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Post by Tom on Nov 8, 2017 16:08:12 GMT -5
Of course they are. No one wants their own taxes to go up million dollars. On the other hand, how likely is it that this will actually happen as per the first draft. This is a proposed plan. I haven't heard that an actual bill has been filed, never mind getting out of committee. Right now this isn't even as far along in the process as the bill in MA that would force HC87 to change the name of his school. Sounding rather cynical, I haven't seen a lot to make me think this will be the first major legislation of the current administration
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Post by matunuck on Nov 9, 2017 8:35:51 GMT -5
Wall Street Journal
The College Tax Reform Tantrum Higher ed howls at the modest cut in subsidies in the House bill.
By The Editorial Board Nov. 8, 2017 Colleges have been rocked by student protests, but now they’re launching a demonstration of their own in Washington against reductions to their tax subsidies. They’re throwing a tantrum because they may, at long last, have to rationalize their spending.
The IRS code contains about a dozen individual tax subsidies for higher education, all with disparate rules that the IRS describes in a 95-page brochure that makes academic prose look lucid. Parents and students can claim three different tax credits, deduct loan interest, and receive an exemption for some discharged loans and tuition assistance.
These dispensations are layered on top of low-interest federal loans (4.45% for undergrads), grants and loan-forgiveness programs. The Congressional Budget Office estimates that the government will lose about 25 cents on every dollar of subsidized Stafford loans.
Colleges that have been riding this gravy train are howling that Republican House reforms repealing and consolidating their tax carveouts will raise tuition. But stripping down the subsidies might make students and parents more aware of costs and impel colleges to curb unnecessary spending.
Take the three tax credits, which the House bill proposes to combine into a partly refundable $2,500 American Opportunity Tax Credit that can be claimed for up to five years. This simplification would yield about $17.5 billion in revenue over 10 years and reduce the enticement for students to drag out their education. The Lifetime Learning Credit, which is part of the consolidation, can now be claimed indefinitely.
Parents and students would also no longer be allowed to write off tuition (cost: $3.9 billion in 2015) and interest on student loans ($13.6 billion), which receive singular treatment in the tax code. Interest on other non-mortgage personal loans is subject to taxation. Individuals have also been able to claim these above-the-line deductions even if they don’t itemize.
The GOP bill would also tax “tuition waivers” that colleges often use to pay grad students in kind. These effectively let colleges employ teaching assistants as indentured servants and have contributed to a surfeit of graduate degrees in fields for which there are few jobs beyond academia. Maybe colleges could try paying TAs a better wage.
The reforms would continue to encourage thrift by letting parents sock up to $28,000 annually in 529 college savings accounts that grow tax free. However, it’s unfortunate that the plan retains a tax exemption for discharged debt of borrowers who become government and nonprofit workers. Cancelled debt under other loan-forgiveness programs is typically taxable, but not for this privileged class.
All of these subsidies have failed to make college more affordable. Colleges instead pocket the subsidies and jack up tuition, which they steer into bloated administration and facilities. Over the last decade, tuition has risen at an annual inflation-adjusted 2.4% at private, and 3.5% at public, four-year colleges. Soaring college costs are the main reason student debt has doubled since 2009 to $1.3 trillion. Students are also taking longer to finish, perhaps in part because taxpayers are footing much of the tab.
Government grants, loans and tax credits also give students less reason to work during school. Alternatively, their parents can write off their college costs. This may help explain why labor-force participation over the last decade has declined by 5.4 percentage-points among Americans age 16 to 24 compared to 1.6 percentage-points from 25 to 54.
College leaders also complain that the House bill doubles the standard deduction, which means fewer middle-income households will itemize. They say this will reduce charitable giving and alumni donations. If that’s true, they really need to work on alumni enthusiasm.
Some public colleges have also groused that the elimination of the state and local deduction could discourage tax increases in states like Connecticut and New York. They’re worried that Democrats will instead cut funding for public colleges.
They have a better point that the GOP’s 20% excise tax on compensation of nonprofit employees that exceeds $1 million is arbitrary and meddles in wage-setting that Congress shouldn’t do. The House also slaps a 1.4% excise tax on investment income of private college endowments (which private foundations must also pay) that exceed $250,000 a student. We’d prefer ending the charitable deduction rather than taxing endowments, but as endowments grow so will political interest in taxing them.
*** If they’re really concerned about student welfare, colleges could make up for the decline in tax subsidies by scaling back spending and tuition. Purdue University President Mitch Daniels has held tuition flat since 2012, so it can be done. College leaders howl that Republicans are squeezing students to pay for corporate tax cuts. But college graduates would benefit from a simpler tax code with fewer distortions that produces more growth and higher wages.
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Post by Pakachoag Phreek on Nov 9, 2017 9:14:49 GMT -5
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Post by purplenurple on Nov 9, 2017 9:30:30 GMT -5
These are dubious statements at best:
However, it’s unfortunate that the plan retains a tax exemption for discharged debt of borrowers who become government and nonprofit workers. Cancelled debt under other loan-forgiveness programs is typically taxable, but not for this privileged class.
But college graduates would benefit from a simpler tax code with fewer distortions that produces more growth and higher wages.
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Post by somedaycamesuddenly on Nov 9, 2017 17:22:20 GMT -5
These are dubious statements at best: However, it’s unfortunate that the plan retains a tax exemption for discharged debt of borrowers who become government and nonprofit workers. Cancelled debt under other loan-forgiveness programs is typically taxable, but not for this privileged class. But college graduates would benefit from a simpler tax code with fewer distortions that produces more growth and higher wages. Yeah dude! Freaking social workers and public defenders beating the system! Let's just let the trickle down growth lead to high paying jobs for them.
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Post by KY Crusader 75 on Nov 9, 2017 19:17:22 GMT -5
No econ classes at BU???
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Post by somedaycamesuddenly on Nov 9, 2017 22:56:19 GMT -5
Everyone of those students pushing back on this must just be misinformed about what's in their best interest, right? I know people generally like other's telling them what's best for them, especially when "what's best for them" has dubious empirical evidence.
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Post by Pakachoag Phreek on Nov 10, 2017 7:42:01 GMT -5
The distortions remain in the tax code, and for many, the cuts are ephemeral. Here is the table produced by the Joint Committee on Taxation. For example, look at the effect over time of those taxpayers making between $200,000 and $500,000 Significant savings in 2019, but paying more (tax increase) by 2023. _____________________________________ www.treasury.gov/resource-center/tax-policy/Documents/Tax-Expenditures-FY2017.pdf^^^^ Tax expenditures are revenues foregone, (Money that would otherwise be owed and paid to the Federal government if not for an allowable deduction and certain credits.) Start on pdf p. 21 for the list. The single largest tax expenditure (employer share of health insurance) is not touched by the House bill. There is a difference between real tax reform and reform in the guise of tax cuts. -----And tax cuts which add to the Federal deficit and the national debt. If tax legislation is passed, it will be tax cut bill, not a tax reform bill. And most of the cuts are front-loaded because that's the only way the tax-cutters can stay within their deficit targets. The table indicates the one income cohort where the cuts aren't front-loaded. As for jobs, the country is currently near full employment. Where there is high unemployment, these are geographic pockets where the old jobs (and employers) have left and there have been fewer replacement jobs and new employers. The people there are stuck geographically and economically. Here is a profile of Johnstown PA, in Politico, two days ago. Put aside the politics but try to understand the economic fix they are in. Its a community and county with only dark clouds above. www.politico.com/magazine/story/2017/11/08/donald-trump-johnstown-pennsylvania-supporters-215800How is the tax bill going to revive the economic fortunes of Johnstown? (My sense is that Lewisburg, not that far away, has survived, in large measure, because of the Federal prison system.) The table below is the projection of employment by sector between 2016 and 2026. It was just released by the Bureau of Labor Statistics. It shows those sectors with the fastest growth in the number of jobs, and those sectors where jobs are projected to decline the most. The projections are made independent of any tax cut. How is the tax cut going to stem or reverse the decline in those industrial sectors where employment is decreasing? The short answer is that it won't. www.bls.gov/emp/ep_table_203.htm^^^^Note the increase in jobs for support activities for mining is related to oil and gas extraction, not coal.
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Post by KY Crusader 75 on Nov 10, 2017 8:08:02 GMT -5
How accurate have these "authorities", such as the Joint Commission on Taxation, been on previous forecasts? It's like when we wait for the Congressional Budget Office to "score" some proposal knowing that the office has been off base n the past. Who did President Obama rely upon when he told us that the Affordable Care Act would result in lower insurance bills for American families? Didn't his experts say it was supposed to save everybody $2,500 or something like that?
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Post by sader1970 on Nov 10, 2017 10:14:13 GMT -5
I am confident that the CBO and these other scorecards are as accurate as Massey, Bassett, etc. in pre-season sports predictions. How about you?
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Post by CHC8485 on Nov 10, 2017 11:49:41 GMT -5
Kill the entire tax code and start over. All the currrent code does is encourage cheating, cause confusion, waste time, creates division and give lobbists jobs.
Flat tax. No deductions. Exempt the first $50,000 in income. Graduate the rates if you must but the idea of trying to drive behavior through tax code is a poster child for the law of unintended consequences.
My sister is in favor of scrapping Federal income tax entirely in favor of a national sales tax. Her rationale - drug dealers, mobsters, pimps, illegal gamblers, and others who gain their income through illegal channels all buy stuff and so would not escape - or at least it would be more difficult to escape - paying taxes. It encourages saving, and a millionaire who buys a Mercedes would pay a lot more than a working stiff who buys a 10 year old Honda Civic. Not sure I completely agree, but can see her point.
Of course either would result in large scale unemployment for accountants and lobbyists so ...
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Post by sader1970 on Nov 10, 2017 12:14:20 GMT -5
No, no, no! This only gets us halfway. The goal should be to put the lawyers out of a job!! A lot of lobbyists are lawyers, so this would help and only accountants working for organized crime should become unemployed. Seriously, though, I think your sister's sales tax idea may have some merit. The downside is that they say the poorer people spend a greater percentage of their income on purchasing things. A luxury sales tax on the sale of planes, yachts, lamborghini's, porsches, etc. might help make it fairer.
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Post by hchoops on Nov 10, 2017 13:01:15 GMT -5
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Post by KY Crusader 75 on Nov 10, 2017 14:02:18 GMT -5
No, no, no! This only gets us halfway. The goal should be to put the lawyers out of a job!! A lot of lobbyists are lawyers, so this would help and only accountants working for organized crime should become unemployed. Seriously, though, I think your sister's sales tax idea may have some merit. The downside is that they say the poorer people spend a greater percentage of their income on purchasing things. A luxury sales tax on the sale of planes, yachts, lamborghini's, porsches, etc. might help make it fairer.Re: poorer people spending a higher percentage of their income on purchases, perhaps the tax code would exempt certain items with food being the obvious one to not tax. Re: luxury tax: I think that would prove to confirm "the law of unintended consequences" in that it would hurt lower income people. Didn't GHW Bush impose a tax on yachts and cars costing over $30,000 (not sure where the exact demarcation line was drawn) during his administration? What that does is cause the (evil) rich to make fewer purchases of such items and thus putting out of work the "common man" who was employed to manufacture them. Isn't that what happened then? If you buy a $1,000,000 yacht (and we know many boats/ships cost 5X, 10X, 50X that amount) there's probably $200,000 worth of labor in that retail price providing a year's employment for 3 or 4 craftsmen. Hinckley Yachts, for example, employs 685 people in the US: cut its sales by 10% and 25 people lose their jobs. If anything we'd be smart to subsidize sales of yachts rather than tax them.... Pak Phreek-- can you scare up any data on this subject (I'll try but you're the expert) e.g. the effect of Pres Bush's initiative?? EDIT: according to the story below, it was a Democratic Congress initiative that the President signed.
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Post by KY Crusader 75 on Nov 10, 2017 14:07:52 GMT -5
Bush Will Try to Kill Luxury Tax on Yachts January 27, 1992|ART PINE | TIMES STAFF WRITER
WASHINGTON — President Bush plans to ask Congress on Tuesday to repeal the luxury tax on yachts that lawmakers enacted in late 1990 and may seek to end similar levies on private aircraft, automobiles, jewelry and furs, White House officials and lawmakers said Sunday. The White House is expected to portray the move as a bid to help restore jobs. Yacht builders have reported that their sales have fallen off sharply since the tax was enacted, and manufacturers of luxury automobiles have voiced similar complaints. The plan to seek repeal of the tax on yachts was confirmed by Samuel K. Skinner, the new White House chief of staff, during an appearance on ABC-TV's "This Week With David Brinkley," and by Senate Minority Leader Bob Dole (R-Kan.), on CBS-TV's "Face the Nation." It was not immediately clear whether Bush also would go ahead with a request to roll back the taxes on the four other luxury items, but Dole suggested that the proposal might include private aircraft and said that Congress may add the remaining three as well.
The move to repeal the luxury tax is expected to be among a spate of new measures that Bush plans to propose in his State of the Union address Tuesday as part of an election-year package designed to gain the initiative on domestic issues. Bush also is considered likely to propose a doubling of the current $33 million in federal spending to control tuberculosis and a new public housing initiative that would enable tenants to remove apartment managers who were found to be ineffective. Disclosure of the likely proposals Sunday marked the latest in a string of calculated leaks by Administration officials designed to build suspense before the Tuesday speech, which the White House is touting as a turning point in the Bush campaign. Skinner said that he hoped the speech would inspire new confidence that would help spur the economic recovery. ". . . That's (where) we're going to begin on our effort, Tuesday night, to make sure it happens," he told the television audience on Sunday. The luxury tax--on yachts, automobiles, private aircraft, jewelry and furs--was pushed through by congressional Democrats as part of the autumn, 1990, budget accord between Congress and the White House and accepted reluctantly by Bush as a necessary price for the pact. Although Democrats had intended the soak-the-rich levy as an "equity" measure, affected businesses claimed that it stunted sales of yachts, cars, private airplanes and other luxury goods, sparking plant shutdowns and layoffs. Senate Majority Leader George J. Mitchell (D-Me.), who represents a state that has a sizable boat-building industry, already has made a speech on the Senate floor saying that he would support a proposal to repeal the luxury tax on yachts. "The welfare of luxury boat buyers is not our concern," he said. "Rather, our concern is the well-being of the many thousands of Americans who work in the boat manufacturing and sales industry."
The luxury tax on yachts requires boat buyers to pay a 10% extra federal sales tax on that part of the purchase over $100,000. But boat sales dropped sharply and revenues from the levy have been far smaller than expected. [bolding is mine] Separately, Mitchell, who appeared with Dole on "Face the Nation," said that Democrats may agree to vote for an expected Bush proposal to cut the tax rate on capital gains if it is part of a balanced package of broader tax changes.
Mitchell's comments paralleled a similar view offered Thursday by House Speaker Thomas S. Foley (D-Wash.). Democrats generally had opposed such a move a year ago. Capital gains are the profits from the sale of stocks or other assets. The New York Times first reported the luxury tax proposal Sunday. It also said that Bush plans to propose substantial increases in public health and child welfare programs. The newspaper said that the measures were likely to include an 18% boost in childhood immunization funds, to $349 million; an 18% rise, to $9.4 million, in monies to combat infant mortality; and a 9% jump, to $2.8 billion, in aid to poor women, infants and children. Also on tap are proposals for a 15% increase, to $684 million, in funds for community health centers; a 19% increase, to $120 million, for the National Health Service Corps, which assigns physicians to work in rural and inner-city areas. The proposed change in tenants' rights laws for public housing units reportedly would enable project dwellers to vote to transfer control of these units to new managers if the old ones have allowed the buildings to deteriorate excessively. The move has been advocated by Housing and Urban Development Secretary Jack Kemp as part of a move to "empower" project dwellers to encourage them to take better care of their facilities.
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Post by sader1970 on Nov 10, 2017 14:11:18 GMT -5
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Post by KY Crusader 75 on Nov 10, 2017 14:24:31 GMT -5
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Post by sader1970 on Nov 10, 2017 14:45:38 GMT -5
First, when I think of yacht, I am not thinking about a dinky little $100K boat (it's all relative . . . . "if you have to ask, you can't afford it."). Living in RI and often taking trips to Newport and Nantucket, not on a yacht mind you, there are dozens upon dozens, if not hundreds of true yachts that you know cost millions and some doubtless 10's of millions. Lots of them are flying foreign flags especially Australia and New Zealand, which wouldn't be taxed. The people that buy those are not worrying about an extra 10% expense and it also appears that most of those yachts basically sit there at the docks with their crews because their owners are busy flying around on the private jets.
These people are not evil, they just have a lot of money, God bless them (think Warren Buffet or even - gasp - Bob Kraft who Trump has often quoted as telling him not to give him a tax break but rather to the middle class). But they also don't need any additional help with tax breaks.
I am all for lowering corporate taxes to something reasonable and eliminating some loopholes but it is a little disingenuous to talk about lowering taxes for the middle class when you actually mean tax rates but then the reality is paying more taxes as SALT tax deductions are eliminated and other things that working stiffs use.
I also assume the postcard tax returns are not actual postcards as I would just love to send in a postcard with my name and social security number on an open document through the mail.
The bottom line is that tax reform is very, very difficult or it would have been done already. I don't blame Republicans or Democrats or politicians in general because no matter what you do, someone is going to get the short end of the stick. Right now, everyone is pi$$ed off.
The joys of a democratic republic. It stinks but no one knows a better form of government.
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Post by KY Crusader 75 on Nov 10, 2017 16:13:42 GMT -5
How then do you explain the decline in yacht sales after the tax was enacted?
Re:democracy we can recall Mr Churchill's evaluation: "Democracy is the worst form of government except for all those others that have been tried."
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Post by sader1970 on Nov 10, 2017 16:27:02 GMT -5
Good thing I don't have to explain it. I'm not an economist. But . . . . I'm not talking $100K boats or even taking into account inflation. Those were wealthy people (upper, upper middle class) but not mega-wealthy. The numbers might be different if you looked at the multi-million dollar, travel around the world yachts. Did they really tank too? Like so many things, not black & white but knowing where the balance is. Again, that's why this is a difficult subject. Would you be OK if yachts were just taxed at the same rate as the standard sales tax for everything else (hopefully excluding food)? I'd be OK with that. See? I'm willing to compromise.
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Post by Tom on Nov 10, 2017 23:10:01 GMT -5
No, no, no! This only gets us halfway. The goal should be to put the lawyers out of a job!! A lot of lobbyists are lawyers, so this would help and only accountants working for organized crime should become unemployed. Seriously, though, I think your sister's sales tax idea may have some merit. The downside is that they say the poorer people spend a greater percentage of their income on purchasing things. A luxury sales tax on the sale of planes, yachts, lamborghini's, porsches, etc. might help make it fairer.Re: poorer people spending a higher percentage of their income on purchases, perhaps the tax code would exempt certain items with food being the obvious one to not tax. Even if you take food out of the equation, a sales tax would be really regressive. Also, I can't imagine the tax rate being high enough that just having a sales tax could possibly not reduce total revenues.
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Post by Pakachoag Phreek on Nov 11, 2017 10:08:31 GMT -5
Sales taxes, as a principal source of revenue, are hugely regressive. You simply cannot get enough taxable consumption by the rich to get the revenue you seek. ___________________________________ Washington Post surveys the tax mood in Alpharetta GA, where HC often recruits football players. www.washingtonpost.com/business/economy/i-dont-feel-wealthy-the-upper-middle-class-is-worried-about-paying-for-the-tax-overhaul/2017/11/09/a5cf1acc-c55e-11e7-aae0-cb18a8c29c65_story.html?utm_term=.b990d9c8c644_____________________________________ I did a quick survey of several European countries with high standard of living to see how much of their tax revenue was from VAT. Links are below. I also included Estonia where supposedly the tax code is so simple you can file by smartphone. The VAT is not as important a source of revenue as I thought. These surveys are produced by the OECD (Organization for Economic Cooperation and Development) in Paris. The U.S. is a member of the OECD as are 34 other countries. Most are European countries. Tax revenues are expressed as a percentage of GDP, which is way to standardize across countries, particularly countries not sharing the same currency. Note that the United States has the firth lowest tax burden (Federal, state, local) among the 35 countries. Americans may believe their taxes are too high, but compared to most of the developed world, they are low. www.oecd.org/tax/revenue-statistics-switzerland.pdfwww.oecd.org/tax/revenue-statistics-netherlands.pdfwww.oecd.org/tax/revenue-statistics-germany.pdfwww.oecd.org/tax/revenue-statistics-estonia.pdfwww.oecd.org/tax/revenue-statistics-canada.pdfwww.oecd.org/tax/revenue-statistics-united-states.pdf^^^ The right-most columns in the last table in each of these survey reports shows the country's position with respect to 34 other counties for each revenue source. The U.S. is 3rd highest (among 35) in its reliance on personal income, profits, and gains. In the middle of the pack with respect to corporate profits and gains. And 35th of 35 on tax revenues from the sale of goods and services (which would include VAT. if the U.S. collected a VAT tax.) .
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Post by sader1970 on Nov 11, 2017 12:00:33 GMT -5
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Post by CHC8485 on Nov 11, 2017 14:25:14 GMT -5
1 - not to get political here, but the criticism that sales won’t generate the same revenue as income assumes that the federal government must maintain funding at currently budgeted levels. Perhaps my sister does not see that as a necessary given.
2 - Note that I said I don’t think I completely agree, so I already similarly poked some holes in her position.
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Post by Tom on Nov 13, 2017 9:02:23 GMT -5
Your honor, I withdraw the question. It must be true if PP has the stats to back it up. 8485, falls on you to now tell your sister a federal sales tax is a stupid idea. I thought it was Pr Chris Augustiniak (sp?) who said it in freshman economics
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