The counterargument is that, if there is no incremental effect from a higher effective state tax rate, why haven't the states already raised taxes? Why does California have a 12% top rate (effective rate of 7.2% with SALT deduction) instead of a 20% rate (effective rate of 12% with SALT deduction)?

I know two people who have over $100k in student loans that work for public institutions and are ****ting their pants right now. One is like 6 months from forgiveness. The other has almost 2 years I think. He'd have to at least pro-rate it right?

I missed this part, whats its impact on loan forgiveness? You referring to PSLF? I’m not in the program, but know a lot of people who are going to be screwed big time if that got taken away.

You guys know why like in Dodger games there are tons of fans for the visiting team and that kind of thing never happens to the home team outside of California?

Your confusing the GOP Tax Bill (Tax Cuts and Jobs Act) with the Higher Education Act re-authorization. They are two different bills.

Everything I've ever seen in regards to PSLF is that it grandfathers in borrowers, but who knows.

I just used the Google machine, it was not in the tax bill but apparently there is a separate proposal to eliminate the forgiveness program. Have no idea how likely it is to pass.

In addition to what others have said already... any tax advantage might be wiped out by you losing your benefits, especially if your company matches contributions to a 401k.

Plus, as a pass-through, you would owe double FICA taxes on the wage portion of your income. And you would also have fees to create the business, fees to an accountant, etc. It would be a complicated calculation based on the numbers alone, before considering the legal side.

I might be misunderstanding your point and how this works, but wouldn't that likely throw a lot more people into the Fed AMT which would result in an overall higher tax rate? (Fed AMT + 20% state tax)

I don't disagree that this would make sense from the state's perspective.

The new bill, while reducing the repayment plans to just the 10% plan and 10-year plan, would grandfather in everyone else, in its current form (at least as I understand it, and it's a big deal for me so I researched it a decent amount).

Wait that's still a thing?

Senate Republicans Made a $289 Billion Mistake in the Handwritten Tax Bill They Passed at 2 A.M.

It appears that Senate Republicans managed to make a $289 billion or so mistake while furiously hand-scribbling edits onto the tax bill they passed in the wee hours of Saturday morning. The problem involves the corporate alternative minimum tax, which the GOP initially planned to repeal, but tossed back into their stew at the last second in order to raise some desperately needed revenue. The AMT is basically a parallel tax code meant to prevent companies from zeroing out their IRS bills. It doesn’t allow businesses to take as many tax breaks but, in theory, is also supposed to have a lower rate.

Except not under the Senate bill. When Mitch McConnell & Co. revived the AMT, they absentmindedly left it at its current rate of 20 percent, the same as the new, lower rate of the corporate income tax that the bill included. As a result, many companies won’t be able to use tax breaks that were supposed to be preserved in the legislation, including the extremely popular credit for research and development costs.

Derp.

So that's why they have to go to conference. The Senate bill is a clusterf*ck on its own so they need time to iron out the wrinkles.

Won't "fixing" it make it cost more than $1.5 trillion? Or are we just assuming they'll add a Poor Black Person Oxygen Tax in conference to make up the difference?

Isn't that what the coal baron was complaining about?

This is what I don't think is clear. Did the CBO analysis use what was actually in the bill, or what the Senate intended?

Did the CBO analysis even happen? How could it? There was literally unreadable stuff scribbled in the margins.

This is what I still don't understand. If I understand correctly in order to pass the bill with 51 votes they could not raise the deficit more than $1.5T in the next 10 years and could not add to the deficit after 10 years.

With all the last minute changes, who was keeping score of the impact of the bill on the deficit? Was the Parlamentarian going around with a calculator adding and subtracting the cost of all the last minute amendments? And who was calculating what those costs were?

They explained where the analysis came from in the article: "The figure came from Congress’ Joint Committee on Taxation, whose analysts I can only assume were running on Red Bull and fumes while trying to provide the GOP with last-minute scores."

Sounds like it actually helps the deficit and is overall good for everyone except businesses.

What is different about this in the house bill? No chance the house passes it as is? Will this have to be changed or will it piss businesses off too much?

Wishful thinking, but I wanna post this video anyway.

Pretty good story on why this is a mess.

https://www.politico.com/story/2017/...blicans-208049

The tl;dr version is that the bill is filled with potential problems and new loopholes that could have severe unintended consequences.

Here's my understanding of the AMT situation:

- The AMT is in the Senate bill at 20%, and is not in the House bill at all.
- Whether or not the Senate wanted to have an AMT, there was a definite screwup involved in setting the AMT at 20% while the corporate rate is 20%. Here's why:

Companies calculate their taxable income, including deductions, multiply it by the corporate tax rate, then deduct tax credits to get their basic tax liability. They then, separately, multiply their taxable income (*excluding* deductions) by the AMT rate, *ignore* tax credits, to get their AMT tax liability. The company's ultimate tax liability is the higher of those two calculated liabilities.

The intent here is to make sure that companies aren't taking advantage of too many deductions and tax credits. So in a world of 35% tax rate and 20% AMT, the idea is that companies can lower their tax liability to less than 35% of pre-deduction taxable income, but they can't lower it to below 20%.

Here, that collapses, because when you start with a corporate tax rate of 20% (per the Senate bill), you're effectively ALWAYS going to end up with a higher AMT liability. That means that all of the deductions and tax credits that companies have been fighting for are nullified through the AMT.

Was this effect included in the JCT estimate? It seems like no. Apparently, the AMT provision was estimated to raise $40 billion in revenue in the late-night estimate, but in reality it's likely to raise >$300 billion:



Now, as I understand it, this is good news and bad news:
It's good news for deficit hawks, because it means that the effect on the deficit will be far less than what the JCT estimated.

It's bad news for companies, because it means the tax savings that they were expecting will be far smaller to nonexistent.

Because we know that politicians ACT LIKE they care about deficits, but REALLY care about corporate taxes, this mistake is not something that they're just going to ignore.

This is an uglier discussion of the AMT issue that is probably of interest to approximately no one besides bobman:

https://www.taxreformandtransition.c...-consequences/

It's funny that Republicans ran on "let's simplify the tax code and get rid of loopholes" but they didn't really mean it, and now it's in their tax bill by accident.

A quick Google search led me to this: https://www.forbes.com/sites/erikshe.../#357f7f6a58aa

So, did Republicans just increased the corporate tax? LOL

I don't think that's the right way to look at it. Republicans didn't increase the tax rate, because those existing effective tax rates include the fact that foreign earnings are supposed to be taxed, but end up being permanently reinvested, and therefore not taxed (more accurately, not included in the calculation of effective tax rates). (So the income is in the denominator, but they don't generate tax in the numerator) Those foreign earnings will continue to get preferential treatment in the current bills, so the 20% rate really only applies to domestic earnings, and the foreign earnings will continue to be tax advantaged. That's not exactly accurate, but I think the spirit is close enough.