Republicans are always having a collective hissy fit that the U.S. is the most over-taxed country in the world. They know they're lying. Look at the OECD chart above showing tax as a percentage of GDP in each of the OECD countries. The U.S. has the lowest percentage of any countries other than Ireland and 3 really screwed up countries: Turkey, Chile and Mexico. The average of all economically developed countries is 34.3%-- but the U.S. rate is 26.0%. So, yeah, everything Paul Ryan has said for the last 2 decades about taxes and the economy has been based on a lie.And it is personal income taxes that are playing an increasingly significant role in the tax mix as revenues from social security contributions and consumption taxes fall, and corporate tax collections remain low, having failen significantly during the financial crisis and not recovered, remaining flat at around 8.9% of revenues.One of the big international private banks sent out a statement this week with perspectives on Ryan's Tax Scam, offering 8 key points:
• Tax BracketsThe proposed House bill reduces the 7 current tax brackets down to 4 for individuals with the standard deduction increasing from $12,700 to $24,000 for joint filers. The Senate bill keeps the current 7 brackets but reduces the highest bracket to 38.5%. In the House bill, the previous phase out of itemized deductions for high income earners is eliminated. Business rates would be 20% for C corporations with a 25% cap rate for pass-through income. The 25% rate does not apply to professional services business including financial services. Under the Senate bill, these tax rate reductions would not take effect until 2019.• The Alternative Minimum Tax (AMT)The AMT, which is a supplemental income tax intended to curb tax avoidance, would be repealed under both bills [Senate and House].• Estate/Gift TaxesUnder both bills, the estate tax exemption is doubled to roughly $11 million for singles and $22 million for couples. The Senate bill keeps the estate tax intact for estates over this level at a 40% rate. The House bill repeals the estate tax effective Jan. 1, 2024. There is no impact on states with estate tax such as Oregon and Washington. The gift tax continues under both Bills. The House bill reduces the gift tax rate from 40% to 35%.• 401(k)s & Individual Retirement Accounts (IRAs)401k and IRA contribution limits are left unchanged.• Carried InterestsCapital gains treatment for carried interests is retained. The House has indicated, however, that it will impose a minimum holding period of 3 years for long term capital gains treatment.• Personal ExepmtionsCurrently at $4,050 per person, personal exemptions would be repealed under both bills.• Home Mortgage Interest & Property Tax Deduction and Changes to Exclusion upon SaleOne of the more widely discussed items is the proposed changes to mortgage interest deductions and property tax deductions for homeowners. Both bills would eliminate the mortgage interest deduction for second homes. For the primary residence mortgage interest deduction, the Senate version of the bill does not make any changes to the current $1 million limitation for deducting primary home mortgage interest. However, the House version proposes major changes. The home mortgage interest deduction in the House version of the bill would see interest rates capped on a $500,000 mortgage for primary residences and new purchases (down from $1,000,000). Existing mortgage interest on primary residences would be grandfathered.The House proposal would have a major negative effect on the current benefits of owning an expensive home in areas of the country, such as the East and West Coasts, where real estate is more expensive. For example, a $1 million dollar home bought with a 20% down payment would result in a mortgage of $800,000. Under current law and the Senate plan, the homeowner could deduct all of the $35,736 in interest via itemized deductions on their federal taxes, while they could only deduct $22,335 under the House plan. The $13,401 higher tax deduction under the Senate plan adds up to a tax savings of roughly $3,350, assuming a 25% tax bracket.Another major impact on home ownership is the reduction or elimination of the itemized deduction for state and local taxes which includes both state income taxes and property taxes (now commonly referred to as "Salt"). It is capped at $10,000 under the House bill and is completely eliminated under the Senate version.Another significant proposed change in the House bill removes the twoyear principal residence use rule in order to qualify for the $250,000 single/$500,000 married gain exclusion upon the sale of a primary residence. The proposed change is now 5 of 8 years of use as your principal residence in order to qualify for the gain exclusion. Additionally, the exclusion is phased out dollar for dollar if your income exceeds $250,000 single/$500,000 married.• Impacted Itemized DeductionsThe charitable deduction stays. However, the medical expense deduction, expenses incurred by an employee during the trade of business (that are not reimbursed by the employer), personal casualty loss deductions and deductions for previous estate taxes paid on distributions from inherited IRAs would be eliminated. Also removed are the dependent care assistance programs for working families with dependent children and the tax-free employer reimbursement for an employees' tuition which is currently set at $5,250.
Hart Research Associates has polled voters in 3 states on the Senate plan, as reported by USA Today. These are 3 of the states with undecided senators, McCain, Flake, Collin and Corker. Voters in all three states "believe that the proposed overhaul mostly benefits the wealthy." And in all 3 those who disapproved outnumbered those who approve.
• In Maine, 53% of surveyed voters said they disapproved of the current plan, while only 22% approved.• In Arizona, 44% disapproved and 26% approved.•In Tennessee, 47% disapproved and 37% approved