The estate tax is such a red herring. Right now the first $5 million is exempt, not subject to federal estate taxes. So well to do parents living in a $3 million Mc Mansion can give their kids another $7 million in an estate (along with the house) before the Fed estate tax kicks in.

However if you live in a red (GOP) state you may find that the estate tax kicks in at a much lower value. In Louisiana it cost me $1K in estate fees (NOTE red states have fees not taxes) to give my wife's truck (she got from her parents) to her daughter. Louisiana refused to accept the registration transfer until the truck had been probated in Louisiana, even though my wife had been a California resident for the last 20 years and the truck had been in California the last 5 years.

In the red states, death taxes are very real and a burden to all income levels. What escapes the GOP electorate is that it is not a Federal estate tax that hurts their wallet but a local estate tax enacted by the same politicians that vow to eliminate the Federal death tax (which is by comparison is insignificant for most of the electorate). Bait and switch politics at it's very best.

dajo9 said:

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wifeisafurd said:

---

sycasey said:

---

I predict this tax reform effort will go about as well as the health care repeal effort.

---

I predict that some tax bill will pass, because the GOP survival is dependent on same. The corporate tax reduction likely is bipartisan, will be permanent and not even face reconciliation (the corporate tax also is small percentage of tax revenues (around 9%) and most liberal economists (the Reich's of the world) agree that a cut is necessary to be competitive. As for reconciliation, my guess is that the personal tax cuts (note no tax rate cut at highest rates, but it take longer to reach the higher rates, and the lowest rate is increased, but there are new credits and standard deduction to offset the rate gain) will go into effect and certain deductions and benefits will be removed. None of this will improve simplification. The big dollar controversy will be a separate lower tax rate for "small business", whatever that means, which has high growth potential, but also real risk of deficits due to revenue reductions (there are a lot of small businesses). Not sure this change passes. The end of the inheritance tax is a symbolic, high controversy, low impact proposal, as relatively little revenue is raised from this tax, and the tax can be avoided for the most part through good tax planning. GOP probably would give this up.

---

Please provide a source for Robert Reich advocating for lower corporate tax rates.

I don't believe there are 60 votes in the Senate for a decrease in the corporate tax rate. Furthermore, I think any democratic Senator that votes in favor would be more likely to lose their next election.

---

Reich advocates eliminating the corporate income tax actually. He would do what another poster said, which is tax the shareholders with a capital gain. To quote Reich:

"It's time we eliminated the corporate income tax and made up the shortfall by increasing capital gains taxes. Here's the logic: First, the corporate income tax favors big companies that are able to shift their income abroad and engage in other tax-avoidance activities, while harming small companies that can't do any of this and therefore suffer a competitive disadvantage. Yet small companies are the engines of job growth in America.

Second, the people who actually pay the corporate income tax should properly be the company's shareholders, who are the legal owners of the company and who benefit from increases in its income. But in many cases, depending on the structure of the market, a significant share of the actual burden of paying the corporate income tax is often borne instead by employees in the form of lower wages, or consumers in the form of higher prices."

March 19, 2014 article in Economy. You can Google his other articles or follow him on Linked-In.

As for the permanence of corporate tax reduction, I was quoting the NYT. They could be wrong. But currently the current track is to not include the corporate tax reduction in reconciliation. That could change obviously.

So in case you missed the headline on the NY Times on November 2, 2017 it reads in large bold print:

Republican Plan Delivers Permanent Corporate Tax Cut

sp4149 said:

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The estate tax is such a red herring. Right now the first $5 million is exempt, not subject to federal estate taxes. So well to do parents living in a $3 million Mc Mansion can give their kids another $7 million in an estate (along with the house) before the Fed estate tax kicks in.

However if you live in a red (GOP) state you may find that the estate tax kicks in at a much lower value. In Louisiana it cost me $1K in estate fees (NOTE red states have fees not taxes) to give my wife's truck (she got from her parents) to her daughter. Louisiana refused to accept the registration transfer until the truck had been probated in Louisiana, even though my wife had been a California resident for the last 20 years and the truck had been in California the last 5 years.

In the red states, death taxes are very real and a burden to all income levels. What escapes the GOP electorate is that it is not a Federal estate tax that hurts their wallet but a local estate tax enacted by the same politicians that vow to eliminate the Federal death tax (which is by comparison is insignificant for most of the electorate). Bait and switch politics at it's very best.

---

If this was aimed at my earlier comment, it was only about the federal estate tax, not state taxes. I don't know enough about different state estate taxes to comment.

NYCGOBEARS said:

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This tax bill is idiotic no matter what side of the aisle you're on.

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I think Oak and I disagree. There are some winners and losers. As I said elsewhere, I probably lose or break even depending on what passes, but my friend in Northwest Arkansas who has around the same level income wins big.

wifeisafurd said:

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dajo9 said:

---

wifeisafurd said:

---

sycasey said:

---

I predict this tax reform effort will go about as well as the health care repeal effort.

---

I predict that some tax bill will pass, because the GOP survival is dependent on same. The corporate tax reduction likely is bipartisan, will be permanent and not even face reconciliation (the corporate tax also is small percentage of tax revenues (around 9%) and most liberal economists (the Reich's of the world) agree that a cut is necessary to be competitive. As for reconciliation, my guess is that the personal tax cuts (note no tax rate cut at highest rates, but it take longer to reach the higher rates, and the lowest rate is increased, but there are new credits and standard deduction to offset the rate gain) will go into effect and certain deductions and benefits will be removed. None of this will improve simplification. The big dollar controversy will be a separate lower tax rate for "small business", whatever that means, which has high growth potential, but also real risk of deficits due to revenue reductions (there are a lot of small businesses). Not sure this change passes. The end of the inheritance tax is a symbolic, high controversy, low impact proposal, as relatively little revenue is raised from this tax, and the tax can be avoided for the most part through good tax planning. GOP probably would give this up.

---

Please provide a source for Robert Reich advocating for lower corporate tax rates.

I don't believe there are 60 votes in the Senate for a decrease in the corporate tax rate. Furthermore, I think any democratic Senator that votes in favor would be more likely to lose their next election.

---

Reich advocates eliminating the corporate income tax actually. He would do what another poster said, which is tax the shareholders with a capital gain. To quote Reich:

"It's time we eliminated the corporate income tax and made up the shortfall by increasing capital gains taxes. Here's the logic: First, the corporate income tax favors big companies that are able to shift their income abroad and engage in other tax-avoidance activities, while harming small companies that can't do any of this and therefore suffer a competitive disadvantage. Yet small companies are the engines of job growth in America.

Second, the people who actually pay the corporate income tax should properly be the company's shareholders, who are the legal owners of the company and who benefit from increases in its income. But in many cases, depending on the structure of the market, a significant share of the actual burden of paying the corporate income tax is often borne instead by employees in the form of lower wages, or consumers in the form of higher prices."

March 19, 2014 article in Economy. You can Google his other articles or follow him on Linked-In.

As for the permanence of corporate tax reduction, I was quoting the NYT. They could be wrong. But currently the current track is to not include the corporate tax reduction in reconciliation. That could change obviously.

---

If Reich supports lower corporate taxes in conjunction with higher capital gains taxes, that's a pretty big caveat you may want to have included in your original post. Without higher capital gains taxes, Reich has made it clear he opposes a corporate tax cut. Your attempt at showing bipartisan support requires very misleading details.

Sebastabear said:

---

dajo9 said:

---

wifeisafurd said:

---

sycasey said:

---

I predict this tax reform effort will go about as well as the health care repeal effort.

---

I predict that some tax bill will pass, because the GOP survival is dependent on same. The corporate tax reduction likely is bipartisan, will be permanent and not even face reconciliation (the corporate tax also is small percentage of tax revenues (around 9%) and most liberal economists (the Reich's of the world) agree that a cut is necessary to be competitive. As for reconciliation, my guess is that the personal tax cuts (note no tax rate cut at highest rates, but it take longer to reach the higher rates, and the lowest rate is increased, but there are new credits and standard deduction to offset the rate gain) will go into effect and certain deductions and benefits will be removed. None of this will improve simplification. The big dollar controversy will be a separate lower tax rate for "small business", whatever that means, which has high growth potential, but also real risk of deficits due to revenue reductions (there are a lot of small businesses). Not sure this change passes. The end of the inheritance tax is a symbolic, high controversy, low impact proposal, as relatively little revenue is raised from this tax, and the tax can be avoided for the most part through good tax planning. GOP probably would give this up.

---

Please provide a source for Robert Reich advocating for lower corporate tax rates.

I don't believe there are 60 votes in the Senate for a decrease in the corporate tax rate. Furthermore, I think any democratic Senator that votes in favor would be more likely to lose their next election.

---

There aren't 60 votes for this in the senate, but they only need 50. That was the point of the whole budget reconciliation song and dance a few weeks ago. As long as they keep this under $1.5 tn no filibuster possible.

---

wiaf said the corporate tax reduction would be permanent. For it to be permanent I believe they need 60 votes or offsetting revenue increases. Otherwise, it sunsets after 10 years as the GWB taxes did. That's my understanding at least.

wifeisafurd said:

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sp4149 said:

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The estate tax is such a red herring. Right now the first $5 million is exempt, not subject to federal estate taxes. So well to do parents living in a $3 million Mc Mansion can give their kids another $7 million in an estate (along with the house) before the Fed estate tax kicks in.

However if you live in a red (GOP) state you may find that the estate tax kicks in at a much lower value. In Louisiana it cost me $1K in estate fees (NOTE red states have fees not taxes) to give my wife's truck (she got from her parents) to her daughter. Louisiana refused to accept the registration transfer until the truck had been probated in Louisiana, even though my wife had been a California resident for the last 20 years and the truck had been in California the last 5 years.

In the red states, death taxes are very real and a burden to all income levels. What escapes the GOP electorate is that it is not a Federal estate tax that hurts their wallet but a local estate tax enacted by the same politicians that vow to eliminate the Federal death tax (which is by comparison is insignificant for most of the electorate). Bait and switch politics at it's very best.

---

If this was aimed at my earlier comment, it was only about the federal estate tax, not state taxes. I don't know enough about different state estate taxes to comment.

---

My intent was that many red state voters think 'estate tax' as a Federal tax, when the Federal tax really doesn't impact them much compared to their state's estate fees.

I suppose as a protest one could leave assets only to those who don't live in a red state with high estate taxes.

It does bother me that when I die, the state of Louisiana will get big bucks while nothing from a third generation Californian will stay in California.

How sheltered do you have to be to think that rich people are not getting taxed more. I may not be a billionaire, but I would consider myself rich and I will be getting taxed more. Why are options and the excess dilution as opposed to RSUs, RSAs or cash so sacred? Because you have to make the tech people wealthy and not taxed more? Many companies have gone to restricted stock awards or restricted stock units anyway. I understand that sweat equity for hedge fund getting taxed lower is unfair but to say that earnings I make in investing my already taxed capital at a lower rate is unfair is just arbitrary determination. Why is it unfair? Are you saying that any capital gain on the sale of your house should be taxed as ordinary income?

This is an example of the elitist denial. Sure, only the smart educated folks like you know the difference between long term capital gains and ordinary income. It can't be that there is benefit to encouraging long term investment of capital using already taxed income.

calbear93 said:

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How sheltered do you have to be to think that rich people are not getting taxed more. I may not be a billionaire, but I would consider myself rich and I will be getting taxed more. Why are options and the excess dilution as opposed to RSUs, RSAs or cash so sacred? Because you have to make the tech people wealthy and not taxed more? Many companies have gone to restricted stock awards or restricted stock units anyway. I understand that sweat equity for hedge fund getting taxed lower is unfair but to say that earnings I make in investing my already taxed capital at a lower rate is unfair is just arbitrary determination. Why is it unfair? Are you saying that any capital gain on the sale of your house should be taxed as ordinary income?

---

There are all kinds of studies that indicate, on average, the wealthy, particularly owners, are getting the most benefit. Your specific situation may or may not be consistent with the average.

http://www.latimes.com/politics/washington/la-na-pol-essential-washington-updates-upper-income-earners-get-biggest-1509999075-htmlstory.html

calbear93 said:

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This is an example of the elitist denial. Sure, only the smart educated folks like you know the difference between long term capital gains and ordinary income. It can't be that there is benefit to encouraging long term investment of capital using already taxed income.

---

Here goes our 7 figure income, Harvard educated lawyer calling other's elitist again.

You really think a poll of the average American can explain the difference between how payroll income and capital gains are taxed? Of course you don't.

I am with you. I am not a big fan of this proposal either, especially if it creates bigger deficit. I am for reducing corporate tax rate and am interested in finding revenue to offset the corporate tax rate reduction.

And I don't have a problem with long term capital gains being taxed at a lower rate. Unless you would like capital gains to be taxable even before the gain is liquidated, people can defer gains indefinitely through cash management like secured revolver at a very low rate. You can increase capital gains and owners are still going to pay very little for ownership as long as there are cash management strategies through debt.

Income and education do not make you elitist. Thinking that the regular folks are ignorant and need to be led like little children is elitist. Yeah, I would take that bet that most working folks would know the difference between capital gain and ordinary income. Most regular folks file tax returns and own homes.

calbear93 said:

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How sheltered do you have to be to think that rich people are not getting taxed more. I may not be a billionaire, but I would consider myself rich and I will be getting taxed more. Why are options and the excess dilution as opposed to RSUs, RSAs or cash so sacred? Because you have to make the tech people wealthy and not taxed more? Many companies have gone to restricted stock awards or restricted stock units anyway. I understand that sweat equity for hedge fund getting taxed lower is unfair but to say that earnings I make in investing my already taxed capital at a lower rate is unfair is just arbitrary determination. Why is it unfair? Are you saying that any capital gain on the sale of your house should be taxed as ordinary income?

---

As I noted originally, RSUs have the same problem as options. They are both deferred compensation and both taxed at vesting. And again all of this works great for public companies. It does not, however, work for private companies where there is no public market in which to sell shares to pay taxes. And private companies are what is driving the vast majority of the growth in recent years. If you are pro-growth and pro-business this plan is an abomination.

What part of the tax reform do you find objectionable? Any provision in particular or is it that certain people even richer than you may benefit as well?

Most RSUs are taxed when they are vested since the underlying shares are delivered when vested. Certain deferred compensation provides for different vesting and delivery date for RSUs, but that is rare.

calbear93 said:

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Why are options and the excess dilution as opposed to RSUs, RSAs or cash so sacred?

---

I don't think options are sacred, I think our tax code frequently recognizes the difference between a realized gain and an unrealized gain. The notion of taxing holders of options upon vesting and not upon exercise doesn't seem consistent with how we treat other equity holders. If all we were talking about was discontinuing the favorable treatment of ISOs vs NSOs, I think we would be having a much different discussion.

If real estate businesses, hedge funds or the businesses of other participants in Trump's kleptocracy thrived on options, they would receive the more favorable capital gains treatment. Because they are synonymous with silicon valley liberals, they are receiving what is essentially the worst tax treatment imaginable - taxable even before any gain is realizable (given that many of these options are in illiquid companies).

Then extend the vesting, with acceleration upon severance. If you are saying that there is no market, no point in earlier vesting. However, there surely is a market for shares of private companies like Uber.

calbear93 said:

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Then extend the vesting, with acceleration upon severance. If you are saying that there is no market, no point in earlier vesting. However, there surely is a market for shares of private companies like Uber.

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I think a lot of companies would like to see this happen since it would reduce dilution (particularly now with extended exercise periods being all the rage). Of course Uber has a market but many companies don't. Even if there would theoretically be a market for a company's securities, many companies have transfer restrictions. What is the point of changing the taxation of options? It's not to raise tax revenue because that will never happen. It's clearly to punish SV private companies that use options for compensation. If all they wanted to do was ensure that everyone is paying ordinary income on their gains, they could simply remove ISO treatment which would more or less have that impact.

Disagree. When your in-the-money options vests, the only reason you haven't exercised is that you want to invest longer. If tax were due when vested, nothing stopping you from exercising and selling (like you would do when restricted stock vests and you have to sell by either having the company withhold shares or by selling in the open market) enough to pay taxes. Options got an unequal favorable treatment because options were treated as qualified deferred compensation under the tax laws.

If you are not holding control securities, Rule 144 would be readily available. Besides, most people who would make market for and buy shares in private companies are accredited investors.

No one uses ISO because of the limitations on the company's tax deduction.

calbear93 said:

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Most RSUs are taxed when they are vested since the underlying shares are delivered when vested. Certain deferred compensation provides for different vesting and delivery date for RSUs, but that is rare.

---

This is quickly getting into the area of tax reg nerdom, so I'm going to apologize to anyone still reading this chain, but the answer to your question is that the RSUs used by private companies are in fact quite different. Private tech companies, consumer product companies, etc. mostly use "Private Company RSUs" sometimes referred to as "Facebook Style RSUs." These essentially have a dual trigger provision, both of which must be met for the RSUs to be taxable. The second trigger is a change of control or an IPO. In essence, it's just a way to replicate the tax effect of stock options by deferring the taxes until you have a liquid market in which to sell shares and pay your taxes. These are both "deferred comp" and blown up under the tax reform package.

And as to your other point that people can always sell their private stock at an Uber, for example, this may occasionally be true, but for every Uber there are 100 or 1,000 small companies without a liquid market. Even at Uber, doing a third party tender more than once or twice a year would be challenging.

But look, this is just too much in the weeds. Bottom line, I object to the tax code being revised to pick winner and losers (when I thought the point of this reform was the opposite), I object to exploding the deficit and I object to further complicating the code in the guise of "simplification." This thing is a mess.

Agree with you that, unless each cut is offset by equal dollar increase and does not slow growth, I am against any tax reform.

calbear93 said:

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No one uses ISO because of the limitations on the company's tax deduction.

---

I can assure you venture backed companies still issue ISOs. To the extent you are talking about public companies and a subset of the most successful private VC backed companies, I would agree with your statements but it's not reflective of the vast majority of private companies I'm familiar with.

That's fair. I'm biased in my public company experience.

calbear93 said:

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This is an example of the elitist denial. Sure, only the smart educated folks like you know the difference between long term capital gains and ordinary income. It can't be that there is benefit to encouraging long term investment of capital using already taxed income.

---

Quit with the "elitist" crap. It is a statistical fact that a large percentage of people don't know that investment income is taxed at a lower rate than wages. I'd say it is elitist to think that other people sit around thinking about tax rates that don't apply to them.

calbear93 said:

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How sheltered do you have to be to think that rich people are not getting taxed more. I may not be a billionaire, but I would consider myself rich and I will be getting taxed more. Why are options and the excess dilution as opposed to RSUs, RSAs or cash so sacred? Because you have to make the tech people wealthy and not taxed more? Many companies have gone to restricted stock awards or restricted stock units anyway. I understand that sweat equity for hedge fund getting taxed lower is unfair but to say that earnings I make in investing my already taxed capital at a lower rate is unfair is just arbitrary determination. Why is it unfair? Are you saying that any capital gain on the sale of your house should be taxed as ordinary income?

---

Upper middle class and moderately wealthy get taxed by far the most in terms of rate. The very wealthy do not get taxed more by a percentage of income. I remember laughing at Republicans who were ripping into Romney because he had paid a low tax rate when easy back of the napkin math showed that he paid the capital gains rate adjusted for the fact that he tithes. It should have been obvious to any Republican politician what tax rate Romney would be paying since it was exactly the tax rate they advocate for people like Romney.

Why should the determining factor of how income gets taxed be whether you go out and do a job vs. you invest money and earn interest. So what if you paid taxes on the capital. You earned income. You haven't paid taxes on that yet. IMO all income should be treated the same. And the fact is that taxing investment income at a lower rate is a huge tax give to the wealthy as they have by far the most investment income.

I'm fine with paying capital gain on the sale of my house. Now if people want to make certain exceptions for sale of one's residence to encourage upward mobility in the housing market, that is a policy issue, but ultimately I should pay all capital gains taxes from the date of my first home purchase to the last sale of the last property whether that is because I chose not to roll it over to a higher priced house or I died and my heirs sold the property.

If income is going to be taxed, it should all be taxed.

As for your question to another about what they are upset about, I'll tell you what I'm upset about.

I'm fine paying higher taxes so someone who has less than I do can pay less.

I'm fine paying higher taxes so we can provide for more infrastructure or other benefits that only the government can provide.

I'm fine with cutting taxes across the board and equaling that with a cut in spending. I might not like it, but it is fair.

I'm NOT fine with paying more taxes so it can go to fund a tax cut for people who make more money than I do. Especially when many of those people are already paying a lower effective tax rate than I do by a wide margin. (for instance, the previously mentioned Mitt Romney pays a lower tax rate than I do).

I'm NOT fine with tax policy that very specifically targets populations based on their correlation with political views.

Sebastabear said:

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I think you could append "ifornia"to the end of your title and be completely accurate.

Hard to imagine Congress could come up with a better bill to ruin California and the economic engine it provides to the entire country if not the world if you tried. Let's see...

1. No more ability to deduct state taxes = massive tax increase on high earners

2. Property tax deductions capped at $10k means (given our home prices) most people who itemize and bought a home in LA or the Bay Area in the last decade lose a good sized sized deduction.

3. Maximimum mortgage deduction halved. Live in Kansas? Not a problem. Live in CA? See point 2.

4. Loss of ability to deduct student debt? Luckily we don't have an educated workforce or anything.

5. And my favorite... Stock options and restricted stock units (basically the magic juice that makes the Valley economy run) are gone. These things are now immediately taxable for the employee on vesting. Not a problem if you are an employee of a public company since you can just sell some of your stock in the market to pay your tax bill, but if you work for a private company like Uber or Airbnb or Palantir - you know basically the companies that have generated most of the growth over the past five years - you are screwed.

So all in all a disaster for the state and for all of the States who feed off of us. They might not see it now, but they will.

Any Ca rep voting for this should be drummed out of office.

---

Anyone catch the new tax on college endowments? Apaprently the threshold was increased so maybe Cal with its low endowment might be safe. However, if the tax applies to UC as a whole, kiss 1.5% of the UC budget good bye (am I reading this right?)! What next, a tax on late night comics? What is the pubic policy behind this one, other than colleges are seen as liberal bastions? Why colleges and not other non-profits with huge endowments?

BTW, is the charitable deduction still being eliminated in an effort to really slam higher eduction?

A qualification is that the 7 figure attorney who is being vilified (and everyone else making that many zeros) has most of their itemized deductions phased out in any event. So again, as far as this board is concerned, it is the California professional making between 100K to 500K who really being shafted the most.

dajo9 said:

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wifeisafurd said:

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dajo9 said:

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wifeisafurd said:

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sycasey said:

---

I predict this tax reform effort will go about as well as the health care repeal effort.

---

I predict that some tax bill will pass, because the GOP survival is dependent on same. The corporate tax reduction likely is bipartisan, will be permanent and not even face reconciliation (the corporate tax also is small percentage of tax revenues (around 9%) and most liberal economists (the Reich's of the world) agree that a cut is necessary to be competitive. As for reconciliation, my guess is that the personal tax cuts (note no tax rate cut at highest rates, but it take longer to reach the higher rates, and the lowest rate is increased, but there are new credits and standard deduction to offset the rate gain) will go into effect and certain deductions and benefits will be removed. None of this will improve simplification. The big dollar controversy will be a separate lower tax rate for "small business", whatever that means, which has high growth potential, but also real risk of deficits due to revenue reductions (there are a lot of small businesses). Not sure this change passes. The end of the inheritance tax is a symbolic, high controversy, low impact proposal, as relatively little revenue is raised from this tax, and the tax can be avoided for the most part through good tax planning. GOP probably would give this up.

---

Please provide a source for Robert Reich advocating for lower corporate tax rates.

I don't believe there are 60 votes in the Senate for a decrease in the corporate tax rate. Furthermore, I think any democratic Senator that votes in favor would be more likely to lose their next election.

---

Reich advocates eliminating the corporate income tax actually. He would do what another poster said, which is tax the shareholders with a capital gain. To quote Reich:

"It's time we eliminated the corporate income tax and made up the shortfall by increasing capital gains taxes. Here's the logic: First, the corporate income tax favors big companies that are able to shift their income abroad and engage in other tax-avoidance activities, while harming small companies that can't do any of this and therefore suffer a competitive disadvantage. Yet small companies are the engines of job growth in America.

Second, the people who actually pay the corporate income tax should properly be the company's shareholders, who are the legal owners of the company and who benefit from increases in its income. But in many cases, depending on the structure of the market, a significant share of the actual burden of paying the corporate income tax is often borne instead by employees in the form of lower wages, or consumers in the form of higher prices."

March 19, 2014 article in Economy. You can Google his other articles or follow him on Linked-In.

As for the permanence of corporate tax reduction, I was quoting the NYT. They could be wrong. But currently the current track is to not include the corporate tax reduction in reconciliation. That could change obviously.

---

If Reich supports lower corporate taxes in conjunction with higher capital gains taxes, that's a pretty big caveat you may want to have included in your original post. Without higher capital gains taxes, Reich has made it clear he opposes a corporate tax cut. Your attempt at showing bipartisan support requires very misleading details.

---

Obviously you guys are way more intelligent on this subject than me, so perhaps you can help me on this one regarding corporate taxes. According to the U.S. General Accountability Office, "In each year from 2006 to 2012, at least two-thirds of all active corporations had no federal income tax liability." For those that were profitable, they stated "For tax years 2008 to 2012, profitable large U.S. corporations paid, on average, U.S. federal income taxes amounting to about 14 percent of the pretax net income that they reported in their financial statements (for those entities included in their tax returns)." Here's the link: https://www.gao.gov/products/GAO-16-363

My question is, why do we need to reduce the corporate tax rate when it appears most companies are paying nothing or those that are paying actually are paying at a rate well below the headline one to begin with? Seems to me we should be eliminating the loopholes that allow corporations to avoid paying taxes all together, no?

dajo9 said:

---

wifeisafurd said:

---

dajo9 said:

---

wifeisafurd said:

---

sycasey said:

---

I predict this tax reform effort will go about as well as the health care repeal effort.

---

I predict that some tax bill will pass, because the GOP survival is dependent on same. The corporate tax reduction likely is bipartisan, will be permanent and not even face reconciliation (the corporate tax also is small percentage of tax revenues (around 9%) and most liberal economists (the Reich's of the world) agree that a cut is necessary to be competitive. As for reconciliation, my guess is that the personal tax cuts (note no tax rate cut at highest rates, but it take longer to reach the higher rates, and the lowest rate is increased, but there are new credits and standard deduction to offset the rate gain) will go into effect and certain deductions and benefits will be removed. None of this will improve simplification. The big dollar controversy will be a separate lower tax rate for "small business", whatever that means, which has high growth potential, but also real risk of deficits due to revenue reductions (there are a lot of small businesses). Not sure this change passes. The end of the inheritance tax is a symbolic, high controversy, low impact proposal, as relatively little revenue is raised from this tax, and the tax can be avoided for the most part through good tax planning. GOP probably would give this up.

---

Please provide a source for Robert Reich advocating for lower corporate tax rates.

I don't believe there are 60 votes in the Senate for a decrease in the corporate tax rate. Furthermore, I think any democratic Senator that votes in favor would be more likely to lose their next election.

---

Reich advocates eliminating the corporate income tax actually. He would do what another poster said, which is tax the shareholders with a capital gain. To quote Reich:

"It's time we eliminated the corporate income tax and made up the shortfall by increasing capital gains taxes. Here's the logic: First, the corporate income tax favors big companies that are able to shift their income abroad and engage in other tax-avoidance activities, while harming small companies that can't do any of this and therefore suffer a competitive disadvantage. Yet small companies are the engines of job growth in America.

Second, the people who actually pay the corporate income tax should properly be the company's shareholders, who are the legal owners of the company and who benefit from increases in its income. But in many cases, depending on the structure of the market, a significant share of the actual burden of paying the corporate income tax is often borne instead by employees in the form of lower wages, or consumers in the form of higher prices."

March 19, 2014 article in Economy. You can Google his other articles or follow him on Linked-In.

As for the permanence of corporate tax reduction, I was quoting the NYT. They could be wrong. But currently the current track is to not include the corporate tax reduction in reconciliation. That could change obviously.

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If Reich supports lower corporate taxes in conjunction with higher capital gains taxes, that's a pretty big caveat you may want to have included in your original post. Without higher capital gains taxes, Reich has made it clear he opposes a corporate tax cut. Your attempt at showing bipartisan support requires very misleading details.

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Actually, your misrepresenting his position. He wants to eliminate corporate taxes in their ENTIRETY and instead have taxation at one level at capital gain rates. While that approach makes sense to me (why penalize companies for using a corporate approach versus an LLC for example, though I'm not sure of the justification for capital gain treatment, and would have all pass through income taxed at ordinary income rates), most economists are not supporting the Reich approach of a single level of taxation. I quoted him because he is a well known liberal to cal folks and his approach is extreme in that it is a huge reduction of taxes, by eliminating the double taxation on income and then giving taxpayers capital gains treatment. Under consideration simply is reducing the corporate tax rates 15% and dividends still taxed at ordinary income rates. Again, unless you have some other source you wold like to quote, the current approach is too make the corporate rate change permanent and not included in reconciliation, as the NYT and various other sources have stated.

dajo9 said:

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Sebastabear said:

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dajo9 said:

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wifeisafurd said:

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sycasey said:

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I predict this tax reform effort will go about as well as the health care repeal effort.

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I predict that some tax bill will pass, because the GOP survival is dependent on same. The corporate tax reduction likely is bipartisan, will be permanent and not even face reconciliation (the corporate tax also is small percentage of tax revenues (around 9%) and most liberal economists (the Reich's of the world) agree that a cut is necessary to be competitive. As for reconciliation, my guess is that the personal tax cuts (note no tax rate cut at highest rates, but it take longer to reach the higher rates, and the lowest rate is increased, but there are new credits and standard deduction to offset the rate gain) will go into effect and certain deductions and benefits will be removed. None of this will improve simplification. The big dollar controversy will be a separate lower tax rate for "small business", whatever that means, which has high growth potential, but also real risk of deficits due to revenue reductions (there are a lot of small businesses). Not sure this change passes. The end of the inheritance tax is a symbolic, high controversy, low impact proposal, as relatively little revenue is raised from this tax, and the tax can be avoided for the most part through good tax planning. GOP probably would give this up.

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Please provide a source for Robert Reich advocating for lower corporate tax rates.

I don't believe there are 60 votes in the Senate for a decrease in the corporate tax rate. Furthermore, I think any democratic Senator that votes in favor would be more likely to lose their next election.

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There aren't 60 votes for this in the senate, but they only need 50. That was the point of the whole budget reconciliation song and dance a few weeks ago. As long as they keep this under $1.5 tn no filibuster possible.

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wiaf said the corporate tax reduction would be permanent. For it to be permanent I believe they need 60 votes or offsetting revenue increases. Otherwise, it sunsets after 10 years as the GWB taxes did. That's my understanding at least.

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That is all correct. News sources are reporting that the plan is to have the corporate tax cuts permanent which means supporters must think they have at least 60 senators. Note this can change.

HKBear97! said:

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dajo9 said:

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wifeisafurd said:

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dajo9 said:

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wifeisafurd said:

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sycasey said:

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I predict this tax reform effort will go about as well as the health care repeal effort.

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I predict that some tax bill will pass, because the GOP survival is dependent on same. The corporate tax reduction likely is bipartisan, will be permanent and not even face reconciliation (the corporate tax also is small percentage of tax revenues (around 9%) and most liberal economists (the Reich's of the world) agree that a cut is necessary to be competitive. As for reconciliation, my guess is that the personal tax cuts (note no tax rate cut at highest rates, but it take longer to reach the higher rates, and the lowest rate is increased, but there are new credits and standard deduction to offset the rate gain) will go into effect and certain deductions and benefits will be removed. None of this will improve simplification. The big dollar controversy will be a separate lower tax rate for "small business", whatever that means, which has high growth potential, but also real risk of deficits due to revenue reductions (there are a lot of small businesses). Not sure this change passes. The end of the inheritance tax is a symbolic, high controversy, low impact proposal, as relatively little revenue is raised from this tax, and the tax can be avoided for the most part through good tax planning. GOP probably would give this up.

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Please provide a source for Robert Reich advocating for lower corporate tax rates.

I don't believe there are 60 votes in the Senate for a decrease in the corporate tax rate. Furthermore, I think any democratic Senator that votes in favor would be more likely to lose their next election.

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Reich advocates eliminating the corporate income tax actually. He would do what another poster said, which is tax the shareholders with a capital gain. To quote Reich:

"It's time we eliminated the corporate income tax and made up the shortfall by increasing capital gains taxes. Here's the logic: First, the corporate income tax favors big companies that are able to shift their income abroad and engage in other tax-avoidance activities, while harming small companies that can't do any of this and therefore suffer a competitive disadvantage. Yet small companies are the engines of job growth in America.

Second, the people who actually pay the corporate income tax should properly be the company's shareholders, who are the legal owners of the company and who benefit from increases in its income. But in many cases, depending on the structure of the market, a significant share of the actual burden of paying the corporate income tax is often borne instead by employees in the form of lower wages, or consumers in the form of higher prices."

March 19, 2014 article in Economy. You can Google his other articles or follow him on Linked-In.

As for the permanence of corporate tax reduction, I was quoting the NYT. They could be wrong. But currently the current track is to not include the corporate tax reduction in reconciliation. That could change obviously.

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If Reich supports lower corporate taxes in conjunction with higher capital gains taxes, that's a pretty big caveat you may want to have included in your original post. Without higher capital gains taxes, Reich has made it clear he opposes a corporate tax cut. Your attempt at showing bipartisan support requires very misleading details.

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Obviously you guys are way more intelligent on this subject than me, so perhaps you can help me on this one regarding corporate taxes. According to the U.S. General Accountability Office, "In each year from 2006 to 2012, at least two-thirds of all active corporations had no federal income tax liability." For those that were profitable, they stated "For tax years 2008 to 2012, profitable large U.S. corporations paid, on average, U.S. federal income taxes amounting to about 14 percent of the pretax net income that they reported in their financial statements (for those entities included in their tax returns)." Here's the link: https://www.gao.gov/products/GAO-16-363

My question is, why do we need to reduce the corporate tax rate when it appears most companies are paying nothing or those that are paying actually are paying at a rate well below the headline one to begin with? Seems to me we should be eliminating the loopholes that allow corporations to avoid paying taxes all together, no?

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Good question. The effective corporate tax rate for Fortune 500 firms is around 20% per the GAO, and the 14% combined rate probably reflects small corps that make less money and pay a graduated rate.

There is not a huge drop in the amount of overall income tax revenue from the reduction in the corporate tax rates when compared to the huge tax revenue reductions contained in the individual changes (especially for flow though income). But the amounts are material for individual large corps. The rationale for the rate cut is to encourage repatriation of large dollars offshore, and to encourage the Apples of world to not offshore profits because US rates will now be more competitive with foreign rates. Another way of putting this is that the investment in greater than the tax savings (see my other post). There are other distortions that economists see in the corporate tax, but its not worth getting into here. What should be understood is there are huge revenue reductions in the proposed individual and flow through tax provisions that threaten huge deficits and the bet is taxation from economic growth will offset these revenue reductions. It is a roll of the dice from that standpoint. The other thing is many of the revenue enhancements seem aimed at liberal causes/high tax states, IMO.

HKBear97! said:

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My question is, why do we need to reduce the corporate tax rate when it appears most companies are paying nothing or those that are paying actually are paying at a rate well below the headline one to begin with? Seems to me we should be eliminating the loopholes that allow corporations to avoid paying taxes all together, no?

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Be careful, such talk makes the tax cut hawks nervous. Many of those countries that have "lower" corporate tax rates tax all income, not just profits, I think most corporations do not want a VAT, value added tax that they would have to pay whether profitable or not. Which would you rather pay, personal income tax or a 20% tax on your net wealth growth for the year? If you just make ends meet, you would never pay taxes even with incomes in 7, 8, 9 figures. I suspect that those corporations talking about the high corporate tax rates here would not want the tax structure changed to that of the "cheaper countries" where all corporations pay taxes.

One reason that the tax cuts will not bring all those trillions back to the US; Multi-national corporations are just that and foreign shareholders do not want the money to go back to the US. Now if our government wants to reduce corporate taxes so that more dividends can be sent overseas, they are fine with that. I doubt that the GOP proposal would get much traction if the public knew just how much foreigners would benefit, just the opposite of America First...

wifeisafurd said:

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Anyone catch the new tax on college endowments? Apaprently the threshold was increased so maybe Cal with its low endowment might be safe. However, if the tax applies to UC as a whole, kiss 1.5% of the UC budget good bye (am I reading this right?)! What next, a tax on late night comics? What is the pubic policy behind this one, other than colleges are seen as liberal bastions? Why colleges and not other non-profits with huge endowments?

BTW, is the charitable deduction still being eliminated in an effort to really slam higher eduction?

A qualification is that the 7 figure attorney who is being vilified (and everyone else making that many zeros) has most of their itemized deductions phased out in any event. So again, as far as this board is concerned, it is the California professional making between 100K to 500K who really being shafted the most.

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I think the college endowment tax is targeted at Harvard. IIRC, it would apply if assets were greater than $100,000 per student and only for private schools.