U.S. Budget Negotiations

[gtyellowjacket]

Trump is now telling Congressional Republicans to raise taxes on the rich. I think he's finally running into math.

Trump tells Congress to raise taxes on the rich in budget bill​

Republicans in the Senate have floated this already and been shot down, but ebb and flow I guess.

Would be interested in the math on how much that helps, though. The gap in their budgeting so far has been enormous.

On a related note, what is politically tricky here is that unless they come through on other working and middle class tax cuts, the working and middle class voter won’t actually feel the reduced tax rate — from their perspective, things will remain same. The rates would revert to Obama era rates if nothing is done but that can be tough to effectively message.

One of Trump's proposals is "pushing to raise the top tax rate from 37% to 39.6% for individuals earning $2.5 million and higher or joint filers earning $5 million, with carve-outs for small businesses, according to one source."

Another is to plug the carried interest loophole for private equity.

I'm not against it but it's not likely to raise that much money. The carried interest proposal would cut the deficit by $13B over 10 years. That's a drop on the bucket. Just not sure how many people make $2.5M a year. That might be .01% or even less.

 

[nycfan]

 

[nycfan]

More interesting to me, a plurality supports not extending the tax cuts …

 

[HintonJamesHeel]

Trump is now telling Congressional Republicans to raise taxes on the rich. I think he's finally running into math.

Trump tells Congress to raise taxes on the rich in budget bill​

One of Trump's proposals is "pushing to raise the top tax rate from 37% to 39.6% for individuals earning $2.5 million and higher or joint filers earning $5 million, with carve-outs for small businesses, according to one source."

Another is to plug the carried interest loophole for private equity.

I'm not against it but it's not likely to raise that much money. The carried interest proposal would cut the deficit by $13B over 10 years. That's a drop on the bucket. Just not sure how many people make $2.5M a year. That might be .01% or even less.

The carried interest loophole should be closed asap and the fact that so many on both sides of the aisle oppose closing it shows how corrupt the whole thing is.

 

[Duke Mu]

Prolly half of MAGA Rep. families are on Medicaid.

 

[gtyellowjacket]

The carried interest loophole should be closed asap and the fact that so many on both sides of the aisle oppose closing it shows how corrupt the whole thing is.

Yeah. Trump hates it too which is weird. He spoke out against it in his first term. I wonder if some hedge fund guy stole one of his girlfriends or something.

He doesn't mind getting capital gains treatment for his and others work in real estate development but he does not like private equity getting that tax treatment for their work.

 

[BlueSmoke]

Trump is now telling Congressional Republicans to raise taxes on the rich. I think he's finally running into math.

Trump tells Congress to raise taxes on the rich in budget bill​

Trump is now telling Congressional Republicans to raise taxes on the rich. I think he's finally running into math.

Trump tells Congress to raise taxes on the rich in budget bill​

Just not sure how many people make $2.5M a year. That might be .01% or even less.

That might be .01% or even less.

In 2022, there were 27,261 tax returns with incomes over 5,000,000 for a total Adjusted Gross Income of 1,413,000,000.
Not sure on single , Head household, or filing separate over 2.5 Million. But those from 2,000,000 to 5,000,000 single were 87,517 tax returns at something less then 80,000,000,000. Not many in Head of household or separate.

So Trump may be getting an extra $40,000,000,000.

 

[superrific]

The carried interest loophole should be closed asap and the fact that so many on both sides of the aisle oppose closing it shows how corrupt the whole thing is.

Bullshit. The Dems were ready to close it throughout 2021-22. There was one Dem who opposed closing it: Kyrsten Sinema. Because all Pubs opposed it, and she opposed it, the votes were not there to pass.

All Pub Senators + one Dem-> independent Senator is not "so many on both sides of the aisle."

 

[gtyellowjacket]

In 2022, there were 27,261 tax returns with incomes over 5,000,000 for a total Adjusted Gross Income of 1,413,000,000.
Not sure on single , Head household, or filing separate over 2.5 Million. But those from 2,000,000 to 5,000,000 single were 87,517 tax returns at something less then 80,000,000,000. Not many in Head of household or separate.

So Trump may be getting an extra $40,000,000,000.

Thank you for finding those numbers. I assume all that is income and not capital gains?

$40 billion/year won't get us there but it is a significant amount of money. Hope it passes.

 

[superrific]

In 2022, there were 27,261 tax returns with incomes over 5,000,000 for a total Adjusted Gross Income of 1,413,000,000.
Not sure on single , Head household, or filing separate over 2.5 Million. But those from 2,000,000 to 5,000,000 single were 87,517 tax returns at something less then 80,000,000,000. Not many in Head of household or separate.

So Trump may be getting an extra $40,000,000,000.

did you mean total AGI of $1.4T, not $1.4B?

How much of that is capital gains, though? Wouldn't be affected by raising top rates on ordinary income.

 

[BlueSmoke]

Thank you for finding those numbers. I assume all that is income and not capital gains?

$40 billion/year won't get us there but it is a significant amount of money. Hope it passes.

Very good question. Buried on Irs.gov tax statistics is one schedule that attempts to break out (somewhat) capital gains by 15% and 20%. I'm going to ignore the 15% because I have a feeling most of the high earners are in the 20%. For all tax returns at 20%, it shows #84,658 tax returns for a total figure of $308,739,000,000. So I am assuming its safe to deduct this capital gains from the 1.4 Trillion to arrive at a number to calculate 2.6% against. Extremely rough, but better then no idea.

 

[BlueSmoke]

did you mean total AGI of $1.4T, not $1.4B?

How much of that is capital gains, though? Wouldn't be affected by raising top rates on ordinary income.

I apologize greatly. AGI of 1.4 Trillion or 1,400,000,000,000.

 

[BlueSmoke]

I am assuming the way the IRS computer would be able to tabulate, that its most likely that capital gains are included in the gross number of 1.4 Trillion. Rather doubt it could break it out from tax return data. But perhaps a tax accountant on here could figure that out.

 

[superrific]

I apologize greatly. AGI of 1.4 Trillion or 1,400,000,000,000.

No need. We don't usually see such big numbers written out.

A friend of mine is considering early retirement. He's an only child; his dad was an exec at a big Pharma company but died a while back; and his mom has been investing their money reasonably well over 30 years.

Anyway, he was telling me, "my mom is rich now. Her net worth is 10 figures"

I said, "your mom is a billionaire? WTF?"

He said, "Wait, no not 10 digits. 8 digits." LOL. That's still rich.

 

[nycfan]

Yeah. Trump hates it too which is weird. He spoke out against it in his first term. I wonder if some hedge fund guy stole one of his girlfriends or something.

He doesn't mind getting capital gains treatment for his and others work in real estate development but he does not like private equity getting that tax treatment for their work.

Speaking of

 

[nycfan]

“… The bill released late Friday would increase the standard deduction by $1,000 for individuals and $2,000 for married couples starting in tax year 2025, above and beyond the Trump tax cuts’ expansion of that basic level where income taxes don’t apply.

… Friday’s bill is incomplete and will likely be changed substantially before the committee vote. It is silent on some of the issues that are dividing Republicans, including the cap on the state and local tax deduction and the fate of clean-energy tax credits that Democrats created in 2022. It doesn’t include the tax-rate increase for the highest-earning Americans that Trump has been floating in recent days.

The changes to the standard deduction and child tax credit wouldn’t be permanent under the proposal, but they would have an immediate effect above and beyond maintaining the status quo. The boosts would make it easier for Republicans to show Americans some benefit from tax cuts before the 2026 midterm elections. The extra tax cuts could also counter some of the effects of Trump’s tariffs on consumers. …

Although the bill would make some tax cuts permanent, it schedules some to lapse in a few years, a move that lowers the headline cost but sets up expirations for a future Congress to address. For example, the extra standard deduction lasts only through 2028. So does the $2,500 child credit, which would drop to $2,000 in 2029 and then increase with inflation.“

——
So there is the GOP solution to the political problem that extending current tax levels wouldn’t feel like a cut because they are an extension of existing tax brackets from the first Trump Administration— a temporary increase in the standard deduction and child tax credit to juice refunds (for those who use the standard deduction) ahead of the ‘26 midterms, expiring after the ‘28 Presidential election year.

 

[Duke Mu]

I mean Trump was a tax and spend Democxrat and HIllary supporter before realizing that a hal-black person POTUS was in the white House.

 

[Duke Mu]

“… The bill released late Friday would increase the standard deduction by $1,000 for individuals and $2,000 for married couples starting in tax year 2025, above and beyond the Trump tax cuts’ expansion of that basic level where income taxes don’t apply.

… Friday’s bill is incomplete and will likely be changed substantially before the committee vote. It is silent on some of the issues that are dividing Republicans, including the cap on the state and local tax deduction and the fate of clean-energy tax credits that Democrats created in 2022. It doesn’t include the tax-rate increase for the highest-earning Americans that Trump has been floating in recent days.

The changes to the standard deduction and child tax credit wouldn’t be permanent under the proposal, but they would have an immediate effect above and beyond maintaining the status quo. The boosts would make it easier for Republicans to show Americans some benefit from tax cuts before the 2026 midterm elections. The extra tax cuts could also counter some of the effects of Trump’s tariffs on consumers. …

Although the bill would make some tax cuts permanent, it schedules some to lapse in a few years, a move that lowers the headline cost but sets up expirations for a future Congress to address. For example, the extra standard deduction lasts only through 2028. So does the $2,500 child credit, which would drop to $2,000 in 2029 and then increase with inflation.“

——
So there is the GOP solution to the political problem that extending current tax levels wouldn’t feel like a cut because they are an extension of existing tax brackets from the first Trump Administration— a temporary increase in the standard deduction and child tax credit to juice refunds (for those who use the standard deduction) ahead of the ‘26 midterms, expiring after the ‘28 Presidential election year.

Restore the personal exemptions (projecting $5500 a family member from 2016 tax returns) and reduce the standard deduction and I'd be happier. The 2017 tax bil favors rental property owners and punishes middle class families with a moderate mortgage as well as truckers.

 

[dcphx]

First 3 things I would do is
1. Close the carried interest loophole
2. Add a capital gains bracket of 32% starting at $1m to $1.5m or so
3. Make any loan borrowed against stock count as ordinary income

 

[mpaer]

Carried interest is a type of compensation paid to general partners of investment funds. Typically, general partners receive two types of compensation:

• Management fees, tied to some percentage of the value of managed assets.
• Carried interest, tied to some percentage of the profits generated by those assets.

For example, a general partner might have them receiving an annual management fee equal to 2 percent of a fund’s assets as well as carried interest equal to 20 percent of a fund’s profits. That “interest” refers to the share of profit which is “carried” over to the fund manager: the general partner.

While a management fee is taxed as ordinary income, at a top marginal rate of 37 percent, carried interest on assets held for more than three years is often treated as long-term capital gains, with a top rate of 20 percent (investment income may also be subject to an additional 3.8 tax). And because it is taxed as capital income rather than compensation, carried interest is also not subject to the 15.3 percent self-employment tax, which is equivalent to payroll taxes paid by employees and their employers to finance Social Security and Medica