The proposed corporate tax rate cut

One business my wife and I own is a straight up C corporation.  We can take a salary, or we can pay taxes on profits.  We have been building the business so we have taken a great many capital expenses buying equipment for the business.  When you run a business, taxes are a good thing because that means you made a profit.  I have never once in my career thought how much better we would be with a tax cut for our corporations.  Cost of inventory, insurance, real estate taxes, business services, repairs, and employee costs simply are tenfold more important because if you do not manage those costs there is no profit and taxes are a moot point.

Well with retirement we have decided to list part of the business for sale, and I just read the preliminary tax proposals and it is simply theft of revenue from all Americans and an outright gift to corporations and their shareholders.  We are small potatoes.  However, if we do sell the difference between the federal government revenue will be huge in our case.  In our case it could represent a 55k gift with the sale of the business.  We had planned to sell spring of 18 and depending on the effective date of this bill, we will be getting a gift from every American taxpayer as we go 200 billion a year further in debt, and corporations rape this country with a unearned windfall.

I predict the big rush to put business in LLCs will now have a rush to reconfigure and incorporate partnerships, subchapter S, and sole proprietor business into straight C corporation.   What is NOT being talked about is the LOST revenue from these large multi national LLCs changing to C corporations as the projections by the GAO are simply ten miles off because there is no allowance for lost revenue given to the simple fact every wealthy person currently in LLC paying the top rate of 39 percent individual are going to in mass move to 20% C corporations.   This is the biggest hoax which has been perpetrated on the American people with static projections which assumes the pigs will not simply change their id and go to this huge tax give away and lower their effective rate from 39 percent to the sale of shares with a capital gains rate of 15%.........bait and switch.......out right fraud.   Put real numbers into the projections as to the real impact on the deficit.   We are losing this nation.

I haven't browsed the forum in awhile though I would be interested in seeing any conservative defend this tax cut.

House republicans are saying it will not only be deficit neutral, but it will actually boost revenues when you factor in economic growth.  The problem there is that it is already well established that tax cuts do not produce economic growth.  We have a half century of economic data which clearly tells us that tax cuts do not produce economic growth.  

Let's say that we take republicans at their word and assume that this tax cut will be deficit neutral.  It won't be, but lets just say we take them at their word and assume that it will be.  OK.  So the plan is to cut taxes and then reduce government spending such that this is a deficit neutral policy.  Fair enough.  Let's now look at how we actually calculate GDP:

C + I + G + Net(E- !) = GDP

That is, GDP is the sum total of all consumer spending (C), plus investment (I), plus government spending (G), plus the net balance of exports and imports.

So that's how we calculate what most people generally refer to when they say "the economy".  So lets say that we cut taxes.  That will give more money to consumers.  Best case scenario, they will spend 100% of that money in the economy.  That gain in C; however, would be produced by a reduction in G...assuming the tax cut is really deficit neutral.  And if that is the case, there is no net gain in the equation of GDP.  Any gains in C would be offset by losses in G.  But here is the kicker, the republicans are proposing regressive tax cuts - that is, tax cuts that primarily benefit top tier income earners.  The problem there is that top tier income earners are the last likely to spend 100% of their newfound tax cut money.  So this policy would actually hurt economic growth...that is, assuming it is deficit neutral.  Of course, it won't be.  They will cut taxes, the deficit will explode, the economy will tank, a democrat will then win the next election, enter the white house, and then republican will magically be concerned with the budget and debt again...and they will blame everyone on the new democratic president.

There is simply no cure for stupid.

A corporate tax is just a consumption tax for the useful idiots that are opposed to a consumption tax.

PkrBum wrote:A corporate tax is just a consumption tax for the useful idiots that are opposed to a consumption tax.

Profound . . . . . .

Trump’s Trojan horse tax cut

Using the promise of middle-class tax cuts as a Trojan horse for a tax windfall for the rich and deep spending cuts is a tactic dating back to the Reagan administration.

By Robert Reich - November 2, 2017 | Op-Ed

The goal of Trump and the Republican leaders is to pull off a giant redistribution of over $1 trillion from the middle-class, working-class, and poor to the rich, who are already richer than ever.

They’re selling this to the public with a false claim that the middle-class will benefit from their tax cut plan. It’s a gigantic Trojan horse.

For most Americans, the proposed tax cuts are tiny and temporary. That’s right – temporary. They will shrink in just a few years. And some middle class Americans will actually get a tax increase.

Meanwhile, the top 1 percent will get a gigantic tax cut. The Tax Policy Center estimates that the current plan will save the bottom 80 percent between $50 and $450 in taxes per year, but that it saves each person in the top 1 percent an average of $129,000 a year. For people at the very top, like Trump himself, the tax cuts are humongous. And the corporations they own will also get a massive tax cut.

Republicans say economic “growth” will pay for the tax cuts, so there’s no need to cut social programs like Medicare and Medicaid.

But Republicans have just passed a budget that would cut nearly $1.5 trillion from Medicare and Medicaid to pay for these tax cuts. Pell Grants, housing assistance, and even cancer research are also on the chopping block.

Now, they say we shouldn’t take their budget resolution seriously. It was just a device to get the tax bill through the Senate with 51 votes.

But once these tax cuts are passed, the budget deficit will explode. The Tax Policy Center predicts that it will cut federal revenue by $2.4 trillion over the next 10 years.

When that happens, the only way out of the crisis will be something dramatic – exactly the cuts in Medicare and Medicaid, and maybe even Social Security – that Republicans have wanted for years.

By this time, any talk of raising taxes on the rich will be dismissed.

Using the promise of middle-class tax cuts as a Trojan horse for a tax windfall for the rich and deep spending cuts is a tactic dating back to the Reagan administration.

But the version they’re aiming for now is “YUGE.”

We must see the strategy for what it is. And it must be stopped.

Study: Obama tax hikes on the rich didn't hurt economy, or the rich

November 4, 2016

"President Barack Obama's 2013 tax increases for wealthy Americans neither slowed their income growth nor hurt the economy, according to a study that taps into a key debate in the current presidential race.

The top 1 percent of earners managed to increase their share of the nation's income at about the same pace after their taxes were raised as they had before, according to the study , released Thursday by Emmanuel Saez, an economics professor at University of California at Berkeley.

That outcome suggests that wealthier Americans did not respond to the higher taxes by either working less or saving less, as many economists often say will happen.

Saez and his frequent collaborator, Thomas Piketty, have helped fuel a contentious debate over income inequality with their research into income gains by the wealthiest Americans. Like their previous work, the new study uses recently released tax data from the IRS..."

http://www.chicagotribune.com/business/ct-obama-tax-hikes-study-20161104-story.html

My problem is that any fair minded person would use projections on the deficit which would reflect rational behavior from high income folks. Rational behavior will be mass abandonment of sole proprietorships, sub s corps, partnerships, and LLCs which boomed in the last 20 years. I also will need to see what if any changes are made in tax credits and rules on retained earnings. It is the backdoor chit which compounds an already facially unfair tax plan.

I understood some of my high wealth golf buddies getting piszed at me when as a life long Republican I told them I would be voting for Hillary. One of my friends owns a fairly large label company with a plant in Illinois and China and I remember him looking at me and saying as if I was betraying our friendship with my vote that he would lose hundreds of thousands of dollars if Hillary won. I get that. I do not get a family making 40k a year continuing to support and believe the propaganda that they will be better off from the trickle down from my friend who uses his wealth to buy 2 million dollar condos in the same building as former speaker of the House Boner, and has in the last ten years opened a plant in China. Wealth is independent of patriotism or loyalty to a nation. We fought a revolution against the abuses of British Wealth in exploiting colonists economically, yet we roll up in a ball like defenseless kittens when the wealthy around the world are stealing our wealth as a nation and we are giving them a reward to their behavior. All the racial drama and division only so the 1% can steal more of this country and perpetrate the myth that as a democratic nation we can actually pass policies which benefit our citizens.

The truly ironic thing is that taxes DO NOT fund Federal government spending. The United States is monetarily sovereign and can create dollars at will, it could eliminate ALL taxes tomorrow and still pay all its bills, forever.

Federal taxes do serve other economic, social and political purposes but they are not required for Federal government spending.

Think about it: The Federal government has to create US dollars BEFORE it can tax them. It has to spend dollars into the economy BEFORE it can tax them out of it. SPENDING precedes TAXATION.