Sunday, October 22, 2017

It's As If Ryan And Trump Are Determined To Eviscerate The Middle Class With Their Tax Plan


On Thursday we looked at how the Trump-Ryan tax cuts for the rich will be toxic for Republicans in states where the elimination of the federal deduction for state and local taxes is significant and will mean as much as $20,000 annually flowing from the bank accounts of middle class taxpayers into the bank accounts of multimillionaires and billionaires. Since then, Maine Republican Susan Collins has told The Hill that she's not ready to commit to voting for the package. "Until I see the specifics of the bill obviously I’m not going to take a position on it," she said. One detail she's not likely to be a fan of is the sharp cut in the deductibility of 401 (k) contributions. Ryan is eager to cut that to provide bigger tax breaks for the wealthy. Saving though deductible 401 (k) plans used to be routinely supported by Republicans as an opportunity to help middle class taxpayers save for retirement. The Trump-Ryan GOP doesn't care at all about middle class taxpayers, other than as fodder for soundbytes.

Ryan and Trump and their teams are looking for short term gains-- regardless of how badly they hurt the long-term financial situations of Americans-- to help finance big tax cuts for their campaign contributors.
It is unclear if Republicans will ultimately include a cap on contributions in the tax bill that they are expected to release in the coming weeks. Such a move would almost certainly prompt a vocal backlash from middle-class workers who save heavily in such retirement accounts and from the asset management industry.

The proposals under discussion would potentially cap the annual amount workers can set aside to as low as $2,400 for 401(k) accounts, several lobbyists and consultants said on Friday. Workers may currently put up to $18,000 a year in 401(k) accounts without paying taxes upfront on that money; that figure rises to $24,000 for workers over 50. When workers retire and begin to draw income from those accounts, they pay taxes on the benefits.

Rumors have circulated for months that negotiators were debating including a cap as a way to help offset the revenue loss from a reduction in business tax rates that Republicans have put at the center of their plan. Reducing contribution limits would be, in effect, an accounting maneuver that would create space for tax cuts by collecting tax revenue now instead of in the future.

Such a move would be likely to push Americans to shift their savings to so-called Roth accounts, where contributions are taxed immediately, and not when they are drawn out as benefits. That would increase federal tax receipts for the short run.

The congressional Joint Committee on Taxation estimates that tax exclusions for individual retirement contributions will cost the federal government $115 billion for the 2018 fiscal year. That is just a fraction of the $1.5 trillion tax cut that Republicans are aiming to enact.

In addition to being politically problematic, including a cap could also complicate the tax bill’s prospects in the Senate. Under the rules of budget reconciliation-- the method Republicans are employing to avoid a Democratic filibuster of the bill-- legislation cannot increase budget deficits after a decade. Shifting revenue by lowering 401(k) limits “raises money early, but loses money late, and that’s exactly the opposite of what you want in a reconciliation bill,” said Rohit Kumar, a former Senate aide who leads the tax policy services practice at PricewaterhouseCoopers, an accounting firm, in Washington.

Republicans drafting the tax bill have kept its details closely held, and they would not comment on Friday about whether 401(k) changes were under discussion. Republicans on the House Ways and Means Committee “are developing pro-growth tax reform policies that will encourage and support retirement savings for all Americans,” a committee spokeswoman said.

The tax framework that President Trump and congressional Republican leaders released last month promised to retain “tax benefits that encourage work, higher education and retirement security.” It left the door open to changes in the current system, saying that “the committees are encouraged to simplify these benefits to improve their efficiency and effectiveness.”

Democrats have seen firsthand the perils of proposing changes to savings accounts. In 2015, an outcry forced President Barack Obama to quickly back off his proposal to change the tax benefit of college savings plans known as 529 accounts.

On the Senate floor on Thursday, Senator Gary Peters, Democrat of Michigan, warned that the Republican majority was “keeping open the possibility of raising taxes on Americans who are trying to save for their retirement.”
Goal ThermometerRyan's opponent, iron worker and union activist Randy Bryce, was appalled by the GOP plan. "If this was something being proposed by Democrats," he told us today, "every city would have it’s streets filled with every working person who had enough gas money to get there."

Jared Golden is the progressive candidate running for the sprawling northern Maine district occupied by Trump rubber stamp Bruce Poliquin. Jared is the Majority Whip of the Maine state House and he's not liking what he sees of the Trump tax cuts for the wealthy. He's not happy about the plans they're making to cut federal tax deductions on retirement accounts. "On the 401(k) savings," he told us, "Paul Ryan and Bruce Poliquin are destroying the middle class. They don't understand how hard we work for our wages and the fact that it's getting harder and harder to save for retirement. Their priority is to cut taxes for the rich even if it's at the expense of the middle and working class. I don't care what party label you have behind your name, if you agree with me that Congress should be helping working people save for a comfortable retirement then I am ready to work with you." (I think he was talking about Susan Collins there.)

James Thompson is the Kansas Berniecrat who nearly turned the Wichita-based 4th district blue in a special election this year-- and without a lick of help from Pelosi and her DCCC. They're not helping this cycle either. They hate progressives. Thompson saves his fire for reactionary Republicans harming working families. This was his take on the latest GOP shenanigans with the Ryan tax plan:
The filthy rich are not satisfied with paying poverty wages and overtaxing the middle class while cutting taxes for the top 1%. Now they want to rob us of our retirements too by limiting the amounts we can contribute tax free to our 401Ks from the current $18,000 per year to just $2400 per year. They are doing this in order to fund their tax cuts for their billionaire buddies and corporate lobbyists. The vast wealth of this country has already been re-distributed to the top 1% over the past 40 years through the use of "trickle down economics" thereby creating an income disparity the likes that has not been seen in this country. Yet, their greed knows no bounds. When trying to determine how to pay for their cuts to the filthy rich cronies of Donald Trump, the Trump Republicans decided to attack the retirement benefits of our middle class. If this attack on the middle class is allowed by the Republican controlled Congress, the middle class will be devastated, more people will be unable to save for retirement and putting an even bigger strain on Medicaid, Medicare, Disability and other social programs in the United States. When I make it to Congress in 2019, I will fight everyday to protect working Americans from these types of attacks on our middle class. The middle class needs tax relief, not the richest 1% of this country. It is time to stand up and fight for the middle class; fight for fair taxation, and fight for America.
Kia Hamadanchy is one of the progressives running for the Orange County seat occupied by Trump/Ryan rubber stamp Mimi Walters. He sure wouldn't be voting for this toxic tax plan. "Just the fact that the California GOP invited Steve Bannon to address their annual convention shows how delusional and out of touch they really are. I'm actually kind of surprised Bannon didn't have Sherrif Joe Arpaio opening for him considering the way the state party appears to be going about their business. There is a reason that it's very possible that there won't be any Republicans on the statewide ballot on 2018 and its because time and time again the California GOP continues to embrace the xenophobia and extremism of figures like Bannon. That's why they are going to lose every single swing seat in 2018 and why they are on the path to permanent extinction in the state of California."

The other outstanding progressive running in CA-45 is Katie Porter, who's worked with Elizabeth Warren on these exact kinds of issues. She told us this morning that "Trump, Ryan, and their staunch allies, like my opponent Mimi Walters, are putting tax giveaways for the rich ahead of retirement security for middle-class Americans. As a consumer advocate, I’ve seen firsthand the importance of encouraging middle-class families to save for their futures. This policy would hurt families and leave our nation on fragile financial ground."

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At 4:57 PM, Anonymous Anonymous said...

Didn't need to read the piece. This has been the goal of the Rs since just after Lincoln. It's been the goal of the democraps since the DLC/Clinton era started in 1981.


oh and in case you decide to waste another piece on this, they also want the SSI trust fund for wall street to gamble with too.


At 6:04 PM, Anonymous Anonymous said...

There is another and more important aspect to this Republican plan to bankrupt the average American: the elimination of the mortgage interest deduction.

My house is bought and paid for. I have been very fortunate. I could not have even bought it in the first place without the mortgage interest deduction.

Few people are in my position who work an hourly-wage job for their income, mostly because too many used their home appreciation to buy expensive toys they likely can't afford now to be able to use. I'm especially pointing to people with boats and RVs and no equity in their homes.

If the plan of the GOP is to ensure that no middle class person even HAS a house to reverse mortgage someday, this is how they will do it.

Still care more about whether gays can marry?


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