I am more interested in what the so-called deficit hawks will do. If memory serves GOP used to claim they care about federal deficits and national debt. This plan - which isn’t really a plan for lack of meaningful details - has absolutely nothing to pay for the tax cuts.
People just assumed Trump will close the business tax loopholes when he cuts the rate to 15%. What makes you think that? What does “eliminate tax breaks for special interests” really mean? Who are special interests?
In the end Trump will just do the easy stuff. Cut, cut, cut. With no painful reforms so loopholes will stay. Ryan’s border tax is terrible. But at least that is a principled stand. Ryan wants to make his plan revenue neutral. Trump doesn’t care.
That has nothing to do with a REIT. They don’t even pay corporate taxes. Their income is passed through to investors as a dividend. Then it’s taxed at the dividend rate of the investor.
Paying for cuts is a myth so far. We’ve yet to cut taxes and lower tax revenue. I’m willing to bet tax revenue will increase under this plan. I do wish we’d attack spending by reducing redundant departments, cut the $125B/yr the pentagon admitted it wastes, etc.
Special interest = some expenses are a deducation and others are a credit. That’s a massive difference. Expenses aren’t all treated equally. It’s distorted by special interests. It’s why the tax code is 70,000 pages.
I have a simple definition for special interests: they are other people’s interests.
We are all special interests.
Like I said this is not a plan. It’s not even a plan for a plan. It’s something people write down on a whiteboard in a brain storming session, a wishlist of some sort. When we finally have some details, which looks like it will be October at the earliest, we can see how CBO scores it.
Yes, I know the charts and the benefit of 1031 exchange fully !
You need to open an 1031 exchange escrow. This is fine.
Identify home with in 45 days and close within 180 days. Unless you get into contract within 45 days, there is no use of 1031.
This is toughest part (Getting a home in BA) with additional rules “Your new home price must be at least $1 more than your selling price and new home loan must be at least $1 more than current loan which must be lenders loan limit”
BA homes, esp investment multiplexes, are going crazy with high cash down like 60% or 70% cash down payers.
Then, the lender eats away with 1% point on mortgage rate difference as Aunt Janet hiked FED rate.
I tried, but finally gave up with an idea, let me pay LTCG tax (max 30% on profit) and pay off my existing rental homes. This puts me $2500/month additional cash flow.
As I stated already, corp tax reduction to 15% makes USA as tax haven country. If that happens (which I still with current congress disagreement ), Trillions will flow into USA and capital outflow will be minimized.
The White House insists that economic growth will cover the cost, which could be as high as $7 trillion over a decade.
In each year from 2006 to 2012, at least two-thirds of all active corporations had no federal income tax liability. Larger corporations were more likely to owe tax. Among large corporations (generally those with at least $10 million in assets) less than half—42.3 percent—paid no federal income tax in 2012. Of those large corporations whose financial statements reported a profit, 19.5 percent paid no federal income tax that year. Reasons why even profitable corporations may have paid no federal tax in a given year include the use of tax deductions for losses carried forward from prior years and tax incentives, such as depreciation allowances that are more generous in the federal tax code than those allowed for financial accounting purposes. Corporations that did have a federal corporate income tax liability for tax year 2012 owed $267.5 billion.
These reasons also explain why corporate effective tax rates (ETR) can differ substantially from statutory tax rates. ETRs attempt to measure taxes paid as a proportion of economic income, while statutory rates indicate the amount of tax liability (before any credits) relative to taxable income, which is defined by tax law and reflects tax benefits built into the law. The statutory tax rate on net corporate income ranges from 15 to 35 percent, depending on the amount of income earned. For tax years 2008 to 2012, profitable large U.S. corporations paid, on average, U.S. federal income taxes amounting to about 14 percent of the pretax net income that they reported in their financial statements (for those entities included in their tax returns).
When foreign and state and local income taxes are included, the average ETR across all of those years increases to just over 22 percent. GAO also computed ETRs that combine large profitable corporations and those large corporations with current year losses, which pay little if any actual tax. Over tax years 2008 to 2012, all large corporations—profitable and those that reported current year losses—paid 25.9 percent of their pretax net income in U.S. federal income taxes, and 40.1 percent when foreign and state and local taxes are included. Including corporations with losses results in a more comprehensive estimate, but makes the results difficult to interpret because ETR is not meaningful for a corporation in a year in which it has a net loss. GAO could not examine the variation in ETRs across corporations with the aggregated data available, although GAO’s prior work suggests that ETRs are likely to vary considerably.
American companies can prepare two income statements. A rosier one to show the shareholders. A gloomier one to show IRS. There are a metric ton of accounting statement trickery you can use to bring that net income down to zero or even negative. Depreciation and amortization are your friends.
Tax cuts paying for itself? Reminds me of a joke how some broke business models make profit. “We will make it up in volume!” Sure you will.
US Corporate tax is not super low. Companies are hiding trillions behind the scene and paying low tax. When Trump brings down corp rate, it is historic and benefits US long term.
There is no doubt. Trump is helping economy to grow unlike other media reports.
Never Trust media, Trump is 100% right on corporate tax.
This is major change to USA and welcome change which no other president has done so far (that includes Obama & Clinton too).
The tax side, Trump is great. If he succeeds in this, this will help USA long run.
Tax code should be simple. Too much time is wasted on tax filing, planning. Let people and business focus on making money, not on studying tax code.
This plan will make bottom 90% pay much less tax and the top 10% pay the same or a little less tax. Income inequality will go down.
When SF and NYC elites pay more tax and the middle west mom and pod pay less tax, economy may boom and the SF/NYC elites may make a lot more. Hard to say who is the winner.
Do not worry about whether you’ll get more or less tax cut. Focus on simplicity. The most beautiful thing in the world is simplicity. Applaud the effort to simplify tax code
Simple Simplify. …Except the lobbyists are lined up at Donalds door to keep their pet loopholes…Let the games begin…But its all about politics and the Donald doesn’t have a clue…Similar to the Trumpcare debacle, this will be a circus…Let the games begin…lol
Btw, home mortgage deduction is in his proposal. .So high end home prices won’t suffer…But states with high income tax will…
Come on, @Jil, you are pretty savvy. I am shocked you didn’t find a way to make the 1031 Exchange work somehow, instead of paying Uncle Sam all that money you worked hard for. Or, do a reverse 1031 Exchange where you get the property first technically and then sell your place. More expensive of course and I hear IRS might catch wind of scheme to avoid gain which is not good of course. I certainly would engage with a good agent who gets a listing that would work (may not be perfect, but the end goal is to just exchange out for a few years, move in as primary, and then sell anyway) where I make a deal with the owner to top all offers by X dollars as long as he/she is willing to work with me on exchange process. I pay the premium pricing (obviously it will be way less than paying the otherwise capital gain) willingly and maybe accept the fastest closing offer on my selling property. I think it can work as long as you line up all of the ducks properly and be prepared to have to pay some to make it all work.
I would be curious to hear if others here were able to do an exchange in a HOT market like it is now and whether or not it worked out ok or not.
If this gets near passing, then it’ll be time to short H&R block and any other publicly traded tax prep service.
Our tax systems costs consumers billions a year in added costs to products and services. Companies have to either staff massive tax departments or pay a third party to correctly pay all the taxes. The cost of all of that gets added into the cost of every product or service we buy.
