The Truth about Tax Reform

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Re: The Truth about Tax Reform

Postby KeithE » Wed Nov 29, 2017 1:44 pm

From the NYT
What the Tax Bill Would Look Like for 25,000 Middle-Class Families

Please read (if you can - may require NYT registration)

Numerous analyses have estimated the average impact of the bill on household finances, and advocates on both sides have produced examples of “typical” families that would win or lose under the plan.

Such analyses, however, tend to gloss over the remarkable diversity of Americans’ financial situations. In truth, there is no “typical” American household. Even families that look similar on the surface can differ in ways that radically alter their situation come tax season.

The 25,000 dots on the chart above each represent an American household in the broadly defined middle class. The vertical axis represents income; the horizontal axis represents how big a tax cut (or tax increase) each household would get under the bill in 2018 {but received in 2019 -most people seeing what has happened to their tax bills in the Feb- April 15, 2019 timeframe well after Nov 2018 elections}


Look at all the data analysis by going to the link above. Sorry can’t cut and paste these interesting scatterplots. Wish it would have been expanded to include lower and upper classes.

Unlike what I gave last night this is purely individual tax cuts or increases for the middle class broadly defined as $40K to $140K - no evaluating what increases in expenses are required by Medicaid/CHIP dis-funding, ACA mandates/subsidies being cancelled, and other programs being cancelled. Note that by 2027 (and going forward after that) shows on the left side of the last plot that all of the middle class will have tax increases of from $100 - $500/year (since all tax cuts rescinded by 2026). The right side shows a very uncertain “trickle down effect” from the big corporate tax breaks.

Congress’s in-house tax analyst, the Joint Committee on Taxation, estimates that about 25 percent of the cuts to corporate taxes would go to workers in the form of higher incomes. Using that and some other assumptions from the committee, we can allocate the corporate tax cuts to individual households, which is what we show in the chart on the right above. A bit under half of middle-class households would get a tax cut — or, technically, an increase in after-tax income — under these assumptions, and a bit more than half would see their after-tax income go down compared with under existing law. Both the cuts and the increases would generally be small for middle-class households, although the gains could be significant for some wealthy households.
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Re: The Truth about Tax Reform

Postby KeithE » Thu Nov 30, 2017 2:31 pm

The report that Mnuchin claims shows the Tax Cuts ad Jobs bill will “pay for itself” does not exist.

Whistleblower: Mnuchin's Touted Analysis Claiming 'Tax Cuts for Rich Pay for Themselves' Doesn't Even Exist

"In our models, we believe there will be $2.5 trillion of growth," Mnuchin said during a recent CNN interview. "And we're happy to go through the numbers. We're happy to give the details. We want full transparency to the American public."

Despite such lofty promises and his expressed commitment to "transparency," however, Mnuchin has yet to release the promised analysis, even as the Senate is expected to vote on the GOP tax plan as early as Thursday night. According to an economist at the Office of Tax Analysis, he hasn't done so for good reason: there is no such study.


As for the argument that “he bill will spur economic growth”, a survey of 50 economists has only 1 economist out of 50 (from a cross section of viewpoints/universities) that “agrees” with the following question:
Question A: If the US enacts a tax bill similar to those currently moving through the House and Senate — and assuming no other changes in tax or spending policy — US GDP will be substantially higher a decade from now than under the status quo.


And the one who agrees the bill will substantially improve within a decade (Darrell Duffie, finance economics prof from Stanford School of Business Dept of Finance) adds
A reduced corporate tax reduction is likely to grow GDP. Whether the overall tax plan is distributionally fair is another matter.


And slightly more to the Mnuchin's point (the bill will “pay for itself”), all economists agree (except one who was uncertain) that the debt/GDP ratio will increase. The exact question was:
Question B: If the US enacts a tax bill similar to those currently moving through the House and Senate — and assuming no other changes in tax or spending policy — the US debt-to-GDP ratio will be substantially higher a decade from now than under the status quo.


This growth argument is bereft of any support. This is a very bad bill - economically.

And 13 Million people will lose their health care 'Disgusting': Senate Republicans' Tax Plan Will Scrap Obamacare Mandate

All of this so the GOP/Trump can claim a legislative win.
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