Trump is a loser... of money

[Red]

Never underestimate the power of “fake news”

As one of the commentators, I’m pretty sure David From, said yesterday, he has lost control of the narrative. This is a body blow. It won’t change his core. They are in a cult, and he hates the same people they hate, and that’s all that matters to them, but he can lie about this report’s findings till those proverbial cows come home, how he responds tonight, even if it is hard to imagine any undecided exist at this point, if he flubs his demeanor, his responses, that will hurt. He’s cornered by this, and all the implications that spin off from it. To some degree, he loses some control of the narrative with this report.

 

[Red]

Never underestimate the power of “fake news”

 

[TheGoldStandard]

This is completely dumb. There will always be deductible expenses for businesses. There are some gross receipts fees but they are super low and apply to only certain types of entities. How you going to tax gross receipts like every business has the same margin.

Accountants spend like no time on rates and brackets... it’s all about deductions. You can remove personal deductions and exemptions but that will hurt the average Joe more than guys like trump. Business owners are the wealthiest people and they get to deduct business expenses. Flat tax would do nothing to hurt them. Honestly it would provide incentive for them to hoard profits rather than invest in equipment, buildings, expansion because they can write off those expenses... take away the punitive upper tax rates
likely just hoard the cash.

We have an alternative minimum tax... it doesn’t work and hammers the middle class.

We need tax reform but it’s so much more complicated than a flat tax.

A true flat tax is just that, deductions allow you to game the system. Many states have a gross receipts tax, including my state of Washington (and no income tax on individuals). As a business owner I pay 1.5% of my gross income (service industry). The tax is different for different industries. It ensures the state gets paid. Works quite well compared to other states that allow a lot of games with deductions. And yes, I am quite aware of the AMT. I was suggesting something only for top tier earners, not the AMT we have now (assuming deductions still exist).

And a true flat tax would have no deductions. That would never happen, which is why I alluded to a modified tax system.

I'd prefer a tiered income tax with no deductions (although it would end my career). The government could extrapolate what a tier of income normally pays with average deductions. So if a $280k-$350k earner pays on average an effective federal tax rate of 20% (estimate), then that is your tax rate. No deductions, no games. Make a tier of no deduction rates for everyone except low earners. Simplifies the system, and removes deductions. And it would also make people in states with high income taxes get motivated to lower their taxes. As it is now, with state deductions, states with high taxes keep more money at the expense of the federal government.

If business tax reform isn't included in the mix, then rich people will always find ways to game the system. And if the system allows for it, they should. Take advantage of the rules for the game board in front of you.

 

[Handlogten's Heros]

A true flat tax is just that, deductions allow you to game the system. Many states have a gross receipts tax, including my state of Washington (and no income tax on individuals). As a business owner I pay 1.5% of my gross income (service industry). The tax is different for different industries. It ensures the state gets paid. Works quite well compared to other states that allow a lot of games with deductions. And yes, I am quite aware of the AMT. I was suggesting something only for top tier earners, not the AMT we have now (assuming deductions still exist).

And a true flat tax would have no deductions. That would never happen, which is why I alluded to a modified tax system.

I'd prefer a tiered income tax with no deductions (although it would end my career). The government could extrapolate what a tier of income normally pays with average deductions. So if a $280k-$350k earner pays on average an effective federal tax rate of 20% (estimate), then that is your tax rate. No deductions, no games. Make a tier of no deduction rates for everyone except low earners. Simplifies the system, and removes deductions. And it would also make people in states with high income taxes get motivated to lower their taxes. As it is now, with state deductions, states with high taxes keep more money at the expense of the federal government.

If business tax reform isn't included in the mix, then rich people will always find ways to game the system. And if the system allows for it, they should. Take advantage of the rules for the game board in front of you.

A true flat tax can't work in business unless it is a super nominal fee... like the1.5%. Even if you had a ton of different industry designations to charge different rates it would allow complexity and would have so many unintended consequences.

The reason trump pays so little has nothing to do with a flat tax or graduated rates etc. If you want to get rid of personal exemptions/deductions like you suggest that won't change anything for the rich.

Most of the ways the rich "game the system" are by reinvesting, financing, and using non-cash deductions like accelerated depreciation. Amazon gets a lot of credits for R&D and reinvests a ton of money in the business for expansion.

Most of the rich people I know pay a ton of tax. They plan and get some of the edge off of it, but can't avoid unless you are doing something illegal. There are things we can change without throwing out the whole tax code. Changing tiers and throwing out some fairy tale flat tax system won't change things. Reduce non-cash items like depreciation, disallow investment interest, get rid of wealth transfer vehicles that avoid tax, add on a federal property tax for commercial properties, get rid of capital gains and qualified dividend rates, add in consumer taxes for luxuries...

There aren't an easy or quick fixes that can overhaul the entire income tax system.

 

[NAOS]

A true flat tax can't work in business unless it is a super nominal fee... like the1.5%. Even if you had a ton of different industry designations to charge different rates it would allow complexity and would have so many unintended consequences.

The reason trump pays so little has nothing to do with a flat tax or graduated rates etc. If you want to get rid of personal exemptions/deductions like you suggest that won't change anything for the rich.

Most of the ways the rich "game the system" are by reinvesting, financing, and using non-cash deductions like accelerated depreciation. Amazon gets a lot of credits for R&D and reinvests a ton of money in the business for expansion.

Most of the rich people I know pay a ton of tax. They plan and get some of the edge off of it, but can't avoid unless you are doing something illegal. There are things we can change without throwing out the whole tax code. Changing tiers and throwing out some fairy tale flat tax system won't change things. Reduce non-cash items like depreciation, disallow investment interest, get rid of wealth transfer vehicles that avoid tax, add on a federal property tax for commercial properties, get rid of capital gains and qualified dividend rates, add in consumer taxes for luxuries...

There aren't an easy or quick fixes that can overhaul the entire income tax system.

Speaking of luxuries.... what are are the different ways we can tax second homes? I don’t mean cabins.... some distinction needs to be made here... but I mean fully functional, on-grid vacation homes. Tax these in new ways, please.

And all these rivers of taxation need to be paired with a system of debt forgiveness in order to meaningfully reestablish things.

 

[Avery]

Speaking of luxuries.... what are are the different ways we can tax second homes? I don’t mean cabins.... some distinction needs to be made here... but I mean fully functional, on-grid vacation homes. Tax these in new ways, please.

And all these rivers of taxation need to be paired with a system of debt forgiveness in order to meaningfully reestablish things.

It would be interesting to understand how many people that have second homes actually have third homes, fourth homes, etc. I imagine a higher % of people than we might think that have second homes have even more than that.

My wife's family built their cabin in the 60's for about $5k - land included (about 1k sq. feet). How sweet would that be nowadays? Electrical and plumbing is shot though - would be easier to tear it down vs. try and fix.

 

[Handlogten's Heros]

Speaking of luxuries.... what are are the different ways we can tax second homes? I don’t mean cabins.... some distinction needs to be made here... but I mean fully functional, on-grid vacation homes. Tax these in new ways, please.

And all these rivers of taxation need to be paired with a system of debt forgiveness in order to meaningfully reestablish things.

Not sure the best way, but it wouldn't be hard. luxury taxes could be applied to boats, cars, etc. over a certain price. Like instead of letting businesses deduct the private jet add a surtax on it. When you get to that level of wealth its all a just a big pissing contest so they will pay whatever.

Some of the challenge is if you tax too hard you will drive them to other countries that will give them tax relief. You also have to be aware of the industries you could hurt.

I think wealth transfer taxes would be one of the biggest opportunities for taxation. On one hand it doesn't seem fair as that money was already taxed, but on the other hand it ain't like the little ***** that inherit it earned it.

 

[NAOS]

Not sure the best way, but it wouldn't be hard. luxury taxes could be applied to boats, cars, etc. over a certain price. Like instead of letting businesses deduct the private jet add a surtax on it. When you get to that level of wealth its all a just a big pissing contest so they will pay whatever.

Some of the challenge is if you tax too hard you will drive them to other countries that will give them tax relief. You also have to be aware of the industries you could hurt.

I think wealth transfer taxes would be one of the biggest opportunities for taxation. On one hand it doesn't seem fair as that money was already taxed, but on the other hand it ain't like the little ***** that inherit it earned it.

Seems fair af to me. I’ve always supported robust inheritance taxes.

 

[TheGoldStandard]

A true flat tax can't work in business unless it is a super nominal fee... like the1.5%. Even if you had a ton of different industry designations to charge different rates it would allow complexity and would have so many unintended consequences.

The reason trump pays so little has nothing to do with a flat tax or graduated rates etc. If you want to get rid of personal exemptions/deductions like you suggest that won't change anything for the rich.

Most of the ways the rich "game the system" are by reinvesting, financing, and using non-cash deductions like accelerated depreciation. Amazon gets a lot of credits for R&D and reinvests a ton of money in the business for expansion.

Most of the rich people I know pay a ton of tax. They plan and get some of the edge off of it, but can't avoid unless you are doing something illegal. There are things we can change without throwing out the whole tax code. Changing tiers and throwing out some fairy tale flat tax system won't change things. Reduce non-cash items like depreciation, disallow investment interest, get rid of wealth transfer vehicles that avoid tax, add on a federal property tax for commercial properties, get rid of capital gains and qualified dividend rates, add in consumer taxes for luxuries...

There aren't an easy or quick fixes that can overhaul the entire income tax system.

Agree., but as a corporate and m&a tax attorney for large corporations, there are so many tax loopholes, it is crazy.

Most of my income generating clients pay no tax through legal means, although I operate in a special area of law which provides these breaks.

And yes, the entire tax code should be thrown out, but as I stated in my first post, too many rely on the complicated system and will fight back. And good luck getting the government to make a change on their own.

Before entering private practice, I was part of a government task forced that partnered with the IRS to update a set of regs. We had proposed regs for this change in 2011. The revised regs. have still not been promulgated.

And a business shouldn't pay more than a nominal flat fed tax, especially if no deductions. The majority of income tax burden should be on individuals. If Amazon paid a 1.5% gross receipts tax, the IRS would collect substantially more. Moving capital gains to ordinary income (perhaps with relief for retirement plan distributions) would also go a long way. In WA 1.5% is the max. Most businesses pay less, and it brings in a lot of our revenue. I am a partner in a multi-state firm, so I get taxed in multiple states. For me, the 1.5% gross receipts tax is inline with the 6.9% tax (on net income) I pay on income from other states.

A system with lower base rates and no deductions ensures everybody pays. Lower overall tax rates, with more collections. Right now approximately 50% of American households pay no federal income tax. And many high wage earners pay a much lower percentage than the middle and upper middle class.

 

[TheGoldStandard]

Seems fair af to me. I’ve always supported robust inheritance taxes.

The problem with wealth tax is it can destroy a business. Many family businesses are passed on and weath tax can wreak havoc as many companies are asset rich but cash poor.

 

[Handlogten's Heros]

Agree., but as a corporate and m&a tax attorney for large corporations, there are so many tax loopholes, it is crazy.

Most of my income generating clients pay no tax through legal means, although I operate in a special area of law which provides these breaks.

Outside of my tech clients which rack up huge losses all of my clients that make money pay significant tax.

If you are saying get rid of pass throughs and apply the tax as a C-corp for businesses that may work. The business owners then get taxed on wage? They will find ways to receive compensation outside of a wage and avoid the punitive individual rates. No matter what system you setup there will be work arounds. Those that are the wealthiest will be the ones with the means to setup the work arounds.

I think there is some low hanging fruit, but even changes to those items could have rough side effects.

 

[NAOS]

The problem with wealth tax is it can destroy a business. Many family businesses are passed on and weath tax can wreak havoc as many companies are asset rich but cash poor.

Two replies:
1. From a competition-is-good perspective, should we be concerned about these businesses, or would it be better to recycle their value?

2. I imagine it is possible to value a company in a great number of different ways. As a lawmaker/taxman, you obviously want to tinker with the regulatory dials and not do undo harm to middle-class, pro-worker jobs. Or at least as little as possible. For example, there could be ways of not counting the value of inherited machinery; and, in certain parts of the country, maybe you could not count the value of inherited land or industrial buildings at full-market rate for a period of 10 years after inheritance (or some **** like this)... long enough to see if the next generation actually wanted to carry it on. But if they just want to get free cash from the process that grandpa started, then my heart isnt gonna bleed for them.