US Policy Changes Vol.6 (Economy Vol.2 – incl tax/budget)

Here are articles on tax (and budget/economy). Excerpts are on our own.

Who Benefits From Donald Trump’s Tax Plan? (w Voice; 11/13/2016) | @jey51 ‏@nprpolitics
…Michael Pollard @RANDCorporation… …@lilybatch @nyulaw @TaxPolicyCenter…
…the top 1 percent would get about half of the benefits of his tax cuts, and a millionaire, for example, would get an average tax cut of $317,000… a family earning between $40,000 and $50,000 a year would get a tax cut of only $560… A single parent who’s earning $75,000 and has two school-age children, they would face a tax increase of over $2,400…
@StephenCalk… the loss of the exemption is partially offset by other changes in Trump’s plan. … there will be big tax cuts for middle-income families. …a family earning $50,000 a year… child-care costs are $7,000 or $8,000 a year. …going to save 35 percent on their net tax bracket.
@lilybatch… calculation is misleading because it focuses on tax rate reduction rather than a family’s after-tax income — in other words, how much money they have in their pocket after taxes.
But @StephenCalk… personal-income tax cuts, as well as the Trump proposal to reduce the corporate tax rate from 35 percent to 15 percent…

Trump vs. Clinton: their tax proposals (10/23/2016) | @ChrisSangerEY @EY_TaxInsights
…immediate expensing of new business investments…
…limited to manufacturers, and those who elect expensing will lose the deductibility of corporate interest expense.
…most corporate tax expenditures would be eliminated, except for the R&D Credit. … a step-up in basis would be disallowed for estates over US$10 million: “The Trump plan will repeal the death tax, but capital gains held until death will be subject to tax, with the first US$10 million tax-free as under current law to exempt small businesses and family farms. …
…allow working parents to deduct from their income taxes child care expenses for up to four children and elderly dependents, capped at the average cost of care for the state of residence. …
The eldercare exclusion would be capped at US$5,000 per year. …creating Dependent Care Savings Accounts that would allow both tax-deductible contributions and tax-free appreciation year-to-year. …six weeks of paid maternity leave by amending the existing unemployment insurance…

AN ANALYSIS OF DONALD TRUMP’S TAX PLAN (PDF; 12/22/2015) | Jim Nunns, Len Burman, Jeff Rohaly, and Joe Rosenberg ‏@TaxPolicyCenter
… His plan would significantly reduce marginal tax rates on individuals and businesses, increase standard deduction amounts to nearly four times current levels, and curtail many tax expenditures. His proposal would cut taxes at all income levels, although the largest benefits, in dollar and percentage terms, would go to the highest-income households. The plan would reduce federal revenues by $9.5 trillion over its first decade before accounting for added interest costs or considering macroeconomic feedback effects. …
Individual Income Tax
• Collapse the current seven tax brackets, which range from 10 to 39.6 percent, into three brackets of 10, 20, and 25 percent.
• Increase the standard deduction to $25,000 for single filers and $50,000 for joint filers in 2015, indexed for inflation thereafter.
• Tax dividends and capital gains at a maximum rate of 20 percent.
Estate and Gift Taxes
• Repeal federal estate and gift taxes.
Business Taxes
• Reduce the corporate tax rate to 15 percent.
• Limit the top individual income tax rate on pass-through businesses such as partnerships to no more than 15 percent.
• Repeal most tax breaks for businesses.
• Repeal the corporate alternative minimum tax.
• Impose up to a 10 percent deemed repatriation tax on the accumulated profits of foreign subsidiaries of US companies…
• Tax future profits of foreign subsidiaries of US companies each year as the profits are earned.
TABLE 1, 3, 4

Trump’s Tax Cuts May Be More Important for the Economy Than His Trade Policies: @barclay’s economists expect a net positive effect on growth next year. (w Video; 11/10/2016) | @is_fink @markets
… “In essence, our baseline is constructed on the theme that protectionist trade policy imposes a tax on the domestic economy in terms of higher prices, forced reallocation of activity, and potentially slower productivity growth,” the analysts led by Chief U.S. Economist Michael Gapen write in a note published on Wednesday. “To compensate for this, public sector policy then reduces personal and corporate tax rates and expands public sector investment spending.” …
“All told, the impulse to real GDP growth from consumption and investment is 1.0-1.5 percentage points in late 2017 and early 2018, which would more than offset the drag in activity we estimated from higher tariffs…

Trump’s Tax Plan (11/13/2016) | Lee Sheppard @Forbes
… inject $4-6 trillion into the economy over 10 years, mostly by means of business tax cuts. … supply-side economics… Two problems:
First… Think of it as the tax version of QE. But consumption has fallen, and newly subsidized businesses would still need customers in order for investing to make sense.
Second… the system as a whole is not redistributive. … it would not put a lot more money in the hands of people with a high marginal propensity to consume.
… The House Republicans have proposed the destination-based cash flow tax would work like a subtraction method VAT. It would be a cash flow tax because capital equipment expenditures could be immediately deducted in full. Intellectual property, research and wages costs would also be fully deductible. … likely to be the starting point for Trump business tax cuts.
… The trouble with this plan is that it isn’t a VAT, and it wouldn’t satisfy the WTO trade agreements the United States signed. … Exporters could deduct domestic wages and importers couldn’t deduct foreign wages. … There are theorists who think that Congress might deliberately set up a WTO violation in order to be told to adopt a VAT instead.
The House Republicans also propose a European territorial dividend exemption system for the benefit of a handful of large businesses like Apple, Google and Big Pharma. …
… Trump proposes a deemed repatriation at a 10% rate for cash and 4% for earnings not represented by cash. …

Trump’s tax policy bad news for Europe? (11/11/2016) | @RFI_English
… Seven hundred US companies employ more than 100,000 people in Ireland, according to an @AmericanChamber report.
@danobrien20 at @iiea also warns that Trump’s plan could “deteriorate in a trade war,” as “the US and Europe already have very deep disagreements” on issues of trade.

Analyses of 2016 Candidates’ Tax Plans Demonstrate That Dynamic Scoring Is Now Mainstream (10/31/2016) | @CurtisDubay @heritage
@TaxFoundation… the Trump plan would grow the economy between 6.9 percent and 8.2 percent, depending on how it treats pass-through businesses. If those businesses pay the 15 percent business rate, the plan would be more pro-growth. … “the larger economy [is] due chiefly to the significantly lower cost of capital under the proposal, which is due to the lower corporate income tax rate and expensing for those firms that choose to adopt it instead of deducting interest.”
@TaxPolicyCenter found smaller growth effects for the Trump plan than it found for @TaxFoundation. It estimates that the Trump plan would increase aggregate demand “by about 1.7 percent in 2017, by 1 percent in 2018, and by smaller amounts in later years.” It also reports a range of growth estimates under varying assumptions. After less than 10 years, @TaxPolicyCenter estimates that Trump’s tax cuts would reduce the size of the economy.
@TaxPolicyCenter sees short-term growth resulting from the Trump tax plan because it increases after-tax incomes for most households, which they would likely spend, and because the expensing provisions would increase business investment.

Details and Analysis of Donald Trump’s Tax Plan (w PDF; 9/29/2015) | @AlanMCole @TaxFoundation

Donald Trump tax policy (w PDF) | @DeloitteTax
PDF (11/10/2016): Tax policy decisions ahead – Impact of the 2016 elections

Election results may provide opportunities for major tax law changes in 2017 (PDF; 11/9/2016) | @PwC_Tax

Mr Trump’s Tax Policies — what do they mean? (11/9/2016) | Grant Wardell-Johnson (@kpmgaustralia) @KPMG_US

Ryan and Trump Agree on Tax Cuts (Video; 9/19/2016) | @bpolitics (@bhgreeley)