Jeb Bush's tax proposal

[explanade]

Bush made a big push this week appearing on some national shows, writing a WSJ op-ed as well as give a speech on his tax proposals.

Rather than choose between cutting rates for high earners (as old-school Republican supply-siders would prefer) and targeting relief to the middle class (as new-wave Republican reformacons would like), Bush chooses to hand out goodies to just about everybody. Among other things, he would:

- Cut the seven tax brackets we have today down to three, with lower rates of 28, 25, and 10 percent (today, the top rate is 39.6 percent).*
- Double the standard deduction taken by most filers.
- Increase the Earned Income Tax Credit, which helps low-wage workers.
- Eliminate the inheritance tax, which would help the very, very rich.
- Kill the marriage penalty.
- Slash corporate rates to 20 percent (from today's top rate of 35 percent) and let businesses expense capital investments immediately (sounds wonky, but it's a big deal).

In the end, wealthy taxpayers and companies get lower rates, while Bush says more than 15 million additional people would owe no federal income taxes at all. You get a tax cut! And you get a tax cut! And you get a tax cut!

And how would he pay for all this? Well, for one, he's following Donald Trump's populist example by vowing to do away with the carried interest loophole that benefits rich private equity fund managers. But mostly, he'd just cap unnamed "deductions used by the wealthy and Washington special interests." Easy as that.

http://www.slate.com/blogs/moneybox/201 ... ficit.html

The 28% rate for the top tax bracket is the same as other candidates and Romney's proposal in 2012. Supposedly supply-siders and Club for Growth people have had a heavy influence in 2012 and this year for the tax policies of all the GOP candidates, who all have a 28% top rate except for Trump, who hasn't really spelled it out.

All candidates are pushing for lowering the corporate tax rate, as did Romney.

Now Bush is framing this proposal in the context of it providing sustained 4% GDP. Of course, Republican candidates promising greater economic growth in return for tax cuts is not a new thing. It's been promised at the state level, in states like Kansas, where it hasn't worked out at all.


Bush's proposals could impact retirees or wannabe retirees:

It would encourage older Americans to keep working: Earlier in the campaign, Bush made headlines for saying that Americans “need to work longer hours.” He quickly tried to clarify that he meant that too many workers are stuck in part-time jobs. But as I wrote at the time, Bush was right that one way to achieve faster economic growth is to encourage more Americans to work, or to work more hours than they do now.

Bush’s plan includes a number of provisions that implicitly encourage work, such as expanding the EITC and cutting overall taxes. But it only explicitly targets one group: workers older than 67. Under Bush’s plan, they would be exempt from the employee’s share (but not the employer’s share) of Social Security taxes. That would encourage workers to stay on the job, and presumably encourage companies to keep them by making them cheaper to employ.

If workers delay retirement, that would help the Social Security system (although those gains would be at least partly offset by the lower taxes being paid into the system). But the larger economic effect is less clear. Older workers are already staying in the workforce longer; the age group struggling most in the economy is Americans ages 16 to 24, whose unemployment rate remains in the double digits.

Jeb Bush’s Tax Plan Is Pretty Weird | FiveThirtyEight


He's behind in the polls in the GOP field but he still has the most money, unless Trump is willing to pump hundreds of millions into his campaign.

But even if Bush isn't the nominee, there's a good chance many aspects of his proposal will also be in the GOP platform or in what the GOP nominee proposes next year, since most of the candidates already have similar tax policy features.

 

[REWahoo]

Uh oh. Porky was just placed on Defcon 1....

 

[aaronc879]

I don't like everything in his proposal but I could live with it. I'm not convinced that it will be paid for though. I'm concerned he would plan to pay for part of it at the expense of the poor/low income. I'd like more detail in how it will balance out.

 

[utrecht]

Ben Carson is making a serious challenge to get the nomination. Ratings are climbing quickly. He wants a flat tax and elimination of the IRS.

 

[CaliforniaMan]

Maybe someone can answer this for me. I have always heard people talk about lowering the number of tax brackets, and have always wondered why anyone thinks it matters.
"Cut the seven tax brackets we have today down to three."
I mean what does it matter if there are 3 brackets, 7 brackets or 17 brackets. I guess it might simplify filling out the forms if we had to do hand calculations, but who does that anymore. Am I missing something?

 

[rodi]

Please limit comments directly to how this effects retirement, early retirement, etc.

Taxes have an impact on retirement, but this is not an appropriate forum for the merits of political candidates or their platforms accept as they impact early retirement and financial independence.

 

[explanade]

Maybe someone can answer this for me. I have always heard people talk about lowering the number of tax brackets, and have always wondered why anyone thinks it matters.
"Cut the seven tax brackets we have today down to three."
I mean what does it matter if there are 3 brackets, 7 brackets or 17 brackets. I guess it might simplify filling out the forms if we had to do hand calculations, but who does that anymore. Am I missing something?

Well tax reform is generally sold as a way to improve economic performance.

That and IRS and tax return complexity are things people generally oppose.


The number of brackets is just one part of the proposal. There are others which may have more direct bearing on retirees.

 

[utrecht]

Please limit comments directly to how this effects retirement, early retirement, etc.

Taxes have an impact on retirement, but this is not an appropriate forum for the merits of political candidates or their platforms accept as they impact early retirement and financial independence.

I'm not a tax expert by any means but wouldn't a flat tax make it easier to plan for taxes in retirement? It seems that if you know you will pay X% of your income and all of the deductions and all of the complicated things are removed, planning for retirement would be easier.

 

[Senator]

No matter what the tax rates are on anyone, the tax collections will be woefully short of what is needed. Of course, we can always print money, as long as we print it at a pace just below all other countries...

Taxes will go up, exponentially, in future years. Older Americans pay the highest taxes, as they have the highest incomes, and are retiring.

Wages are falling. Upcoming demographics indicate lower level service salaries, not STEM salaries.

In retirement, you can expect more taxes, no matter who is in. Maybe a VAT tax, sales tax, gas taxes, etc.

 

[explanade]

Maybe but it's unlikely a flat tax makes it as part of one of the major candidate or party's platform.

Usually flat taxes are accompanied by proposal for a national sales tax, which some conservative think tanks and activists support.

But that would be a huge conversion, to change not only the income tax structure but then implement sales tax collection across the nation.

Pretty radical thing for one of the major parties to run on.

Chris Christy claims he's the only candidate with a specific proposal to reform social security and Medicare, though he's currently not getting much traction.

Unlikely the nominees of the two parties will have drastic reform proposals for either program.

 

[frayne]

Politics aside whenever someone says they are going to change the tax code, it just seems to make it more complex and convoluted, especially for those of us who do our own taxes.

 

[Ronstar]

The tax proposals by the various presidential candidates are important to er's. Posts need to be centered on the proposals and not the candidates. Any mention of candidates can be deemed as partisan. Note that our community rules say:

"Partisan political commentary is not allowed in any section of the forum. Discussions about current or pending legislation or regulations that directly pertain to Early Retirement are acceptable but may be closed or removed if they wander off topic or become disruptive."

Personally I would like to see a simplification of the tax code so that I could feel more comfortable doing my own taxes and in doing tax planning. As it stands now, I find it difficult to calculate how much tax DW should have taken out of her pension checks.

 

[utrecht]

Maybe but it's unlikely a flat tax makes it as part of one of the major candidate or party's platform.

Usually flat taxes are accompanied by proposal for a national sales tax, which some conservative think tanks and activists support.

But that would be a huge conversion, to change not only the income tax structure but then implement sales tax collection across the nation.

Pretty radical thing for one of the major parties to run on.

Chris Christy claims he's the only candidate with a specific proposal to reform social security and Medicare, though he's currently not getting much traction.

Unlikely the nominees of the two parties will have drastic reform proposals for either program.

I would love a national sales tax as opposed to any Federal income tax or in some combination of a flat tax and a national sales tax. Simplify everything. Get rid of deductions and exemptions. What could be more fair? Low income people buy less stuff so they will pay less tax. High income people buy more stuff and will pay more tax.

 

[explanade]

Tax simplification is not being pursued for its own sake though.

It's usually a means to achieve certain political or philosophical aims.

Usually the flat tax proposals reduce tax revenues, which is the real intent, not tax simplification.

 

[rodi]

Thanks for participating.

Porky Pig Cartoon Ending "That's All Folks!" - YouTube