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Tax cuts: The know nothing Rule!

So Trump & friends have finally delivered on their tax cut promise, as expected the bulk of tax cuts go to the richest 1%, but then again they do pay the bulk of all taxes -- yes they do!  However, for a gang (looking at you Paul Ryan) who were so anti deficit just a year ago the new tax cuts are unfunded with promised reduction in tax loopholes.

Lying liars:  Trump & his advisor say that most of the tax cuts are going to the middle class.  Fact, 50% of all tax cuts will go to the 1%.

Loopholes:  Certain (unspecified) tax breaks will be removed.  Since its corporation that benefits from these tax cuts (and their advisors) it is unlikely that the White House will have a smooth sailing on that one.  The other big shift was to remove the deduction for state taxes (after all its not income if you've paid it to the state government!).  That would do two things (a) screw the blue states (e.g. California, NY, Connecticut and New jersey) and (b) it would not harm the base in states that have low or zero local income taxes.  Two small problems (a) the Treasury Secretary has already indicated that this is "negociable" and (b) "own goal" who do you think pays these high taxes (mostly rich republicans that live in Democrat controlled states).  So what Uncle Sam give in one hand it takes back in the other...think of all those NYC bankers who one day get a 15% reduction in income tax, but now 100% of their income is federally taxable (not 50% as in the past)...Its lovely to get $150,000 windfall but not so much fun when the Feds take $200,000 away.

The other deduction:  Well already Trump has allowed not accelerated deprecation, but year 1 deprecation of assets -- that will create a bump in GDP that will be depressed thereafter (just in time for the 2018 mid term election -- because companies that can deduct 100% of their capex will see profits rise...)

Finally, and this is the problem, the biggest deductions (tax abatements) are all to the middle class (powerless); especially child benefits and companies (very very rich lobbying efforts) so I would guess that the biggest deduction that will take a hit will be the mortgage interest payment relief...Since interest rates are low now it will not hurt too much, but as they go back up.  Real increase in revenues.

In the end, I don't see companies allowing their deducton.  So that the game the GOP has been playing with Obama that deficit matters is now clearly no longer the case.  Increase in the deficit is good when its the GOP that does it!

Big surprise

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