verbal8 wrote:Infrastructure could be a game changer. If executed properly it really could put the country on a better path and increase the popularity of incumbents.
However a similar opportunity was there with tax reform and the Republicans blew it. I think if something gets passed it will be focused on privatization and passed soley with Republican votes.
what if the tax reform was a big step in the right direction? remember, you cant build rome in a day. If this bill, in addition to other trump initiatives work to grow the middle class' wealth I think we can amend the law later to include a death tax. And to force corporations to invest their tax savings into the economy instead of buying back their own stock.
Keep in mind that
the true wealth disparity exists mostly in vacuums in big cities like NYC, Chicago, Boston, DC, SF, Miami. Or in shell corps in states with no taxes.
and many experts predict the taxes of the wealthy in high tax regions might go up due to the cap on SALT . So in a way, i dont think wealthy "individuals" will gain that much from this reform. Large corporations however do get an advantage. Which is good if it drives more growth as expected. The issue is only if those corporations use their tax break to hoard the wealth and buy back more of their shares. The reform bill would be better if incentives force those corporations to spend their tax savings back into the economy and into growth derived initiatives.
That said, i think the middle class can gain here on the upper class not only in those wealthy regions mentioned above but also and possibly mainly in wage increases as opposed combined with outright tax redistribution. Again, the middle class does gain some ground here on the upper class in taxes too.
But what they really should fight for now is a pay raise. Good immigration reform in addition to better trade deals should keep those wages rising. And thats where the middle class should gain ground on the upper class as well as the tax reform.
So the tax reform passes those tests or me. unfortunately not the death tax test(yet). This should be a major campaign issue in 2020 and 2024. But not from a snake oil salesman. Instead, from a guy like trump who lays out his campaign pledges. and then delivers. Hopefully D's can get back to A. telling us something. and B. that something being the truth. Get a damn plan(actual campaign pledges) in front of the american people and then deliver on it if elected.
So I'm of the opinion that even though this tax reform is not perfect. It goes along way towards making us mor ecompetitive internationally for businesses and righting some current wrongs which i address below. Next time around, if R's and D's (bipartisan?) can focus on the death tax(I'm aggressive. want 50% or greater on wealth over 20 million). But as DCKings keeps reminding everyone.
it means nothing if the (trusts and foundation) carve outs are not addressed. also the large corporate (C-corp) rates will be 21%. Small pass-through corps like mine should have the same rate including the pass through income. Keep in mind Small Business makes up 55% of our economy. and across the nation in small towns they make up as much as 80-90% of local economies in those small towns. cammac often mentions that small businesses in his neck of the woods pays 8.5-12%. Im not asking for that low. But if 21% is a fair tax rate for large corps then it should have been the same for small s-corps who take massive risks often with their own capital, even their own personal residence at risk, to own a small business which create and maintain jobs for 55% of the entire US work force.
You might need to be an accountant or small business owner to follow...but...For example: as a dentist I can work for another dentist and earn about $400,000 as a W2 employee depending on hours i work and how hard i work. No risk. No stress. Call in sick whenever I want. leave the job at home when i leave the office. Move out of state if i desire. etc. And pay about 32-35% in taxes. But As a self employed small business owner, I might make a 15-20% more money ONLY if I run an efficient office. and take on a ton more stress. Massive amounts of risk. And That extra 15-20% could easily be eaten up by (self) employer-side tax contributions. In my field and in many fields, you end up with a zero sum gain in most cases as a small business owner vs. W2 employee, save the additional income write offs like depreciation.
So the only real "advantage" under the old tax plan in owning a small business vs. W2 employee is that I can eventually build up and sell the business which will have equity only if it is attractive and healthy business. Perhaps even increasing the equity in it before i sell (again, given its an attractive investment). But Businesses fail. and owning a business is/can be difficult. Small business owners seldom can take advantage of Tif zones and other incentives, nor negotiate sweet heart deals like ATT has right now. yet small business owners often risk much and put their entire net worth of assets on the line for loans to purchase or start-up these businesses and it is all at risk if the business fails. It's crazy! No investment banker will finance these. They no better. So Something not right there. Small business owners are essentially getting royally screwed over compared to large corporations. Too much risk. not enough reward. and literally zero tax incentives to own a small business( Under the old plan). the only reason any one would take on a small business is that they are stupid enough to believe in themselves, that they will make it, or they have lightening in a bottle.
Additionally, When the economy was down especially like 2008-2012 my gross production/collection numbers were waaaaaaaaaay down. like in half. and didn't fully recover to 2007 levels until this year. If i were a W2 employee I could have consolidated my days in one office and picked up shifts in another office. Or moved to a town with more dental needs. Or picked up days teaching. Something nearly all doctors can NOT do if they own their own clinic(because there is no time to work elsewhere when you own your own small business and there are nearly always conflicts of interest for other potential employers). So in owning my own business, I took on a huge risk. huge amounts of stress. kept multiple families fed when the economy was down. Didn't layoff a single person, barely cut any of my employees hours, yet my take home pay from 2008-2012 was half what it was in 2002-2007. Where was my reward!!?? I got taxed the same amount as a w2 employee(yet also had to pay my employer side contributions). And I had a large monthly overhead to worry about as the economy was collapsing. So why even own a small business? and If HRC would have won I am 100% certain that 2017 economy would have no better than 2016 which was barely better than 2015.
That changes under the trump plan. its now worth the risks to own a small business again. the risk "numbers" are now on your side much much much more so than under the old plan. Especially if you own or purchase the real estate that houses your business because you will be able to get really creative. Likely keeping your rates at 21-22% (if you want to be very creative and aggressive).
With trump tax plan the high end ind. rate dropped to 37% from 39.6 and all other rates building up to the top rate drop around 3-5% as well. As well as (up to) a 20% discount(off the individual rate) on s-corp pass-through income(which is all of my income). As well as not paying taxes on the first $24,000(standard deductible). I have not seen the exact table yet but I am estimating that my average discount off of the 2017 individual rates will be about 16-17%. When you consider my employer side contributions plus my individual contribution rates they used to come to about 45%(all taxes considered). I anticipate my new rates to now come down to 28%(all taxes considered).and if i want to be creative with the real estate end and charge my self more rent, i can get this down to 22% on average with the real estate LLC now carrying a much larger tax burden by charging myself more in rent.
And that 28% expected tax burden now makes it much more "worth" the risk to own a small business...especially if I can get it down to that 22ish%. Where the old (combined) rates of 45%(all taxes considered) were awful. At the old rates, I was almost better off being a w2 employee when you consider stress and risk. It was borderline not worth it besides the equity in the practice(business) that was a sellable asset(which is an entirely separate issue)...just like it is in the NBA CBA.
"America" is filled with small business owners just like me that move more than half of our entire economy and employ 55% of the workforce. Bottom line, we should be rewarded just as well as large corporations. If not, the risk is that we will merge our small businesses into large corporations. become more powerful in congress. Resulting in products that will become more bland and more expensive. services will become much more expensive. just like it has in medicine. just like it has for a cup of coffee. just like it has in big pharma. Imagine how much a hair cut will cost if mom and pop salons cease to exist. Or when mom and pop diners and restaurants and bars cease to exist to check the large corporate owned restaurants and bars. A beer down the street will cost $15. heck it almost cost $15 buck right now in almost every bar near me. That's what's coming if we dont keep increasing incentives for small mom and pop businesses to survive and compete.
So in this regard. trump and R's knocked it out of the park.
like i said, its a full rebuild.
