Financial News

[southsider2k5]

After the SEC and Equifax hacks, the IRS signs up Equifax to head their ID verification services.

[bigruss]

After the SEC and Equifax hacks, the IRS signs up Equifax to head their ID verification services.

lolz

[StrangeSox]

There's a guy cosplaying as the Monopoly guy at the Senate Equifax hearings and he's seated directly behind the Equifax CEO so he's on camera the entire time.

 

https://twitter.com/senatorshoshana/status/...638726126182410

[StrangeSox]

First monthly decline in jobs in 7 years, mainly due to losses in the leisure & hospitality sector probably because of the hurricanes. July and August were also revised downward slightly.

[bmags]

I think this will almost certainly get revised to positive, and also some good news in that the employment rate when accounting for demographic changes is back to pre recession levels.

 

The "structural unemployment" people were incredibly wrong and caused a lot of damage.

[StrangeSox]

Chipotle downgraded by Bank of America on new concern: It's paying employees too much

[StrangeSox]

Yesterday, the Senate voted to end a CFPB rule that would have barred the banking industry from forcing mandatory arbitration on customers, locking them out of the courts and out of class action lawsuits entirely. Banks lobbied hard to kill this rule, and consumer groups were universally in favor of it.

[StrangeSox]

Equifax Was Warned

Last year, a security researcher alerted Equifax that anyone could have stolen the personal data of all Americans. The company failed to heed the warning.

 

 

holy moley this is some extremely bad infosec

 

"I didn't have to do anything fancy," the researcher told Motherboard, explaining that the site was vulnerable to a basic "forced browsing" bug. The researcher requested anonymity out of professional concerns.

 

"All you had to do was put in a search term and get millions of results, just instantly—in cleartext, through a web app," they said. In total, the researcher downloaded the data of hundreds of thousands of Americans in order to show Equifax the vulnerabilities within its systems. They said they could have downloaded the data of all of Equifax's customers in 10 minutes: "I've seen a lot of bad things, but not this bad."

[StrangeSox]

Republicans Stick With Big Corporate Tax Cuts in House Bill

The Tax Cuts and Jobs Act seeks the biggest transformation of tax code in more than 30 years; leaves top individual tax rate at 39.6%

 

WASHINGTON—House Republicans, seeking the biggest transformation of the U.S. tax code in more than 30 years, aim to permanently chop the corporate tax rate from 35% to 20%, compress the number of individual income tax brackets, and repeal the taxes paid by large estates starting in 2024, according to a detailed summary of the plan reviewed by The Wall Street Journal.

 

To partly offset that lost revenue, Republicans plan to curtail the deductions individuals take for state and local tax payments and the ones businesses get for the interest they pay on debt. But the plan being released Thursday morning stops short of touching other popular tax breaks that were being considered for change, such as the ability of individuals to park up to $18,000 a year in pretax funds into 401(k) savings accounts.

 

The plan, named the Tax Cuts and Jobs Act, calls for leaving the top individual tax rate at 39.6%, but pushing the income threshold for that rate to $1 million for married couples. The House Ways and Means Committee plans to consider the bill next week with the aim of turning it into law by Christmas and having most of it take effect in 2018.

 

Republicans view the tax bill as essential to their political futures and their best chance for a legislative victory in President Donald Trump’s first year in office. Mr. Trump will likely argue the bill meets many of his goals, but it still faces a challenging path to completion in a Congress contending with many competing interests.

 

The tax bill, revised repeatedly in the final days before its release, already bears the marks of political compromises large and small, in addition to budgetary contortions needed to avoid creating larger and long-lasting budget deficits. For example, incentives for business investment lapse after five years and so does a new $300 per person credit for filers, their spouses and non-child dependents such as college students. Those expirations mean the tax cuts would shrink in future years unless Congress acts.

 

Those moves were necessary because a budget blueprint agreed upon by the Senate and the House constrains the tax overhaul to a cost of $1.5 trillion over a decade. They need to hit that target and avoid higher budget deficits beyond that to qualify for fast-track rules that could let them pass a bill without Democratic votes. But Republicans are seeking more than $5 trillion in rate cuts over a decade and need to find offsetting provisions, and critics will label some of their decisions as budgetary gimmicks. Republicans have spent months trying to solve that math problem, looking for tax breaks to repeal without disturbing the slim political coalition they need to pass a bill.

 

INCOME-TAX RATES

The bill collapses the current seven individual tax brackets into four: 12%, 25%, 35% and 39.6%. For married couples, the 25% rate starts at $90,000, the 35% rate starts at $260,000 and the top rate starts at $1 million. For individuals, those break points are $45,000, $200,000 and $500,000.

 

The new bottom tax rate covers more income than the current 10% and 15% brackets do, meaning lower taxes for many middle-income households. But many upper-income households could face a higher marginal tax rate under the House bill, which pushes some from a 33% bracket into 35%. Whether they see actual tax increases would depends on particulars, and full estimates aren’t available yet.

 

POLITICAL LAND MINES

Meantime, there are political land mines scattered in the plan, some easy to see and others that businesses and advocates will likely unearth in the coming days.

 

For example, the proposal repeals an itemized deduction for medical expenses, a crucial provision to households with extraordinary health-care costs. It also repeals the tax credit for adoption and the deduction for student-loan interest.

 

The bill also limits the home mortgage-interest deduction. For new home purchases, interest would be deductible only on loans up to $500,000, down from $1 million today; existing loans would be grandfathered.

 

Because of the larger standard deduction, fewer people would have a tax incentive to make charitable donations. Many charity groups had pushed for a more widely available deduction, but Republicans decided not to expand the charitable deduction to people who don’t itemize their deductions.

 

Businesses would lose the ability to deduct certain executive compensation above $1 million, which they can now do for performance-based pay. Life insurers would lose some tax breaks. Banks with assets exceeding $50 billion would get no deduction for certain payments to the Federal Deposit Insurance Commission.

 

Tax-exempt bonds could no longer be used to build professional sports stadiums. Private universities with assets exceeding $100,000 a student would pay a new 1.4% excise tax on their net investment income. Businesses would no longer be able to deduct entertainment expenses, though today’s rules for business meals would remain.

 

MULTINATIONALS

There are big changes in store for multinational companies. U.S. companies would, generally, no longer pay taxes on their active foreign income, a move corporations and Republicans say is important in a competitive international landscape. To prevent companies from shifting profits abroad, the bill creates a new 10% tax on U.S. companies’ high-profit foreign subsidiaries, calculated on a global basis.

 

The plan also imposes new restrictions on foreign companies operating in the U.S. They would face a tax of up to 20% on payments they make abroad from their U.S. operations. That is designed to prevent them from loading up their U.S. operations with deductions and pushing profits to low-tax jurisdictions. Companies could lower those taxes by agreeing to have more of their operations in the U.S. tax system.

 

Many companies would face a new limit on their interest deductions, which would be capped at 30% of earnings before interest, taxes, depreciation and amortization, which is a measure of cash flow. Real-estate firms and small businesses would be exempt from that limit.

 

HOW A FAMILY FARES

Under current law, in 2018, a married couple with two children making $60,000 would get a $13,000 standard deduction and four personal exemptions each worth $4,150. That means they would pay taxes on $30,400 of taxable income. Their base tax bill of $3,608 would be reduced by $2,000 in child tax credits for a total income tax of $1,608.

 

Under the House plan, the same married couple with two children would get $3,800 in tax credits, $3,200 for the two children and $600 for the two parents. The same family would get a $24,400 standard deduction but no exemptions, for $35,600 of taxable income. Their base tax bill of $4,272 would be reduced by the $3,800 in credits for a total income tax of $472.

 

The House bill also expands the child credit for the upper-middle class. Currently, the credit starts phasing out for individuals with incomes above $75,000 and married couples with incomes above $110,000. Under the House bill, those thresholds move up to $115,000 and $230,000.

 

ESTATE TAX

The estate tax provisions also contain wrinkles. The estate-tax exemption, set for $5.6 million per person and $11.2 million per married couple, would double immediately. The tax would get repealed starting in 2024.

 

Even after repeal, heirs would continue to get something known as a “step-up in basis.” That means they would only owe capital-gains taxes on the difference between the sales price of an asset they inherit and the value of the asset at the previous owner’s death. Previous versions of estate-tax repeal had limited that benefit.

 

Will be interesting to see how Tax Policy Center etc. analyze the bill and what the overall impact will be. Expect massive cuts at the top end.

Edited November 2, 2017 by StrangeSox

[bmags]

DOA in senate. No way mortgage-interest deduction could be touched on a partisan basis, especially when the tax decreases aren't really making up for it.

 

Can't believe Rs would put a vote on that. They'll get crushed with ads.

[StrangeSox]

They're trying to same tactics they did with the healthcare fiasco--secret bill, bunch of really bad compromises and changes that their ideology demands, no way to actually get to a politically acceptable and passable final bill.

 

I still think the most likely outcome of "tax reform"/upper class tax cuts is what we got with the Bush tax cuts--a $300 check for most people, hundreds of thousands or millions for the wealthy, and it all sunsets in 10 years.

[bmags]

Those republicans were so much more politically savvy than these ones, and were also coming off a budget surplus and had the "why should the government keep your money?" line.

[StrangeSox]

Not only are mortgage interest deductions capped for all new loans going forward, but property tax deductions are also capped at $10k. Student loan interest deductions eliminated. State income tax deductions eliminated.

 

Looks like the upper middle class (let's call this low-six figure household income range, 100-250k maybe) would be hosed hard by this.

[Balta1701]

They're trying to same tactics they did with the healthcare fiasco--secret bill, bunch of really bad compromises and changes that their ideology demands, no way to actually get to a politically acceptable and passable final bill.

 

I still think the most likely outcome of "tax reform"/upper class tax cuts is what we got with the Bush tax cuts--a $300 check for most people, hundreds of thousands or millions for the wealthy, and it all sunsets in 10 years.

And utter silence of course from the folks who have complained about the deficit and inflation coming to kill us all immediately for the last 10 years.

[StrangeSox]

Sure, because they'll use the enormous hole in the budget they're trying to create to justify harsh austerity measures a few years down the road, and Third Way centrists and weak democrats (looking at you Lipinski) will go along with them.

 

"starve the beast" is intentional

[bmags]

Given the circumstances it's hard to see the corporate tax rate decrease go to anything but dividend payments. You can make argument it will soften blow of higher labor costs, but I don't see it.

[StrangeSox]

I'm going to ask my boss about that $4k salary increase the White House is promising will come from this bill.

 

I'll let you know when he stops laughing.

[bmags]

Sure, because they'll use the enormous hole in the budget they're trying to create to justify harsh austerity measures a few years down the road, and Third Way centrists and weak democrats (looking at you Lipinski) will go along with them.

 

"starve the beast" is intentional

 

That's the thing though, no way in hell lipinsky would vote for the pay-fors that directly affect his district.

[Balta1701]

That's the thing though, no way in hell lipinsky would vote for the pay-fors that directly affect his district.

The "State and local tax one" is going to be tough. If I'm running as a Democrat in downstate Illinois and my opponent voted for this, I'm totally running on the fact that they voted to raise taxes on Illinois to cut taxes in Indiana.

[bmags]

The "State and local tax one" is going to be tough. If I'm running as a Democrat in downstate Illinois and my opponent voted for this, I'm totally running on the fact that they voted to raise taxes on Illinois to cut taxes in Indiana.

 

And they'll just say you support MS-13 and want to turn the district into a sanctuary city.

[StrangeSox]

They're gonna do that anyway, though. It's still a tough sell to Republicans from states like Illinois, NY and California.

[bmags]

Anyway this is DOA in senate. Fun suicide mission by Ryan though.

[StrangeSox]

Anyway this is DOA in senate. Fun suicide mission by Ryan though.

 

Very Serious Policy Wonk Paul Ryan has been "working" on budgets, healthcare plans, and tax bills for nearly a decade a now and has zero to show for it. He's got the most undeserved reputation for being a smart policy guy in Washington.

[bmags]

Very Serious Policy Wonk Paul Ryan has been "working" on budgets, healthcare plans, and tax bills for nearly a decade a now and has zero to show for it. He's got the most undeserved reputation for being a smart policy guy in Washington.

 

He's just a terrible speaker. Has no idea how to build a consensus. They never have a shared framework, they are always negotiating on the edges.

[StrangeSox]

Gotta say I'm a little disappointed they didn't stick with Trump's proposed "CUT CUT CUT TAX PLAN" name for the bill