Twelve Republicans voted ‘No’ on the Trump Tax Reform. Why? Because they represent three states, New York, California and New Jersey, with the highest income and property tax rates in the country and the new limitations will affect their constituents.
California has the highest personal income tax rate at 13.3%. New Jersey comes in first as having the highest effective property tax rate at 2.31%. New York City residents come in a close second with state and local taxes for some districts at 12.96% and an ‘add-on’ property tax for properties over $1million at 1% which would effectively no longer be a deduction given it would ultimately exceed the cap.
Of course, every single Democrat voted against the Bill. Why?
There were a few agendas: 1) the Obamacare mandated penalty for not having health insurance was repealed. That means that the young and healthy are no longer required to carry insurance. 2) They fear that welfare programs could possibly be impacted with budget cuts 3) They claim that the effect of lowering middle income earners taxes will no longer apply as of 2027 – which is rather nonsensical since the entire Bill expires in 2025. Hello? 4) They fear that government revenue will decrease significantly creating greater deficits.
INDIVIDUALS: 1. A number of itemized deductions were eliminated or capped. 2. The Estate Tax deduction was doubled. 3. Alimony would no longer be a deduction after 2019 (so don’t get divorced). 4. Tax rate brackets were lowered. 4. The standard deduction was nearly doubled while the personal exemption was eliminated. 5. Child tax credit was revised and tightened to include the requirement of a social security number. 6. The AMT would have a much higher phaseout threshold. 7. Repeals the limitation on itemized deductions.
CORPORATIONS: 1. Rate was lowered to 21%. 2. A phase in to allow full deduction of capital expenses rather than depreciation. 3. Eliminates the carryback provision of NOL. 4. A 15.5% offer for corporate repatriation of overseas cash profits and an 8% rate for reinvested earnings. 5. And a territorial tax system whereby only domestic earnings are subject to tax (avoid the potential for double taxation).
The Democrat argument is predicated on the fact that government won’t make enough money to pay for all their benefits and perks, and parties… But the reality is in the fact that as corporations come home to their 21% tax rate vs 39.1%, they’ll get troughs of people off the handout roll of welfare, food stamps, and Medicaid because they will actually be working for a living.
It is estimated that $3.1 trillion in US company profits is being held overseas! Bring It On Home! There are limitations. This does not mean corporations will no longer hire foreign employees who are better trained, it does mean that the incentive for American workers to become trained will create a revolutionary new training industry as we play catch-up, or ketchup… with hundreds of thousands of new labor jobs available.
Tax preparers and estate planners may see a rollback in their usefulness. H&R Block may want to diversify into training centers for the new generation of employees.
But the biggest gripe the Democrats have regarding the Tax Reform is that it actually might work, and that could disrupt their antagonistic agenda when trying to damage Trump. Today their voice of dissent is based on mere block numbers with the assumption that corporations will remain in the EU, the Bahamas, and the Maltives – some will, but I imagine most will come home like