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Drain That Swamp!

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AlligatorsR

Congressional Republicans are really going to sell the public on keeping themselves on the ACA while they continue attempting dooming millions of Americans to early and painful deaths.

House Republicans appear to have included a provision that exempts Members of Congress and their staff from their latest health care plan.

The new Republican amendment, introduced Tuesday night, would allow states to waive out of Obamacare’s ban on pre-existing conditions. This means that insurers could once again, under certain circumstances, charge sick people higher premiums than healthy people.

Republican legislators liked this policy well enough to offer it in a new amendment. They do not, however, seem to like it enough to have it apply to themselves and their staff. A spokesperson for Rep. Tom MacArthur (R-N.J.) who authored this amendment confirmed this was the case: members of Congress and their staff would get the guarantee of keeping these Obamacare regulations. Health law expert Tim Jost flagged me to this particular issue.

A bit of background is helpful here. Obamacare requires all members of Congress and their staff to purchase coverage on the individual market, just like Obamacare enrollees. The politics of that plank were simple enough, meant to demonstrate that if the coverage in this law were good enough for Americans than it should be good enough for their representations in Washington.

That’s been happening for the past four years now. Fast-forward to this new amendment, which would allow states to waive out of key Obamacare protections like the ban on pre-existing conditions or the requirement to cover things like maternity care and mental health services.

If Congressional aides lived in a state that decided to waive these protections, the aides who were sick could be vulnerable to higher premiums than the aides that are healthy. Their benefits package could get skimpier as Obamacare’s essential health benefits requirement may no longer apply either.

I appreciate wanting to keep your staff healthy. Too bad it doesn’t apply to all Americans. I guess being a College Republican who gets a staff job out of college with a fireeating Republican makes you the member of a superior class, unlike those people.

Meanwhile, the Trump tax plan sure looks great!

Reduction of the corporate tax rate from 35 percent to 15 percent, a cut which sounds like it will indeed apply to “pass-through” companies like the Trump Organization.

Reduction of the top individual tax rate from 39.6 percent to 35 percent and reduction in the number of individual tax brackets from seven to three.

Doubling the standard deduction.

Repeal of the estate tax.

Repeal of the Alternative Minimum Tax.

Repeal of the “Net Investment Income” tax that helps pay for Obamacare.

It would also eliminate nearly every deduction except for mortgage. Among many other things, this would effectively mean the end of freelancing as a career choice.

How would this affect Herr Trump? Secretary of the Treasury Jay Gould:

How will the president’s own tax bill be affected by the plan? “I can’t comment on the president’s tax situation since I don’t have access to that.”

I’m sure that Trump will make this clear soon enough by releasing his taxes!

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  • DaftPunk

    This will definitely help them retain their seats.

    • Pat

      George Callas, one of Paul Ryan’s tax experts, has some amazing things to say about Trump’s tax plan.

      • sibusisodan

        Yowzer. The leapt out at me:

        A corporate rate cut that is sunset after three years will increase the deficit in the second decade. We know this.

        That sounds suspiciously reality based. A three-year Corp tax cut results in lost revenue seven years later? That’s significant.

        Where has this guy been hiding? How does he work for Ryan without his brain exploding?

        • Pat

          Ryan is not a complete idiot. He’s going to hire and use people who have expertise in their fields. This is what distinguishes him from a guy like Trump.

          Callas’ comment about magic unicorns is instructive: there are things that they can do, i.e. sell to the Congressional Budget Office, like tax cuts for individuals, and there are things that they cannot, like cutting corporate tax rates.

          I personally like the line about dropping money out of helicopters onto corporate headquarters.

  • catclub

    It would also eliminate nearly every deduction except for mortgage. Among many other things, this would effectively mean the end of freelancing as a career choice.

    I don’t understand why this would follow.
    Business expenses for freelancers are listed as business expenses that reduce the taxable net income of the business – then you treat that net from the business as your personal salary
    that is taxed. No personal income tax deductions necessary.

    • Karen24

      I believe the plan eliminates business expenses as credits as well. Everything = taxable income.

      • catclub

        If that is true I will be surprised and amazed. So a retailer
        who buys goods for $190 (an expense) and sells them for $200 is taxed on the income of $200? Not the net income of $10?

        • Katya

          The tax laws treat cost of goods sold differently than expenses. Gross receipts less cost of good sold = gross income. Business expenses are then deducted from gross income to calculate net profit. Net profit is reported as income on the Form 1040.

    • I am not an expert on this as someone who is not a freelancer, but I can say that Twitter is full of lefty freelancer people who write about the economy and they are freaking out.

      • Cassiodorus

        Business income is part of gross income, while business expenses are deductible. The effect under current law is that you only end up paying taxes on the net, but making it where business expenses are not deductible changes that.

      • EvanHarper

        Twitter is constantly full of leftists freaking out over poorly researched imaginary problems though.

    • Derelict

      As a freelancer, I deduct my expenses. If I have to pay income tax on gross revenues, I can see a scenario where I lose money every year because my tax bill exceeds my retained income. For example, gross $1M with expenses of $950,000. Right now, I pay tax on $50,000 income. Without deductible expenses, I pay tax on $1M out of the $50,000. Which leaves me about $250,000 short.

      Welcome to the gig economy where General Electric gets to deduct all of its expenses to generate a $20M tax credit on its $22B of profits, but where freelancer me can’t deduct any of my expenses and gets to turn over my entire income to the government. That Trump is sure a friend of the working man!

      • liberalrob

        As long as you work for GE, what’s the problem?

        Everyone knows those “freelancers” are all slackers and moochers who just don’t want to get a real job doing a real day’s work at a real American company anyway. They just want to get paid to sit on their couch all day playing Xbox in their underwear while the money rolls in from some little thing they do on their computer a couple of hours at night. That ain’t workin’…

        Now look at them yo-yo’s that’s the way you do it
        You play the guitar on the MTV
        That ain’t workin’ that’s the way you do it
        Money for nothin’ and chicks for free
        Now that ain’t workin’ that’s the way you do it
        Lemme tell ya them guys ain’t dumb
        Maybe get a blister on your little finger
        Maybe get a blister on your thumb

        We gotta install microwave ovens
        Custom kitchen deliveries
        We gotta move these refrigerators
        We gotta move these colour TV’s

      • Dennis Orphen

        Welcome to Delaware.

    • Crusty

      I gather that the proposal is more of a pamphlet or hand bill than actual legislation, but I suspect your interpretation of any actual proposal is correct. Freelancers won’t quite be hurt they way Erik says they’re fearing.

      And I think this is a safe assumption, because when Mr. Bigshot Businessman Trump spends $100 dollars to renovate an apartment building as cheaply and shittily as possible, you bet your ass he wants to deduct that $100 as a business expense.

      • Bruce B.

        That’s not a freelancing expense.

        One of the stranger things to me about the modern business scene is the intense hatred that a bunch of corporate executives and small business owners alike turn out to have for freelancers. It’s not universal, but it is widespread, and it’s not something I ever heard much about before I started freelance writing myself. There are enough “destroy all freelancing” businesspeople out there to make it seem very likely to me that Erik and his sources have the correct reading of this.

        It is no exaggeration to say that there are businesspeople who regard freelancing the way the NY office of the FBI regards the Clintons.

        • Crusty

          It’s a business expense. Freelancers can deduct business expenses. If they haven’t been, they’re getting bad advice.

          And some business people love freelancers- you don’t have to give them health insurance, pay them when they’re not there, give them supplies, etc.

    • Hob

      There’s not enough information available about what they’re proposing to judge whether your interpretation or Erik’s is more accurate. I mean, you’re assuming that 1. the plan [sic] specifically describes the deductions to be eliminated in a way that excludes business expenses, and 2. Trump and his advisors even understand the difference. I don’t think those are safe assumptions. Erik’s version may not be well supported either, but doesn’t require that Trump has any idea what he’s doing or that he gives a shit whether freelancers live or die (the approach to ACA replacement suggests that the latter is not a concern).

      • GeorgeBurnsWasRight

        You left out:
        3) Trump won’t change his position repeatedly.

      • Hogan

        The plan lists mortgage interest and charitable contributions as the only deductions not being targeted. But this document is so far from actual legislation that its light will take 175 years to reach actual legislation.

    • Lurking Canadian

      One possible explanation that would apply to freelancers but not to GE is elimination of “business use of home” deductions. A freelancer working out of a home office can (at least in Canada) deduct a pro-rated portion of rent, electricity, heat, internet, etc equal to the fraction used as the office. If the new plan eliminates this class of deductions, it would certainly make freelancing much less attractive, but would not require GE to pay tax on the gross.

      Of course I have not read the plan, so I have not idea how accurate this guess might be.

      • catclub

        On my schedule C for taxes, I write down office expenses, and they reduce the business income I report on schedule C. So they are fully deductible from income.

        • Lurking Canadian

          I’m not sure if we are agreeing or disagreeing. Assume you are Donald Trump and you are trying to screw catclub over without inconveniencing the Chamber of Commerce. Is there anything in the form that could be used to distinguish a home-based business from a non-home-based one?

          I know how a Canadian Trump could do it: business use of home expenses as deductible, but different (thy require a different form) than other business expenses. I don’t know how the actual Trump can do it.

          • Katya

            The Schedule C already separates out expenses related to the use of a home for business purposes, and eliminating that line item would be pretty simple.

            (And a corporation doesn’t file a Schedule C, which is only filed by individuals who have some kind of business. The Schedule C is used to calculate the net profit or loss of a business, which is carried over to the Form 1040 and reported as income.)

  • sam

    How will the president’s own tax bill be affected by the plan? “I can’t comment on the president’s tax situation since I don’t have access to that.”

    Even with the minimal amount of tax info we have about Trump, we know the following –

    – he runs his business with pass-through taxation, so he will massively benefit from this change
    – the one tax year where we saw some of his tax filing, the AMT raised his effective tax rate from about 4% to over 30%. So he’s killing the AMT.
    – he and his are the few remaining people who get hit by the estate tax, which (thanks to the raise in thresholds over the past several years), now really only hits the superwealthy. So clearly that needs to go.

    • JKTH

      Yeah, you pretty much couldn’t have a better plan if the goal was to minimize Trump’s taxes. It’s telling that all of these things are bog-standard Republican tax proposals too…almost like their goal is to minimize taxes on the super-rich.

  • sam

    Meanwhile, based on his original campaign proposal, I fell into that weird income spot where my taxes would actually go up under his plan, while my boss, who makes twice as much as me, would get a massive tax cut.

    I don’t mind paying more in taxes to, you know, pay for roads and schools and healthcare. I DO MIND paying more in taxes to give my boss (who I like! This isn’t about him as a person!) more money.

  • sibusisodan

    From the Guardian article on the tax napkin plan:

    “I think it’s pretty clear we’re going to have to use a reconciliation vehicle because today’s Democratic party is very different from the Democratic party in the 80s,” McConnell said.

    He is such a card. Yeah, it’s the Democrats who have changed. Say the one term joke again!

  • Cassiodorus

    If it’s anything like his campaign tax plan, it also oddly raises rates for families with stay-at-home moms.

    • Derelict

      Family values! Women should stay home and raise children, which is why we’re going to penalize the lazy sluts so that they get off their asses and join the workforce.

      • Cassiodorus

        No, no… the tax increase is for families with stay-at-home moms. If the mother is working, the increases to the child care credit likely offset the increases elsewhere.

        • Derelict

          For most families making under $40,000, the child care credit comes out to $10 for the year. Seems doubtful that $10 will offset any likely increases in anything else.

  • Thrax

    …and the Republican quest to make every single myth about the ACA true for the GOP “replacement” bill continues. Special breaks for a single state: check. Rushed through with no hearings: check. Secret bill that no one could read until just before the vote: check. Exempting Congress: check. At this rate, I expect to hear about a death panel any moment now.

    • Thrax

      I forgot “you didn’t consult the minority,” budget tricks to game the cost, “you have to pass it to find out what’s in it”–I’m sure there are others.

      • JKTH

        I hope there’s no ramming down our throats involved.

  • sam

    Looking at the actual memo, I seriously think they spent more time figuring out what fonts to use than on thinking about what should go into this tax “plan”.

    • keta

      I love the very last phrase and its obvious last-second-addition-before-release:

      ” – and can pass both chambers.”

      The sweet and delicious little last-second cherry on top that is meant to make the whole steaming mess somehow…palatable.

      • efgoldman

        ” – and can pass both chambers.”

        I have no doubt that Granny Starver and his merry band can get the tax mess thru the house; It is every wet dream they’ve had since they’re 12th birthdays.
        Unless Yertle McTurtle changes the rules again, it has no chance in the senate.

        • Lurking Canadian

          Unless Yertle McTurtle changes the rules again, it has no chance in the senate.

          So it’s a slam dunk, is what you’re saying?

    • Mellano

      Looking at the actual memo, I seriously think they spent more time figuring out what fonts to use than on thinking about what should go into this tax “plan”.

      It’s possible they did. But that isn’t saying much, since it has the same design as the minutes from a high school student government meeting circa 1997.

    • They thought about using Microsoft’s appalling blinking font effect for keywords like “middle class” but realized they don’t work on Twitter.

  • Hogan

    Paul Ryan’s diary, 4/26/17:

    “I crapped out a better tax plan than this on my last visit to Taco Bell. WTF?”

  • daves09

    Elimination of the state income tax deduction so that the actual productive states-Ca., NY, Mass., others-can send even more money to the no tax hellholes-Ala, Miss., et. al.
    Cohn and Mnuchin, both billionaires from Wall Street fraud, standing up there very piously declaring how great this will be for middle class families.
    Mnuchin:”No I don’t know how much money this will put in Trump’s pocket, and he ain’t saying, so fuck off.”

  • John F

    Among many other things, this would effectively mean the end of freelancing as a career choice.

    “Free Lancer” = Independent Contractor

    I think someone is confusing “deductions” (what you put on Schedule A) with what you can subtract from gross income (cost of goods and services etc) to arrive at net income )on your Schedule C).

    Repeal of the Alternative Minimum Tax.

    In isolation THIS IS A REALLY BAD IDEA- staggeringly regressive. Of course it appeals to Trump since the AMT is the only kind of income tax he ever has to pay.

    • Katya

      I think there is some confusion there, yes. Schedule C deductions refer to business expenses, but NOT cost of goods sold, which is deducted from gross sales/receipts to calculate gross income. Business expenses like advertising, office supplies, etc., are then deducted from gross income to determine net profit or loss, which is reported on the face of the Form 1040 as business income, and which is included in “total income.” Then you take various deductions to arrive at your “adjusted gross income.” Then you take your Schedule A deductions and tax credits to arrive at your “taxable income.”

      Which is all to say, real tax reform to simplify this mess would be fantastic, but you’re not going to get there with a page of bullet points. This stuff is truly complicated, and you really need people with a great deal of expertise working on it.

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