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Biggest Reform EVER passed thread

It looks like this plan is actually a tax hike on many in the middle class by 10 years because of the expiration of credits and the failure to index the new benefits to inflation

https://medium.com/@kamin_83016/how-a-tax-cut-turns-into-a-tax-increase-960c32d1ba82

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This is how they're planning to get a CBO score under the $1.5 trillion threshold. I figured it would be some function of sunsetting provisions, here it is.
 
Except it isn’t - the bill takes away the deduction for the person paying alimony, but makes it tax free to the recipient (i.e., the opposite of current law). As such, there’s almost no additional revenue generated by the change. Current law makes sense - person who gets the money pays tax on it; person who pays it gets to deduct it. I have no idea what the rationale is for this, other than it would add another line to the GOP’s precious postcard.

Political move, it is benefit to women / single moms.
 
The Original Sin of the GOP Tax Plan

As an example, Gleckman points to the plan’s treatment of what are called “pass-through” taxes paid by small businesses. The GOP plan lowers the rate for these taxes, but includes several rules to prevent rich individuals from classifying themselves as dummy companies in order to pay less in taxes thanks to the new rate. Gleckman worries that these anti-abuse measures will backfire: Rich people will just hire smart lawyers to handle all the new paperwork, while the maze of caveats will make life hell for small businesses. Indeed, the National Federation of Independent Business, the lobby for the nation's small businesses, said on Thursday that it was “unable to support” the bill as released, due to concerns about the pass-through provisions.

How did a plan to simplify the tax code become such a mess? Blame the first principles of the proposal.

Before the last major tax reform in 1986, Ronald Reagan’s Treasury Department set out to pass an economically rational, deficit-neutral, bipartisan bill. The modern Republican Party, however, is starting from a principle that isn’t bipartisan, deficit-neutral, or economically rational at all: that, with corporate profits and the stock market at all-time highs, America’s largest corporations deserve a $2 trillion tax cut.
 
Oh yeah the idea that this will simplify corporate tax? That's a real knee-slapper.
 

So what is the maze of caveats that will make life hell? Pretty sloppy article to call that out as a failure but not even attempt to mention what they are. Typical "just believe us, we're right" garbage from 923's Atlantic. How do they know it is a maze that will make life hell if they clearly don't even know what they are?
 
you know, there was a lot of stuff Obama did that i wasn't a fan...but this group is bat shit crazy, sleazy, corrupt and just pfft.

embarrassing really.
 
So what is the maze of caveats that will make life hell? Pretty sloppy article to call that out as a failure but not even attempt to mention what they are. Typical "just believe us, we're right" garbage from 923's Atlantic. How do they know it is a maze that will make life hell if they clearly don't even know what they are?

I googled it for you and found a pretty good summary in about 45 seconds. https://www.bloomberg.com/news/articles/2017-11-03/trump-tax-bill-gives-cuts-in-pass-through-rule-loophole-killers

Under the bill, many service providers—doctors, lawyers, accountants, and people in fields like financial services and the performing arts—are assumed to be excluded from the pass-through rate. Other pass-through businesses would have 70 percent of their income classified as wages, subject to a higher federal rate and to Social Security and Medicare payroll taxes. Just 30 percent of their income would get the low pass-through rate.

Business owners could hire accountants to challenge these assumptions. A business could prove to the Internal Revenue Service that it deserves to pay the lower rate on its pass-through income based on how much capital it has invested.

This is where the complications come in. The bill offers a series of formulas to determine how much of a business’s income is subject to the pass-through rate, and they’re already making accountants’ heads swim.

“It’s way too complicated at this point,” said Johanna Fox Turner, a CPA and financial planner at Fox & Co. Wealth Management in Kentucky who also specializes in doctors. “I just cannot figure out how they’re going to get all that to work.”
 
Why are certain service providers treated differently than other earners of income? Why should an interior designer be able to take advantage of this but not a lawyer or an accountant?
 
If Ms. Fox Turner's head is swimming from a "series of formulas", then she probably shouldn't be an accountant.
 
Why are certain service providers treated differently than other earners of income? Why should an interior designer be able to take advantage of this but not a lawyer or an accountant?

The rationale is probably because a lawyer/accountant/doctor is more than likely setting him/herself up as a pass through IC but the capital investment is being made by a corporate group. The ways to "challenge the assumptions" to get the passthrough treatment are probably just proof that the service provider is in fact a true solo practitioner who made the capital investment himself. May be too difficult for Ms. Fox Turner to follow though.
 
I can see the rubes buying that but for the life of me would never understand a lawyer believing that. Tax law is one of the most complicated parts of law with good reason.
 
I've already mid-interpreted that clause 3 times in the past 24 hours. Arguing that this is going to be simple to figure out is silly.
 
Sure, but let's drop the charade that this is a tax "simplification" bill.

It does simplify it in terms of most people and the system as a whole. That certain portions have to follow some requirements to prevent obvious abuse opportunities ("loopholes" for the rubes) doesn't negate that overall simplification.
 
It does simplify it in terms of most people and the system as a whole. That certain portions have to follow some requirements to prevent obvious abuse opportunities ("loopholes" for the rubes) doesn't negate that overall simplification.

and you are basing this judgment on what exactly?

Anyway, I just got a nice email from a lobbying organization for Big Real Estate patting themselves on the back for the great job they did to keep 1031 exchanges, keep SALT deductions for business, keep the carried interest tax expenditure, no limits on interest deduction for the real estate industry, and get that sweet 25% rate for pass-throughs. But this is all for the middle class and "simplification".

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