Random Politics & Religion #22

I do enjoy Scotch already.

I'm on a voluntarily detox with fruits and vegetables to make up for killing all those pesky brain cells. Pretty soon I'll be able to do basic math !

Actually I've gone like a month without drinking

Yeah I did that on a bet after watching homer do it on simpson's episode "duffless" in 1993... it was awful.

I also never drink alone cause God counts as my designated driver...

I also never drink alone cause God counts as my designated driver...

President Donald Trump on Wednesday is planning to unveil a proposal to cut the corporate tax rate to 15%, sharply reduce taxes on U.S. companies’ foreign profits and slash the top tax rate to 15% on so-called pass-through businesses, including many owner-operated companies, said White House officials familiar with the planning.

Mr. Trump also plans to include a tax break for child-care expenses, similar to the one he proposed during the campaign at the urging of his daughter, Ivanka, now a top White House adviser.

The president is set to unveil his proposed tax changes on Wednesday, but important issues were still being sorted out inside the White House on Tuesday.

By restating core pieces of his campaign-trail plan, Mr. Trump is trying to frame the coming tax debate in Congress. But parts of his plan clash with House Republicans’ ideas, and the party is embarking on the enormous task of trying to rewrite the tax code with major fault lines on tax rates, tax breaks and budgetary goals.Further, Mr. Trump may have trouble complying with the congressional procedure known as reconciliation, which allows a Republican party-line vote in the Senate, but which requires bills to avoid increasing budget deficits outside the 10-year budget window.

On income-tax rates for individuals,Mr. Trump has said he wants to reduce the number of brackets, but his advisers are still debating where to set the rates.



Treasury Secretary Steven Mnuchin is said to prefer a top rate of 37%, the people said. That’s below today’s top rate of 39.6% but above the 33% rate that Mr. Trump proposed during the campaign. That new top rate wouldn’t apply to pass-through income, which would get the special 15% rate.

White House officials also have agreed to propose a territorial tax system, the people said. In such a system, favored by large multinational firms, U.S. corporations would pay little or no tax on future foreign earnings. The nation’s current worldwide tax system levies all corporate income, regardless of where it is earned. Companies get credits for paying foreign taxes and can defer U.S. taxes until they repatriate foreign profits.

During the early part of the campaign, Mr. Trump proposed immediate taxation of U.S. companies’ worldwide earnings, but he was silent on that issue after he revised his tax plan during the general election campaign.

White House press secretary Sean Spicer declined to talk about details of the proposal. “We’ll have plenty of time to talk about that tomorrow,” he said on Tuesday.

Like his call for a 15% corporate tax rate, Mr. Trump’s proposal to slash rates for pass-through companies could pose problems for Congress. But matching the rates at 15% will win him support from small-business groups who say all business income should be treated equally, even though some corporate income is subject to a second layer of taxes on capital gains and dividends.

Lawmakers are likely to struggle to fit the 15% pass-through tax rate inside budgetary and procedural constraints, because it would add more than $1 trillion to the 10-year cost of any tax plan. It also will be hard for Congress to write rules to prevent people from converting higher-taxed wages into lower-taxed business profits.

“The chief beneficiaries are professionals that organize themselves in an LLC or partnership. Doctors, lawyers, consultants, lobbyists,” said Steve Rosenthal, a senior fellow at the Tax Policy Center, a project of the Urban Institute and Brookings Institution, in Washington. Mr. Rosenthal said the Internal Revenue Service would have trouble distinguishing between labor income and business profits. “Drafting a rule is challenging,” he said. “Administering a rule is impossible.”


Most U.S. businesses are pass-throughs, which are called that because their income and deductions pass through to their owners’ individual returns. That group includes many small firms, but it also includes large global law firms, hedge funds and Mr. Trump’s own real estate and branding businesses. These businesses don’t pay the corporate tax rate, which Mr. Trump also wants to lower to 15%.

House Republicans have proposed a 20% corporate tax rate and a 25% top tax rate on pass-through businesses, and those are both ambitious goals that require politically difficult tradeoffs. Mr. Trump’s plan is leaning toward even deeper cuts in tax rates, bigger budget deficits and bold estimates of the economic growth his tax cuts could generate.

“Well, that’s pretty aggressive, isn’t it?” Sen. John Cornyn (R., Texas) said of the 15% corporate tax-rate proposal. “We need to see the whole plan. I certainly am not going to draw any lines in the sand at this point. Obviously, deficits and debt are important, but economic growth is, too, and we need to get the economy growing again, which will also increase the amount of revenue generated for the Treasury.”

Mr. Trump’s plan will be silent on the controversial border-adjustment feature in House Republicans’ plan, which taxes imports and exempts exports, and has drawn intense objections from retailers and GOP senators.

The White House’s decision not to publicly endorse the provision isn’t surprising, given repeated concerns raised in recent weeks by top economic officials, including Mr. Mnuchin, over how the provision might ripple through currency markets, but it does underscore the stiff political headwinds facing the specific proposal, as well as other efforts to raise revenue more broadly.

Rep. Kevin Brady (R., Texas), the plan’s author, said Tuesday that he plans to keep pushing the idea, though with some changes and transition rules to soften the impact.

Sen. Debbie Stabenow (D., Mich.), said she was waiting to see the plan in writing for details about how it would affect small businesses, families and budget deficits. “There’s just a lot of questions,” she said. “And just throwing out an idea doesn’t mean they’ve actually got a plan put together.”

Even a temporary tax cut in the corporate tax rate as short as three years might cost the government revenue beyond 10 years and run afoul of those reconciliation rules. Lower rates mean that businesses will use fewer tax credits, said a senior aide to House Speaker Paul Ryan (R., Wis.). As a result, they will carry those credits forward and reduce revenues in future years.

According to an estimate by the Joint Committee on Taxation, prepared for Mr. Ryan, cutting the corporate tax rate to 20% for 2018, 2019 and 2020 would reduce federal revenue by $5.9 billion in 2027 and cause a “nonnegligible revenue loss” outside the budget window. That could trigger a challenge to using the reconciliation rules. According to the JCT, that effect occurs because of tax credits carrying forward and from companies accelerating repatriation of foreign profits to the years with lower tax rates.

That carry-forward effect could be altered if other policies were added to the corporate rate cut that would counterbalance it. But the analysis shows the challenge of creating a long-lasting corporate tax cut.

If a corporate tax cut were to expire after just a few years, “that would seem to me to be almost worse than doing nothing,” said Doug Holtz-Eakin, a conservative economist. The business community, having waited for years for Congress to address the corporate tax code, “would just give up hope in the U.S. political system.”

Sen. David Perdue (R., Ga.) said Tuesday he could live with a corporate tax rate between 15% and 20%, and he encouraged Mr. Trump to repeal the tax upon repatriation of foreign profits. “He’s going to give us a hint and an insight into what he’s going to really push for in this tax package,” Mr. Perdue said. “It galvanizes us about the priorities as opposed to sitting around talking about this deduction or that deduction. Let’s look at the bigger picture, and that is to make America grow again.”

Administration officials met late Tuesday with senior Republican lawmakers in the Capitol to discuss the tax plan.

“No question, the fundamental principles of tax reform—the White House, the Treasury, the Senate and the House all agree on what we’re trying to do, and we’re all committed to getting tax reform done,” Mr. Mnuchin told reporters afterward.

By focusing on reconciliation, Republicans have chosen a path that largely or entirely excludes Democrats.

Sen. Ron Wyden of Oregon, the top Democrat on the Senate Finance Committee, said Tuesday that he hadn’t heard from the White House on its tax plan. That’s a mistake, he said.

“You make it partisan only, and you don’t get both sides invested in it, people saw what a debacle you had on the first round of health policy,” Mr. Wyden said. “You can win by reconciliation, if you just decide to hardball your way through it, but the track record shows it’s not sustainable and it’s not successful.”

That new top rate wouldn’t apply to pass-through income, which would get the special 15% rate.

White House officials also have agreed to propose a territorial tax system, the people said. In such a system, favored by large multinational firms, U.S. corporations would pay little or no tax on future foreign earnings. The nation’s current worldwide tax system levies all corporate income, regardless of where it is earned. Companies get credits for paying foreign taxes and can defer U.S. taxes until they repatriate foreign profits.

even though some corporate income is subject to a second layer of taxes on capital gains and dividends.

Lawmakers are likely to struggle to fit the 15% pass-through tax rate inside budgetary and procedural constraints, because it would add more than $1 trillion to the 10-year cost of any tax plan.

Yeah I did that on a bet after watching homer do it on simpson's episode "duffless" in 1993... it was awful.

I wonder if Trump even has an idea on how to offset the costs of this "plan." Make the EU pay for it?

Tax cuts always pay for Themselves.

No, it doesn't. It will increase the debt unless you cut the budget.

That's not always true. People look at it as a zero-sum game and it's not.

Lower income taxes
Spur economic activity
Create more revenue

Pretty simple actually

Yes we all know how it is supposed to work on paper, however, in the real world, tax cuts rarely if ever pay for themselves. But like I said, that option is off the table, and thats all that really matters.