Actually, predictions. The tax bill will be enacted and signed into law. It won’t be as good as the Republicans and the Trump Administration have been claiming and it won’t be as bad as the Democrats have complained it is.
The entire incident is remarkably similar to the Affordable Care Act. A major policy will be enacted under strictly partisan lines. It addresses a problem in serious need of attention. A flawed bill is enacted but it’s one that can be claimed accomplishes the task, in this case tax reform. It doesn’t accomplish the reform we really need. It isn’t as good as its proponents claim or as bad as its opponents do. It will be a political football for years to come.
Still not sure what is in it. It qualifies as a tax cut, but not yet sure what about it counts as reform.
Steve
Another way it’s like the ACA.
I’m not sure the analogy is quite apt, by I will make one comparison: steve has said that he doesn’t think Republicans are truly interested in health care reform, and I have said that I don’t think Democrats are truly interested in tax reform.
I find setting tax rates fairly boring, and rejiggering rates doesn’t strike me as any more permanent or important than the Fed changing interest rates. The analogy would be more apt if the ACA simply changed Medicaid eligibility rules; something that would effect only a relatively few Americans. Most don’t pay taxes, many won’t notice any changes, some will see tax cuts, and even fewer will see tax increases.
All that, it would have been a nice moment had Republicans responded to the Rubio hustle and got on the phone with Joe Manchin and asked what his support would cost.
Yeah, I agree. After complaining about Obamacare for years Republicans turned around and did basically the same thing. I have to wonder if there will be any hope for any major bipartisan legislation going forward. I guess divided government is the best we can hope for, so I’m actually hoping the Democrats take back the Senate.
Anyway, our income this year is a bit below the median for the US generally. Based on an online calculator that estimates the new tax law changes, we’ll not only pay no federal income tax, we’ll get about $1000 refund giving us an effective negative tax rate (note, this doesn’t account for FICA). The combination of the increase in the standard deduction and the child tax credits are huge in our case.
A family with 3 kids earning w-2 income only will not pay any federal taxes until they hit $78,000 using the standard deduction. Assuming these calculators are roughly accurate. That is pretty significant. By contrast a couple without any children would have a $6k tax liability.
I have to wonder how this will scale at higher incomes.
It looks like this law will substantially reduce the number of Americans who actually fund the federal government. Tax revenues will be even more closely synced to the wealthy and their fortunes, good or bad. Actual tax revenues, therefore, are likely to be even more volatile.
Another irony – this bill eliminates the individual mandate for the ACA and only possible since the SCOTUS ruled it was a tax.
Generally speaking, I don’t think most Americans have any belief that policy affects the economy. Twenty years ago at the height of the Clinton/Rubin/Greenspan troika there was actual enthusiasm about economics or the stock market going up or a dumb airport book like Dow 36,000,000,000,000. There were people who actually said downsizing is right-sizing, or used the term ‘creative destruction’ (a term, incidentally, referring to the phase before the Hegelian dialect is synthesized into pure Marxism). But now? You would have to be an idiot to believe the stock market means anything except to investors. And that goes for policy, for growth, for the entire idea of there being an actual economy. It means nothing. That’s why nobody is even out there trying to pretend–like with the Bush tax cuts–that this is anything except a tax cut designed to loot the country.
By the economy not having any meaning I meant it’s just numbers with no relationship to daily life. The only economic event now is catastrophe and the bottom falling out.
Whatever Americans think policy does have an effect on the economy and, consequently, on daily life. The misconception that many policy-makers have is the unfounded belief that fine-tuning is possible. The best you can do is directionality.
I also think that policy-makers, innumerate as so many of them are, have no real sense of how large the economy is. These days a couple of billion is barely a rounding error. They should be thinking hundreds of millions or trillions.
Americans may be clueless about certain things but they aren’t clueless about there being no direction. The history of growth is not numbers and policy–it’s industrialization and Taylorization; cars, planes, radio, and television; refrigerators and modern luxuries; advertising and consumerism; computers. Most Americans have enough cognitive skill to grasp that there’s probably nothing else out there on the economic horizon except an endless series of numbers that tell mindless stories about their lives, good or bad. That’s why Trump voters never really believed that jobs were coming back to the heartland, for example.
“Generally speaking, I don’t think most Americans have any belief that policy affects the economy. Twenty years ago at the height of the Clinton/Rubin/Greenspan troika there was actual enthusiasm about economics or the stock market going up…..”
You mean those policies that gave us the dot com bubble and the origins of the housing bubble……
“The only economic event now is catastrophe and the bottom falling out.”
Golly, that sounds bad. Maybe Kurt Cobain was ahead of his time…..