The Truth about Tax Reform

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The Truth about Tax Reform

Postby KeithE » Sat Aug 12, 2017 10:24 am

Through loopholes, offshoring and cheating, the truth is that corporate rate in the USA is on average 13-19% not 35%. The worldwide average is 22.5%. So don’t buy the story from the GOP that US companies pay more than any other country. There is a wide variance with most Top 500 companies paying 0% and some honest smaller companies paying their full share of 35%. In total the Fortune 500 companies avoided paying taxes on $2.5T in 2015 (yes that is right T). At at 20% rate that would-be $500B which is more than the annual deficit that year ($439B). In 1951 corporations paid 32.1% of the US’s revenues, and they paid 10.8% in 2015. In general I favor about a 25% tax but with no loopholes and no offshoring profits ands US corporations making money overseas pay as well. Our deficits would be eliminated and income taxes reduced.

Wrt income taxes as previously posted:

The nonpartisan Tax Policy Center (TPC) has just released a study of the Trump tax plan. Trump Tax Agenda: 'Astonishing' Cuts for Rich Like Him and Hikes for Middle Class

The top 0.1 percent, earning above $3.4 million a year, would get an average tax cut of $937,700, or a 13.3 percent boost in after-tax income."


"And among those in the middle class, almost a quarter would see their taxes go up," Ehrenfreund notes. "For households with annual incomes between $49,000 and $86,000, those facing a hike would see an average annual increase of $1,000."


"the overall plan would give the average family earning under $25,000 per year a $40 tax cut, or a 0.3 percent boost in after-tax income.

-------------------------------

I will be following the “tax reform” as it moves through Congress and I thought I'd offer this opening salvo.

Already I read where the Trump plan has backed off of collecting taxes on offshore profits and will continue to allow deferrals of profits moved offshore. Read Trump Reversal.
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Re: The Truth about Corporate Taxes

Postby Sandy » Sat Aug 12, 2017 11:06 am

No surprises there. No doubt, there will be those who support him who deny that he's going to raise taxes on the middle class, even as their tax bills reflect the raise and their money gets sucked right out of their pockets. I certainly hope he is as successful at getting this through as he was with the health care bill. As all of this moves forward, it is becoming clear that he is disconnected from Congress, including his own party. They are passing routine bills that he is signing, but well below the threshold of previous administrations, and none of his initiatives are getting much traction. The polling data, on both his job performance and on the potential for Democrats to regain both houses in 2018, has McConnell and Ryan risking his wrathful tweets, knowing that he doesn't have the political clout to help them. The tweets and behavior of the Donald have convinced me he is genuinely insane, not just a cliché, he is mentally ill. I think there's evidence that an increasing number of Republican senators are recognizing that as a fact.

I'm not opposed to tax reform. I followed the discussion with Steve Forbes years ago, actually went to a couple of his seminars, and he really made a lot of sense. He laid out a tax structure that he claimed would create jobs, stimulate economic growth and simplify the tax structure. Historically, there were two administrations which put in some variations of his theories and plans, and on both occasions, it produced a high level of economic growth, in one case, record economic growth, and it created jobs and put a dent in unemployment. That, as opposed to the times when administrations have cut the taxes of the corporate wealthy, and plunged the economy into recession, or had to exponentially increase government spending to keep that from happening. Forbes' theory was to find the "sweet spot," the balance point where tax policy does the most good. Too much of the tax burden on the middle and working class causes decreases in consumer spending, and if foreign trade doesn't fill in the gap, the economy tanks. Too little of the burden on corporate wealth, and the government runs up debt and interest which takes money out of the economy. I predict tax reform will be a long debate, with little action at the end.
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Re: The Truth about Corporate Taxes

Postby Dave Roberts » Sat Aug 12, 2017 11:27 am

Tax reform is needed, but we seem to have no one considering the future of the country, only the futures for their own vested interests. My first tax reform would be that all income should be taxed for Social Security. Then, I think we should raise the corporate rate with generous exceptions for investments in research and production. Of course, I don't expect any of this from the Trump administration.
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Re: The Truth about Corporate Taxes

Postby Haruo » Sat Aug 12, 2017 11:54 am

Capitalism is founded on self-centered, generally short-sighted, greed. Adam Smith himself said as much, and that without God in Jesus guiding investors and owners, the result would be unpleasant.
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Re: The Truth about Corporate Taxes

Postby KeithE » Sat Aug 12, 2017 12:01 pm

Dave Roberts wrote:Tax reform is needed, but we seem to have no one considering the future of the country, only the futures for their own vested interests.


Amen to that.
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Re: The Truth about Corporate Taxes

Postby KeithE » Sat Aug 12, 2017 12:03 pm

Sandy wrote:Too much of the tax burden on the middle and working class causes decreases in consumer spending, and if foreign trade doesn't fill in the gap, the economy tanks.

Amen to that.

Sandy wrote:I predict tax reform will be a long debate, with little action at the end.

Regretfully, I think you are right. Of course the GOP tax plan will likely be worse than the status quo (as bad as it is). Just like in health care.
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Re: The Truth about Tax Reform

Postby William Thornton » Sat Aug 12, 2017 12:14 pm

As long as they don't touch my sacred cow, the clergy housing allowance, I'm ok with tax reform.
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Re: The Truth about Corporate Taxes

Postby JE Pettibone » Sun Aug 13, 2017 8:40 am

Dave Roberts wrote:Tax reform is needed, but we seem to have no one considering the future of the country, only the futures for their own vested interests. My first tax reform would be that all income should be taxed for Social Security. Then, I think we should raise the corporate rate with generous exceptions for investments in research and production. Of course, I don't expect any of this from the Trump administration.


Ed: Dave who do you imagine will pay the higher corporate rates? Ultimately it is the consumer who buys products and services provided by the corporations.
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Re: The Truth about Corporate Taxes

Postby KeithE » Sun Aug 13, 2017 10:07 am

JE Pettibone wrote:
Dave Roberts wrote:Tax reform is needed, but we seem to have no one considering the future of the country, only the futures for their own vested interests. My first tax reform would be that all income should be taxed for Social Security. Then, I think we should raise the corporate rate with generous exceptions for investments in research and production. Of course, I don't expect any of this from the Trump administration.


Ed: Dave who do you imagine will pay the higher corporate rates? Ultimately it is the consumer who buys products and services provided by the corporations.


I would not go as far as Dave to say we should raise the corporate tax rate. And it stands, the corporate tax rate is highly variable from 0% (those who lobby for special privileges often with payouts to campaign financing) to 35% (those that don’t play those games). That should be equalizes (my opinion at about 20-25%).

As for promoting R&D, that is best done by government itself (e.g.. NIH, NASA, National Labs) for R&D that private industry wont do, due to risk and/or largeness (e.g mass transit). R&D can (and is) being done by SBIR (Small Business Innovative Research) and IRAD programs (for larger companies) also administered by the government (awarded competitively). Larger firms that want to take a risk, should do that on their own or compete, imo. Right now, many large earmarks via lobbyists circumventing competitive processes - that receives too much R&D bucks.

But Dave I do agree with eliminating the SS cap. It is there for a reason- the SS paybacks are slanted to disproportionally (compared to contributions) help the poor. But that is as it should be, imo.

And Ed, these days the amount of profit taken has a lot more to do with higher prices (and demanded higher profit margins) passed on to the consumer than taxes paid (many of the biggest pay NO taxes).
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Re: The Truth about Tax Reform

Postby JE Pettibone » Sun Aug 13, 2017 5:44 pm

Ed: Given there are a lot of middle class stock holders in most corporations, I think the would be smart to increase dividends and let us pay the additional tax.
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Re: The Truth about Corporate Taxes

Postby Dave Roberts » Sun Aug 13, 2017 7:01 pm

JE Pettibone wrote:
Dave Roberts wrote:Tax reform is needed, but we seem to have no one considering the future of the country, only the futures for their own vested interests. My first tax reform would be that all income should be taxed for Social Security. Then, I think we should raise the corporate rate with generous exceptions for investments in research and production. Of course, I don't expect any of this from the Trump administration.


Ed: Dave who do you imagine will pay the higher corporate rates? Ultimately it is the consumer who buys products and services provided by the corporations.


Looking at corporate tax rates in the 1950's, one of America's most prosperous eras, the profits could be taxed at up to 91%. Therefore, it was prudent for business to invest either in development or in the tools of production or in wages to workers. Now, the effort is to maximize stock prices rather than the growth of productivity.
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Re: The Truth about Tax Reform

Postby JE Pettibone » Fri Aug 18, 2017 6:31 pm

Ed: And Dave , as I recall a major reason for the prosperity of the 50 was due largly to the emerging market for products that had not been avaiable during most of the 40's, due to WW11. Automobiles and major apliances leading the list, acccompied by housing, thanks to the GI Bill. The inpact of veterans reentering the labor market was eased by many former GI's entering college. The influx of new students revived many Schools, including Baptist Colleges and Universities.
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Re: The Truth about Tax Reform

Postby Dave Roberts » Sat Aug 19, 2017 9:33 am

JE Pettibone wrote:Ed: And Dave , as I recall a major reason for the prosperity of the 50 was due largly to the emerging market for products that had not been avaiable during most of the 40's, due to WW11. Automobiles and major apliances leading the list, acccompied by housing, thanks to the GI Bill. The inpact of veterans reentering the labor market was eased by many former GI's entering college. The influx of new students revived many Schools, including Baptist Colleges and Universities.


And profits were reinvested in raises to wages, research and development that made many of those new products possible like television, the transistor, the growth of FM radio as the medium clear of static, and the development of color television for the masses. New products emerged to meet that demand because of the investments of business in the future rather than short term gains for the rich.
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Re: The Truth about Tax Reform

Postby JE Pettibone » Sun Aug 20, 2017 7:15 pm

Dave Roberts wrote:
JE Pettibone wrote:Ed: And Dave , as I recall a major reason for the prosperity of the 50 was due largly to the emerging market for products that had not been avaiable during most of the 40's, due to WW11. Automobiles and major apliances leading the list, acccompied by housing, thanks to the GI Bill. The inpact of veterans reentering the labor market was eased by many former GI's entering college. The influx of new students revived many Schools, including Baptist Colleges and Universities.


And profits were reinvested in raises to wages, research and development that made many of those new products possible like television, the transistor, the growth of FM radio as the medium clear of static, and the development of color television for the masses. New products emerged to meet that demand because of the investments of business in the future rather than short term gains for the rich.


Ed: Dave, Color TV hardly qualifies for the 59''s; See Wicki: Although all-electronic color was introduced in the U.S. in 1953,[2] high prices and the scarcity of color programming greatly slowed its acceptance in the marketplace. The first national color broadcast (the 1954 Tournament of Roses Parade) occurred on January 1, 1954, but over the next dozen years most network broadcasts, and nearly all local programming, continued to be in black-and-white. In 1956 NBC's The Perry Como Show became the first live network television series to present a majority of episodes in color. CBS's The Big Record, starring pop vocalist Patti Page, was the first television show broadcast in color for the entire 1957-1958 season; its production costs were greater than most movies were at the time not only because of all the stars featured on the hour-long extravaganza but the extreme high intensity lighting and electronics required for the new RCA TK-41 cameras. It was not until the mid-1960s that color sets started selling in large numbers, due in part to the color transition of 1965 in which it was announced that over half of all network prime-time programming would be broadcast in color that autumn. The first all-color prime-time season came just one year later.

Early color sets were either floor-standing console models or tabletop versions nearly as bulky and heavy, so in practice they remained firmly anchored in one place. The introduction of GE's relatively compact and lightweight Porta-Color set in the spring of 1966 made watching color television a more flexible and convenient proposition. In 1972, sales of color sets finally surpassed sales of black-and-white sets. Also in 1972, the last holdout among daytime network programs converted to color, resulting in the first completely all-color network season.

The First transitor wah intoduced by Bell Labs n 1947 the impetus for its development during the war was the need for Lighter more portable communications equipment for the Aemed forces. After the was several companies adapted them for civilian use.
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Re: The Truth about Tax Reform

Postby Haruo » Sun Aug 20, 2017 9:27 pm

WW11? 1947, which war?
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Re: The Truth about Tax Reform

Postby Jim » Sun Aug 20, 2017 10:15 pm

Haruo wrote:WW11? 1947, which war?

WWII - 1941-45; Korean Conflict - 1950-53
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Re: The Truth about Tax Reform

Postby Haruo » Sun Aug 20, 2017 10:19 pm

WW11 is not the same as WWII, and if the first transistor was developed in '47, that's "peacetime", not the war Ed implied.
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Re: The Truth about Tax Reform

Postby JE Pettibone » Sun Aug 20, 2017 10:53 pm

Haruo wrote:WW11? 1947, which war?


Ed: Ok WW II. BTW, there is often a gap between development and introduction especially products initially designed with a military purpose and re-purposed, for Civilian use.

Keep in mind the Pentagon and its suppliers seldom announce new products while they are under development.
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Re: The Truth about Tax Reform

Postby KeithE » Wed Aug 30, 2017 7:01 pm

Latest estimate of what the Trump tax plan entails (with the rates given in Trump's one page summary) from the Institute of Taxation and Economic Policy is summarized in the plots below (for income tax). The average tax cut by income group is given below:

Image

As a percentage of income that tax cut is:

Image

The income group share of population and share of tax cuts is:

Image

That means that the top 0.5% (income $1M/yr or more) will get nearly half (48.8%) of these income tax cuts while the bottom 45% of people (incomes <$43,000/yr) will only get 4.4% of those cuts.

These numbers are different in detail than the Tax Policy Center’s analysis given in the lead-off post in the topic. But the theme is the same.

I do not know whether or not this reflects the ending of the loopholes that Trump claimed was part of his plan in his speech today - no details given of course and his word means nothing (to me). I hope that some more equitable deal is made with ending these loopholes (or by Congress). Most likely the Congressional Plan will be done in secret by the GOP.

These cuts (along with the planned corporate tax cuts) will result in much greater annual deficits.

This is not “reform” it is merely a big gift to rich people and corporations who will just squirrel away their gains. This on top of 40 years of great tilting of the economic playing field (both individual and corporate) towards the top wage earners and the corporations (mostly large ones).

Image

Image

Trickle down has never worked (as the 1980’s and 2000’s proved). Corporations will only invest more when there are more people able to spend more money. Do not believe the Trumpian claim of his tax plan is a “pro growth” plan or will result in great gains in jobs or wages for “most Americans”.

William ignores graphs. Others, please pay attention and talk with your Reps and Senators.
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Re: The Truth about Tax Reform

Postby Sandy » Thu Aug 31, 2017 9:09 am

It's becoming pretty clear that "tax reform" under Trump means less for him, and for those in and above his economic bracket, and more for just about everyone in the middle class, significantly more than now. The same arguments are being used, that if you cut taxes at the highest levels, that will lead to more investment and thus, more jobs and a stronger economy. The fact that we have done this twice in modern American history, and both times it led to economy-killing recessions that went deeper than any except the depression, seems to be lost on those proposing it. But why should they care? They are not the ones who will be devastated by a tanking economy.

A lot of opposition has been stirred up, so it will take some selling to convince people that this proposal, which will raise the taxes of just about everyone above the $50 thousand to $150 thousand income level. Last figure I saw was 6%. How they will sell that to a majority of Americans will be interesting, short of out and out lying. Too bad a tax can't be passed that will apply only to those who voted for Trump.
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Re: The Truth about Tax Reform

Postby William Thornton » Thu Aug 31, 2017 9:54 am

I ignore Keith's selective use of graphs...but I'm liking Sandy's comment above. Not sure what went wrong there. Maybe he ignored the graphs or did his own thinking.

TR is a tough sell since most lower income people don't pay income taxes anyway.
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Re: The Truth about Tax Reform

Postby Dave Roberts » Thu Aug 31, 2017 10:09 am

William Thornton wrote:I ignore Keith's selective use of graphs...but I'm liking Sandy's comment above. Not sure what went wrong there. Maybe he ignored the graphs or did his own thinking.

TR is a tough sell since most lower income people don't pay income taxes anyway.


They at least pay Social Security which is more than I can say for the wealthy and super wealthy who get their money without any Social Security deductions since it comes from investment income. Mitt Romney sank after he released his tax returns and people saw how little he paid (15% taxes and no Social Security if I remember correctly). Funny that no TR proposal addresses that one.
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Re: The Truth about Tax Reform

Postby KeithE » Thu Aug 31, 2017 10:46 am

Sandy wrote:It's becoming pretty clear that "tax reform" under Trump means less for him, and for those in and above his economic bracket, and more for just about everyone in the middle class, significantly more than now. The same arguments are being used, that if you cut taxes at the highest levels, that will lead to more investment and thus, more jobs and a stronger economy. The fact that we have done this twice in modern American history, and both times it led to economy-killing recessions that went deeper than any except the depression, seems to be lost on those proposing it. But why should they care? They are not the ones who will be devastated by a tanking economy.


Agreed especially the underlined.

Sandy wrote:A lot of opposition has been stirred up, so it will take some selling to convince people that this proposal, which will raise the taxes of just about everyone above the $50 thousand to $150 thousand income level. Last figure I saw was 6%. How they will sell that to a majority of Americans will be interesting, short of out and out lying. Too bad a tax can't be passed that will apply only to those who voted for Trump.


Tell me whose tax proposal this is that you mention above with the 6% figure. Was that an increase of 6% for those over $50K (or $150K)? Is it the Progressive Caucus/the Peoples’s Budget, Fair Tax proponents? Is it some vague memory? Links with details if possible please.
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Re: The Truth about Tax Reform

Postby KeithE » Thu Aug 31, 2017 10:52 am

William Thornton wrote:I ignore Keith's selective use of graphs...but I'm liking Sandy's comment above. Not sure what went wrong there. Maybe he ignored the graphs or did his own thinking.

TR is a tough sell since most lower income people don't pay income taxes anyway.


Select you own data then William and share it with us. DATA does not lie unless of course you think it fabricated. If so you could find some bonafide data yourself. As stands you only accept data you like and are too incompetent/lazy to provide countering data.

I suspect you do not understand Sandy’s comment above. Read it carefully again.

The Earned Income Tax Credit is a small consolation for those who have been screwed for decades. And as Dave has pointed out, they do pay payroll taxes.
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Re: The Truth about Tax Reform

Postby William Thornton » Thu Aug 31, 2017 11:14 am

I understand Sandy but his wording left the door open.
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