How to treat the millions of business owners whose income passes through to their individual tax returns is crucial to the Republican tax agenda
Republicans want to lower the tax rate for these businesses in conjunction with corporate rate cuts. But they haven’t decided what should be taxed at 25%, as a firm’s business income, and what should be taxed at 33%, as the owner’s wages at the firm.
The rules would affect millions of business owners whose income passes through to their individual tax returns rather than appearing on corporate filings. They include law firms, hedge funds and manufacturers and they are a powerful force in Republican politics.
.. If they apply the 25% liberally to pass-through income, the federal government could lose hundreds of billions of dollars in revenue and create a new form of widespread tax avoidance.
They could also create inequities, with law firm associates paying the 33% top rate on wages while their bosses, the partners, pay 25% on income for similar work.
.. Because House Republicans want to lower the corporate rate to 20%, pass-through firms want to follow that rate lower.
As Trump Unmuzzles the Economy, Rosy Scenario Will Become Economic Reality
President Obama’s first budget forecast roughly eight years ago was much rosier than Trump’s. And there was nary a peep of criticism from the mainstream-media outlets and the consensus of economists.
.. the Obama policy didn’t include a single economic-growth incentive. Not one. Instead, there was a massive $850 billion so-called spending stimulus (Whatever became of those spending multipliers?), a bunch of public-works programs that never got off the ground, and finally Obamacare, which really was one giant tax increase.
.. So eight years ago tax-and-spend was perfectly okay. And the projection that it would produce a 4 percent growth rate perfectly satisfied the economic consensus.
.. So here’s President Trump reaching back through history for a common-sense growth policy that worked in the 1960s, when JFK slashed marginal tax rates on individuals and corporations, and again in the 1980s, when Ronald Reagan slashed tax rates across-the-board and sparked a two-decade boom of roughly 4 percent real annual growth. But the economic consensus won’t buy Trump’s plan.
.. Most of the Trump critics point to the decline in productivity over the past 15 years. They say, unless productivity jumps to 2.5 percent or so, and unless labor-force participation rises, we can’t possibly have 3 to 4 percent growth.
.. “Take off the muzzle and the economy will roar.”
Paul Ryan: The Flimflam Man
the Ryan plan would reduce revenue by almost $4 trillion over the next decade. If you add these revenue losses to the numbers The Post cites, you get a much larger deficit in 2020, roughly $1.3 trillion.
.. And that’s about the same as the budget office’s estimate of the 2020 deficit under the Obama administration’s plans. That is, Mr. Ryan may speak about the deficit in apocalyptic terms, but even if you believe that his proposed spending cuts are feasible — which you shouldn’t — the Roadmap wouldn’t reduce the deficit. All it would do is cut benefits for the middle class while slashing taxes on the rich.
.. The Tax Policy Center finds that the Ryan plan would cut taxes on the richest 1 percent of the population in half, giving them 117 percent of the plan’s total tax cuts. That’s not a misprint. Even as it slashed taxes at the top, the plan would raise taxes for 95 percent of the population.
.. most of the alleged savings in the Ryan plan come from assuming zero dollar growth in domestic discretionary spending, which includes everything from energy policy to education to the court system. This would amount to a 25 percent cut once you adjust for inflation and population growth. How would such a severe cut be achieved? What specific programs would be slashed? Mr. Ryan doesn’t say.
.. After 2020, the main alleged saving would come from sharp cuts in Medicare, achieved by dismantling Medicare as we know it, and instead giving seniors vouchers and telling them to buy their own insurance.
.. There’s also the unwillingness of self-styled centrists to face up to the realities of the modern Republican Party; they want to pretend, in the teeth of overwhelming evidence, that there are still people in the G.O.P. making sense. And last but not least, there’s deference to power — the G.O.P. is a resurgent political force, so one mustn’t point out that its intellectual heroes have no clothes.
But they don’t. The Ryan plan is a fraud that makes no useful contribution to the debate over America’s fiscal future.
Death and Tax Cuts
And after all that inveighing against the evils of Obamacare, it turns out that they’ve got nothing.
Instead, they’re talking about freedom — which these days is the real refuge of scoundrels.
.. Jason Chaffetz insisted that the public outcry is just “a paid attempt to bully and intimidate”; Sean Spicer, the White House press secretary, calls all anti-Trump demonstrations a “very paid, AstroTurf-type movement.”
.. flat tax credits, unrelated to income, that could be applied to the purchase of insurance.
These credits would be obviously inadequate for the lower- and even middle-income families that gained coverage under Obamacare, so it would cause a huge surge in the number of uninsured. Meanwhile, the affluent would receive a nice windfall. Funny how that seems to happen in every plan Mr. Ryan proposes.
.. This week, perhaps realizing how flat his effort fell, he began tweeting about freedom, which he defined as “the ability to buy what you want to fit what you need.”
.. Any plan that makes essential care available to everyone has to involve some restriction of choice.
.. Suppose you want to make insurance available to people with pre-existing conditions. You can’t just forbid insurance companies to discriminate based on medical history; if you do that, healthy people won’t sign up until they get sick.
.. It means that workers don’t have to fear that quitting a job with a large company will mean loss of health coverage, and that entrepreneurs don’t have to fear striking out on their own. It means that those 20 million people who gained coverage don’t have to fear financial ruin if they get sick — or unnecessary death if they can’t afford treatment. For there is no real question that Obamacare is saving tens of thousands of lives every year.
.. mainly they hate Obamacare for two reasons: It demonstrates that the government can make people’s lives better, and it’s paid for in large part with taxes on the wealthy. Their overriding goal is to make those taxes go away. And if getting those taxes cut means that quite a few people end up dying, remember: freedom!