Tax reform impact

[joeea]

There actually was no "shift". The gas tax had been out there almost as long as the income tax. And it has not been raised in 25 years. Not sure what the argument would be against a tax to maintain roads that is tied the fuel used on those roads. Sure it is "regressive". So is the cost of gas. And heaven knows the roads need repairs.

When you run up the deficit by giving most of the tax cuts to the wealthier folks and the companies, then feel the need to run down the deficit by charging regressive fees or increasing regressive taxes or cutting entitlements most critical to the less wealthy - that's the "shift" I am talking about.

We could argue that this shift is a bad thing or a good thing. But it's hard to argue that there is no shift.

 

[Montecfo]

When you run up the deficit by giving most of the tax cuts to the wealthier folks and the companies, then feel the need to run down the deficit by charging regressive fees or increasing regressive taxes or cutting entitlements most critical to the less wealthy - that's the "shift" I am talking about.

We could argue that this shift is a bad thing or a good thing. But it's hard to argue that there is no shift.

Most folks got a tax cut. Having said that, 70% or so of the tax cuts went to corporations, not individuals. And that was done for very sound policy reasons.

The gas tax has not been raised in 25 years, it is paid by the gallon of fuel, and the funds go largely to highways. In essence it is a user fee. The proceeds are to be used to fund infrastructure projects which will make travel more efficient, safer and create jobs. The plan was not to use the tax to reduce the annual budget deficit.

So I still don't see it as any sort of shift, i see two policy moves that make sense. The gas tax will probably not happen, but i think the country would benefit.

Deficits will not be fixed until we have entitlement reform. That is just how the numbers work.

 

[joeea]

So I still don't see it as any sort of shift, i see two policy moves that make sense.

Most of the tax cuts went to corporations and those were permanent. And the wealthier among us benefit most from that. Most of us got small temporary tax cuts. The wealthier among us got higher cuts than others. Those cuts increased the deficit.

Now, due to the increased deficit, one proposal among many is to raise the gas tax - something which hasn't happened in 25 years, and which will affect the less-wealthy more than the wealthy. We could have cut taxes a bit less and spent those revenues on infrastructure, but that isn't what actually happened.

Sure seems like a "shift" (from middle class to upper class) to me. And one that was easy to predict. And as you said, entitlement shifts may be coming. That's rather easy to predict as well.

We could argue the sense behind it. But if you don't see it as any sort of shift, then it's not worth discussing further.

 

[Montecfo]

Most of the tax cuts went to corporations and those were permanent. And the wealthier among us benefit most from that. Most of us got small temporary tax cuts. The wealthier among us got higher cuts than others. Those cuts increased the deficit.

Now, due to the increased deficit, one proposal among many is to raise the gas tax - something which hasn't happened in 25 years, and which will affect the less-wealthy more than the wealthy. We could have cut taxes a bit less and spent those revenues on infrastructure, but that isn't what actually happened.

Sure seems like a "shift" (from middle class to upper class) to me. And one that was easy to predict. And as you said, entitlement shifts may be coming. That's rather easy to predict as well.

We could argue the sense behind it. But if you don't see it as any sort of shift, then it's not worth discussing further.

The purpose of tax reform was to get corporations and jobs to stop leaving our shores. The individual tax cut was seasoning. In my view it was not important.

I think the key difference is that I have not seen the gas tax touted as a way to reduce deficits, but as a way to fund new needed infrastructure spending, partnering with states and the private sector to fund projects at multiples of the federal funds. That spending figures to benefit everyone which to me makes a lot of sense.

I would certainly not support it just to reduce the budget deficit. Like you, I think that would make little sense given we just reduced other taxes.

 

[Markola]

Deficits will not be fixed until we have entitlement reform. That is just how the numbers work.

Or just a choice to view many possible numbers a certain way to seemingly limit the range of choices so that a particular social policy objective that some hold is assumed to be a fait accompli.

To wit, thanks to tax raises, reduced military spending and a strong economy, we had deficits “fixed” for the foreseeable future by the late 90’s. Leaders made many choices since then that have made the deficit and debt what they are now. They could have made different choices and different choices could be made going forward.

 

[meierlde]

The funny thing about the proposed gas tax is that it will only be used for a portion of these projects. The state and even local govts share in the cost of most. This brings state income taxes, sales taxes and even local property taxes into play.

A number of states already have raised their gasoline taxes. I view the difference between gas taxes and tolls as a non difference. It is simple to reduce the cost of gas taxes, buy a more efficient vehicle. With tolling systems such as the ones around Miami you get tolled by license plate unless you buy the sunshine pass.(In Miami to really get around you do need to get a toll tag as the main freeways are all toll.)

 

[USGrant1962]

Most of the tax cuts went to corporations and those were permanent.

From the Joint Committee on Taxation (JCX-67-17), over the next 10 years $1,126B was cut from individual taxes, and $653B from corporate taxes, plus an increase of $324B in international taxes (I would guess mostly on corporations). So most of the tax cuts did not go to corporations. Beyond 10 years who knows what the tax code will look like?

Also, corporations do not really pay taxes - they collect them from customers, owners, or employees and send them to the government(s). The impacts and benefits of corporate tax reductions are very complex.

 

[joeea]

A number of states already have raised their gasoline taxes. I view the difference between gas taxes and tolls as a non difference. It is simple to reduce the cost of gas taxes, buy a more efficient vehicle.

So you are saying for the cost of a vehicle you can reduce your gas taxes?

With tolling systems such as the ones around Miami you get tolled by license plate unless you buy the sunshine pass.(In Miami to really get around you do need to get a toll tag as the main freeways are all toll.)

I suppose you could also say it is simple to reduce the cost of tolls - drive only on back roads.

 

[joeea]

Beyond 10 years who knows what the tax code will look like?

We can never be sure that the sun will come up tomorrow. We can only see that it came up today.

In today's laws, the individual tax cuts are temporary, while the corporate tax cuts are permanent.

 

[meierlde]

So you are saying for the cost of a vehicle you can reduce your gas taxes?
.

In the sense that if you buy a vehicle with a higher MPG you will pay less in total gas taxes than if drive a low mileage vehicle.

 

[meierlde]

I suppose you could also say it is simple to reduce the cost of tolls - drive only on back roads.

If you have all the time in the world and know the back roads then you can avoid the tolls. (you will face zillions of traffic signals in the big cities however)

 

[Montecfo]

Or just a choice to view many possible numbers a certain way to seemingly limit the range of choices so that a particular social policy objective that some hold is assumed to be a fait accompli.

To wit, thanks to tax raises, reduced military spending and a strong economy, we had deficits “fixed” for the foreseeable future by the late 90’s. Leaders made many choices since then that have made the deficit and debt what they are now. They could have made different choices and different choices could be made going forward.

Sure. But not forever. Trajectory and magnatude of entitlement spending and demographics make clear you will have ongoing deficits without reforms. Faster economic growth will help, however.

But you are correct in that the lack of entitlement reform over the period you cite, has assured deficits for the foreseeable future.

 

[Markola]

Really not what I said.

 

[foxfirev5]

If you have all the time in the world and know the back roads then you can avoid the tolls. (you will face zillions of traffic signals in the big cities however)

I avoid SE Florida toll roads by taking Krome Ave (997) down to Homestead. Been doing it for years. The recent reconstruction is a tremendous improvement. Now it will probably go tollroad.

 

[joeea]

Faster economic growth will help, however.

That's true.

And of course tax cuts and the resulting decreased tax revenue will hurt, however.

 

[ERD50]

That's true.

And of course tax cuts and the resulting decreased tax revenue will hurt, however.

Do we know for certain that tax revenue will go down?

I haven't looked at the overall numbers, but there has been reports of large amounts of corporate $ being repatriated and taxed at the new lower rates, whereas it wasn't taxed at all (by the US) previously.

So if a good portion of that repatriated $ goes to investments, that should increase economic activity (and tax receipts) as well.

Cisco is bringing back $67B, and Apple plans to bring back $245 billion in cash held overseas, and pay $38 billion in taxes. And there are many more.

I haven't seen an analysis that includes estimates of those factors, so I'm not sure how it washes out big-picture-wise.

-ERD50

 

[joeea]

I haven't looked at the overall numbers

I haven't seen an analysis that includes estimates of those factors, so I'm not sure how it washes out big-picture-wise.

The Joint Committee on Taxation estimates show that “On a dynamic basis, the legislation would still cost $1.07 trillion over a decade"

Final JCT Analysis of the GOP Tax Bill: Big Cost, Modest Growth | The Fiscal Times

The Congressional Budget Office estimates an increase to the deficit of $1.46 trillion.

 

[gerntz]

When you run up the deficit by giving most of the tax cuts to the wealthier folks and the companies, then feel the need to run down the deficit by charging regressive fees or increasing regressive taxes or cutting entitlements most critical to the less wealthy - that's the "shift" I am talking about.

We could argue that this shift is a bad thing or a good thing. But it's hard to argue that there is no shift.

I can see increasing gas taxes & increasing low income tax credits to a degree to reduce burden on poorest.

 

[gerntz]

Read this today in WSJ:

"Children don’t pay tax on unearned income up to $2,100, says Robert Keebler, who runs an accounting firm in Green Bay, Wis. Under the new tax rules, income above this threshold will be taxed at 10% (unless it’s long-term capital gains on* qualified dividends, in which case the child pays no tax), and income above $6,600..."

* I think should be "or".

Should I read this to mean children's unearned income up to $6600 as Cap Gains & Qual dividends is tax-free (Up from $2100 previously)? Any one heard of this?

https://www.wsj.com/articles/the-best-way-to-use-ugmas-to-pay-for-college-1520219460

 

[joeea]

I can see increasing gas taxes & increasing low income tax credits to a degree to reduce burden on poorest.

That isn't being proposed.

 

[gerntz]

That isn't being proposed.

I just did.