would add that another proviso appears to be causing both cities, counties and some businesses to shake their angry fists at congress. GOP tax bill hits professional sports stadium bonds. Which is interesting that my local newspaper had one of its sports writers go on in an editorial on the sports page about the dangers to the economy of the removal of the sports bond tax increase. I think that this will be a lede for a few news stories going into the weekend. How the evil GOP wants to break sports teams and destroy cities with sports teams. I want to know the over and under for something like this and maybe even combine over/under for this sort of lede combined with the kneeling at the anthem. All of which is teeth gnashing and deflection away from being asked to make hard choices about tax cuts, tax raises and serious budgetary reforms.

    Charles (24e862)

  23. Tax brackets are anathema in a republic. There is no way, other than greed and envy, to justify charging some citizens more than others for the privilege of living in America. If we all have equal rights and responsibilities, we should all be subject to equal rates of taxation.

    To charge some of us a higher rate than others is just plain wrong. We don’t despense justice on a sliding scale, nor are more votes allocated to a favored few (Chicago Democrats excepted).

    I propose the annual budget be divided by the number of taxpayers and each one of them billed accordingly. In addition, a 5% sales tax be collected at the point of sale.

    Only then would taxation emerge from the dark shadows of a tyranny by a greedy majority into the sunlight of a shared national responsibility.

    ropelight (e67740)

  24. What else did anyone expect from the republican leadership that accepts the Budget rules constructed by democrats to protect existing spending and progressive taxation? The status quo will always win until enough politicians in Washington are willing to change it. Don’t despair the most unpopular cuts will be restored in the name of fairness until it’s a bill the democrats be proud of even when they stand together against it. Count on it.

    crazy (d99a88)

  25. I would probably end up paying a little more, but if I didn’t have to itemize, I would gladly eat a few hundred bucks.

    By the time the bill makes it through the sausage grinder of Congress, things will pretty much stay the same, IMO, except corporate rates. If that leads to more jobs and more competition for good employees, it will be worth it.

    Patricia (5fc097)

  26. John Cochrane – economist extraordinaire – nails it:

    But the chaos in U.S. income redistribution is as great as the anarchy in the tax code. Tax discussions fall apart because the redistributive influence of each change is assessed in isolation. By measuring how the tax and transfer system work together, politicians could get better taxes and more effective redistribution.

    HIs argument for true reform via zero income and corporate taxes and the implementation of a VAT is compelling and well thought out. It takes the “winners and losers” arguments out of the equation. It would take a bold leader to gain buy-in and implementation, so it’ll never happen.

    Lenny (5ea732)

  27. Here’s a link to one of Cochrane’s posts on the subject should anyone care to learn more:

    https://johnhcochrane.blogspot.com/2017/10/vat-full-text.html#more

    Lenny (5ea732)

  28. Well these romans,can pay for their own bread and circuses, this solomonic mean just doesnt happen.

    narciso (55a2c4)

  29. But the people who use this deduction have insanely high medical expenses and are incredibly dependent on it.

    Several years when I was paying tens of thousands for my aging mother to live in assisted living, this was important to me. And again during my wife’s health crisis. Now, if the marginal rates were being slashed it might be palatable, but they aren’t. And even these modest cuts will be eliminated the moment the Dems are back in charge (and maybe even sooner), but the deductions will never return.

    Kevin M (752a26)

  30. Well these romans,can pay for their own bread and circuses,

    “What have the Romans ever done for us?!”

    Kevin M (752a26)

  31. This bill was dead the moment those idiots tried to sucker citizens by telling them they could file a return on a postcard.

    Catch the video of Trump literally sniffing out one of the ‘props’– for the fertilizer it really is. The stink of ol’Steve Forbes is all over it.

    DCSCA (797bc0)

  32. To charge some of us a higher rate than others is just plain wrong.

    But we don’t. We just charge some lower rates.

    Kevin M (752a26)

  33. With due respect to those like our host who’ve voluntarily chosen to live in states with high state and local taxes — and with considerably less respect to those who live in such states but have actively encouraged those higher state and local tax rates in part because those rates are effectively subsidized by the rest of the nation — I have little to no sympathy for those who’ve enjoyed a past windfall from the government having a thumb on the scales in favor of people who live in high-tax states. Removing that thumb — or actually, just easing back on it, which is what the current proposal would do (leaving $10k in deductions for SALT) — is not an attack on the people who’ve been receiving the windfall.

    Just as our host is upset at the prospect of losing this subsidy, I’m upset at the prospect of continuing it.

    Beldar (fa637a)

  34. It would take a bold leader to gain buy-in and implementation, so it’ll never happen.

    And retired people, living on what they have managed to glean out of 40+ years of high income taxes will never be willing to pay high sales taxes on what they buy with this after-tax savings*.

    And they all vote.

    *Most currently retired people had very little access to 401(k) plans which didn’t really start until the mid-90s. Perhaps going forward retired folks with huge 401(k) balances will be OK with killing income taxes.

    Kevin M (752a26)

  35. (leaving $10k in deductions for SALT)

    It leaves $10K for property taxes alone, which are generally LOWER in CA than TX.

    Kevin M (752a26)

  36. Can’t say I’m overall in favor of the proposed tax plan, but this:

    “If we combined the elimination of state and local tax deductions with sweeping cuts in all brackets (necessarily accompanied by spending cuts) such that every American still received a tax cut”

    is probably impossible to achieve.

    There is no change to the tax code that does not adversely affect somebody. If you amend “every American” to “every American with a W-2”, perhaps you could come up with something that cuts taxes, on net, for all those people.

    Frederick (64d4e1)

  37. Point taken,

    narciso (55a2c4)

  38. Beldar, at 33:

    > leaving $10k in deductions for SALT

    Respectfully, I do not think this is a fair interpretation of what is being proposed.

    It would be *one thing* if you could deduct up to $10K in state and local taxes.

    But the proposal is to eliminate the deductibility of state and local *income* taxes and preserve the deductibility of up to $10K in state and local *property* taxes.

    That’s a direct choice to favor property owners over non property owners. It is placing a thumb on the scales and choosing to favor those with more resources (because they were able to buy property) over those with fewer.

    I would still be unhappy with a $10K cap on SALT deductions, but it would be nowhere near as bad as what’s actually being proposed.

    aphrael (e0cdc9)

  39. aphrael, I don’t think there should be any subsidy for state or local income or property taxes. If forced by political realities to keep a deduction for property taxes but capping it at $10k, I can stomach that as a necessary compromise of principle. At least there’s an arguable social benefit to federal subsidies designed to encourage home ownership — although I think that kind of benefit ought to done at the state level rather than the federal one, if it’s to be done at all. But it’s palpably unfair, and has always been palpably unfair, to subsidize states that have personal income taxes at the expense of those which don’t. That needs to end.

    Beldar (fa637a)

  40. Elimination of the SALT deduction is GREAT. Not because it benefits me (it won’t), but because it makes things “fairer” in the scheme of Federal Income Taxation.

    Mr. albert (#19) and that Beldar person (#33) are correct

    i want you to read this comment what was made in the context of the recent Illinois budget drama

    i want you to read it carefully

    here we go:

    Generation X – Sunday, Jul 2, 17 @ 9:56 pm:

    I think there is a bigger problem Nationally that none of this really addresses. Ok fine we move to 4.75% and stave off disaster to another day. We all know that isn’t going to be enough in the long run and it is very difficult to raise taxes ever.

    The answer is to significantly lower the Federal Income tax so that States may raise the revenue they need to fund the issues and priorities that each respective state sees fit. Get the Feds out of education, healthcare, Environmental Protection and return those powers to the States. Lower the income tax federally and allow Illinois to tax appropriately.

    After all Illinois doesn’t have the same priorities/issue as say Delaware, Utah or Alabama. The Feds are handcuffing our State Government making it impossible to function effectively. A family in Illinois making $50,000 will watch as $15,000 of its income goes marching out the door, most of which goes to the Feds.

    terrifying.

    happyfeet (28a91b)

  41. It leaves $10K for property taxes alone, which are generally LOWER in CA than TX.

    I think you can purchase a 100 acre hog farm with Colonial Mansion in Texas for about the same as a 2 bedroom condo in CA.

    Ben burn (b3d5ab)

  42. A year ago, the world was introduced to the Destination Based Cash Flow Tax (DBCFT) by Rep. Kevin Brady (R-TX) who, unlike a normal Republican, really is a policy wonk with big ambitions and strongly held views.

    This proposal was so poorly understood in GOP circles that Republicans rapidly started calling it a “border tax” and then they dropped the idea once they realized that under Brady’s plan some people would pay more taxes than they do now. That’s a fine reason to oppose a change, but it’s also a feature of any conceivable tax reform plan. If you enact big cuts to tax rates then you either need to blow up the deficit — which means you can’t pass a permanent bill under budget reconciliation rules — or else you need to offset the lost revenue by making changes elsewhere. Some people pay less but others pay more.

    https://www.vox.com/policy-and-politics/2017/11/3/16596440/republicans-change

    Ben burn (b3d5ab)

  43. Just so I’m clear on the author’s position, a tax cut that greatly improves the US’s inane corporate tax structure is unacceptable unless he gets sufficient goodies out of it too. This is a real thing that an actual adult put his name on?

    Selfish. Greedy. Completely disinterested in anything that doesn’t put cash in one’s own wallet. Is this a Pelosi guest-post?

    As a Californian who will also get whacked by this, nothing will improve conservative’s fortunes in this state faster than forcing people to actually pay their state income tax rate- and not hide from it by deducting it from your fed bill. If this bill only did this, it would be an obvious yes for any conservative in California whose primary objective wan anything other than bashing Trump.

    That last line gives it away. Trump Trump Trump Trump Trump Trump Trump

    The post does not mention Donald Trump. The thumbnail photo I have at RedState is of Paul Ryan, not Trump. But for those with the most acute cases of TCDS (Trump Criticism Derangement Syndrome) there doesn’t even have to be a mention of Trump to claim that a rejection of a GOP initiative is “Trump bashing.”

    As for your insulting and inane claim that there aren’t enough “goodies” in this bill for me: I am not looking for “goodies,” bub. I DO NOT WANT A TAX INCREASE. It is not “selfish” to demand that spending be cut before my taxes are raised a dime.

    As for the disparity between California and New York and other states: yes, there is inequity there, but there is arguably inequity in that I have to pay state income taxes and other states’ residents do not. You say if I want the benefits move to Texas. I could say if you want to deduct more taxes move to California. I do not say that because I think it is a dumb argument. Other states have higher property taxes but I will not bitch about how they get to deduct more because guess what? I get to pay a lower rate than they do. I am not interested in playing the “I win so goody if other people get screwed” game. I will definitely play the “I had better not lose” game. If you want this to be about sheer winners and losers and not principles, let’s fight it out. I will not apologize for defending my own position. I think taxation is robbery to begin with, given the unnecessary shit we are coerced to pay for. I will alway, always fight to pay less.

    Patterico (b6df96)

  44. Chuck Bartowski (bc1c71) — 11/3/2017 @ 10:43 am

    Does this mean you can’t deduct more than $500K of interest payments in a year? Or that the original loan can’t be greater than $500K?

    The latter. And the way they wanted to ophase it in shows how detached they are. They set a cutoff date for November 2, 2017. What> Are mortgage loas arranged in one day? Do people regularly back out? Tax law changes sometimes are done that way, but they should grandfather anything in the next 3 or 4 months.

    The mortgage interest law change would reduce the maximum level of principle. Up that amount could be deducted I think. It is now at $1 million, (set by the 1986 law I think) and would be reduced to $500,000 and limited to one house, rather than two. And the bill would further not allow any any interest from any home equity loan to be deducted (it’s now capped at principle of $100,000)

    But that’s not the biggest change.

    They almost double the standard deduction; increase the child tax credit from $1,000 to $1,600; abolish personal exemptions and replace it with a $300 tax credit (but it stops after 5 years in order to lower the CBO score) except for those dependents who eligible for the child tax credit instead; abolish most itemized deductions except property taxes (capped at $10,000), some mortgage interest, and charitable contributions – any deduction for medical expenses is now gone, as is sate and local income taxes.

    Brackets are modified. The 0% bracket is higher maybe (or maybe not) and the two lowest 10% and 15% are replaced by one at 12%.

    401(k)s stay the same. Corporations cannot deduct interest.

    Sammy Finkelman (20d02d)

  45. . I think taxation is robbery to begin with,

    Holy Moly. Even John Galt Libertarians endorse Spartan taxes. I hope that’s just hyperbole.

    Ben burn (b3d5ab)

  46. There’s a famous dictum in _McCulloch v. Maryland_, the case that settled the principle that the Federal Government is exempt from state taxation, that “the power to tax is the power to destroy”.

    Pursuant to that, I have always been of the view that it is not ok for one sovereign to tax money being paid to another sovereign. The money you pay in federal taxes should not be included in the tax base used to calculate state taxes, and the money you pay in state taxes should not be included in the tax base used to calculate federal taxes. OTHERWISE, one sovereign or the other has the power to use the tax code to control the behavior of the other, and, in extremis, to destroy it.

    It seems to me that if we’re going to have a system of divided sovereignty, that’s a fundamental requirement for it to work.

    So *ideologically* I am opposed to doing away with the SALT deduction, for that reason.

    But completely seperate from that, as a non-property owner, I find the government doing away with *my* SALT deduction but *not* doing away with the SALT deduction available to property owners, to be picking winners and losers and declaring that I will lose — not for a principled reason, but out of political expedience. And that pisses me off.

    aphrael (e0cdc9)

  47. Sammy, at #44:

    I disagree with your characterization.

    It is *not* that the original loan can’t be greater than $500K.

    It’s that only the interest on that portion of the loan lower than $500K can be deducted.

    So if you take out a $750K loan, 2/3 of the interest can be deducted.

    This is an accounting nightmare after the first year or two, which is ironic in a simplification bill.

    aphrael (e0cdc9)

  48. Anyone who reads my post (ALL the words) will see I support eliminating inequity. But NOT by forcing me to pay more. Force others to pay less. Do not justify my being robbed to a greater extent by citing fairness. It’s ALL unfair.

    And again: if we are saying screw principles, I pay less so who cares if you pay more, then it’s just a political fight. OK then. Put up your dukes. In that case I am done reasoning with you. If you are FOR my getting robbed more, you have a fight on your hands.

    Patterico (b6df96)

  49. Perhaps an OBAMACARE parallel would be instructive…

    Destroying healthcare so we can improve it

    Ben burn (b3d5ab)

  50. aphrael’s 47 gets the standing O.

    Patterico (b6df96)

  51. Do not justify my being robbed to a greater extent by citing fairness. It’s ALL unfair.

    it’s not about being robbed i live in a blue state too

    it’s about tilting the board and placing constraints on the rapacious taxations at the state level

    it’s all for the good of future you not for the bad for the good

    happyfeet (28a91b)

  52. @45. John Galt was fiction; just like a frigging postcard return and $4000 in all– or is it most–your pockets– or was it $1100… and growth will explode; generous, cash-flush corporations will raise wages w/even more repatriated billions or maybe just 40 acres and a mule will suffice. Reaganomics; trickle down doesn’t work.

    “Senator- don’t piss down my back and tell me it’s raining.” – Fletcher [John Vernon] ‘The Outlaw Josey Wales’ 1976

    DCSCA (797bc0)

  53. Kevin M, at 16: what’s your source for the claim that the cap doesn’t cover refis?

    I will admit that I haven’t read the proposed bill, something which I suspect is true of everyone here. The press coverage I have seen hasn’t made that claim, and the most natural way to read a cap on future loans is that it applies to all future loans, so i’m curious what the basis for your claim is.

    aphrael (e0cdc9)

  54. Was Dick Trickle a fictional NASCAR driver?

    It’s all so murky, but Republicans are the Workmans Party.

    Ben burn (b3d5ab)

  55. Only losers cry “It’s not fair”. Winners start a business which they bankrupt for every one they start that succeeds, that way they can claim a net operating loss based on the projected value of the bankrupt business and pay no taxes at all on income from their successful business.

    nk (dbc370)

  56. I am not convinced this bill can pass in its current form. A number of Republican congresspeople from high tax states cannot support this and get re-elected. That’s going to make the margin in the house really, really thin. When you then add in people like Corker in the Senate (who won’t vote for it because it isn’t deficit neutral), and a united opposition from the Democrats … it’s not impossible for it to pass, but the road is really incredibly narrow.

    aphrael (e0cdc9)

  57. NK at 55: so it’s a fight, and whatever the victor does is fair game, ethically and morally?

    aphrael (e0cdc9)

  58. Proposed RNC anthem

    https://www.google.com/search?q=workingmans+dead&oq=workingmans+dead&aqs=chrome..69i57j0l3.8839j0j4&client=ms-android-verizon&sourceid=chrome-mobile&ie=UTF-8#imgrc=n1__Gc_BJEuKzM

    Ben burn (b3d5ab)

  59. Actually, I was riffing on Donald J. Trump. Not obviously enough I guess. But since you mentioned it, the 16th Amendment did in fact throw out fairness in taxation and whichever faction has the most representation in Congress wins.

    nk (dbc370)

  60. I think you can purchase a 100 acre hog farm with Colonial Mansion in Texas for about the same as a 2 bedroom condo in CA.

    My tax is lower in CA than a house of a quarter the value would be in TX. CA property taxes for long-held property are TINY. Mine is about 1/4% of market value. Texas is about 1%, give or take, depending on county.

    Kevin M (752a26)

  61. This is an accounting nightmare after the first year or two, which is ironic in a simplification bill.

    It’s not that bad, only a bit of arithmetic. I wouldn’t call it a “nightmare”, although I also wouldn’t call it “simple.” As the principle decreases more of the interest will be deductible. It will also encourage larger down payments.

    Kevin M (752a26)

  62. $500,000 of principal for new home purchases

    I thought I read that earlier purchases would be exempt from this. Or maybe that was a proposal?

    Patricia (5fc097)

  63. New housing starts just hit the skids…durable goods in the Pipeline continue yo shrink….manufacturing jobs falter..

    Ben burn (b3d5ab)

  64. 38 Aph and Beldar: a goal for the Senate (ha!) to accomplish would be to have a general combined deduction with a cap of X where the tax filer can put the combined total of SALT and Property Tax. But neither must remain as separate line deductions. This way a renter in a high-col environment is not at a disadvantage to someone from Texas (or the southern Cook County suburbs of Chicago, where on a 30 year, your property taxes well exceed the P&I every month)

    urbanleftbehind (5eecdb)

  65. Kevin M, at 16: what’s your source for the claim that the cap doesn’t cover refis?

    http://www.cnn.com/2017/11/02/politics/tax-plan-republicans/index.html

    Under section 1302 of the bill, (starting at page 100, line 22)

    ‘‘[C] TREATMENT OF INDEBTEDNESS INCURRED ON OR BEFORE NOVEMBER 2, 2017.—
    ‘‘(i) IN GENERAL.—In the case of any pre-November 2, 2017, indebtedness, this paragraph shall apply as in effect immediately before the enactment of the Tax Cuts and Jobs Act.

    ‘‘(ii) PRE-NOVEMBER 2, 2017, INDEBTEDNESS.
    For purposes of this subparagraph, the term ‘pre-November 2, 2017, indebtedness’ means
    ‘‘(I) any principal residence acquisition indebtedness which was incurred on or before November 2, 2017, or
    ‘‘(II) any principal residence acquisition indebtedness which is incurred after November 2, 2017, to refinance indebtedness described in clause (i) (or refinanced indebtedness meeting the requirements of this clause) to the extent (immediately after the refinancing) the principal amount of the indebtedness resulting from the refinancing does not exceed the principal amount of the refinanced indebtedness (immediately before the refinancing).

    Kevin M (752a26)

  66. Although this suggests I was wrong about being able to roll in other loans.

    Kevin M (752a26)

  67. 34 – Not with a progressive VAT; necessities – food and clothing, e.g. – for lower income retirees would essentially be tax free. The VAT could be equal to the percentage of GDP government spends. Then the politicians can start the real fight – over our spending problem.

    Lenny (5ea732)

  68. Although I can see creatively negative amortization schemes sliding under the bar.

    Kevin M (752a26)

  69. I thought I read that earlier purchases would be exempt from this. Or maybe that was a proposal?

    Any mortgage taken out before yesterday is grandfathered in (subject to the current million-dollar cap), as well as any future (neutral) refi of said mortgage. But a future LoC, or construction loan, or whatever, would be included under the cap.

    Kevin M (752a26)

  70. It is not at all clear that current housing will “hit the skids.”

    While there are new barriers to high-priced mortgages, there is also a big change to the $500K cap gains exclusion on residential home sales:

    * There will be a means test in the future ($500K AGI in some kind of look-back test). After that the exclusion is diminished.
    * The residence period goes to 5 years in the last 8 (up from 2 years in the last 5)
    * The exclusion can only be claimed every 5 years (up from every 2).

    This will put a damper on some mom&pop home flippers and will be a disincentive to sell to some. The nondeductibility of future mortgages will also make trading up harder, reducing those sales, too.

    This will reduce the number of houses on the market. Whether buyers dry up faster than sellers is anyone’s guess.

    Kevin M (752a26)

  71. THe only thing that is clear is that SALES will decrease, which is all realtors care about.

    Kevin M (752a26)

  72. 36. Frederick (64d4e1) — 11/3/2017 @ 11:49 am

    If you amend “every American” to “every American with a W-2″, perhaps you could come up with something that cuts taxes, on net, for all those people.

    You could push much of the tax onto corporations, which would also have he effect of simplifying things for most people.

    Of course a simple VAT would affect the poorest more, but nothing does that more than the mandate to buy health insurance. (which is not taken care of by the subsidies – they stop at a relatively low level of income)

    Sammy Finkelman (20d02d)

  73. As long as high tax states, keep spending more than the overwhelming red fiscal restraint states, they can try to justify their policies to the voters.

    EPWJ (aca251)

  74. Thank you for that response at 65, Kevin. I agree that this means that refinancing is covered, but refinancing *to take on additional debt to pay for repairs or upgrades* would not be.

    Also, that effective date basically hoses anyone with a mortgage currently in process but not yet concluded, which is *wrong*. The effective date should have been set late enough after the introduction of the bill that anyone whose process was in motion but not complete would not be effected by it.

    aphrael (e0cdc9)

  75. If you want a lower marginal tax rate how about a 10% tax rate on income above the lower amount declared the previous two years maybe with a maximum eligibility for 3 out 10 years but with the option of switches years and paying the difference in taxes. All this could be calculated automatically by the IRS.

    Static analysis would show this not costing much.

    Sammy Finkelman (20d02d)

  76. Also, that effective date basically hoses anyone with a mortgage currently in process but not yet concluded, which is *wrong*. The effective date should have been set late enough after the introduction of the bill that anyone whose process was in motion but not complete would not be effected by it.

    Yes, it will probably cause a number of houses to fall out of escrow and some deposit fights. I expect they will bump the date to the end of the year, but this puts everyone on notice.

    Edge effects are the hardest to model.

    Kevin M (752a26)

  77. Our host wrote above (#):

    As for the disparity between California and New York and other states: yes, there is inequity there, but there is arguably inequity in that I have to pay state income taxes and other states’ residents do not.

    The fact that you have to pay state income taxes in California and that I don’t in Texas is due to differences in those two states’ constitutions and laws that reflect voter preferences.

    If you’re actually in favor of eliminating inequities, you’ll blame your political leaders in California to accustoming you and other Californians to your state income tax, set at a state-wide level, rather than to property taxes, which are levied on a more local basis. They’ve done that not only to take advantage of the inequity in the federal tax deductibility — although that is a conscious part of their rationale — but mostly to concentrate government power in Sacramento rather than local political subdivisions.

    You’re accustomed to a windfall, one Texans could take advantage of too but for our historic distrust of letting the Texas Legislature establish the precedent of an income tax. Should Texans have to submit to more concentrated government with less local control, in order to protect your windfall? I don’t think so. You want to define “normal” as “including that windfall,” to make it seem abnormal or unfair if you lose it. I think that’s an economically unrealistic depiction, and if your position is that not a penny of that windfall can be denied to you in the future or you’ll oppose any tax bill, that’s throwing to the winds all other arguments about nationwide equity.

    Beldar (fa637a)

  78. > you’ll blame your political leaders in California to accustoming you and other Californians to your state income tax, set at a state-wide level, rather than to property taxes, which are levied on a more local basis. They’ve done that not only to take advantage of the inequity in the federal tax deductibility — although that is a conscious part of their rationale — but mostly to concentrate government power in Sacramento rather than local political subdivisions.

    I’m sorry, Beldar, but that really displays a lot of assumptions, and lack of knowledge, about the state of California’s governance.

    The voters of California, in the 1970s, passed a statewide constitutional amendment that made it effectively impossible to raise property taxes outside of a particular, predefined plan. They did this because they perceived local governments to be behaving abusively and pushing people out of their homes via taxation, and it was a deliberate attempt to constrain the power of local governments *and* constrain the bite of property taxes.

    That statewide constitutional amendment guarantees that property taxes for new property are low by the standards of both Texas and New York, and that property taxes for long-held property are insanely low by national standards.

    It is the utterly untouchable third rail in California politics.

    aphrael (e0cdc9)

  79. It’s almost as if the view of subsidy, necessity to reduce and difficulty in doing so vary with location.

    Rick Ballard (6a5693)

  80. @patterico @12:39pm

    You should lose. The resident’s of your state currently get all the benefits of federal spending plus the benefits of lavish state and local spending allegedly funded by a state income tax. Except your state and local benefits aren’t funded by a state income tax when that tax is directly deductable from your federal tax bill.

    The only thing the elimination of the SALT deduction will take from you is the money you’re currently lifting out of my wallet.

    Shorter version: pay for your own state boondoggles.

    Trollfeeder (090617)

  81. Then Californians might need to rethink their system, aphrael. I don’t think that California’s (or other blue states’) fiscal dysfunctionality is a good reason to fight against changes to the federal tax code that will put all states on an equal basis. And I resent subsidizing those states.

    Beldar (fa637a)

  82. Lots of this tax bill does seem to be rearranging the deck chairs, but it does kill the AMT, so — absent any actually negative provisions — that makes it worth passing.

    Trollfeeder (090617)

  83. (I’m already resigned to the inevitable federal receivership when California’s unfunded pension liabilities put the entire state government into incurable default — at which point it won’t be Californians making decisions about what happens next, but Congress. And California won’t be the only such state, and might not even be the first.)

    Beldar (fa637a)

  84. Beldar: it’s not possible to reopen that discussion. The supporters of the current system will demogogue it with ads about how changing the property tax rules will bring back the bad old days when grannie was priced out of her home by rising property taxes, and nobody will touch it.

    aphrael (e0cdc9)

  85. @patterico @

    “If you are FOR my getting robbed more, you have a fight on your hands.”

    So…. me supporting a change that would stop you from sponging off of me is robbing you?

    If you want lower taxation in California, make your state spend less.

    Trollfeeder (090617)

  86. The coastal counties of California….

    mg (31009b)

  87. @aphrael @6:40pm

    That may well be true, but the costs of that state policy should be borne entirely by Californians.

    Trollfeeder (090617)

  88. I was expecting to file my taxes on a postcard this year.

    Ken James (d0ddba)

  89. First, my home’s resale value will take a hit, because purchasers won’t be able to deduct all their interest.

    This only matters if you are planning to move out of state. Otherwise what you lose on the sale of your old house you will gain back on the purchase of your new house (assuming it is at least as expensive).

    James B. Shearer (951d11)

  90. … But for many people, possibly including us, what it will do is ensure that we will never sell our home. …

    Hasn’t proposition 13 already discouraged selling long held properties because the taxes for the new owner will be much higher?

    James B. Shearer (951d11)

  91. That statewide constitutional amendment guarantees that property taxes for new property are low by the standards of both Texas and New York, …

    Only when measuring by fraction of market value. Since an equivalent property can cost 2-3 times as much in California (and that is comparing to New York) in absolute terms the property taxes aren’t low at all.

    James B. Shearer (951d11)

  92. #72 Sammy Finkelman (20d02d) – 11/3/2017 @ 2:10 pm

    Of course a simple VAT would affect the poorest more, but nothing does that more than the mandate to buy health insurance. (which is not taken care of by the subsidies – they stop at a relatively low level of income)

    Not if the VAT is progressive. For example, a rebate for VAT on your first $10,000 of expenditures, half on the next $10,000, etc. It’s a simple way to redistribute to those who need it the most.

    Lenny (5ea732)

  93. the corollary’s clear though huh

    failifornians want their subsidies to slurp and slurp and slurp

    but when their profligacy brings them to ruin

    no bailout for them nono

    they ate their pudding first

    happyfeet (28a91b)

  94. I resent having but two Senators when California has 13% of population.

    Ben burn (b3d5ab)

  95. California also makes 13% of our $17 trillion economy.

    Ben burn (b3d5ab)

  96. These reforms always amount to a shell game. Everyone 21 years of age and older should have skin in the game and tax cuts should be coupled with meaningful spending reductions.

    Colonel Haiku (951ecf)

  97. And Dimocrats in California should be thrashed for electing politicians who perpetuate exorbitant spending and ever-increasing taxation, while they incentivize importation of low-skilled workers and exportation of businesses and jobs.

    Colonel Haiku (951ecf)

  98. Mueller is Trumps polar opposite..competent, professional, thorough and intelligent.
    https://www.politico.com/story/2017/11/04/mueller-russia-probe-challenges-244538

    Ben burn (b3d5ab)

  99. He’s a mercenary like ras al ghul likely for gulf interests

    narciso (f12ddf)

  100. dirty fbi slicky-poof Robert Mueller’s corrupt and sleazy and everybody knows it

    (no way Acting Attorney General Rod Rosenstein woulda picked him if he wasn’t)

    happyfeet (28a91b)

  101. Certain patterns suggest themselves like when he colluded with fitz and goldsmith against gonzalez.

    narciso (f12ddf)

  102. Goldsmith is the proprietor of lawfare where wittes and come hang their hat.

    narciso (f12ddf)

  103. Kevin M (752a26) — 11/3/2017 @ 1:50 pm

    aphrael (e0cdc9) — 11/3/2017 @ 2:21 pm

    Thank you, gentlemen for this display of argument in good faith tempered with honesty. I make a point of marking your exchange for the benefit of our “obstinate” trolls, who, by their persistence, cry out for attention and mentoring. It is to them I wish to address the following words; this is the preferred method of debate.

    felipe (023cc9)

  104. Beldar (fa637a) — 11/3/2017 @ 6:00 pm

    Ouch. I admire you for offering such strong, medicinal, advice. I am confident that your words are not lost on our esteemed host.

    felipe (023cc9)

  105. Trollfeeder (090617) — 11/3/2017 @ 6:24 pm

    I do not know if you have commented here very much in the past, but I have just today taken notice of your comments. Welcome to this sight.

    I appreciate the points you make, and I offer this little bit of friendly advice; You will find that our esteemed host is most open to the thoughts of others, especially those who would make themselves his adversary, if those thoughts are expressed with collegiality.

    felipe (023cc9)

  106. Welcome to this sight. felipe (023cc9) — 11/4/2017 @ 8:52 am

    Make that “site.” I cannot blame auto-correct.

    felipe (023cc9)

  107. You sparsely populated red states can pay your own way. This is America. If you ain’t producing you’re a loser.

    Ben burn (b3d5ab)

  108. A Nation of Ponzi schemes is the outcome from unbridled economic Freedumb.

    America as a country has evolved in recent decades into a confederacy of widescale industrial scams. The biggest slices of our economic pie – sectors like health care, military production, banking, even commercial and residential real estate – have become crude income-redistribution schemes, often untethered from the market by subsidies or bailouts, with the richest companies benefiting from gamed or denuded regulatory systems that make profits almost as assured as taxes. Guaranteed-profit scams – that’s the last thing America makes with any level of consistent competence. In that light, Trump, among other things, the former head of a schlock diploma mill called Trump University, is a perfect president for these times. He’s the scammer-in-chief in the Great American Ripoff Age, a time in which fleecing students is one of our signature achievements.

    http://www.rollingstone.com/politics/features/taibbi-the-great-college-loan-swindle-w510880

    Ben burn (b3d5ab)

  109. As opposed to the presidents of Harvard like Larry summers that teach no marketable skill. The military is solid infrastructure and a key responsibility of the republic.

    narciso (d1f714)

  110. narciso (d1f714) — 11/4/2017 @ 9:14 am

    Yes, a constitutionally enumerated responsibility.

    felipe (023cc9)

  111. Taibbi is like Ken silverstein if he applied himself, then again he was one of the young rues roving in Moscow in the 90s, like a wehrmacht lieutenant on laeve.

    narciso (d1f714)

  112. You could be understandable if you applied yourself and spit out those marbles.

    Ben burn (b3d5ab)

  113. Most understand me, silverstein as a protege of Cockburn was cynical about all sides, he for instance pointed out infatuation with Kazakhstan long before uranium one happened

    narciso (d1f714)

  114. Then Californians might need to rethink their system, aphrael. I don’t think that California’s (or other blue states’) fiscal dysfunctionality is a good reason to fight against changes to the federal tax code that will put all states on an equal basis. And I resent subsidizing those states.

    Beldar, why is a property tax functional and an income tax dysfunctional? The day when most state and local services were related to property is long past. Nearly all government spending (outside of pensions) is for education and means-tested assistance.

    CA passed Prop 13 at a time when inflation, coupled with a massive influx of Easterners was driving up real estate values and people were seeing their property tax bills double. All at a time when the government coffers were flush (then-governor Brown (1978) was asking the legislature for money for a state comm satellite).

    Suppose this reform favored income taxes and disallowed the property tax deduction. Would you be arguing the same thing? Or would you be complaining about YOUR ox being gored?

    The real issue here is that the slightly larger standard deduction (coupled with the loss of personal exemptions) does not come close to making up the lost deductions and the brackets are little changed.

    Kevin M (752a26)

  115. (I’m already resigned to the inevitable federal receivership when California’s unfunded pension liabilities put the entire state government into incurable default — at which point it won’t be Californians making decisions about what happens next, but Congress. And California won’t be the only such state, and might not even be the first.)

    I see no provision for the federal government to put a state in receivership. Where do you find that power in the Constitution? And then there is the Guaranty Clause (which isn’t invoked much) but taking control of state government from the people thereof would seem to be in conflict. What next? Station troops in people’s houses to enforce the federal rule?

    Kevin M (752a26)

  116. That may well be true, but the costs of that state policy should be borne entirely by Californians.

    Why shouldn’t the costs of a “no income tax” policy be borne by Texas instead? Would you be making that argument if income taxes were still deductible, but property taxes were not?

    Kevin M (752a26)

  117. Hasn’t proposition 13 already discouraged selling long held properties because the taxes for the new owner will be much higher?

    Not entirely true. In some counties (and most SoCal counties) you can carry across your previous home’s [low] assessment if the new house costs LESS than the old house. One-time deal aimed at empty-nesters/retirement. It can only be done a second time if the new residence is assisted-living.

    Kevin M (752a26)

  118. I resent having but two Senators when California has 13% of population.

    Easy answer: support breaking CA up into about 5 states.

    Kevin M (752a26)

  119. Beldar, why is a property tax functional and an income tax dysfunctional?

    If One man’s treasure is another man’s trash, then one man’s functionality is another man’s dysfunctionality.

    felipe (023cc9)

  120. oops! The first statement:

    Beldar, why is a property tax functional and an income tax dysfunctional?

    was a quote of Kevin M’s comment.

    felipe (023cc9)

  121. @81

    “And I resent subsidizing those states.”

    So when can Patterico and I expect reimbursement from you and the other gulf-coast state residents for hurricane relief?

    In fact, California is one of the 14 “donor states” who get back less than $1 for every dollar paid in federal taxes. Texas gets back about $1.50 for every federal tax dollar paid.

    You’re welcome.

    Dave (445e97)

  122. Dem Red Staters take OPM with clear conscience?

    Don’t they understand the Christian principle every man, woman and child for themselves?

    Ben burn (b3d5ab)

  123. wow you can really feel the raw anger

    happyfeet (28a91b)

  124. In fact, California is one of the 14 “donor states” who get back less than $1 for every dollar paid in federal taxes.

    Well, yes, but it is the least of those 14 donors, getting back about 95 cents on the dollar according to your link. And any margin-of-error would suggest that other metrics would have CA a taker. It is WAY down from its donor status of the 1980’s, where it probably got 50 cents on the dollar. Although that remains a hoary myth in socialist circles.

    Kevin M (752a26)

  125. Nebraska, Kansas, Utah, Wyoming, Oklahoma, Colorado, Minnesota and Ohio are all greater donors than CA (all Trump states). Georgia just barely misses.

    Kevin M (752a26)

  126. Ooops. My bad. MN and CO narrowly went for Clinton. But still.

    Kevin M (752a26)

  127. You do realize that $0.95 on the dollar for CA represents a larger absolute wealth transfer than if, say, Wyoming got nothing back at all, right?

    What really surprised me in that graph is Florida. I have never been to FL, but I picture it as being economically and demographically similar to TX and CA. Unclear what accounts for the huge difference is tax flow (FL gets $4.50 back for every tax dollar).

    In any case, since Beldar finds it morally repugnant for residents of one state to subsidize those of another, I imagine he’ll want to make amends. Since he receives a $0.50 subsidy on every dollar he pays in taxes, I suggest (in the spirit of the new tax bill) the following simplified procedure:

    1) Find the amount of federal tax you paid last year.
    2) Divide it by four.
    3) Mail checks for that amount to Patterico and me.
    4) Sleep better, knowing you are no longer being subsidized by Californians!

    🙂

    Dave (445e97)

  128. Beldar has effectively refuted untoward direction by ignoring same, Dave.

    Funny thing is his ilk think they are victorious through non participation.

    Ben burn (b3d5ab)

  129. ilky poopers is no good Caroline Dhavernas aioli means it has garlic

    happyfeet (28a91b)

  130. made veggie paella today, happyfeet. My wife enjoyed it. I could tell – she had 2nd’s. The key is to get the rice to caramelize on the pan.
    no aioli?

    mg (31009b)

  131. @Dave:Unclear what accounts for the huge difference is tax flow (FL gets $4.50 back for every tax dollar).

    Old people, the military. I’m sure they appreciate your characterization of them as moochers. Not all government spending is considered to be welfare, by conservatives or anyone else, and progressives assure us that Medicaid, Medicare, and Social Security are not welfare.

    There’s lots of ways to slice these numbers. Not to mention how changeable they are from year to year. You can do by Federal spending per capita, excluding whatever you think is “fair”–after all Iowa is not able to host the Navy but should still kick in for it, no? Or by percent of state GDP. All your methodologies will give you different rankings.

    Frederick (845ef7)

  132. @Kevin M 11/04/2017 11:02am

    You ask, “Why shouldn’t the costs of a “no income tax” policy be borne by Texas instead?”

    For your sake, I don’t know whether to hope that you entirely misunderstand the issue, or that you are instead just taking the piss.

    The issue isn’t whether (or how) a state taxes or doesn’t tax; the issue is who pays for the state’s spending. As in, do Texan’s have to pay for California’s STATE spending decisions?

    Well, if the CA legislature (in which Texan’s have no voting rights) bases it’s state spending on it’s state tax receipts;

    AND IF

    the CA legislature imposes substantially higher taxes on its citizens in order to pay for that spending;

    AND IF

    CA taxpayers get to reduce their federal tax assessments by some or all of the amount they paid in state taxes;

    THEN

    CA taxpayers aren’t paying for their state spending (or they’re not paying for their full share of federal spending, pick your evasion); they are foisting at least some of the cost of their stupid bullet train, no plastic bags, whatever else state-level nuttery onto the rest of the country.

    Prop tax, income tax, sales tax — I’d be happier if the feds stopped allowing deductions for state and local taxes of all sorts. Cali, Texas, Alabama all should pay their own way, instead of high-tax states self-righteously mooching off of low-tax states.

    Trollfeeder (090617)

  133. oh. i had no idea carmelized rice was even a thing

    that sounds tricky

    but extremely worthwhile

    happyfeet (28a91b)

  134. @Dave 11/04/2017 11:35am

    You ask, “So when can Patterico and I expect reimbursement from you and the other gulf-coast state residents for hurricane relief?”

    So….. how’s all that earthquake, mudslide, wildfire (at least partly worsened by State laws and regulations), and drought (ditto) rebuilding all y’all are doing by yourself’s coming along?

    You’re so strong. Makes me feel like that alleged guy in the bar that Richard or Henry the whatever (or was it Jake? who can remember?) was jawing on about in that Shakespeare thing.

    Trollfeeder (090617)

  135. no aioli… i just make a dipping sauce sometimes it’s just mayo + sriracha + horseradish i use it for veggie tots when I’m too tired or rushed to cook

    i seriously doubt veggie tots have anything to recommend them healthwise but they’re very tasty and fast to do

    happyfeet (28a91b)

  136. 78. aphrael (e0cdc9) — 11/3/2017 @ 6:04 pm

    The voters of California, in the 1970s, passed a statewide constitutional amendment that made it effectively impossible to raise property taxes outside of a particular, predefined plan.

    In 1978. Proposition 13. Governor Brown was against it, then he said they could make it work. The most important provision is that property taxes are based on the price paid for a house when it was bought and can on;y be raised very little.

    It makes great sense, if you want to base taxes on ability to pay, not push people out of the homes, and eliminate arguments about assessed value.

    Sammy Finkelman (4eebb9)

  137. Another thing – the cost of living is usually higher in higher taxed states, so it is a little unfair to use the same tax brackets in different states.

    Sammy Finkelman (4eebb9)

  138. @133

    Old people, the military. I’m sure they appreciate your characterization of them as moochers.

    Uh, what? I simply cited the number as surprising.

    The military has plenty of presence in TX and (especially) CA.

    @136

    You’re so strong. Makes me feel like that alleged guy in the bar that Richard or Henry the whatever (or was it Jake? who can remember?) was jawing on about in that Shakespeare thing.

    It was a joke. Lighten up, sheesh.

    Dave (445e97)

  139. We have a similar deal in Florida. It can lead to wide discrepancies. I live in a townhouse development. My neighbors have units that are completely identical to mine. Our tax bills vary between $1100 and $2800 (approximately), based solely on the price paid when it was bought.

    kishnevi (c91988)

  140. 74. aphrael (e0cdc9) — 11/3/2017 @ 2:21 pm

    Also, that effective date basically hoses anyone with a mortgage currently in process but not yet concluded, which is *wrong*. The effective date should have been set late enough after the introduction of the bill that anyone whose process was in motion but not complete would not be effected by it.

    They didn’t do that for the proposed change in the treatment of alimony. Right now alimony is deductible for the payer, and taxable to the recipient. The effective date for that proposal is dovorce decrees entered into after January 1, which is very soon, but is actually after they expect the bill to be signed into law by President Trump.

    The proponents argue that the current system is a subsidy for divorce. The real reason is that they are trying to lower the CBO score, so that the Senate Parliamentarian will agree it fits within the budget resolution and the bill can pass the Senate with 51 votes. (The change will result in the collection of more taxes, since the payers of alimony are usually in higher income tax brackets than the recipients. It may also result in less alimony actually being paid. I mean there was a reason this was done this way in the first place.)

    As for why the effective date for mortgages in November 2, they are just out of touch with people buying houses, but apparently not so out of touch with divorces.

    They also changed the way inflation is calculated, going to something called “chained CPI” On Thursday, when they released version 1.0 of this bill, they wanted to make that effective in 2023, but on Friday they changed that to next year, 2018, or immediately. Again, to affect the CBO score.

    Sammy Finkelman (4eebb9)

  141. @felipe 11/04/2017 08:52am

    Thank you for the welcome. As for collegiality, he wrote, “Do not justify my being robbed to a greater extent by citing fairness.”

    His state purchases things (which he may not value, but his allegiance was his choice). Many things. Many, many, many things of great expense. They offset the spending with high state taxation on state residents and businesses. This is all well and good in principle.

    Other states purchase fewer things, and thus have less need for state taxation. This also is all well and good in principle.

    The federal government purchases many, many many things of no value while failinng to purchase things for which it is actually responsible (but our allegiance is our choice, so…). They federal government claims to in part offset this spending with taxes levied across the states. But at one point they decided that they would not tax certain monies paid in taxes to certain subordinate levels of government.

    This was a windfall for unethical subordinate levels who realized that they could through their citizens now deduct state spending from taxes owed to the federal government. It’s a version of the tragedy of the commons where California (e.g.) spends lots of money on stupid stuff that Cajuns (e.g.) would never ever countenance paying for. And then the Californians effectively don’t have to pay for all of it, because they get to write it off the amount they owe to the feds.

    If they had any real brains, California would tax income at 100% and refund it all in muni bonds with an instant maturity date. Then Californians wouldn’t have to pay any federal taxes.

    And then they could, as our host did, write that I’m robbing him by calling foul on the whole fraudulent scheme.

    No taxation without representation. His state should have to face the costs of its own spending.

    Trollfeeder (090617)

  142. For your sake, I don’t know whether to hope that you entirely misunderstand the issue, or that you are instead just taking the piss.

    For your sake, I hope your reading comprehension improves.

    TX has a much higher property tax bill than CA does. So, under the new regime federal taxpayers are paying for Texas’ spending and not CA’s. Texas is doing ALL the “mooching.”

    Kevin M (752a26)

  143. The military has plenty of presence in TX and (especially) CA.

    But Florida practically sends plane tickets to old people. People from a high-tax state sell out and move to nice warm Florida and collect their 401(k)s and cash their cap gains without any state tax.

    Kevin M (752a26)

  144. @Kevin M 11/04/2017 @7:52pm

    hmmmm, if only I’d written something like, “Prop tax, income tax, sales tax — I’d be happier if the feds stopped allowing deductions for state and local taxes of all sorts. Cali, Texas, Alabama all should pay their own way, instead of high-tax states self-righteously mooching off of low-tax states.”

    Trollfeeder (090617)

  145. Some of the other changes in the proposed bill:

    1. The bill abolishes personal exemptions, and adds $600 to the child tax credit, and gives a $300 credit in place of he personal exemption for every dependent not covered by one not covered by the child tax credit. For the first time the child tax credit in indexed to inflation, but only the original $1,000 is. The $300 credit expires after five years. The drafters of the bill really want to make the $300 tax credit permanent, but there’s that old CBO score again, so they cut it off after five years to make the 10 year budget cost lower.

    2. The standard deduction is nearly doubled, from $6,350 for a single filer and $12,700 for married couple filing jointly, in the 2017 tax year, to $12,000 and $24,000, respectively. I don’t know ow it affects the standard deduction Head of Household ($9,300 in the 2016 tax year) This will continue to be indexed for inflation, but at the chained CPI rate. People in the real estate business really hate this thing because, especially when combined with the abolition of state and local income tax deductions, and the $500,000 cap, it will mean that very few people will itemize deductions. The effect of the higher standard deduction is to simply taxes but make them more unfair.

    3. The current deduction for medical expenses over 10% of income (raised from 7.5% by Obamacare) will be abolished. This does not affect many people, but it is very important to the people whom it does affect, usually people with low incomes but lots of savings and high medical bills. The deduction for state and local income taxes is abolished and the deduction for real property taxes is capped.

    4. It “recaptures” tax credits (a favorite Democratic idea) at high enough incomes, resulting in a marginal tax rate bubble of over 45%.

    5. The rate for “pass through” business income is reduced to 25% but personal service businesses, like law, accounting and consulting (and medicine?) are excluded from this provision.

    6. An extra $1 billion is given to Puerto Rico to pay for Medicaid. (Medicaid is block granted or capped when it comes to Puerto Rico. Oh wait – that’s in the CHIP bill I think)

    7. There’s a 20% excise tax on payments by companies to foreign affiliates.

    8. Deductibility of interest paid by corporations is limited 30% of cash flow, and I don’t understand what that means, with special rules for real estate and for smaller businesses. Banks do okay – they can deduct interest paid against interest they receive.

    9. Corporate tax rate is cut to 20% from its current 35%

    10. Immediate expensing of capital investments I don’t know what discount rate) but this expires after 5 years.

    11. Tax brackets change. They now are 0%, 10%, 15%, 20%, 33%, 35% and 29.6%. They would go to 0%, 12% (base rate – ends several thousand dollars above where the 15% rate endsnow, but there are now to be no personal exemptions, so it should start at a lower level of income) 25% (kicks in just above where the 25% rate kicks in now but goes much higher and includes a little bit of the 33% rate) 35% goes up to $500,000 for a single filer and $1 million for a married couple compared to the current 35% bracket which ends at a little above $400,000) and 39.6&) Curently 33% and 25% rate cover a very little income range.

    11. The estate tax is reduced, and completely repealed as of 2024. The Alternative Minimum tax is also repealed.

    12. There is a 10% tax on high profit foreign subsidiaries but no tax on active foreign profits and I don’t know what that means.

    13. One time tax of 10% on existing profit stockpiles of 12% on cash and 5% on illiquid foreign assets (funny how they couldn’t make such a distinction when it comes to the estate tax) to replace the current standard tax (could be 35%) on repatriated foreign profits with a tax credit against foreign taxes and no tax until the money is repatriated (meaning transferred to U.S. entity)

    14. The tax credit for electric vehicles is abolished. So is the special deduction for domestic manufacturing.

    15. The Hope Scholarship credit and the Lifetime Learning credit are abolished, but the Aamerican Opportunity Tax Credit is expanded.

    16. Carried interest is untouched.

    17. 401k(s) contribution limits are not tampered with, per Donald Trump’s tweet about it. This was
    about the only trial balloon shot down.

    18. High income individuals lose the exclusion from income of the first $250,000 or $500,000 in profits from a home sale. (it phases out after $250,000 or $500,000 in inncome)

    19. Large endowments of private universities get taxed.

    Sammy Finkelman (4eebb9)

  146. I resent having but two Senators when California has 13% of population.
    Ben burn (b3d5ab) — 11/4/2017 @ 6:09 am

    We regret you only have but two senators for us to resent.

    You’ll forgive the rest of us for our little concession to states rights and sovereignty.

    Pinandpuller (b18f07)

  147. In fact, California is one of the 14 “donor states” who get back less than $1 for every dollar paid in federal taxes.

    Well, yes, but it is the least of those 14 donors, getting back about 95 cents on the dollar according to your link. And any margin-of-error would suggest that other metrics would have CA a taker. It is WAY down from its donor status of the 1980’s, where it probably got 50 cents on the dollar. Although that remains a hoary myth in socialist circles.
    Kevin M (752a26) — 11/4/2017 @ 12:24 pm

    If it’s individuals paying taxes who cares how much the state gets back?

    Pinandpuller (b18f07)

  148. Trollfeeder (090617) — 11/4/2017 @ 7:27 pm

    I do not disagree with you.

    felipe (023cc9)

  149. I don’t disagree.

    Steve57 (0b1dac)

  150. If it’s individuals paying taxes who cares how much the state gets back?

    Well,it’s the state and individuals (e.g. social security, Medicare, a billion other programs, military pay, etc). But largely not the individuals paying the taxes.

    Kevin M (752a26)

  151. Allegiance?

    Who has allegiance to a state? I live in CA because 1) my people settled here in the 1870’s, 2)the climate, and 3) the ability to get Greek-Mexican fusion food at 4 AM (or whatever else I might want).

    But allegiance? That went out in 1865 last I heard.

    As far as everyone in CA being some damn radical, Mr Trump got more votes from California than any other single state.

    Kevin M (752a26)

  152. I’d be happier if the feds stopped allowing deductions for state and local taxes of all sorts. Cali, Texas, Alabama all should pay their own way, instead of high-tax states self-righteously mooching off of low-tax states.”

    This conversation, which started with someone else, was about how whiney Californians were that their income tax wouldn’t be deducted, and they should demand lower taxes. Problem was that the person who said that was from a state with notoriously high property taxes that were still deductible, so the “tell your state to lower its taxes” argrument was a bit off-putting.

    Kevin M (752a26)

  153. sinting to the effing choir my friend. Kevin.

    Steve57 (0b1dac)

  154. Singing. Singiing.

    Steve57 (0b1dac)

  155. Oh the heck with it all.

    Steve57 (0b1dac)

  156. As far as everyone in CA being some damn radical, Mr Trump got more votes from California than any other single state.

    That’s not true. Trump got more votes in Texas and Florida than he did in California.

    https://transition.fec.gov/pubrec/fe2016/2016presgeresults.pdf

    Dave (445e97)

  157. I am going out on a limb. And, Pat, you hold me to it. But by the gawd that sent me to the expeditionary warfare school I sware to gawd, all that is holy.

    Steve57 (0b1dac)

  158. I hold that all is that is holy is, holy.

    Steve57 (0b1dac)

  159. @152 Steve57

    Don’t you have to read Arab news backwards?

    Pinandpuller (b18f07)

  160. Ha ha ha.

    Steve57 (0b1dac)

  161. I stand corrected.

    Steve57 (0b1dac)

  162. @153 Kevin M

    Well 50% of The People don’t pay Federal taxes. And a homeless guy can live on the beach, talk on his Obamaphone and get free healthcare. So what kind of ROI is a real Cali Baller taxpayer getting for the putative 95 cents?

    Phil Spector made out ok I guess. He didn’t build the California Health Care Facility in Stockton. I think the Barkleys did.

    Pinandpuller (b18f07)

  163. Hey, the first name of the NYC Uzbek terrorist killer means “Sword of Allah”. When I took Martial Arts they called that “telegraphing”.

    Pinandpuller (b18f07)

  164. Does California use 13% of the military budget?

    Pinandpuller (b18f07)

  165. Aww f*ckin’ eye. Can you give me a break? No, you can’t.

    Steve57 (0b1dac)

  166. President Snowflake and the Third Lady have landed in Japan!

    Trump gave his first speech at a military base, wearing a flight jacket. No word on how the “bone spurs” that kept him out of uniform when it mattered (but didn’t stop him from playing competitive squash, football and tennis in college) are holding up.

    Dave (445e97)

  167. Sammy – ugh. Waiting until January 1 is *better* as there’s some sort of notice in that some lawyers will connect the dots and be aware that the practical effect of these legal arrangements will change on a rapidly approaching arbitrary date. *And* something like six months would have been better still.

    I can’t tell if these people are inconsiderate or mean-spirited.

    aphrael (3f0569)

  168. 155..A to the Men on your concluding comment. Nothing more i will add, as i am now experiencin the true downside of the return to Standard time, up way too early.

    urbanleftbehind (15ca62)

  169. I dunno pin, but with the massive volunteer force (1 per cent serving) and our huge population, we have the most mils. I am so sorry.

    Ben burn (b3d5ab)

  170. Shift your fat @$$, Henry, you’re going to swamp the g*dd*mmed boat.

    I can’t confirm it’s true, but this is like I want to think of Washington crossing the Delaware.

    Steve57 (0b1dac)

  171. 170. aphrael (3f0569) — 11/5/2017 @ 2:23 am

    Sammy – ugh. Waiting until January 1 is *better* as there’s some sort of notice in that some lawyers will connect the dots and be aware that the practical effect of these legal arrangements will change on a rapidly approaching arbitrary date.

    Word will get around in the profession and it will be in all the newspapers, and the judge will surely alert them, and any legal publication will because to ignore this could constitute malpractice.. I kno they want the bill to be signed into law shortly after Thanksgiving, but if it happens, it will happen later, and they’d probably only know for sure for about two weeks in advance. And if they can’t get it finalized by the close of business on Friday, December 29, 2017, the divorce agreement would probably need to be renegotiated.

    *And* something like six months would have been better still.

    Of course, and they can use any date – it doesn’t have to coincide with a calendar year. Just put the date in the IRS instructions.

    I can’t tell if these people are inconsiderate or mean-spirited.

    Mostly inconsiderate and clueless.

    They are trying to get the CBO score low enough for the bill to be accepted by the Senate Parliamentarian. (who could be overruled, of course, but that’s almost like killing the filibuster)

    Now mind you, the budget resolution says the tax bill can increase the deficit by $1.5 trillion, but Speaker Paul Ryan says they don’t believe that that’s what really will happen if the bill passes, because the tax bill will cause economic growth. But the Senate Parliamentarian may not agree with that, and they are not going to let an unelected bureaucrat kill the bill, so they put in the budget resolution that that the tax bill can cost $1.5 trillion over 10 years. They are writing the bill in conjunction with Senators and paying attention to Senate rules. That’s how this differs from the health care fiasco according to Ryan. (it also differs because the whole subject of the bill is financial)

    Still, they are having a tough time getting down to $1.5 trillion by the CBO estimate.

    And they may abolish the individual mandate because the CBO may very well say that saves the government money – about 400 billion is it? – because fewer people will go on Medicaid, since they said more did because of the mandate. Senator Cotton went to President Trump and got him to endorse this idea, but Ryan and the leadership don’t really want to do it (on the other hand how many Democratic votes are they going to lose if they do this? They have zero to begin with. The question is would they lose any Republican votes?)

    If they are forced to restore at least some of the state and local tax deductibility, they’ll almost certainly have to repeal the individual mandate – unless the CBO changes its mind.

    Sammy Finkelman (4eebb9)

  172. devastating expose of CNN Fake News propaganda slut Jake Tapper

    The reasons for Tapper’s failure are obvious. Over the last couple of years, #JakeSoWoke (as Ace of Spades perfectly dubbed him has become untrustworthy; a McCarthyite red-baiter, a phony, and his unquenchable sanctimony and self-righteousness has made him as unappealing as a blow-dried tele-evangelist. Outside of the bubble, he is seen as a ridiculous figure always making himself the hero of his own story.

    so many good links there

    how embarrassing for #JakeSoWoke to be so obscenely sleazy and to reap nothing from it 🙁

    happyfeet (28a91b)

  173. oops there should be a close parens after “dubbed him”

    i had to take out some of the yummy links for so it wouldn’t get filtratered, but i should have caught that before I hit the Submit button, and I didn’t

    happyfeet (28a91b)

  174. How sleazy of me@!

    Steve57 (0b1dac)

  175. Washington Post article from 2013, about chained C.P.I. (for urban consumers) when Obama or\proposed it:

    https://www.washingtonpost.com/news/the-fix/wp/2013/04/10/the-ins-and-outs-of-chained-cpi-explained/?utm_term=.f6871a097df4

    Chained C.P.I. alters the market basket every month, to account for substitutions of similar items..

    Yahoo artivle from 2013:

    https://finance.yahoo.com/news/why-chained-cpi-rattles-elderly-100432667.html

    Sammy Finkelman (02a146)

  176. 129. Dave (445e97) — 11/4/2017 @ 2:12 pm

    Unclear what accounts for the huge difference is tax flow (FL gets $4.50 back for every tax dollar).

    Social Security and other pensions, and the presence of many elderly people who pay littleor no federal taxes?

    Sammy Finkelman (69aa73)

  177. 47. aphrael (e0cdc9) — 11/3/2017 @ 12:46 pm

    It is *not* that the original loan can’t be greater than $500K.

    It’s that only the interest on that portion of the loan lower than $500K can be deducted.

    The nature of the limitation (which is currently at $1 million – it was already capped in 1986 – is not entirely clear to me, but I did think that the interest attributable up to the cap, is deductible.

    Page 156 of Publication 17 says:

    Limits on deduction. You can’t fully deduct interest on a mortgage that doesn’t fit into any of the three categories listed earlier. If this applies to you see Part II of Pub. 936 to figure the amount of interest you can deduct.

    aphrael:

    This is an accounting nightmare after the first year or two, which is ironic in a simplification bill.

    Well in this bill you can only deduct a mortgage on one home, so it simplifies that maybe, except that can switch homes during one tax year.

    If there is only one loan it’s probably simple: Just split the loan proportionately between the deductible part and the nondeductible part. If there is more than one loan, at more than one interest rate, and the total amount originally borrowed for home acquisition amounts (in this bill) amounts to more than 500,000, the amount of interest deductible won’t be reported to you.

    Of course tax software I suppose can handle it, if you have all the facts about the loans at hand.

    But this isn’t actually a tax simplification bill, although Paul Ryan talks that way, saying a large percentage of Americans will be able to fill out their returns on postcard – a big postcard with large print, but a postcard. Less than 20 linss.

    Sammy Finkelman (69aa73)

  178. what it will do is ensure that we will never sell our home.

    Section 1035 or whatever it is, that is trades, already very time limited, are abolished for personal homes and limited to business property.

    The exemption from capital gains taxes of the first $250,000 of profit on the sale of your main home requires you (under the proposed bill) to have lived there for 5 of the last 8 years rather than 2 out of the last five years. I don’t know how reduced maximum exclusion in case of a change in place of employment, changes in health or other unforseen circumstances are affected, but to learn about the ways things are now Publication 17 directs you to Publication 523.

    Sammy Finkelman (69aa73)

  179. Fringe benefits, that is money spent on employees that is dedctible to the business, but not taxable to the employee, seem to have been untampered with, including health insurance, commuting costs, and 401(k) contributions. I didn’t read any example of ay change among those sorts of things at all.

    Sammy Finkelman (69aa73)

  180. The promoters of this plan produced some sample families (two of them, anyway, which were printed in the New York Tims last week) that attempted to show how, even though it cost some people money from some provisions, it saved them money in other ways, so it was a net savings.

    One of them was almost funny.

    They had a married couple with two children one of whom was in college and one still in high school. So even though they lost personal exemptions, and some education credits or deductions whatever not was, they still made out better because of increase in the child tax credit, and the fact there was anew $300 credit to replace the personal exemption for cases where the dependent was not a child under age 18.

    It was funny because you could ask what happens when their second graduates from high school, reaches age 18, and so on? They lose $1,300 (the difference between the child tax credit and the $300 credit) and that makes the old law better for them. And they’re surely going to have more years in that situation than in the other.

    (Of course the old personal exemption anyway disappears after the child stops attending school unless their income is really low.)

    Sammy Finkelman (69aa73)


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