Trump's Full Court Press on Tax Reform

El Guapo · Post by **El Guapo** » Tue Nov 21, 2017 3:31 pm

LordMortis wrote: Tue Nov 21, 2017 3:23 pm Isgrimnur Isgrimnur isgrimnur

I read via bumpersticker social media that private school tuition is deductible under the proposed new tax law but "Student Loans" are not. Is that true? (Were student loans deductible before? Mine never were. I also never go the any of the learning credit tax breaks. I'm always too early or too late when it comes to tax incentives.)

The deal with private school tuition under GOP proposals, as I understand it, is that whereas now you can only use money from 529 accounts to pay for college tuition, under the new bills you could also use money from 529 accounts for private school tuition (pre-college). So private school tuition wouldn't be flat deductible. However, if you're super rich, you start a 529 account when you have a baby, put $200,000 or $300,000 or so into it, and then withdraw gains from that account annually to pay private school tuition. Since you don't pay taxes on 529 account gains that are used for eligible expenses, that would make the tuition tax free under those circumstances (at least, to the extent that the 529 account has gains to withdraw).

I got briefly excited when I kept seeing that private school tuition would become tax deductible, since we send our kids to a private Jewish day school, but since we don't have enough money to put into 529 accounts to generate the requisite gains...not especially helpful. But then, I'm not one of the people that the GOP is writing the tax bills for.

I don't know how the new bills change the student loan interest deduction. I assume that deduction is abolished since it's connected to book learnin' and doesn't favor the unbelievably rich.

Isgrimnur · Post by **Isgrimnur** » Tue Nov 21, 2017 3:43 pm

Daily Californian

The Tax Cuts and Jobs Act passed the U.S. House of Representatives last week and is currently under review by the Senate Finance Committee. If passed by the Senate and signed by the president, the bill would allow tax breaks to families that send their children to private schools.
...
The bill would alter 529 plans — tax-deferred plans intended to encourage savings for higher education — to allow individuals to take out $10,000 each year for private school tuition without any tax on the withdrawal.
...
The 529 plan is one of two existing programs outlined in the Internal Revenue Code that allow people to save for education. The other is the Coverdell Education Savings Account, which allows people to deposit $2,000 per year and can be used for kindergarten through 12th grade expenses, for both public and private education.

Under this provision, however, new contributions to Coverdell Education Savings Accounts would be prohibited, and 529 plans would account for kindergarten through 12th grade education expenses, in addition to undergraduate and postgraduate expenses.
...
In addition to several new tax deductions in the bill, many existing ones would also be rescinded — including a tax benefit that allows low- and middle-income students to deduct up to $2,500 of their student loan interest annually.

LordMortis · Post by **LordMortis** » Tue Nov 21, 2017 3:46 pm

Smoove_B · Post by **Smoove_B** » Mon Nov 27, 2017 12:42 pm

At least they're consistent with their new policy proposals:

The Senate Republican tax plan gives substantial tax cuts and benefits to Americans earning more than $100,000 a year, while the nation’s poorest would be worse off, according to a report released Sunday by the nonpartisan Congressional Budget Office.

...

The main reason the poor get hit so hard in the Senate GOP bill is because the poor would receive less government aid for health care.

The Senate Republican tax bill eliminates the requirement that almost all Americans purchase health insurance or else pay a penalty. The CBO has calculated that health insurance premiums would rise if this bill becomes law, leading 4 million Americans to lose health insurance by 2019 and 13 million to lose insurance by 2027.

$iljanus · Post by **$iljanus** » Mon Nov 27, 2017 4:12 pm

Smoove_B wrote:At least they're consistent with their new policy proposals:

The Senate Republican tax plan gives substantial tax cuts and benefits to Americans earning more than $100,000 a year, while the nation’s poorest would be worse off, according to a report released Sunday by the nonpartisan Congressional Budget Office.

...

The main reason the poor get hit so hard in the Senate GOP bill is because the poor would receive less government aid for health care.

The Senate Republican tax bill eliminates the requirement that almost all Americans purchase health insurance or else pay a penalty. The CBO has calculated that health insurance premiums would rise if this bill becomes law, leading 4 million Americans to lose health insurance by 2019 and 13 million to lose insurance by 2027.

Well since folks are convinced that health care = Obamacare = Socialism I guess the Senate is doing them a favor and they can die as supporters of the free market system.

malchior · Post by **malchior** » Tue Nov 28, 2017 12:47 pm

Do I need to draw a process diagram about why a negative feedback mechanism for tax policy is an exceptionally stupid idea? Really. This is so amazingly dumb that you know that these guys are complete morons and know nothings. They have no clue at all and are just winging this.

https://twitter.com/BruceBartlett/statu ... 6944732161

El Guapo · Post by **El Guapo** » Tue Nov 28, 2017 1:00 pm

malchior wrote: Tue Nov 28, 2017 12:47 pm This is so amazingly dumb that you know that these guys are complete morons and know nothings. They have no clue at all and are just winging this.

I don't know about that. As a policy matter, sure, but I strongly suspect that the mechanism is mostly a political / budget rules tool. They need to keep it below $1.5 trillion in revenue (and keep it budget neutral after 10 years) in order to pass it in the Senate via reconciliation (which is, to pass it at all). A mechanism like this lets them say, based on the text of the bill, we can guaranteed it won't go over the relevant revenue thresholds because we have a catch-all in there that will prevent that from happening in any set of circumstances. They know that they can go back and change it after the bill passes. But this lets them get over the first hump - passing the bill itself. It also gives Senators a talking point with the press / constituents - "I share your concern about the deficit. That's why I made sure that there was a provision to automatically claw back some revenue if, due to unforeseen circumstances, the revenue drops beyond [revenue threshold]."

malchior · Post by **malchior** » Tue Nov 28, 2017 1:39 pm

I get what they are saying - the problem is that the markets will have to decide whether the country will be sane or not at any moment that a recession begins. When the world might be on fire and no one can agree on what actually happens. We have chaos in good times - why should we trust they'll get their act together when the chips are down? That is why this is so dumb. This is like setting up a possible fiscal bomb that might explode in the future.

El Guapo · Post by **El Guapo** » Tue Nov 28, 2017 1:59 pm

malchior wrote: Tue Nov 28, 2017 1:39 pm I get what they are saying - the problem is that the markets will have to decide whether the country will be sane or not at any moment that a recession begins. When the world might be on fire and no one can agree on what actually happens. We have chaos in good times - why should we trust they'll get their act together when the chips are down? That is why this is so dumb. This is like setting up a possible fiscal bomb that might explode in the future.

Look - they need it now in order to pass a massive tax cut for the rich. That's all you need to know.

Octavious · Post by **Octavious** » Tue Nov 28, 2017 2:44 pm

I'm going to be really impressed if he someone manages to not get tax cuts through this year. He's sure doing his best to make it harder. Add onto that the possibility that the gov. shuts down (Again because he can't keep his mouth shut). So much winning. I can't take all the winning.

Captain Caveman · Post by **Captain Caveman** » Tue Nov 28, 2017 3:30 pm

Brace yourself. Sounds like we're about to get screwed.

https://twitter.com/ryangrim/status/935590358934749184

https://twitter.com/samstein/status/935592305729396737

Zaxxon · Post by **Zaxxon** » Tue Nov 28, 2017 3:35 pm

Octavious · Post by **Octavious** » Tue Nov 28, 2017 3:40 pm

Wooo!!! MAGA!!!!!!!!! I will welcome the massive recession that will hit when my daughter is starting to hit the workforce!

El Guapo · Post by **El Guapo** » Tue Nov 28, 2017 3:45 pm

Brief overview of why GOP tax cuts will probably pass.

This is what the modern GOP was built to do - it's a machine decades-long in the making that is oriented almost entirely around figuring out how to pass hugely regressive tax cuts that benefit very few people.

Captain Caveman · Post by **Captain Caveman** » Tue Nov 28, 2017 3:58 pm

Yep, here we go.

https://twitter.com/sahilkapur/status/9 ... 6617628672

Octavious · Post by **Octavious** » Tue Nov 28, 2017 4:40 pm

It's a good thing that we at least put in some good regulations to keep from the banks going hog wild and creating another massive recession. Oh wait... That's right the asshat in charge of that consumer group quit and they took over that agency. We're so f'd.

El Guapo · Post by **El Guapo** » Tue Nov 28, 2017 4:43 pm

I guess I don't understand why Collins would even be considering voting for this. She's going to wind up in a situation where Republicans in the state hate her for voting against ACA repeal, democrats hate her for voting for the tax bill (and for supporting the GOP majority)...seems like a weird path to reelection?

Captain Caveman · Post by **Captain Caveman** » Tue Nov 28, 2017 5:27 pm

Maybe she's not planning on reelection. Or maybe if she does want to be reelected, she's realizing that failure to vote for this bill would piss off her donors so much that her chances for reelection would be dramatically damaged. Basically, she must be making the calculation that voting for it serves her better than voting against it.

Alternatively, she just loves giving the wealthy tax cuts. She is a Republican after all.

El Guapo · Post by **El Guapo** » Tue Nov 28, 2017 6:02 pm

Captain Caveman wrote: Tue Nov 28, 2017 5:27 pm Maybe she's not planning on reelection. Or maybe if she does want to be reelected, she's realizing that failure to vote for this bill would piss off her donors so much that her chances for reelection would be dramatically damaged. Basically, she must be making the calculation that voting for it serves her better than voting against it.

Alternatively, she just loves giving the wealthy tax cuts. She is a Republican after all.

She's already announced that she's planning on running for reelection.

Donors is probably the likely explanation.

Post by **ImLawBoy** » Tue Nov 28, 2017 6:09 pm

It could just be that she thinks it's the right thing to do. As CC points out, she is a Republican.

Max Peck · Post by **Max Peck** » Tue Nov 28, 2017 6:32 pm

Perhaps the current draft of the bill is simply Republican-horrible instead of Trump-horrible.

Zarathud · Post by **Zarathud** » Tue Nov 28, 2017 7:27 pm

A constantly changing tax law is terrible policy, especially when it is certain the triggers will be pulled. The Republican Party has no principles other than a tax cut "at any cost." Not winning.

malchior · Post by **malchior** » Tue Nov 28, 2017 8:35 pm

Isn't a wonder how--generally--silent the Democrats have been about this tax cut business?

Pyperkub · Post by **Pyperkub** » Tue Nov 28, 2017 8:39 pm

Zarathud wrote: Tue Nov 28, 2017 7:27 pm A constantly changing tax law is terrible policy, especially when it is certain the triggers will be pulled. The Republican Party has no principles other than a tax cut "at any cost." Not winning.

It's not a tax cut for 99% of Americans as the expiry dates hit. Only Corporations and the 1% will ultimately benefit from this, and it will explode the deficit at a time when we should be paying it down, leaving the US without a crucial tool for when the next recession/depression/crash hits.

malchior · Post by **malchior** » Tue Nov 28, 2017 8:42 pm

We should call this what it is--the final looting of the treasury by the very wealthy.

Victoria Raverna · Post by **Victoria Raverna** » Wed Nov 29, 2017 3:12 am

noxiousdog wrote: Wed Nov 15, 2017 1:19 pm
Zaxxon wrote: Wed Nov 15, 2017 1:05 pm Yes, there are plenty of examples where it's not that hard--and your choice of Amazon, a two-decade old public company, is one. But for a large category--newish start-ups, for example, which is what I've been picturing so far--it's just a guess. No one knows in the early stages whether a particular company is going to zero or Amazon levels, and my point is that trying to put a number on something like that, and then immediately tax folks on that number when it may be several years before they receive any tangible proceeds, is nuts.
Well, that's part of the deal. If done correctly, it closes opportunities for established companies to enrich their executives with tax free income while still allowing options in startups. When valuing startups, at grant or vesting, the value is likely going to be close to zero. If they wind up with value, they would then be taxed at the capital gains rate. In established companies, the value is likely higher and should be considered income and any gains post vesting would be then taxed at capital gains.

I probably misunderstand how the income tax in US works, when an executive get stock options and use them to get stocks, he doesn't get taxed? I would think that when the executive exercise his options, he'll be taxed the difference between what he pay and the actual market value of the stocks. So if an executive buy 2 millions dollars worth of stocks by spending 1 million dollars, he will add 1 million dollars of taxable income? Isn't that how it work?

RunningMn9 · Post by **RunningMn9** » Wed Nov 29, 2017 9:22 am

Victoria Raverna wrote: Wed Nov 29, 2017 3:12 amI probably misunderstand how the income tax in US works, when an executive get stock options and use them to get stocks, he doesn't get taxed? I would think that when the executive exercise his options, he'll be taxed the difference between what he pay and the actual market value of the stocks. So if an executive buy 2 millions dollars worth of stocks by spending 1 million dollars, he will add 1 million dollars of taxable income? Isn't that how it work?

That's how it used to work. Apparently that's considered stealing by some. I don't understand it. Instead, if the company awards an employee stock option grant to an employee (executive or not, and most employee stock option grants are not to executives, they are designed to retain key employees by giving them a stake in the future of the company), they want to tax the employee at the vesting date (even if the employee doesn't buy the stock or own it in any way).

It continues to be an absurdly stupid solution to a problem that doesn't exist.

malchior · Post by **malchior** » Wed Nov 29, 2017 9:53 am

I still can't figure it out personally - replace something straightforward and easy to account for with some Byzantine solution that essentially kills it off. I guess that is the feature of it.

Remus West · Post by **Remus West** » Wed Nov 29, 2017 1:11 pm

malchior wrote: Wed Nov 29, 2017 9:53 am I still can't figure it out personally - replace something straightforward and easy to account for with some Byzantine solution that essentially kills it off. I guess that is the feature of it.

Best I can figure is that it is(was?) one way to create "new" wealth. Old money has always hated new money.

malchior · Post by **malchior** » Wed Nov 29, 2017 2:13 pm

We were just talking about this - there seems to be a lot of effort to push technology out of the country. Kill options / kill net neutrality / punish education / kill clean energy / etc. They seem intent on pushing our biggest innovation engines out of the country...for reasons?

GreenGoo · Post by **GreenGoo** » Wed Nov 29, 2017 2:39 pm

It will be an interesting time when the average American has less access to the internet for more money than many developing countries.

Right now it's just NJ residents, apparently, but they don't have to be alone in this.

Remus West · Post by **Remus West** » Wed Nov 29, 2017 3:09 pm

malchior wrote: Wed Nov 29, 2017 2:13 pm We were just talking about this - there seems to be a lot of effort to push technology out of the country. Kill options / kill net neutrality / punish education / kill clean energy / etc. They seem intent on pushing our biggest innovation engines out of the country...for reasons?

An ignorant population is much easier to control. If you control all information then people believe what you'd like them to believe.

GreenGoo · Post by **GreenGoo** » Wed Nov 29, 2017 3:26 pm

Remus West wrote: Wed Nov 29, 2017 3:09 pm An ignorant population is much easier to control. If you control all information then people believe what you'd like them to believe.

Turns out you don't need to control the information. Just give them the information they want to believe, and it's a done deal.

Remus West · Post by **Remus West** » Wed Nov 29, 2017 3:34 pm

GreenGoo wrote: Wed Nov 29, 2017 3:26 pm
Remus West wrote: Wed Nov 29, 2017 3:09 pm An ignorant population is much easier to control. If you control all information then people believe what you'd like them to believe.
Turns out you don't need to control the information. Just give them the information they want to believe, and it's a done deal.

They are not controlling ALL of it but since most of his base refuses to listen to other sources its close enough.

El Guapo · Post by **El Guapo** » Wed Nov 29, 2017 3:38 pm

Remus West wrote: Wed Nov 29, 2017 3:34 pm
GreenGoo wrote: Wed Nov 29, 2017 3:26 pm
Remus West wrote: Wed Nov 29, 2017 3:09 pm An ignorant population is much easier to control. If you control all information then people believe what you'd like them to believe.
Turns out you don't need to control the information. Just give them the information they want to believe, and it's a done deal.
They are not controlling ALL of it but since most of his base refuses to listen to other sources its close enough.

When I think about how to long-term address the big problems in this country, this seems like one of the harder ones. How do you deal with closed information loops a Fox News and conservative talk radio? How do you get people to consume a broad swath of media, not just a media set designed to cater to their starting biases?

Note that this is not only a conservative issue, just that it's the worst on the conservative side right now (but that could easily change).

GreenGoo · Post by **GreenGoo** » Wed Nov 29, 2017 3:44 pm

Alex, what are: problems an extremely liberal education system can solve?

But if that's not to your liking, how about a neutral education system that clearly and meaningfully addresses critical thought, vetting sources and just generally creates wary, savvy and critical consumers of information.

El Guapo · Post by **El Guapo** » Wed Nov 29, 2017 3:55 pm

GreenGoo wrote: Wed Nov 29, 2017 3:44 pm Alex, what are: problems an extremely liberal education system can solve?

But if that's not to your liking, how about a neutral education system that clearly and meaningfully addresses critical thought, vetting sources and just generally creates wary, savvy and critical consumers of information.

Well, right. I mean, if there's one thing that the Trump era has done for me is to reinforce how important education is not just to the kids being educated, but to the public and the health of the nation at large.

However, "improve the education system" is something that people have been working on for centuries, and are still working on. It's important work, but people were also doing it during the rise of Fox News and the like. Not sure it's super targeted to the problem.

El Guapo · Post by **El Guapo** » Wed Nov 29, 2017 3:56 pm

https://twitter.com/seungminkim/status/ ... 4681085952

GreenGoo · Post by **GreenGoo** » Wed Nov 29, 2017 4:08 pm

I'm turning my dial back and forth at a furious rate! What channel are we supposed to be tuned into?!

Remus West · Post by **Remus West** » Wed Nov 29, 2017 4:09 pm

El Guapo wrote: Wed Nov 29, 2017 3:55 pm
GreenGoo wrote: Wed Nov 29, 2017 3:44 pm Alex, what are: problems an extremely liberal education system can solve?

But if that's not to your liking, how about a neutral education system that clearly and meaningfully addresses critical thought, vetting sources and just generally creates wary, savvy and critical consumers of information.
Well, right. I mean, if there's one thing that the Trump era has done for me is to reinforce how important education is not just to the kids being educated, but to the public and the health of the nation at large.

However, "improve the education system" is something that people have been working on for centuries, and are still working on. It's important work, but people were also doing it during the rise of Fox News and the like. Not sure it's super targeted to the problem.

Except this is not really correct. For most of the time our nation works very hard to promote education of the ideas sections of us like rather than true education. Look at textbooks to see how that works. Want a science text? Better include completely non-scientific information such as creationism on an equal basis along side researched concepts with data to support them. I don't think I need to continue to detail how we have utterly failed to create an actual educational system that nurtures thought above ideology do I?