JimofPennsylvan
Platinum Member
- Jun 6, 2007
- 952
- 714
- 910
The Tax portion of the House Reconciliation bill is not a responsible bill it is a tax bill written to advance far right ideology and would need drastic changes to be a bill garnishing majority public support. The one saving grace of the bill is that it extends all the individual tax rates from the 2017 Tax reform bill which are set to expire at the end of the year. One shortcoming of the bill is that it increases the standard deduction by $1500 for the head of household and $1000 for everyone else for this year and the next three years revealing what this move is which is a brazen effort to buy votes for the Republicans for the mid-terms and the next Presidential election (Sec. 110002(b)). Similarly, the Republicans in their bill raise the child tax credit from $2000 to $2500 for only four years this year and the following three years the agenda is obvious the Republicans are using money from the Treasury to buy votes that is an abuse of governmental power. (Sec.110004). The Republicans should permanently raise the child tax credit to $2500 because inflation has really hurt American families over the past four years and this $500 bump would make up for this loss of purchasing power due to inflation!
This Republican bill, in Section 110005, not only extends the deduction for qualified business income which allows small businesses to deduct 20% of their income from the amount considered taxable income but raises the deducted amount to 23% and expands the type of income eligible to this deduction to dividends comprised of interest income from Qualified Business Development Corporations which are essentially private equity companies publicly traded. This special tax treatment was created by the Republicans in their 2017 tax reform law their rationale was that small business owners were taxed at a higher tax rate the individual income tax rates compared to corporations who are taxed at the lower tax rate of 21% and so these small business owners have less money to reinvest in their business. If the Republicans were trying to create more capital investment in small businesses why didn't they just allow small business owners to divert twenty percent of their earnings into a separate business bank account where these monies couldn't be used for personal needs only the business owners and this 20% percent kept in the small business would not be subject to Federal taxes. The Republicans turned this 20% deduction for Qualified Business Income into a big giant tax loophole for special interests that isn't supported by good public policy meaning in part fairness; the 20 % deduction applies to dividends comprised of interest income from Real Estate Investment Trust and dividends comprised of passive income from Qualified publicly traded partnerships, which in the vast vast majority of cases are not small businesses! If Republicans must, extend this special tax treatment but don't raise the deduction three percent and don't expand it to income from Qualified Business Development Corporations because if you do so you will be largely helping the wealthy to the detriment of ordinary Americans.
The Republicans should remove this Section 110013 in their bill which permanently extends their ban for taxpayers deducting reasonable moving costs if the move was the result of them changing jobs where the new job was farther than fifty miles from their previous residence compared to the distance for the prior job this ban existing for tax years 2018 through 2025. With President Trump's king size effort to dramatically expand manufacturing and its good paying jobs in the United States workers will have to move to these new manufacturing jobs and with this big Artificial Intelligence push in the United States probably half the coding jobs will go away in the long-term in America as AI can generate the needed software so these coding workers will likely have to move to get good jobs; it is good public policy to help these workers relocate to find work that provides a livable wage!
In Section 110101 of their bill Republicans have excluded tip income from taxes, this could not be a worse move! Ordinary taxpayers that pay taxes on their income and don't make a lot of money and struggle to get by will legitimately resent these tip workers getting an exemption from paying taxes, principles do not support this exemption, it create an atmosphere in America that America is corrupt if you have political pull you can get treated specially and do things like not have to pay just taxes. Everyone knows why the Republicans are doing this because Donald Trump campaigned on this policy change and now that he won the election he wants to claim promises made, promises kept on this matter; President Trump needs to realize that American voters don't expect Presidents to keep every single promise they make, the American people elected Donald Trump in 2024 primarily to fix the broken border, to stop inflation and make their lives better economically! This is what Congressional Republicans should do on this matter which is exempt $2400 a year in tip income from taxes and apply it to not only traditional tip workers but all workers as it applies to cash income they receive , I am sure that many service workers that service home owners regularly get ten to twenty dollar tips handed to them by the home owner for extraordinary customer service and it is a real headache and record keeping burden to deal with this from a tax burden why doesn't Congress just give all these people that intermittently are tipped and in very small amounts a big break and say tips $2400 per year and below are a de minimis amount and don't have to be reported on one's taxes!
The Republicans in their bill exclude overtime pay workers receive from taxes (Section 225); this is another tax policy which is atrociously bad. It is not justifiable many self-employed people work over forty hours per week and won't get their income excluded from taxation and many people would love to have the opportunity to work over forty hours a week and not have to pay taxes on the income but their employers don't offer an overtime opportunity. The American system of taxation which has been in effect for over one hundred years is that you pay taxes on all the wages and compensation you earn period whether that wages is for hours worked over forty hours or under forty hours is a distinction that doesn't offer a difference from a good public policy point on taxation.
In the media for the Reconciliation bill the SALT (State and Local Tax) deduction issue has been playing out big it is turning into an issue in the Republican party as divisive as support for the Ukrainian war. The House Reconciliation bill addresses the issue by raising the SALT deduction from $10,000 to $30,000 and phasing it out with incomes over $400,000 (Section 112018); but, this hasn't seemed to placate House members from States with high local taxes. I think both sides have legitimate arguments on the issue I think it is fair to reduce income subject to federal taxation by the amount of state and local taxes such jurisdictions are all part of the government in America so the taxpayer should get a break for that part of their tax bill and on the other hand certain states don't rein in spending like they should they have public unions which really financially gouge the state and local governments so why should citizens from financially responsible states pick-up this tab by allowing citizens from those irresponsible states to deduct their overly high tax bills from their federal taxable income and result in lower tax revenue flowing into the Federal Treasury! What I think Congress should do is distinguish between the property tax portion of SALT and the income tax portion of SALT, people can control the property tax portion of SALT by owning a residence of a lower value so the property tax bill isn't as big therefore it is fair to try to strictly limit this deduction; however, for the state and local income tax the taxpayer has no control over such tax it is based on where one lives and one has to live in a certain locale to do their job. Therefore, it would seem to me to be fair to limit the SALT deduction for property taxes to $30,000 and to try to accommodate these taxpayers from "high" state and local income tax states make the overall SALT deduction limit be $60,000 and of course allow the taxpayer to elect to instead of using the state and local income tax to use state and local sales taxes, the same standard that exists today. For citizens from high state income tax states they should keep in mind that the rules would allow for the situation where if their property tax bill was less than $30000 it was like $15000 they would then be able to deduct $45,000 of their state and local income taxes from their federal taxable income amount. As for the Reconciliation bill's current phase out over $400K I would scrap this because I think it is unfair the whole principle behind this deduction is fairness a taxpayer should be able to deduct the state and local taxes they pay from their income for which they are taxed by the Federal government they deserve a credit for the local tax payment. Whether someone is extremely wealthy and has extremely high income is irrelevant it is about fairly determine one's income level for purposes of applying federal tax rates.
Obviously, this tax treatment of SALT would be highly expensive for the Federal Government; nevertheless, there is an abundance of ways the Congress could pay for it. One way which I think would be helpful is that the tax advantage of Opportunity Zone Funds (OZ Fund) be reduced now if someone holds an investment in an OZ Fund for ten years they pay no capital gain tax because their basis is stepped up to the fair market value of their investment at the time of sale; the benefit should be reduced so that after ten years the taxpayer can reduce their capital gain by fifty percent meaning they only have to declare fifty percent of the gain as a capital gain on their taxes. The same with the qualified Small business stock exclusion where if the stock is held for five years one does not have to pay a capital gains tax on an amount up to ten million dollars, reduce reporting so the taxpayer can reduce declarable capital gains by fifty percent up to ten million dollars!
This Republican bill, in Section 110005, not only extends the deduction for qualified business income which allows small businesses to deduct 20% of their income from the amount considered taxable income but raises the deducted amount to 23% and expands the type of income eligible to this deduction to dividends comprised of interest income from Qualified Business Development Corporations which are essentially private equity companies publicly traded. This special tax treatment was created by the Republicans in their 2017 tax reform law their rationale was that small business owners were taxed at a higher tax rate the individual income tax rates compared to corporations who are taxed at the lower tax rate of 21% and so these small business owners have less money to reinvest in their business. If the Republicans were trying to create more capital investment in small businesses why didn't they just allow small business owners to divert twenty percent of their earnings into a separate business bank account where these monies couldn't be used for personal needs only the business owners and this 20% percent kept in the small business would not be subject to Federal taxes. The Republicans turned this 20% deduction for Qualified Business Income into a big giant tax loophole for special interests that isn't supported by good public policy meaning in part fairness; the 20 % deduction applies to dividends comprised of interest income from Real Estate Investment Trust and dividends comprised of passive income from Qualified publicly traded partnerships, which in the vast vast majority of cases are not small businesses! If Republicans must, extend this special tax treatment but don't raise the deduction three percent and don't expand it to income from Qualified Business Development Corporations because if you do so you will be largely helping the wealthy to the detriment of ordinary Americans.
The Republicans should remove this Section 110013 in their bill which permanently extends their ban for taxpayers deducting reasonable moving costs if the move was the result of them changing jobs where the new job was farther than fifty miles from their previous residence compared to the distance for the prior job this ban existing for tax years 2018 through 2025. With President Trump's king size effort to dramatically expand manufacturing and its good paying jobs in the United States workers will have to move to these new manufacturing jobs and with this big Artificial Intelligence push in the United States probably half the coding jobs will go away in the long-term in America as AI can generate the needed software so these coding workers will likely have to move to get good jobs; it is good public policy to help these workers relocate to find work that provides a livable wage!
In Section 110101 of their bill Republicans have excluded tip income from taxes, this could not be a worse move! Ordinary taxpayers that pay taxes on their income and don't make a lot of money and struggle to get by will legitimately resent these tip workers getting an exemption from paying taxes, principles do not support this exemption, it create an atmosphere in America that America is corrupt if you have political pull you can get treated specially and do things like not have to pay just taxes. Everyone knows why the Republicans are doing this because Donald Trump campaigned on this policy change and now that he won the election he wants to claim promises made, promises kept on this matter; President Trump needs to realize that American voters don't expect Presidents to keep every single promise they make, the American people elected Donald Trump in 2024 primarily to fix the broken border, to stop inflation and make their lives better economically! This is what Congressional Republicans should do on this matter which is exempt $2400 a year in tip income from taxes and apply it to not only traditional tip workers but all workers as it applies to cash income they receive , I am sure that many service workers that service home owners regularly get ten to twenty dollar tips handed to them by the home owner for extraordinary customer service and it is a real headache and record keeping burden to deal with this from a tax burden why doesn't Congress just give all these people that intermittently are tipped and in very small amounts a big break and say tips $2400 per year and below are a de minimis amount and don't have to be reported on one's taxes!
The Republicans in their bill exclude overtime pay workers receive from taxes (Section 225); this is another tax policy which is atrociously bad. It is not justifiable many self-employed people work over forty hours per week and won't get their income excluded from taxation and many people would love to have the opportunity to work over forty hours a week and not have to pay taxes on the income but their employers don't offer an overtime opportunity. The American system of taxation which has been in effect for over one hundred years is that you pay taxes on all the wages and compensation you earn period whether that wages is for hours worked over forty hours or under forty hours is a distinction that doesn't offer a difference from a good public policy point on taxation.
In the media for the Reconciliation bill the SALT (State and Local Tax) deduction issue has been playing out big it is turning into an issue in the Republican party as divisive as support for the Ukrainian war. The House Reconciliation bill addresses the issue by raising the SALT deduction from $10,000 to $30,000 and phasing it out with incomes over $400,000 (Section 112018); but, this hasn't seemed to placate House members from States with high local taxes. I think both sides have legitimate arguments on the issue I think it is fair to reduce income subject to federal taxation by the amount of state and local taxes such jurisdictions are all part of the government in America so the taxpayer should get a break for that part of their tax bill and on the other hand certain states don't rein in spending like they should they have public unions which really financially gouge the state and local governments so why should citizens from financially responsible states pick-up this tab by allowing citizens from those irresponsible states to deduct their overly high tax bills from their federal taxable income and result in lower tax revenue flowing into the Federal Treasury! What I think Congress should do is distinguish between the property tax portion of SALT and the income tax portion of SALT, people can control the property tax portion of SALT by owning a residence of a lower value so the property tax bill isn't as big therefore it is fair to try to strictly limit this deduction; however, for the state and local income tax the taxpayer has no control over such tax it is based on where one lives and one has to live in a certain locale to do their job. Therefore, it would seem to me to be fair to limit the SALT deduction for property taxes to $30,000 and to try to accommodate these taxpayers from "high" state and local income tax states make the overall SALT deduction limit be $60,000 and of course allow the taxpayer to elect to instead of using the state and local income tax to use state and local sales taxes, the same standard that exists today. For citizens from high state income tax states they should keep in mind that the rules would allow for the situation where if their property tax bill was less than $30000 it was like $15000 they would then be able to deduct $45,000 of their state and local income taxes from their federal taxable income amount. As for the Reconciliation bill's current phase out over $400K I would scrap this because I think it is unfair the whole principle behind this deduction is fairness a taxpayer should be able to deduct the state and local taxes they pay from their income for which they are taxed by the Federal government they deserve a credit for the local tax payment. Whether someone is extremely wealthy and has extremely high income is irrelevant it is about fairly determine one's income level for purposes of applying federal tax rates.
Obviously, this tax treatment of SALT would be highly expensive for the Federal Government; nevertheless, there is an abundance of ways the Congress could pay for it. One way which I think would be helpful is that the tax advantage of Opportunity Zone Funds (OZ Fund) be reduced now if someone holds an investment in an OZ Fund for ten years they pay no capital gain tax because their basis is stepped up to the fair market value of their investment at the time of sale; the benefit should be reduced so that after ten years the taxpayer can reduce their capital gain by fifty percent meaning they only have to declare fifty percent of the gain as a capital gain on their taxes. The same with the qualified Small business stock exclusion where if the stock is held for five years one does not have to pay a capital gains tax on an amount up to ten million dollars, reduce reporting so the taxpayer can reduce declarable capital gains by fifty percent up to ten million dollars!
