Financial News

[StrangeSox]

WaPo's write-up on it:

https://www.washingtonpost.com/news/wonk/wp...he-biggest-cut/

 

House Republicans' tax bill would increase taxes for 12 percent of Americans next year, according to a new report from the nonpartisan Tax Policy Center. By 2027, at least 28 percent of Americans would see their taxes rise, the report says. Many of those taking a hit would be people who make less than $48,000 a year.

 

The vast majority of Americans would get a tax cut if the bill becomes law, TPC found, but the rich would benefit the most. The finding comes amid intense debate over whether this bill does enough to help the middle and working classes, a key promise of President Trump.

 

The middle of the middle — those making $48,000 to $86,000 — would get an average tax cut of $700 next year, according to TPC. Meanwhile, taxpayers in the top 1 percent (those making more than $730,000) would receive an average cut of $37,000 next year, and the top 0.01 percent (those making more than $3.44 million) would see their after-tax incomes rise by an average of $179,000 in 2018.

 

Since the wealthy pay more in taxes, some Republicans have argued it makes sense for them to get a bigger tax cut in dollar terms. But TPC also looked at the percent change in after-tax income for the poor, middle class and rich. Using that metric makes it easier to compare across the income groups. According to TPC, the middle class would get a 1.2 percent boost to their after-tax income, while taxpayers in the top 1 percent would get a 2.5 percent boost. The bottom 40 percent would get almost no benefit.

[StrangeSox]

Well tpc screwed up the child tax credit part and has retracted it's analysis. New one will be issued tomorrow

[Balta1701]

So, per one of these analyses, the tax rate I'd have paid while in Graduate School would have been more than 50%. Graduate school would have been impossible and this tax package would literally have ruined any hope of doing what I wanted to do in my life.

[StrangeSox]

.@RepChrisCollins (R-NY) on tax reform: "My donors are basically saying, 'Get it done or don’t ever call me again.'"

— Cristina Marcos (@cimarcos) November 7, 2017

 

 

[StrangeSox]

TPC analysis is updated and re-released.

 

 

By 2027, most people will see little or no change. Except for the wealthy, they still get a huge tax cut. Trump himself explained to Democrats that they gotta pass an estate tax repeal or Trump's heirs won't be able to inherit as much idle wealth.

 

Reporters have also dug into the details of the plan more, and turns out that businesses will still be able to deduct state and local taxes. It's just regular wage-earners who won't.

[StrangeSox]

CBO's scoring of the bill says it'll add $1.7T to the deficit.

[StrangeSox]

https://www.cbo.gov/system/files/115th-cong...citsanddebt.pdf

 

Over a 10 year period

 

e: I think the reconciliation budget bill they passed recently had a $1.5T cap so they'll have to figure out how to come in under that, too.

Edited November 8, 2017 by StrangeSox

[StrangeSox]

It's a $1.5T cap specifically for the tax cuts.

[StrangeSox]

Gary Cohn: ‘The Most Excited Group Out There Are Big CEOs, About Our Tax Plan’

 

He's also unironically using the term "trickle down," which was a pejorative aimed at Reagan's nonsense tax policies.

Gary Cohn: Trickle-down is good for the economy

 

"trickle down" does not actually work, and Harwood does a pretty good job throughout the interview of pointing out how badly they're lying about who the tax plan really benefits.

[StrangeSox]

This would also be a gigantic tax increase (10-20% of total income increase) on every graduate student in the country. Huge cost to higher education.

 

I didn't realize exactly how bad this was until this morning. It's not just taxing whatever stipend you get for being a TA, maybe $15k a year. It's taxing tuition waivers, too. So if you're going to grad school that'd normally cost $30k but that is waived for various reasons, you're now going to be taxed on that $30k. This is going to make going to grad school essentially impossible for a lot of people.

 

e.g.

 

Graduate Students Say GOP Tax Plan Could Increase Their Taxes by Nearly 300%

 

The change would be dramatically higher for students at private universities or those receiving waivers for out-of-state tuition, according to the estimates made by Velan. An MIT research assistant, who receives a $37,000 annual stipend and has about $49,000 in tuition waived, would see an estimated 240% increase in federal income taxes, to $13,577.

 

At Carnegie Mellon’s college of science, a graduate student’s annual taxes could rise from $2,384 under current tax law to $9,459 under the proposed tax plan — an increase of 297%. After-tax income would fall from $27,000 to less than $20,000.

 

That's on top of eliminating student loan interest deductions. Gotta keep that carried interest loophole and cut estate taxes, though! Cartoon villainy.

Edited November 9, 2017 by StrangeSox

[Jenksismyhero]

I didn't realize exactly how bad this was until this morning. It's not just taxing whatever stipend you get for being a TA, maybe $15k a year. It's taxing tuition waivers, too. So if you're going to grad school that'd normally cost $30k but that is waived for various reasons, you're now going to be taxed on that $30k. This is going to make going to grad school essentially impossible for a lot of people.

 

e.g.

 

Graduate Students Say GOP Tax Plan Could Increase Their Taxes by Nearly 300%

 

 

 

That's on top of eliminating student loan interest deductions. Gotta keep that carried interest loophole and cut estate taxes, though! Cartoon villainy.

 

I'm not a fan of the tax plan, but making graduate school more cost prohibitive is probably a good thing.

Edited November 9, 2017 by JenksIsMyHero

[StrangeSox]

....why?

[Jenksismyhero]

....why?

 

Because we need to de-emphasize higher education for the vast majority of people. Racking up insane amounts of debt isn't a good start to a career.

 

[StrangeSox]

This is specifically taxing tuition waivers for grad students who wouldn't be piling up debt because they have tuition waivers. These are for funded grad positions, not people taking out six figure loans. This makes grad school much more expensive, impossibly so for many people, and cuts off one of the few avenues for real economic mobility.

 

I dunno, I think intentionally crippling our institutions of higher learning is really, really bad idea that's going to bite this country in the ass hard in the coming decades.

[CrimsonWeltall]

Because we need to de-emphasize higher education for the vast majority of people.

 

The vast majority? I'm sure there is A portion of people currently going to college who would be better served in the trades or going other routes, but it's not the vast majority.

 

And that's really an undergrad issue, not for graduate students.

 

Who is going to want to be a grad student with these massive hikes in taxes? No one. It's gonna be a brain drain.

[StrangeSox]

It doesn't even make sense. If this were somehow impacting people who actually are taking out tens or hundreds of thousands in loans for grad school, maybe it makes sense to talk about disincentivizing that somehow (but they're already taking out huge amounts, why would this tax increase discourage them from taking out just a bit more?)

 

But this is specifically about taxing people who aren't paying tuition for grad school, and who are being paid by the school for their work there as a TA. There's lots of things broken in higher ed with an over reliance on overworked TA's and now adjunct "lecturers," but this will only make things worse. Instead of the bright young kid who got a fully funded PhD program spot at MIT, they're going to have to turn it down because they can't afford to pay taxes on that $60k tuition waiver. Or they'll have to take out loans to pay the taxes, the exact opposite of what we should want.

 

edit: wonder if this would apply to athletic scholarships, too

Edited November 9, 2017 by StrangeSox

[Dick Allen]

Because we need to de-emphasize higher education for the vast majority of people. Racking up insane amounts of debt isn't a good start to a career.

I love the poorly educated.

[StrangeSox]

Gary Cohn: ‘The Most Excited Group Out There Are Big CEOs, About Our Tax Plan’

 

He's also unironically using the term "trickle down," which was a pejorative aimed at Reagan's nonsense tax policies.

Gary Cohn: Trickle-down is good for the economy

 

"trickle down" does not actually work, and Harwood does a pretty good job throughout the interview of pointing out how badly they're lying about who the tax plan really benefits.

 

This part highlights that Gary Cohn has no idea how marginal tax rates actually work

 

 

The rest of it is pretty good and strong pushback on how heavily this tax cut plan is targeted towards the very wealthy, despite their protestations otherwise, and how basically every objective economist is calling bulls*** on their projections of how much it'll cost and how much it'll impact wages and jobs.

 

[Balta1701]

edit: wonder if this would apply to athletic scholarships, too

No. We're specifically talking about "Graduate tuition fellowships". A scholarship is a different beast in a legal sense. That's why we're talking about this hitting graduate students rather than undergraduates.

 

A number of people are sitting around brainstorming about whether or not tuition waivers from graduate students could be converted into something akin to scholarships in order to get around this, but that may depend on the final text of the law, so people pointing out "You will destroy any industry that relies on an educated workforce with this tax bill" before the final language is written is fairly important.

 

I'm a geologist. From my perspective, this will destroy the workforce of the oil and gas industry. Something like 1/2 our graduates get masters degrees and go into those sorts of fields. None of them are independently wealthy.

[StrangeSox]

https://www.washingtonpost.com/business/eco...omepage%2Fstory

 

The GOP Senate is about to unveil it's own tax plan. It delays the corporate tax cuts until 2019, eliminates the state and local tax deductions*, and keeps the mortgage interest deduction.

 

 

*for people. businesses still get to deduct them.

[Jenksismyhero]

I love the poorly educated.

 

Yep that's what I said!

[Dick Allen]

Yep that's what I said!

That's what Trump said.

[Balta1701]

Still me remaining provincial, but the Senate plan does not destroy graduate education in the United States as the House does.

[StrangeSox]

Senate Tax Bill Rewards the Rich More Than the Middle Class

 

By 2026, 1 in 3 middle class families would be getting a tax hike from this bill (wealthy families and businesses would still reap enormous benefits indefinitely)

 

edit: McConnell now says he "misspoke" when he promised this bill wouldn't raise taxes on anyone in the middle class, just like Trump "misspoke" when he promised their tax plan wouldn't benefit the rich and certainly not him personally.

Edited November 10, 2017 by StrangeSox

[NorthSideSox72]

Yep that's what I said!

Allowing for a moment your posit that fewer people going to grad school is a good thing... what these changes will do is specifically remove people who are not rich - not a random slice of the population. Making grad school more of a domain for those from wealthy families. I don't see how that's a good approach, even if you want to achieve what you suggest.