Tax reforms I would like to see

Daryl wrote:I'm intrigued as to businesses being taxed on their inventory. Ours are taxed on net profit and loss. Inventory could possibly be depreciated if it lost value over time.
Our capital gains tax is paid at the individual or company's tax rate. You can discount it by indexation, or if you hold it over a year just cut it into half.
In regard to the new tax bill, it doesn't make sense to me. The two biggest financial challenges to the US are the growing national debt, and the growing inequity between the haves and have nots. Solution is to cut the top and corporate tax rates? How will that help? Anyone who says trickle down economics goes to the back of the class.

The corporate tax rate is a problem because of international competition. Our current nominal rate is the highest in the world. Big corporations are able to game the system and pay actual taxes far below that but we are putting our small/medium corporations at an economic disadvantage. Corporations employ people if they are at an economic disadvantage relative to foreign competitors fewer people get employed in the USA. Globally there has been a trade war regarding corporate with multiple countries dropping their corporate rates since the 1980s. The idea with the corporate tax rate reduction is reduce the nominal rate but close the loopholes the big guys are using to game the system.

Plus one of the main tricks the big guys use is to keep profits overseas in tax havens. Which mean that we get 0% tax. The idea with a lower rate (plus some loophole closing to make it more difficult) is that there would be less of that problem.

Obama had a similar proposal although the current version of the Republican plan has a bigger rate cut to about 20% (actual value is a moving target, trial balloons of 22% are being floated) vs the Obama proposal of 28%. Current US nominal rate is 35% (39% when state taxes are included which makes the Republican proposal 24-26% and Obama's 32%), international average is 24% (includes state/province taxes). So the argument between Republicans vs Democrats is not whether to cut but how much to cut.

biochem wrote:

Annachie wrote:I'd remove the estate tax, assuming the relevent will is more than 10 years old.

(Obviously it would be more complex than that simple sentence.)

Why a 10 year old will?

Arbitry number.

The idea is to reward forward planning and penalize last minute stupidity.

I believe it was Irish law at one stage.

The USA does not have the highest corpirate ( ) tax rate in the world.

It's the UAE.

Though the US is damn high. Then again, the tax paid by corporations as a % of GDP is damn low.

My only concern, and it's a concern for here in Oz too, is that dropping the corporate tax rate will cause a big drop in tax paid, not an increase. At a time when we really need an increase.
IE: they wont pay tax on more declared income, just less tax on the same declared income.

Unfortunately, the economic model that the GOP are following here tends to the latter.

I confess! I'm not an economist, have never even taken an economics course. So what may actually make sense is driving me to cognative dissonance.

The economic argument seemed to be "US workers make $5.50/hr. for a 32 hour week that's $9152/year. Third world workers make ~ $35/ month or $1820/year. Therefore I can hire 5 foreign workers for the same cost as 1 American one and still have change left over. So the argument seems to go, By slashing the corporate tax rate, lowering the tax in repatriating the bit of change accumulated by hiring 5 employees in my operation in Bangladesh, I can now see the economic advantage in shutting down my operation there and replacing them with 5 US workers.

Sorry, I don't get it. All that seems to be doing is making it more profitable to do nothing. that gives me (as the CEO) more after tax profit for, like MY $multi-million bonus. Or, yeah maybe a one time boost to the ( and by the I mean my) quarterly stock dividend.

As I posted earlier, malice aforethought.

"(1)We slashed taxes for corporations and the richest 5%. (2) We slashed welfare, food stamps, housing vouchers, medicaid, disabiliy, unemployment, etc to force the lazy bast ...er folk off their Fat lazy ... Boy recliners and into the workforce to really get the economy percolating. (3) OOPS, it didn't work, and the corpses of the poor and homeless are stacking up like cord wood. (4) Not our fault, just an unintended consequence of our good faith intentions.

"Who'd a thought the corporations would give the money to their executives and their shareholders? Sorry about that."

pappilon wrote:I confess! I'm not an economist, have never even taken an economics course. So what may actually make sense is driving me to cognative dissonance.

The economic argument seemed to be "US workers make $5.50/hr. for a 32 hour week that's $9152/year. Third world workers make ~ $35/ month or $1820/year. Therefore I can hire 5 foreign workers for the same cost as 1 American one and still have change left over. So the argument seems to go, By slashing the corporate tax rate, lowering the tax in repatriating the bit of change accumulated by hiring 5 employees in my operation in Bangladesh, I can now see the economic advantage in shutting down my operation there and replacing them with 5 US workers.

Sorry, I don't get it. All that seems to be doing is making it more profitable to do nothing. that gives me (as the CEO) more after tax profit for, like MY $multi-million bonus. Or, yeah maybe a one time boost to the ( and by the I mean my) quarterly stock dividend.

This particular tax cut has nothing to do with 3rd world factories and trade deals. It's designed to make the USA more competitive with other 1st world countries. The global trend among 1st world countries has been to lower taxes on corporations. Our current tax rate was competitive in 1986 when it was enacted. It's now the highest in the 1st world (UAE is not a first world country). The Republicans want to lower it to roughly the global average. Obama wants it a few points higher. So there is a bipartisan push to lower the rate, the question is how much.

Also keep in mind with the corporate tax that it's not the big companies that are paying it. The big companies can game the system and wind up paying little or nothing. So when we are talking corporate tax rate what we are really saying is what rate should the small/medium companies pay? How about we split the difference between the Republican 20% and the Democrat 28% and go with 24%?

pappilon wrote:As I posted earlier, malice aforethought.

"(1)We slashed taxes for corporations and the richest 5%. (2) We slashed welfare, food stamps, housing vouchers, medicaid, disabiliy, unemployment, etc to force the lazy bast ...er folk off their Fat lazy ... Boy recliners and into the workforce to really get the economy percolating. (3) OOPS, it didn't work, and the corpses of the poor and homeless are stacking up like cord wood. (4) Not our fault, just an unintended consequence of our good faith intentions.

"Who'd a thought the corporations would give the money to their executives and their shareholders? Sorry about that."

The tax bill doesn't affect the poor since they don't pay taxes.

The problem with government programs is that people are not one size fits all. Some people do need to get kicked off the recliner (yes I've met a few like this). Others just need a temporary helping hand (met some like this too). And other will need permenant help (remember the slow kids at school?? They struggle as adults too but while there are program in schools to help them, they aren't handicapped enough to qualify for adult programs).

It's a tricky balance to get right. Neither the Republicans nor the Democrats seem to manage it.

But none of the benefits are addressed in the bill. And the discussion is so complex it deserves its own thread.

We have discussed them previously in other threads


viewtopic.php?f=16&t=5734&hilit=Welfare+Poor

viewtopic.php?f=16&t=5885&hilit=Help+poor+Welfare

I do like the changes to the state and local tax deductibility. I'd prefer to get rid of it entirely on principle (states should set their own tax rates and keep the Feds out of it!!!!). But to make the deduction removal more politically platable. How about we cap it instead? How about $10,000 for state & local taxes (combined deduction for both income and property)?

Remember with the increase in the standard deduction the poor, working class and middle middle class won't itemize. So the impact of this deduction would only be felt by the upper middle class and the rich.

Personally, I never understood making state taxes deductable on a federal level.


The poor don't pay taxes? I hate to break it to you, but they do.

Maybe not all of them pay income tax, but more do than you seem to think.