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Author Topic: Money  (Read 6750 times)

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Re: Money
« Reply #615 on: July 10, 2019, 02:41:16 pm »

Wednesday July 10th 2019

How to Fix a Big Problem with the Trump -Radical 😈 Republican  Tax Law

Five Questions Congress Needs to Ask About the Impact of the Lopsided Rewrite of the Tax Code
By David Cay Johnston , DC Report Editor-in-Chief

The American people got a highly misleading June 24 report from Congressional staff about the effect of repealing Donald Trumpís 🦀 $10,000 limit on state and local tax deductions, known as SALT.

Millionaires and billionaires get most of the benefits if the limitation is repealed, the Congressional Joint Committee on Taxation reported.


Our major news organizations promptly parroted the findings without digging deeper. And none thought to report on whether the tax committee staff had been asked the right or best question in preparing its analysis.

Fox Business called SALT limit repeal ďa boon for the rich.Ē The Wall Street Journal focused on Democrats wanting to help the rich, a common Republican meme.

We call it the Trump-Radical Republican tax law because it was enacted without a single public hearing in the waning days when Republicans controlled both chambers of Congress

Newsday, a Long Island daily, took a different tack, quoting the mayor of a small village saying ďIím a registered Republican. I actually voted for President TrumpÖ This SALT cap limit is totally unfair to villages like mine and others throughout the country.Ē

The tax committee staff report showed that households reporting incomes of $1 million or more this year would get almost a third of the tax savings if the $10,000 limit is repealed.

Thatís not surprising in a nation where some people earn multi-billion-dollar annual incomes and hundreds of people report making more than $100 million per year. Some very wealthy Americans pay millions of dollars in state and local income and property taxes, though many own land through corporations that are not affected by the SALT limit, which only applies to human beings.

People making such huge incomes donít need any subsidy from taxpayers, even though our tax code is larded with favors for them, including the 5% cut in the top tax rate that the Trump/radical Republican tax law bestowed on them.

The tax committee analysis, released last week, was flawed in several ways. Thatís no slight on the committee staff, who are serious experts on tax policy. The committee staff responds to questions from lawmakers and in this case, the questions asked were too narrow.

The tax committee staff was simply asked the wrong question. We think members of Congress should ask for a new study, asking the five questions below.

Few Taxpayers Taking Deductions
Any new report should also be based on the law before the Trump-Radical Republican tax law that took effect in 2018. That law reduced the share of taxpayers who itemize deductions from about one in three to one in 20.

We call it the Trump-Radical Republican tax law because not one Democrat voted for this law, which showered most of its benefits on the rich and corporations. It was enacted without a single public hearing in the waning days when Republicans controlled both chambers of Congress.

Having only a tiny sliver of taxpayers being eligible to itemize deductions skewed the findings by the Joint Committee on Taxation staff.

Here are the five questions Congress should ask:

1. Who would benefit from the repeal of the SALT limit under the rules in effect prior to 2018, when more than 42 million taxpayers itemized deductions?

2. What happens if the SALT deduction maximum was set at higher levels? For example, what is the deduction was limited to $20,000 or $30,000 or $50,000?

3. What about denying SALT deductions to the half million or so taxpayers who report income of $1 million or more? $2 million or more?

4. How does the SALT limit affect charitable giving?

5. How does the SALT deduction limit interact with home mortgage interest deductions?

Most people with a first mortgage of less than $350,000 on their primary home probably cannot deduct their interest any longer, a sudden and abrupt change that may be shifting the burden of taxes down the income ladder. Thatís because, under the Trump-Radical Republican tax law, a married coupleís first $24,000 of income is untaxed (half that for singles). Those with less than $14,000 of itemized deductions on top of SALT will not file itemized returns.

Pocket Change
Having $25,000 of deductions would only save $120 since just a grand would be deductible and the lowest tax rate is now 12%, up from 10% under the old law. Just the cost of having a tax return prepared, or the time needed to do it yourself, would make itemizing with $25,000 of deductions a waste of time. At $30,000 of deductions, the savings would be just $600.

But a couple with $25,000 of SALT and even modest mortgage balance, say $100,000 at 4%, would find itemizing worthwhile.

The charitable gift and mortgage deductions are about all that itemizers have left under the Trump/radical Republican tax law. But the overwhelming majority of taxpayers who itemized in 2017 no longer can. For many such taxpayers, their combined federal, state and local tax burden rose under a law that Trump and his cult-like followers in Congress proclaimed, falsely, was a tax cut for virtually all Americans.

Charitable giving declined slightly in 2018 when itís safe to assume that most people who itemized deductions on earlier years did not understand that their charitable gifts would not be deductible.

As more people become aware that their future charitable gifts probably will not be tax deductible, we can expect a drop in such gifts from middle-class and upper-middle-class taxpayers, who are overwhelmingly workers or self-employed.

Sound estimates of the effect the new tax law has on giving by families making less than $1 million would be crucial to the health and welfare of Americaís nonprofit sector.

Similarly, for homeowners who donít make charitable gifts, mortgage interest on their principal residence is only deductible above the first $14,000 paid to their lender.

Thatís because the SALT limit plus $14,000 of mortgage interest is $24,000, the threshold for taxing the income of a married couple.

Home Buyers Lose Out
This means married couples with a mortgage of less than $350,000 at 4% or less interest no longer get any tax deduction. Thatís a lot of home buyers. The median home price in the United States is just $227,000, and median prices in 86 of the Top-100 metropolitan areas are below $350,000.

Eliminating the mortgage interest deduction may be good policy, especially since the deduction tends to be upside down, meaning higher income people benefit more than lower income homeowners. Switching to a tax credit for home buyers or just first-time home buyers may be smarter. But abruptly ending a tax deduction that has motivated many people to buy homes is troublesome in many ways, not the least that the way it was done is inherently undemocratic, unlike say phasing the change in over a few years.

The net effect of these changes is to benefit  higher income people with subsidies for their charitable 😈 giving and mortgage interest. The new law takes a system that already favored the prosperous and benefits them even more while disadvantaging many middle-class and upper-middle-class taxpayers.

Trump and the Republican lawmakers who slavishly comply with his demands voted in other provisions that disadvantage working people, including police, firefighters and union members.

The new law denies all ďmiscellaneousĒ deductions, including union dues. Police and other first responders, deductions for the costs of uniforms, dry cleaning and tools from batons and boots to guns and Sam Browne belts, as DCReport told you in April 2018.


Agelbert Comment: Yep, it is another example of the Trump 'get the rich Richer by fleecing everyone else' fascist (reverse Robin Hood) modus operandi

Of course all that extra money in the hands of rich people that did not need it had to go someplace (see below). NO, it did NOT "trickle down", "create jobs". And NO, the Stock Market IS NOT the "economy".

But Peter said unto him, Thy money perish with thee, because thou
hast thought that the gift of God may be purchased with money. Acts 8:20


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