NewOn Thursday Republicans unveiled the first significant overhaul of the nation’s tax code in 30 years, after weeks of internal debate. The bill, which is estimated to cost $1.51 trillion over a decade, highlights a corporate tax reduction and a permanent repeal of estate taxes. To pay for the tax cuts, Republicans are targeting some popular deductions including state and local taxes and medical expenses, as well as capping mortgage interest deductions. It’s already facing pushback from Democrats. We discuss the plan’s implications and what it means for California.

Guests:

Peter Coy, economics editor, Bloomberg Businessweek
Kathleen Pender, business columnist, Net Worth, San Francisco Chronicle
Emily Cadei, Washington correspondent, Sacramento Bee

New Republican Tax Plan Offers Corporate Tax Cut, Limits Mortgage Deductions 3 November,2017Mina Kim

  • EIDALM

    The Republicans so called tax reform, is nothing less than daytime highway robbery of the American people in favor of the billionaires, Wall Street, and multinational corporations who have taken over and totally corrupted the party, it all follows the same the same from
    Reagan puppet master Milton Friedman bogus voodoo economics, Reaganomics, and trickle down nonsense that totally destroyed the
    entire American middle class, and send tens of millions Americans to early death for lack of health care, as well most Americans to extreme poverty and homelessness.

  • EIDALM

    This is not a tax reform, this potentially great disaster to near all Americans, and America as well if it ever passed, by increasing the deficit near 2 trillion dollars, how dare them, the so called Republicans with straight face totally lie, falsely claim their nonsense is good for whatever little left of the American middle class and working people, in fact this obscene and borderline criminal action by the Republicans will cause more devastation to near all Americans, by their continuing failed Milton Friedman voodoo-economics, and trickle down nonsense them blind out in favor of their billionaires friends of the Wall Street, and foreign multinational corporations,…

  • EIDALM

    It has been proven for the last several decades that cutting taxes for the billionaires, Wall street, banks, and multinational corporations, which add trillions of dollars to their treasuries is near never invested back in the country to create jobs or advance the U S economy, instead near all their money is shelved in overseas banks to cheat and avoid to pay their fair share of taxis to start with, case on point the Apple corporation shelve near all of their money, in trillions of dollars in Ireland while using price fixing schemes to rob the American people, as an iPhone they sell for $899 or more, their costs less than $20 using slave labor in China, at same time they use all loopholes and tricks to avoid paying their due and fair share of taxes, the same goes for near all of the Silicon Valley companies and other corporations…….Now you know why America and Americans are such strait dire, poverty, and homelessness.

  • EIDALM

    I could not help myself but laugh, when the speaker of the house with his giant ears, and comic face was bragging on TV that a family whose income is 59 thousands dollars will save 1200 dollars a year on their tax plan…..Mr speaker that is shameful statement as that tax cut for these families amount to little more than 3 dollars each day, that is not enough to buy one slice of pizza for the whole family.

  • EIDALM

    Do you all renumber the nonsense of too big to fail, when Barack Obama gave banks 700 hundred billion dollars, followed by GW Bush 2 trillion dollars, and with all of that money in their hands, bank took the money and runaway with it only to make make more money without investing any of it in the society, but instead they continue to rob the American people with over 10 millions home foreclosures, higher fees for all customers, offering near zero, minimal gain on CD’s, money market, and saving accounts, while charging loan sharks interest rate on all of their credit cards as well as business and personal, and defrauded the American people out of billions of dollars by creating unwanted accounts as well as not needed auto insurance as it was the case with Wells Fargo, Bank of America, and many others…..Inst imagine if this 2.7 trillions dollars where given to the American people instead, each family of five would have revived over 50 thousands dollars, that money they would have spend and invested back in the society to create more jobs and prosperity and would really make America great again, instead all that money was wasted without any benefit to the American people what so ever, in fact it caused far more harm…..Since then they have been creating another bubble as the wages are greatly falling behind income fore near all Americans, and yes there will anothe bubble burst, and most likely Americans are going to hold the bag again.

    • jake3_14

      Dude, GWB preceded Obama, so events couldn’t have happened in the order you state.

      • EIDALM

        Thank you for correcting me, of course i know that, but I wrote the article around 3 AM while I was falling asleep.

  • Steve Haflich

    Several times I’ve heard KQED local news state that the proposal limits mortgage interest deductions to $500K. This is ridiculous — is it a genuine misunderstanding, or merely a failure of copy editing? The proposal actuallylimits the size of the MORTGAGE that can be deducted to $500K.

    • Another Mike

      Right, according to Fortune the max mortgage size is being cut in half, from one million to five hundred thousand.

      But anybody who can borrow half a million and more is not exactly poor. Where does that put them? In the 1%? 2.5%?

  • William – SF

    My question is how much of the U.S. wealth do corporations and the wealthy need? Need is probably not the right word, want seems better. Which government services should I expect to be eliminated? Who’s going to pay for the additional $2+ trillion in U.S. debt? Who’s going to protect me when corporate lawyers sit across from me at an arbitration hearing?

    Corporations and The Wealthy, what’s the end game? Where’s this headed?

    • turquoisewaters

      “Greed” is the word you are looking for.

    • Another Mike

      If you want more US corporations, like Walgreens and several pharma companies, to flee to enjoy a lower tax rate, fine. If you want to keep corporate HQs in the US, it’s time to cut corporate tax rates.

      • William – SF

        NO, that’s not necessary.

        • Another Mike

          Burger King bought Tim Horton’s, and seized the opportunity to move its HQ to Canada.

          • William – SF

            Let corporations take their HQ jobs offshore. Tax their U.S. profits at a higher rate than domestic companies so they hurt more. Doesn’t that MAGA?

      • chriswinter

        As always, the reporting on this is hard to understand, and IMO blows more than a little smoke. For example, a story in Forbes notes that ExxonMobil paid $110B in taxes over the decade 2005-2015, but had net income of $82B. I surmise that their gross income (not mentioned in the story) was well above $110B, otherwise they would have gone broke. Hence, smoke.

        Another list, which I think is also from Forbes but don’t have a link for, shows ExxonMobil paying an effective tax rate of 0.3% for 2016.

        https://www.forbes.com/sites/christopherhelman/2017/04/18/what-americas-biggest-companies-pay-in-taxes/#386a9a972f51

    • Noelle

      Yes, the question that needs to be answered is who benefits? And how are we going to pay for the increase in defense spending?

  • turquoisewaters

    50% goes to the top 1%.
    The middle class gets 8%.
    Some middle class tax cut.
    This is simply the attempt by the GOP to get away with a huge tax cut for corporations and the super rich by also giving some crumbs to the rest.
    “See, everybody got a tax cut.”
    I think we can all see through this.

    • Bill_Woods

      People who pay the lion’s share of taxes are going to be disproportionately affected by changes in taxes.

      • William – SF

        Right! They’ll have to open more bank accounts. Phew!

      • turquoisewaters

        A household of $500,000 will see a 9% decrease in taxes, a household of $60,000 will see a reduction of 1.5%. I cannot see how this is fair. (Saw these numbers published by the tax foundation.)

        • Another Mike

          We have a progressive income tax system. The last dollar earned by the $500,000 household is being taxed at a much higher rate than the last dollar earned by the $60,000 household.

          • Brux

            Read the book “A Fine Mess” by T. R. Reid about all aspects of the tax system.
            When you look at the whole tax system is not progressive anymore at all.
            It is supposed to be. It was designed to be … but it is not.

  • Miguel Praca

    It’s not clear how the Property Tax deduction works. Is it added to the standard deduction or is it an alternative like currently by filing Schedule A? Makes a huge difference!

  • turquoisewaters

    “yeah, simplifying”
    No deductions for medical expenses?
    It’s simpler, BUT I HAVE TO PAY A LOT MORE.

    • Another Mike

      Deductions for medical expenses have been limited since the Reagan tax reforms. Do you really spend more?

      • turquoisewaters

        The IRS allowed you to deduct qualified medical expenses that exceed 10% of your adjusted gross income for the year. Until now.

        • Another Mike

          They?

  • Joseph Callahan

    What about the personal exemption elimination?

  • Another Mike

    I have had to compute my alternative minimum tax for years and years. I have never had to pay it, but I almost always have had to compute it.

  • turquoisewaters

    Give me one good reason why we should do away with the AMT and the estate tax.
    Total gift for Trump and friends.
    That’s not symbolic, that’s a fairness issue.

  • Ryan Kersten

    How would this tax plan affect small business owners? It seems to favor large corporations more than any small to mid-size businesses.

    • William – SF

      The definition of small business isn’t necessarily as it implies…small. For those truly small, they likely pay little federal tax. But to try to answer your question, it seems like they get the same rate reduction – size doesn’t matter, except when it does.

  • Miguel Praca

    If you itemize deductions on Schedule A and you cannot deduct state tax, mortgage interest, and charity, all you have left is Property Tax which is capped at $10000. Makes no sense, who would deduct $10,000 instead of the standard deduction ($12,000/$24,000 for singles/couples)?

    • William – SF

      It’s bait and switch. Republicans need to find offsets to their tax cut giveaways to corporations and the wealthy so they beat up on middle class deductions. Yet their plan will still add more than $2 trillion to the debt. You have to give up something so Republicans can give your money to others.

      • Miguel Praca

        I know what they are trying to do, but I still don’t understand how they propose to do it. Either way it’s hypocrisy to propose a huge deficit when they spent 8 years denying measures that would pump up the economy after crashing it with “deregulation”.

        • Noelle

          They are itching for a “Win” this year in Congress after all the failures, fiscal responsibility be damned. It seems to be a pattern: tax cuts, higher military spending then the Democrats have to deal with the consequences when they get into power, we all lose in the end.

        • William – SF

          I think they propose to do it while holding their noses because the stink will be so awful. After all, campaign donors need to be repaid. i.e. I don’t think they care what the effects are to the U.S.

  • Noelle

    Yes the fetus provision is rich.

  • Another Mike

    Top ten American corporate tax avoiders in 2014, per Fortune magazine.

    Eaton, now headquartered in Ireland
    Ingersoll Rand, same
    Perrigo, (drugmaker), same
    Nabors Insdustries (fracker), now headquartered in Bermuda
    Carnival Cruise Lines, now headquartered in Panama
    XL Group (insurance), now headquartered in Ireland
    Garmin, now headquartered in Switzerland
    Invesco, now headquartered in Bermuda
    Allegion (Schlage locks and doors), now headquartered in Ireland
    Actavis (drugmaker), same

  • Steve

    In my view, the mortgage interest deduction does not save money for home buyers. The reason is, the price of the home is higher than it would otherwise be, which cancels out any savings. When buyers make an offer for a home, they base their offer on the monthly payments that they can afford. That calculation includes their mortgage interest deduction. Without that deduction, buyers would offer less, and home prices would be lower. If the deduction were eliminated, prices of existing homes would come down, but buyers would be essentially unaffected.

    • William – SF

      I would say it depends on location and resource. In the Bay Area some have enough resources that the net affect of the mortgage deduction isn’t a factor – location is.

      They could eliminate the mortgage deduction and lower the tax rate for lower income levels, say less than $250k and there would be one less line on the return and the net effect would be better. At the same time raise the rate on higher income levels.

      • Steve

        Sure, there are always people with enough resources that this isn’t a factor, but I think the vast majority of home buyers are income-limited in the price of a home they can afford. For them, the mortgage interest deduction is a factor in figuring out the monthly payment that they can afford.

        • William – SF

          I agree. For middle class home buyers this tax change is a net negative. But someone (who doesn’t have their paws in the pockets of DJT and Republican politicians) has to pay.

          On a non cynical note, I find it unconscionable of Paul Ryan to sell this tax plan as good for average Americans. It is absolutely anything but good for ~98% of Americans.

    • Another Mike

      Really?

      Seattle’s median home price hit $700,000 in April
      Vancouver, BC’s median home price was $1.8 million (Canadian) in June. ($1.4 million US)
      Mortgage interest is not deductible from Canadian income tax, yet house prices are twice as high.

      • Noelle

        Chinese buyers are a big factor in Vancouver.

        • Another Mike

          They’re a big factor in the SF Bay Area, too.

          Edit: A friend of mine just sold her Santa Clara home — for a substantial premium over the asking price — to an all-cash buyer from China.

      • Steve

        Mike, you are comparing apples and oranges. It doesn’t make sense to compare prices in different markets. What I am saying is, within a given housing market, prices are higher if mortgage interest is deductible. So, for example, if mortgage interest became deductible in Canada, Vancouver prices would rise even further. Now, where my argument would apply less is a situation where lots of buyers are paying cash, and not using a mortgage.

        • Another Mike

          You’re just guessing, while I am making a direct comparison to two cities, equally prosperous, on either side of a border.

          • Steve

            There are many variables that could be affecting the price difference between Seattle and Vancouver. You are “guessing” that the mortgage interest deduction is not having any effect on Seattle prices. I disagree. And yes, you can say I am “guessing” – I am putting forward a view that seems to make sense from a basic economics point of view. I admit it’s unverified – it would take a good study to verify one way or the other.

          • Another Mike

            So kindly explain, enumerate, or even list, some of the other variables you see affecting the price difference. If mortgage interest deductibility mattered, Vancouver BC prices would be around $565K, to make monthly payments about the same. Not $1.4 million.

          • Steve

            I thought these variables should be obvious – basically they boil down to supply and demand. Various factors can affect both. Supply is simpler – how much housing is available in the various prices ranges, and how much new construction is taking place. Demand – how many people are actively looking to purchase houses, and what the income levels of those people are. This can include myriad factors like how many foreign buyers are coming in, which apparently is quite prevalent in Vancouver. Another variable is government and tax policy differences in Vancouver, British Columbia, and Canada vs. Seattle, Washington, and the USA.

            Your argument seems contradictory to me. You seem to be saying that there is no difference between the Seattle and Vancouver housing markets, and yet you are also pointing out that Vancouver prices are much higher.

            Your statement “If mortgage interest deductibility mattered” is incorrect. What you meant to say was “If mortgage interest deductibility were the ONLY difference that mattered” … .

  • Tina Levine

    My understanding of the AMT is that is limits the deductions of local taxes including property taxes. So, doesn’t the tax plan actually extend the AMT to EVERYBODY, rather than just higher income people, although it’s been creeping down to more and more individuals.

  • turquoisewaters

    All this money should have gone towards infrastructure and paying down the debt.
    The next generation will hate us for this.

  • John

    It could help crash the Bay Area housing market and bubble, which would be good.

    • William – SF

      No. It’ll give those with more wealth the opportunity to buy more properties to rent to you for more.

  • Jessica

    Awesome, they just confirmed I’m losing the two benefits I get when filling

  • William – SF

    I do fear this will pass, after all it’s about money, and it’s complicated, and I fear too many people don’t pay attention nor understand taxes. All DJT and the Republicans need do is sell, sell, sell …lie, lie, lie. And they’re doing that.

  • Another Mike

    We need the experts to evaluate and publish some scenarios, before we can get excited one way or the other. (Ex. “Bill, 47 works as an accountant. His wife, Pat, works part time while raising three teenagers. Etc.” Will their taxes go up or down?)

    • William – SF

      As EIDALM writes and Paul Ryan said, the average American household gets $3 (three-dollars) a day …at best. Wooohoo!

      • Another Mike

        The average American works at Home Depot and does all his shopping at Walmart,

        • William – SF

          …and they still won’t be able to buy a pumpkin latte at Starbucks.

          For now. Sooner than later, they’ll be working multiple jobs … into old age.
          This goes to my question about the end game – where does this lead the nation? It’s a hugely bigly tax overall hugely bigly overwhelmingly benefiting those far above the middle class. That has consequences, as has the wealth transfer in the last 20+ years. I don’t think it’ll end well. I can’t see how it can.

          • Noelle

            Economist Richard Wolff points out that the jobs that are proliferating in USA are personal service jobs for those who need help caring for elderly, dog walkers, personal shoppers…in other words, low-pay and benefits for these people. We are recreating a servant class, much like in GB in the 19th century. Progress. Shop at Walmart, get blamed for not saving enough for retirement, work until you die.

          • William – SF

            … and Make America Great Again!

          • Another Mike

            Yes. A friend of mine, a perpetual student, is making ends meet by picking up a few shifts as bartender, and housesitting, where she has to potty the resident dog three times a day and feed their rebellious teenage daughter when (if?) she ever comes home from school.

  • chriswinter

    A tax holiday to bring overseas funds back to the U.S. was passed during the GW Bush administration. The New York Times noted that “The law specifically said the money could not be used to raise dividends or to repurchase shares.”

    I was shocked — shocked! — to learn that most of the repatriated funds were used for exactly those two things.

    http://www.nytimes.com/2009/06/05/business/05norris.html

  • aaron

    A household of $500,000 will see a 9% decrease in taxes, a household of $60,000 will see a reduction of 1.5%. I cannot see how this is fair. (Saw these numbers published by the tax foundation.)Definitely not the “massive middle class tax cut” Trump promised.

  • Cole Rollins

    Several times I’ve heard KQED local news state that the proposal limits mortgage interest deductions to $500K. This is ridiculous — is it a genuine misunderstanding, or merely a failure of copy editing? The proposal actuallylimits the size of the MORTGAGE that can be deducted to $500K.

Host

Mina Kim

Mina Kim is KQED News’ evening anchor and the Friday host of Forum. She reports on a wide range of issues affecting the Bay Area and interviews newsmakers, local leaders and innovators.

Mina started her career in public radio at KQED as an intern with Pacific Time. When the station began expanding its local news coverage in 2010, she became a general assignment reporter, then health reporter for The California Report. Mina’s award-winning stories have included on-the-scene reporting of the 2014 Napa earthquake and a series on gun violence in Oakland.

Her work has been recognized by the Radio Television Digital News Association, the Society of Professional Journalists and the Asian American Journalists Association.

Mina grew up in St. John’s, Newfoundland and Oak Park, CA. She lives in Napa.

Sponsored by

Become a KQED sponsor