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  • Ever since they won control of the government in 2016,

  • Republicans have been obsessed with getting this one thing done.

  • Tax reform.

  • We're going to have a phenomenal tax reform.

  • They've passed a bill, the President has signed it,

  • so let's break down what's actually going to change.

  • Imagine that instead of getting paid in dollars,

  • you got paid in cereal.

  • The government takes a certain amount of cereal in taxes.

  • And it uses it to pay other people to do things

  • build roads, fly fighter jets, do research.

  • You get the picture.

  • The more you earn, the bigger the share of your cereal the government takes.

  • Sometimes the government wants to incentivize you to do certain things with your cereal.

  • Like if you buy a house for a hundred pieces of cereal,

  • and then sell it for 200 pieces of cereal,

  • you'd normally have to pay capital gains taxes on that profit.

  • But there's a special loophole that says you don't have to.

  • The tax code is full of loopholes like this,

  • which means if everyone puts their cereal together,

  • there would be two bowls.

  • One that the government dips into for taxes,

  • and one it doesn't.

  • Now, Republicans want the government to take a smaller portion.

  • And they say they want people to keep more of the cereal.

  • But if they do that, the government won't have enough cereal to pay for what it needs.

  • So part of this new law is taking some of the cereal that's not taxed,

  • and change the rules so that it is taxable.

  • That way, the government can take a smaller share of the cereal

  • but still pay for the stuff it needs.

  • This is what politicians mean when they talk about "broadening the tax base."

  • Here's the problem:

  • Republicans aren't broadening the base enough.

  • They're taking a lot less cereal from people

  • and adding some new taxable cereal

  • but not enough to pay for what the government needs.

  • To pay for that stuff, the government is going to have to go into debt.

  • This means they're going to have to take even more cereal, years in the future,

  • to pay back the debt they're taking out now.

  • Republicans think this will help grow

  • the total amount of cereal available to both tax payers and the government.

  • So what happens to that 1.5 trillion dollar gap?

  • It goes back into people's bowls,

  • but not everyone gets the same share.

  • If you break the population into five equally sized groups

  • based on how much they earned in 2017

  • and look at how much each group will earn in 2018,

  • every group does get a tax cut.

  • But fast forward ten years,

  • and you can see that lower and middle class Americans

  • will actually pay more since their tax cuts aren't permanent.

  • And if you break that top group into smaller groups

  • you can see the very wealthiest benefit most of all.

  • So while this new law does close some loopholes to bring in new tax revenue,

  • the bill's larger purpose is to realize the Republican vision of a fairer tax code.

  • One in which the wealthiest pay a lot less.

Ever since they won control of the government in 2016,

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B1 US Vox cereal tax government pay taxable

The new US tax law, explained with cereal

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    Jerry posted on 2018/01/18
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