Newspaper column: Tax reform bill divides Nevada delegation along party lines

Like everything else to come out of Washington, the House tax reform bill introduced this past week has turned into a partisan hissing match in a fact-free zone.

Republicans hail it as an economy stimulating second coming, while Democrats decry it as a sop to the wealthy and a death knell for the middle class.

The bill lowers the corporate tax rate from 35 percent to 20 percent, doubles the standard deduction, lowers the individual tax rates for all but millionaires, allows 100 percent expensing of business costs instead of the current 50 percent, eliminates deductions for state and local taxes, except for property taxes, and allows mortgage interest deduction.

Republican Dean Heller said the bill will provide tax relief for middle class families, while Democrat Catherine Cortez Masto said the bill rewards corporations and the rich at the expense of working families, seniors and the poor.

“As a member of the U.S. Senate’s tax-writing committee, I’m waking up each and every day with the sole focus of ensuring that Nevada’s hardworking families and small business owners come out ahead when the Senate passes its final product,” Heller said in a statement, adding, “I’m going to continue fighting for a major tax overhaul that will help my state and push for policies that will create jobs, boost growth, and make it easier for Nevadans to provide a better life for their kids.”

A Cortez Masto press release fulminated, “Republicans in Congress have one priority: ripping off America’s middle class and working families. Rather than transparently writing a bill that puts economic growth and American’s financial security first, the current Republican tax proposal targets Nevada families. The latest Republican proposals would put our country even further in debt, take money out of working families pocketbooks …”

Cortez Masto also claimed, “The average tax increase on families nationwide earning up to $86,100 would be $794.”

But the Washington Post fact checked that claim and found it was based on a report by Democrats on the Joint Economic Committee who actually said, “If enacted, the Republican tax reform proposal would saddle 8 million households that earn up to $86,100 with an average tax increase of $794 …”

But you see, there are 122 million households making less than $86,100. Thus only 6.5 percent of those households would see a tax hike of that amount. The Post reported that more than 97 million, or 80 percent, of that group would get a tax cut averaging about $450.

Republicans say the bill would result in a tax savings of $1,182 for a typical household of four with gross income of $59,000, resulting in their tax bill being only $400.

Las Vegas Democratic Rep. Dina Titus joined the partisan fray by calling the bill “a red herring tax plan that relies on the myth of trickle-down economics in order to give the nation’s top earners a handout.”

Titus said she could not see how working families could save money if the bill removes certain deductions, including the one for state and local sales taxes — ignoring the fact 70 percent of Americans take the standard deduction and do not itemize, nor the fact Nevadans who do itemize can deduct only about 10 percent as much as taxpayers in high-tax states such as California and New York and thus are subsidizing those states.

Democratic Rep. Ruben Kihuen, who represents southern rural Nevada and northern Clark County, used the occasion to solicit contributions while slamming the bill by saying, “We expected Paul Ryan and the Republicans would bend over backwards to make big corporations and the super rich the winners in this plan, and that’s exactly what they did. Meanwhile, it’s all at your expense.”

Republican Congressman Mark Amodei, who represents northern Nevada, took a more nuanced approach, promising in an email to constituents to thoroughly research the 429-page bill, while also saying, “I think we can all agree the American taxpayer would be better off if Congress were to reform our current tax code in favor of a system that is simpler, fairer, and has lower tax rates.”

The bill also eliminates the $7,500 tax credit for purchasing electric cars, such as Teslas, whose batteries are built in Sparks, and drops the tax exemption for municipal bonds to finance sports stadiums, such as the one planned for Las Vegas for the Raiders.

Next, Congress needs to address the runaway federal spending.

A version of this column appeared this week in many of the Battle Born Media newspapers — The Ely Times, the Mesquite Local News, the Mineral County Independent-News, the Eureka Sentinel and the Lincoln County Record — and the Elko Daily Free Press.

(AP pix)

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Tax reform bill lands shortly after the morning newspaper

This is one of the problems with running a daily newspaper in the Internet age. The Las Vegas paper — which hit the driveways this morning — has a story about what is expected to be in the Republican tax reform bill, but an hour or so later the actual tax bill has been released.

The New York Times is reporting that the much debated and maligned dropping of the income tax deduction for state and local income and sales taxes is still in the bill.

The state and local tax (SALT) deductions are patently unfair to states with lower tax rates.

Using 2010 statistical data from the IRS, you find Californians who filed for state and local income tax deductions claimed deductions of $10,700 per return. Nevadans who filed for the state and local sales tax deduction claimed only $1,430 per return.

Calculated on a per capita basis, Californians claimed $2,116 in federal income tax deductions, while Nevadans claimed only $166 per person for sales tax deductions.

The tax deduction for property taxes remains but is capped at $10,000. The bill also maintains mortgage interest deductions for existing mortgages, but caps the deduction for newly purchased homes to $500,000.

The bill also establishes three tax brackets — 12, 25 and 35 percent. “Single filers making up to $24,000 will pay no income tax; up to $90,000 will be in the 12 percent bracket, up to $260,000 in the 25 percent bracket and up to $1 million in the 35 percent bracket. Those making above $1 million will be in the 39.6 percent bracket, which is currently the top rate for millionaires,” the Times says.

The standard deduction for the 70 percent of Americans who do not itemize would increase from $6,350 for individuals to $12,000 and from $12,700 to $22,000 for married couples.

There will be no changes to 401(K) plan tax exemptions after all.

It also doubles the exemption for the estate tax and repeals it after six years.

Bloomberg is also reporting that the bill ends the $7,500 credit for purchasers of electric vehicles made by companies such as Tesla Motors, which got more than $1 billion in tax breaks from Nevada to build a battery plant in Sparks.

Now the fight begins. Nevada Democrats have largely opposed the tax reforms that would benefit most Nevada taxpayers and stimulate the economy.

 

Filing IRS return on a postcard? Don’t count on it

Having already failed miserably at health care, infrastructure and immigration reform, Trump is barreling down the road toward tax reform failure.

The most notable aspect of his tax reform outline is the doubling of the standard deduction to $12,000 for individuals and $24,000 for married couples. Nearly 70 percent of households already chose to take the standard deduction now and this should increase that exponentially, especially since most deductions except for charitable donations and mortgage interest would be eliminated.

As The Wall Street Journal notes, millions will be able to file on a postcard.

But the usual suspects are already wailing about their special-interest tax deductions oxen being gored.

While Trump and his ilk say his $5 trillion in tax cuts will be covered by economic growth generating enough tax revenue to cover that, many economists question this conclusion. Of course, hardly anyone is calling for cutting spending by $5 trillion. Trump himself has allowed the debt to balloon beyond $20 trillion.