The entire tax bill seems to be sticking it to Democrat states, in particular New York and California, but it is really about urban vs. rural politics.
Democrats have become too concentrated as a party in urban areas and so rural voters have gotten enough political power to attempt to address what they view as economic inequities in the current urban/rural income distribution.
Republican have also flipped the script on Democrats and so now they are proposing to tax the "rich" (actually urban middle class) and redistribute that to the poorer rural middle class.
It is funny because conservatives have been warning for decades that redistributionist games don't end well, while the Democrats have been advocating them, but now that the shoe is on the other foot it doesn't seem like such a good idea.
This narrative isn't consistent with what the actual tax bill does, which is a massive redistribution of wealth to the very richest Americans. For example, what part of repealing the estate tax for inheritances above $5.5 million will help this urban middle class?
I don't see how the tax plan helps the rural red state poor. It certainly helps the rich and prefers red states (people lose state and local deduction, businesses keep it). However, the rural red state poor already aren't paying much if any taxes. It's more of a red meat issue for them.
I honestly haven't calculated the tax difference for the rural red state poor. Are you sure they won't benefit from the increased standard deduction? If you're sure then I'll trust your calculations over my not-calculations.
1. As already mentioned, it helps ultra-wealthy and people in red states at the expense of the blue states. But by crippling the tech economy, the govt. would harm their own long-term ability to collect tax revenue to invest in other states. Right now, CA provides more tax revenue than it takes back and this money pays for federal govt. projects elsewhere.
2. Many people would get bankrupted simply by vesting. It's one thing to tax people once they have money. But most options are not liquid. Many people would simply not have money to pay for options that they cannot sell and will not be able to wait for some hypothetical IPO or buyout.
Let's just be honest about what this is: it's a vindictive and cynical move to harm the economies in blue states and only marginally help those in red states, and then only in short term (until the tech economy in the US contracts and moves elsewhere).
If this passes, I hope those who support it enjoy their feeling of revenge, because that's all they'll end up with. The rest of us in tech sector will just find another place to grow our business.
Pro-redistribution people like me would be thrilled if we were removing distortionary tax expenditures from rich people to benefit the poor or even middle class.
What’s proposed is punishing the urban rich to benefit the megarich, with a tax increase after less than 10 years for the median household.
Which is very clever if your poor base is willing to go along with it, which appears is the case.
Who cares if all semblance of shared institutions dies in the process, the megarich get their tax cut!
Democrats have become too concentrated as a party in urban areas and so rural voters have gotten enough political power to attempt to address what they view as economic inequities in the current urban/rural income distribution.
Republican have also flipped the script on Democrats and so now they are proposing to tax the "rich" (actually urban middle class) and redistribute that to the poorer rural middle class.
It is funny because conservatives have been warning for decades that redistributionist games don't end well, while the Democrats have been advocating them, but now that the shoe is on the other foot it doesn't seem like such a good idea.