9 things about historic Tax Reform - Trump’s first big legislative win

Chris MaccenroyDec 20, 2017Finance23011

Late Tuesday night, the Republican Senate passed historic tax reform – a massive package of corporate tax cuts and well-sized individual tax cuts, combined with the repeal of the individual mandate and opening the Arctic National Wildlife Refuge for oil exploration. It represents the only significant win for President Trump and the Republicans in Congress – but it is a major win. Here’s what you need to know.

This is President Trump’s first big legislative win. And it deserves to be cheered by conservatives.

© Article’s author: Ben Shapiro.
© Source: Daily Wire

9 things about historic Tax Reform

1. Virtually Everyone Will Get A Tax Cut

Despite the media’s insistence that this is a “tax cut for the rich,” virtually everyone who pays taxes gets a tax cut. The only people who see tax increases are high income-earners living in high-tax states (like yours truly). This isn’t the biggest tax cut in history, as Republicans have been pitching, but it’s not insignificant either – according to the Tax Policy Center, the average household will receive a tax cut of $1.610 in 2018; an average household earning $1 million or more would see a tax decrease of approximately $69.660, as compared with $870 for households making $50.000 to $75.000. The reason for that: high income earners pay the vast bulk of the taxes in the country. The idiotic idea that Americans will pay more taxes after the bill – an idea believed by 50% of the population – is simply wrong.

U.S. taxpayer’s comment:

During the 2008 financial crash many of the corporations moved their money out of the banking system in September and parked it elsewhere. For the next eight years even though they were promised they would not have to pay the corporate rate tax on that money. Now corporations have it in writing they will not have to pay the full tax rate on that trillion dollars. Their version of immunity since the bill states this is permanent, meaning should the IRS, Congress or Judicial institution learn something later no one can redress this issue in the future.

2. Individual Tax Decreases Sunset, But Will Likely Continue

The media are making a lot of the fact that these tax rates expire in 2025 – a provision Republicans had to include in order to pass the bill through reconciliation. But the chances that these individual tax rates will be increased for those in the middle class are negligible – even Democrats aren’t stupid enough to dramatically raise taxes on the middle class.

U.S. taxpayer’s comment:

AT&T announced they are giving 1k bonus checks to 200k employees and investing 1 billion in spending due to tax reform. Boeing is also investing 300 million due to tax reform. So to all the naysayers talking about the debt and deficit, its already having an effect. Oh, and by killing the individual mandate, that essentially just took out Obamacare as a whole. Two birds, one stone and floods of liberal tears. Winning!

3. Corporate Tax Rates Drop Dramatically

This was the biggest motivating factor with the bill: cutting the corporate tax rate. The United States had the highest corporate tax rate in the industrialized world. Cutting that rate from 35% to 21% is a huge cut indeed, and brings the United States into competition with European states with far lower corporate tax rates. Countries like Ireland, which has a 12.5% corporate tax rate, have seen high sustained growth thanks to a healthy business climate – Ireland cut its corporate tax rate from 40% to 12.5% in 1995, and has seen 23% GDP growth, compared with 7.2% GDP growth from 1960 to 1995.

U.S. taxpayer’s comment:

Seen this before; Kennedy, Nixon, Reagan, Bush 43. Guess what’s next? Inflation. With 4% unemployment, wages will go up. While that may seem like a good thing, it also means inflation will go up even more. Which means that Trump’s base will feel the pinch along with all other low income people. For those of us with investments, it will be a bonus, for two reasons. First, as prices go up, the payout to stockholders goes up. Also, as taxes go down, companies will simply take that saved tax money, and buy back stock, thereby increasing the value. What? Are some of you actually dumb enough to believe they will expand business? Hire more people? Hire who? Unemployment is at 4%. The lower classes will suffer even more, and those of us who have money will prosper. And that is just so unfair.

4. There Is A Big Increase In The Child Tax Credit

The child tax credit, which is truly a redistribution scheme backed by some conservatives, will be boosted to $2.000 per child and will be refundable up to $1.400. That was the provision Sen. Marco Rubio (R-FL) wanted, and one he got – and one that will be politically beneficial to Republicans in their fight to make the tax bill seem populist.

U.S. taxpayer’s comment:

How do we know that the tax law will benefit America? Because no Democrat voted for it, and we actually read it before it passed. Trump could literally cure cancer but yet there would always be someone out there saying what a terrible man he is.

Real Americans took our country back from globalist elite! We wanted our jobs and our nation back! Our health care was too expensive. Mine is $700/month now (thanks to Obamacare). My car insurance is still $25 per month (from Insurance Panda), but what are the Democrats plans for that? If you look at Democrat strongholds like Detroit and New Orleans, car insurance will run you $300+ per month! Look for increase in taxes too! We are revolting against our Democrat/Socialist over-lords. And it feels good. :)

5. High-Income Earners In High-Tax States Pay More

Because tax reform includes reductions in tax deductions for state and local taxes, those in high-tax states with high incomes could pay more. Furthermore, the mortgage interest deduction has been decreased markedly, which hits high real estate value blue states. This could lead to a downturn in the real estate market.

U.S. taxpayer’s comment:

Economic growth will far outpace the growth of the deficit. Employment opportunities will grow, causing dramatic increases in compensation across the board as companies bid to hire. This isn’t voodoo. It’s black letter economics, and a wise turn-around that Democrats who voted against it will forever regret.

6. Itemization Is Downsized

The new bill doubles the standard deduction, so fewer Americans will bother itemizing – they won’t reach the standard deduction with itemization. This means simplifying the tax system, meaning that many Americans will be able to fill out their taxes on a postcard.

U.S. taxpayer’s comment:

Liberals absolutely hate that the country is in a economic boom and is headed for prosperity we haven’t seen in decades. They would much rather see you and I be in poverty and be destitute. The United States as a third world nation would be just fine for them. Liberals have a very serious mental illness.

7. The Individual Mandate Is Gone

The tax bill uses the death of the individual mandate to reduce deficits. That’s because many of those who were encouraged to seek health insurance by the individual mandate were on Medicaid, meaning that they cost the federal government billions. Now many people will opt out. The upside to ending the individual mandate is obvious: Americans will no longer be forced to purchase a good they don’t want. But there is a downside: that cash from the individual mandate was used to bring down costs for older and sicker members of the individual insurance market. That means that Republicans will have to either reduce regulations in health care, states will have to do so, or insurance companies will have to find better ways to compete on pricing – or, alternatively, Republicans can bail out the insurance companies. It looks like the latter possibility is most likely, which effectively means a new government entitlement.

U.S. taxpayer’s comment:

You know, the death of the Individual Mandate probably should be the biggest part of this story! Its huge win for the basic idea of freedom! High taxes might be bad policy, but forcing people to buy insurance at gun point or be fined it unconstitutional. I am okay with American deciding poorly on policy, I accept it as part of democracy that I won’t get my way some of the time. However, I won’t tolerate unconstitutional fines. I recall screaming at the radio 9 years ago when this Gruberscam was passed or rammed through by the despicable dems. Now the IM is gone and hopefully, this Obamascam will be gone, too. We need the free market back in health care with lots of choices and plans, not one-sized gruberment central planning.

8. Oil Exploration In The ANWR Is Now Possible

For well over a decade, Democrats have prevented the oil exploration of the Arctic National Wildlife Refuge. That was foolish policy, given the amount of oil expected to be found there, as well as the small footprint necessary for drilling. Concerns about the impact on wildlife have been wildly overstated – caribou populations have increased in areas around existing pipelines. Alaskans are likely to be far richer than they otherwise would have been thanks to this provision.

U.S. taxpayer’s comment:

What happens with Obamacare will depend largely on what legislative intervention happens between now and 2018. One thing this sets up for sure is the need to do something! Insurers will have be bailed out, or plan requirements relaxed, pre-existing condition and lifetime coverage underwriting restrictions altered, something. I honestly think most Americans won’t look past their own kitchen table as far as how they vote goes. Even if the democrats claims are all true and “millions are thrown off coverage” if rates for healthy members of the middle class can be stabilized or decreased; the GOP will be just fine on election day.

9. Deficits Will Increase

The bill was slated to create $1.5 trillion in new deficits. That’s likely an understatement, since the individual tax rates won’t be allowed to sunset. That means that Republicans will have to figure out a way to cut, or they’ll just be continuing to blow through borrowed cash, which means inflation or tax increases in the future.

All in all, the Republican tax bill is strong policy – and insertion of the end of the individual mandate could turn out to be a feat of political genius by Sen. Tom Cotton (R-AR). The bill is unpopular right now, but that’s because most Americans believe the media – when they see that their taxes are lower, that effect will dissipate somewhat. With that said, Republicans had better see continued strong economic growth, or voters will mistake correlation for causation and attribute any weakening in the economy to the tax reform bill, buying into the Democratic narrative that Republicans were out to help fat cats rather than middle class Americans.

And what is your reaction?

4.5
Votes: 11
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Total: 6 comments
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  1. Sarah Gillmor
    7
    10
    Sarah GillmorJournalist
    2017-12-21, 1:24PM
    This bill seems like a very good bill with all things considered, and it moves the mountain to the right, especially considering the fact that it repeals the individual mandate. Ideally, of course, I want the income tax to be abolished and the progressive tax code revised to a flat tax, but that's way outside of mainstream thought right now.
    +2
  2. lexuss
    3
    6
    lexussJournalist
    2017-12-21, 9:25AM
    Thing #9 is the most important to a conservative. It isn't "winning" when the "conservative" Party controls the White House and both Houses of Congress during an economic expansion and the deficits INCREASE! If we can't get control of spending in the first year of a all-Republican Government, when will we? Not in 2018. It is an "election year" and we will only have 51 Republican Senators. Probably not in 2019 or 2020 since the Republicans have record low approvals and will likely lose seats in the House. With the coming retirement of a large percentage of the American population, our future prospects for paying off the accumulated debt appear grim.
    +7
  3. Trevory Mogger
    1
    6
    2017-12-20, 10:03PM
    Let's talk about the impact on federal debt.

    This bill appears to create a $2 trillion deficit over the next ten years. That is about $6.000 per person in the United States. On top of our existing debt, that brings our total federal debt to around $70.000 per person I think. But it's not fair to think of debt in terms of dollars per person, because the debt isn't underwritten by the people of the United States. It is underwritten by the wealth of the United States.

    Total household wealth in the USA is about $85 trillion. With this bill, federal debt becomes $22 trillion. The debt is about a quarter of our total wealth, so to put it another way, we have collectively signed away the rights to a quarter of our national wealth. So if you have a thousand, a million, or a billion, just remember that the federal government has spoken for a quarter of it, and with the deficits incurred by this bill, they're speaking for more. sunglasses
    +10
  4. Michael John
    3
    2017-12-20, 9:45PM
    I think it has been unwise, to over promote the stock market rise as proof of anything. It is a massive bubble, and it WILL pop during POTUS first term, most likely... and that leaves him open to blame when it tanks, despite it pretty much being a totally artificial market. There is no discounting the impact Trump has had on the economy and consumer confidence. The left will increasingly say that is as a result of what Obama did before leaving office. Normally, that would largely be true. But there was nothing normal about Obama's impact on business (to the negative) and nothing normal about Trump's impact on same (to the positive).

    The global economy itself is drowning in debt and the debt based economy is coming to an end because it doesn't really work anymore, in growing equity. It never did, really. But there's just no more capacity for the "debt growth model" because it has no real productivity. This tax bill will help for a little while. Mandating price discovery for all segments of "health care" is the ONLY thing that will fix the economy long term, and it will trash the economy for a couple years in the process, but that would be followed by the American economy roaring back to life again.
    -4
  5. Chris Maccenroy
    5
    10
    Author: Chris MaccenroyJournalist
    2017-12-20, 6:07PM
    That means that Republicans will have to figure out a way to cut, or they’ll just be continuing to blow through borrowed cash, which means inflation or tax increases in the future.

    This is never going to happen. Republicans are NOT going to cut, they will continue to explain that a growing economy will grow them out of deficits. That would be true if they didn't increase spending, which if the past is anything to go by, they will. Which ultimately will bring us back to much higher taxes and interest rates due to inflationary pressure.
    +11
    1. Mister Portman
      4
      2017-12-20, 9:48PM
      I had another thought on the individual mandate. Remember when they tried to repeal and replace? Remember the CBO came out and said 23 million would "lose their health care". Remember when the media then framed that as 23 million would be "kicked off?"

      No matter how hard I tried to explain to people that "kicked off" and "choose to decline" are not the same thing. It was exhausting. I realize 23 million didn't make up only the individual mandate folks, but it accounted for most of it. Now fast forward to the spring. Imagine if congress tried again, but this time the mandate is already repealed and will not go into any CBO analysis. This will reflect a MUCH smaller number of uninsured people as a result. Since most people out there had no clue what went into the original 23 million, most people will assume the new repeal and replace bill is much better, even if it's identical (though I admit it could have been better anyway).

      Basically, this paves the way to use the fake news against it's own kind. it's a really smart move and one I expect to see in the next 6 months.
      +4
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