Hype aside, GOP tax reform bill creates more winners than losers (Editorial)
An interesting take from a larger New York State City Newspaper. Seems they walked the line as opposed to taking sides.
The Republican tax reform bill is neither as bad nor as good as the partisan fight over it might have led you to believe. When you put aside emotion and focus on data, the proposal is likely to create more winners than losers. Most Central New Yorkers are likely to come out ahead.
It's been 30 years since the last significant revamp of the tax code. In that time, it has metastasized into more than 70,000 pages of mind-numbing complexity, costing businesses and individuals $37 billion annually just to comply.
Tax reform ought to accomplish four goals: cut tax rates, broaden the tax base, simplify the rules and not blow a hole in the federal budget.
The tax bill largely accomplishes the first three. It lowers individual tax rates and brings small business and corporate tax rates to levels more competitive with the rest of the world. It eliminates a raft of deductions that shield income from taxation. It significantly raises the standard deduction, eliminating the need for most taxpayers to itemize and reducing the complexity of complying with the law.
It fails on the fourth by increasing the deficit by $1 trillion to $1.5 trillion over the next decade - and possibly more, if you believe (as most people do) that Congress won't let individual tax cuts expire. That's a bit of budget sleight-of-hand to qualify the bill for a simple majority vote. Opponents of the bill use their own sleight-of-hand; they assume Congress won't renew the tax cuts, to show that taxes will rise disproportionately on lower- and middle-income people by 2027.
he bill has other defects that should be cured when the House and Senate get together to reconcile their separate bills. That would require both proponents and opponents of tax reform to bend.
President Donald Trump has made it clear he will not accept a corporate tax rate above 20 percent, down from the current 35 percent. There is room to raise the corporate tax rate a couple of percentage points to reduce the size of the projected deficit without jeopardizing economic growth.
Gov. Andrew Cuomo believes the Senate bill's elimination of deductions for state and local taxes will be "disastrous" for the state. We're not convinced the sky will fall. For most New Yorkers, it is likely to be a wash once other changes are put into place. Reporter Michelle Breidenbach's analysis of IRS data for Onondaga County shows why.
First, to claim SALT, you must itemize your tax deductions. Roughly one-third of taxpayers in Onondaga County (and the state, for that matter) choose to itemize; the rest take the standard deduction. Taxpayers who choose to itemize claim an average deduction of $23,569 in Onondaga County.
Second, the tax reform bill would double the standard deduction - from $6,350 to $12,000 for single filers, and from $12,700 to $24,000 for married couples. A higher standard deduction would make itemizing irrelevant for 96 percent of Onondaga County taxpayers. Losing the SALT deduction won't affect them at all.
The House bill would allow taxpayers to deduct up to $10,000 in property taxes, which would cover most Upstate New Yorkers and help Downstate New Yorkers with high property tax bills. This may be the best deal Cuomo can expect to get on SALT from the GOP-led Congress. Reps. John Katko and Claudia Tenney, two of four New York Republicans to vote for the House bill, vow to flip to "no" if the property tax deduction isn't in the final bill. It was included in the Senate version at the last minute Friday.
Diminishing SALT will cast an even harsher light on the high tax burden state and local governments inflict on New Yorkers. It may force a rethinking of government that the tax cap, tax freeze and consolidation incentives so far have failed to stimulate.
Congress also should reconsider the tax bill's hit to higher education. Graduate students and children of college employees who receive "in kind" tuition will be taxed on those benefits, a financial setback for them and a blow to U.S. scientific research.
Loss of the federal historic tax credit will also disproportionately hurt New York, the No. 1 state to claim it. The federal credit, combined with a state credit, made the renovation of the Hotel Syracuse and other downtown Syracuse properties financially possible. Its elimination could dampen the resurgence of center cities across Upstate.
The tax reform bill is far from perfect, but it moves us toward a tax system that encourages U.S. businesses to invest here and makes the tax code simpler for millions of Americans.
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Looks like some good and some bad.....we'll have to see what it looks like after the two houses get together......
This article was written before the final Senate vote in the early hours of Dec. 2 so it's not quite accurate. The deduction (up to $10k) for property taxes remained in that version which is good news for middle class homeowners but it will, of course, increase the deficits produced by the bill. And even though in eliminates the PPACA's individual mandate, promises were made to Susan Collins (for her vote) that at least two huge new spending bills would be submitted to replace the lost revenue in order to provide the subsidies needed to keep insurers in the program. Those would again add billions of additional deficits. Whatever one's political perspective this "tax cut" is just a massive government revenue expenditure (mostly to the rich) which will produce massive additional federal debt. But as the DICK Cheney once said: "Ronald Reagan showed that deficits don't matter" (but only when Republicans control the show, of course).