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Taxes and death is inevitable

Taxes and death is inevitable

But tax reform still has not died

Yesterday at 10:09, views: 264

The largest reform of the tax code over the past 30 years is close to completion. First, the House of representatives, and at the end of last week and the Senate approved the proposed measure, bringing the administration trump’s first major victory at the legislative field. The white house hopes that the lower and upper chambers will resolve differences between their versions of the bill in the near future, so that the final version laid on the table of the President no later than Christmas.

Republicans believe that tax reform will improve their chances of success in the upcoming midterm elections to Congress in November next year. Today’s polls such optimism is not supported: 61 percent of respondents believe that innovation will primarily benefit the rich and only 24 percent — that the main “beneficiary” is the middle class. The majority leader in the upper house, Mitch McConnell, these results do not frighten: “Major Billy are not popular. Remember how unpopular Obamacare was when she was taken in Congress?”. And yet, look at all the dislike of Americans to Obama’s brainchild to destroy him directly have failed, as it implies McConnell.

The Senate tax bill passed by a margin of just two votes: with all the Democrats “against” vote Republican Bob Corker, in his own definition – “fiscal conservative”. He fears that tax innovations will undermine the composite revenues of the Federal budget and will result in another increase in the deficit and the national debt.

The reform provides for total tax cuts of almost $1.5 trillion over 10 years. Rates on income of legal and natural persons will be lowered indefinitely or only for a certain period, time will tell. Many loopholes and deductions, which are abundant in the tax code, subject to liquidation. Or cuts. For example, if previously the entire amount of the property tax could be deducted from income, to write off from now on will be only the first 10 thousand from it.

Focal point of tax reform declared decrease in rates on income of legal persons (corporations) from 35 to 20 percent. 35-the interest rate existing in America – actually the highest among all industrialized countries, although not all corporations, and not always actually pay for it through the art of their highly skilled accountants. It is on a 15 percent reduction of the tax burden borne by corporations, I trust the Republicans, seeing in it a powerful incentive to economic growth and the creation of new jobs, which should, in the future, close all the newly formed holes in the revenue side of the budget. Another effective incentive to investment is designed to serve the state reforms to allow the business to fully amortize the new equipment during the first year after its acquisition. The authors of the reform, moreover, expect to emigrate to America capital of about $3 trillion, which domestic corporations “parked” in offshore c soft tax regulations.

It is not necessary to be a professional economist to understand that the calculations presented by the Republicans in support of the forecast, in the highest degree conjectural. The real economy is too complex to be mechanistically linked to the easing of the tax burdens of corporations with an abrupt increase in production. If the tax cuts, other things being equal, spur production, increase the budget deficit by reducing taxes supposedly slows economic growth. The question is which effect is stronger. Therefore, a 20 percent rate, whatever was proclaimed the Republican party leadership, there’s absolutely nothing sacred. What is best confirmed by the words of trump, uttered almost immediately after the vote in the Senate: who said that 20 — the last word? In the final version of the bill agreed upon by the top and bottom of the chamber, bid, look, will rise to 22 percent.

Trump is a politician, is fully aware that in the ranks of his party, not to mention the population as a whole, much dissatisfaction with the discrepancy between the deep drop in corporate rates and a relatively shallow reduction rates that taxed incomes of physical persons (citizens). Reducing the corporate rate from 20 and up to 22 percent will save about $200 billion, which would be a bit to rectify this imbalance. The politicization of the digits as it passes through Congress important fiscal bills are enormous, each “sister” tightly clings to his “earring”. No sooner had the Republican Senator Marco Rubio to hint about reducing the corporate rate to 20 not sacred, and 20.94 percent as comrades in the party immediately took his offer in the category of “catastrophic”. Alarmists, however, it is possible to understand different preconditions and provisions of the reform are intertwined so closely that a change in one link is capable of pulling a cascade of changes in all the others.

(Fans of historical Parallels will appreciate the analogy with mobilization plans of the great powers before the First world war: the sequence of steps in these plans were worked out so thoroughly, that did not allow any derogation, in order not to cause anywhere in the circuit any further damage and to keep up with the mobilization, which is held by the opponents; the deployment of forces was made in strict accordance with the schedule. The rest, as they say, is history).

Democrats worried that if the optimistic hopes of the Republicans for rapid economic spurt is not justified, they did not admit their error and will not restore the old taxes and a reduction in important social programs, particularly Medicaid and Medicare. Under the guise of this law, adopted during the reign of Obama, the required measures to mitigate the effects of laws leading to the increase in the budget deficit.

In each hut their rattles. Remember the words of McConnell that big bills are never popular. So, realtors, and sadly predict that reducing the amount of interest on a mortgage loan permitted to write off (mortgage interest deduction), lower house prices on average more than 10%, especially in rich areas. Firms working with private investors, is reeling because of new restrictions on the deductibility of the property tax will hurt the disposable income of their customers. Your worries there are economists; many of them, the time for tax reform is badly chosen: economic activity today, they say, is so high, and further heating it by reducing taxes will only increase the risk of inflation. Therefore they believe that before the end of the year, the Central Bank will again raise its discount rate, and sharper than it would be in the absence of reform. I am inclined to think that this will not happen; no wonder that, in the end, trump was replaced by Obama’s Chairman, Janet Yellen at her Powell’s.

Speaking of trump… it’s Hard to imagine that the Supreme ruler of an authoritarian country did not win personally from the tax reforms planned by him. Well, in democratic countries? The President says that not only nothing to gain, but even lose due to the implementation of its initiative. Meticulous The New York Times asked experts, and they in one voice said that it is not. Even without access to the tax returns of trump, which he stubbornly refuses to disclose, it is clear that in both the adopted versions of the reform there is nothing that would threaten essential sources of income of the President and his family: rent, royalties, and license fees. Low tax rate, which trump pays today as the developer (carried interest) also will not increase (by the way, this loophole when he was a candidate trump repeatedly promised to eliminate). If a collector buys a painting and sells it after some time with profit and then becomes the canvas of van Gogh, the profit from the first asset still charged tax. With real estate, where specializiruetsya trump, it is not so: if the profit from the sale of the first object is directed to the acquisition of real property, then the profits are not taxed (like-kind exchanges). What is the difference between works of art from the skyscrapers? The person asking this question, never in polite society will not be accepted.

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