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Biggest Reform EVER passed thread

But if they own a home, they will likely get less take in CA.

That's just not proving to be true. People who own nice homes also make nice incomes, and when those incomes are taxed at 24% opposed to 33%, they save alot of money.
 
Yea, earlier I speculated our federal rate would go up. Now, looks like it will go down for 2018. We’ll lose some on the deductions but probably still itemize. Biggest increase for us is going to be from ‘16-‘17 due to the need to raise income to pay large non-deductible expenses.

Has nothing to do, however, with why I don’t like the tax reform. I think it’s fiscally irresponsible, socially unjust, and economically ill-timed.
 
https://www.nytimes.com/2018/01/18/business/economy/tax-housing.html


Here is the claim that article makes. I think that is poor logic and the credits are just as valuable (perhaps even more valuable) as long as the taxpayer has tax liability to offset with the credit. As far as I am aware, the credit amount hasn't been reduced.

You get a dollar for dollar credit for the investment. With the lower incremental tax rates, the credits benefit incrementally should actually increase over a deduction amount.

Journalists who write about taxation are usually a big fail because they don't understand what they are talking about.

SAN FRANCISCO — The last time that Congress approved a sweeping overhaul of the federal tax code, in 1986, it created a tax credit meant to encourage the private sector to invest in affordable housing. It has grown into a $9 billion-a-year social program that has funded the construction of some three million apartments for low-income residents.But the Republican tax plan approved last month amounts to a vast cutback, making it much less likely that such construction will continue apace. Because the tax rate for corporations has been lowered, the value of the credits — which corporations get in return for their investments — is also lower.
 
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Continuing the quote...

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...“It’s the greatest shock to the affordable-housing system since the Great Recession,” said Michael Novogradac, managing partner of Novogradac & Company, a national accounting firm based in San Francisco.

According to an analysis by his firm, the new tax law will reduce the growth of subsidized affordable housing by 235,000 units over the next decade, compounding an existing shortage.

Already, developers and city agencies are scrambling for new financing and scaling back longer-term plans...
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Michael J. Novogradac, CPA: not a journalist.
 
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well I'm a CPA that does high level corporate taxes and I really don't understand what hes talking about. If a credit regime didn't change than the value of the credit has not been reduced by lowering the tax rate the incremental value has actually been increased. The one main exception I can see is if the credit amount exceeds the taxpayer's tax liability. But a $100 in tax credits In a 21% rate environment is just as valuable as a $100 in tax credits in a 35% rate environment and the incremental value over the tax deduction is actually greater.
 
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l looked over his analysis it really has nothing to do with the incremental value of tax credits.
 
His conclusions:

Quote
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Combined Effect

On balance, it appears that the final version of tax reform legislation would reduce the total amount of LIHTC-financed affordable rental homes at a minimum by about 219,200 to 232,200, or more, over 10 years. Furthermore, given the lower financial feasibility under a lowered corporate rate, the changes would also likely result in rental homes that would likely serve higher average income levels, provide fewer amenities and/or social services.

Economic and State Impacts

That significant reduction in housing production would also mean the loss of more than 262,000 jobs and billions of dollars in business income and federal, state and local tax revenue across the United States.
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Pretty damning summary of the limited benefits of the tax breaks.
https://www.alternet.org/labor/there-major-ceo-tax-con-job-going#.WmfJfxn7z7E.facebook

But the vast majority of executives who announced they’d share the bounty of the Republican tax breaks with their employees didn’t explain how they’d spend their windfalls or offer workers long-term value.
The conservative group Americans for Tax Reform, which supported tax breaks for the rich and corporations, compiled a list of about 125 companies that announced their workers would benefit this year from some portion of the corporate tax break.

The overwhelming majority of these are one-time bonuses. It’s true that the average worker will appreciate an extra $200 to $1,000. But none of the companies promised that $1,000 would arrive in workers’ paychecks every year, even though corporations will enjoy the tax breaks every year.
...

Other big names that have announced one-time bonuses or pathetic wage increases are Walmart, AT&T, Comcast, Boeing and AFLAC. Again, it’s great any time additional money finds its way into the pockets of those whose labor creates corporate profits. But all of these companies were involved in a massive public relations con.
Comcast and AT&T announced $1,000 bonuses, then laid off workers. Comcast dumped 500 and AT&T dumped thousands.
Walmart pulled the same trick. It boasted of bonuses ranging from $200 to $1,000 and raises for its lowest-paid workers to $11 an hour. That’s still not a living wage and was done only to keep up with Target, which announced in September a base wage of $11. And Walmart topped it off with layoffs. About 11,000 former Walmart workers won’t be around to get those raises.
AFLAC said it would place a one-time contribution of $500 in workers’ 401(k) accounts amid allegations in lawsuits that it lied to applicants about the pay they would receive and failed to give workers commissions they had earned.
Boeing got in on the good publicity by saying it would spend $300 billion on workers, but its workers will see no new money. Instead of raises or bonuses, Boeing will spend the money on worker training, upgrading its factories and matching workers’ donations to charities – for which, of course, it can claim another tax break.
 
Kimberly-Clark Announces Layoffs, Along With $3.3 Billion In Operating Profit

Kimberly-Clark plans to cut up to 5,500 jobs — about 13 percent of its workforce — and get rid of 10 manufacturing plants, releasing a restructuring plan along with its year-end results that showed net sales rose to $18.3 billion, up slightly from 2016.

As it announced financial results and layoff plans, Kimberly-Clark's board of directors also approved a 3.1 percent increase in the company's quarterly dividend for 2018, which it says is the 46th consecutive annual dividend increase for shareholders.

Falk noted that in 2017, Kimberly-Clark "returned $2.3 billion to shareholders through dividends and share repurchases."

 
Makes sense. Companies take the risk to create jobs to make more money. If they are making more money anyway through tax cuts, why keep taking the risk? Invest in ways to make more money without hiring more workers.
 
https://www.nytimes.com/2018/01/18/business/economy/tax-housing.html


Here is the claim that article makes. I think that is poor logic and the credits are just as valuable (perhaps even more valuable) as long as the taxpayer has tax liability to offset with the credit. As far as I am aware, the credit amount hasn't been reduced.

I work as an affordable housing developer. Tax credits are sold on a market and that amount is used for equity to construct the housing. The amount you get for the tax credits is not 100 cents on the dollar. Currently, in Chicago, you can get about 97 cents on the dollar, 92 cents on the dollar in the suburbs, and 85-88 cents on the dollar in the suburbs. Reducing the corporate tax rate decreases the demand for the credits, suppressing the market.

There are other laws -- namely the Community Reinvestment Act (CRA) -- that influence the market. The CRA requires financial institutions to invest a certain amount across the geographic footprint of their operations. For large banks, they have a hard time lending enough in low-income markets. The tax credit purchase counts toward their CRA requirements, inflating the value of tax credits in urban areas. So much so that not long ago, you could get over 100 cents on the dollar for tax credits.

The tax reform absolutely impacts the industry and increases the burden on state and local government to find money to fill the gap.
 
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