Showing posts with label tax policy. Show all posts
Showing posts with label tax policy. Show all posts

Sunday, June 16, 2019

June links

Negotiations with Iran. Trump does a U-turn because he wants something done. Also he might be trying to head off Bolton's push to war.

Hong Kong protests. China is trying to depress freedoms in Hong Kong, again. That's a difficult situation, and those are brave people.

Did tax cuts help the economy? Economists were in a race to check for the indicators before they were swamped by Trump's trade wars. The data is rather muddy.

Shaming Congress. Jon Stewart speaking with such humanity and passion to a bunch of butt-kissing politicians. This is the kind of person we need in Congress, not the ones we have now. (Scroll down for video of his full speech.) An economist tells Trump why too many sanctions are harmful.

Shaming a politically correct college. Oberlin College was hit with a massive judgment for abetting trumped-up demonstrations by students against a local business.

Special considerations when pregnant women are jailed. I have never considered this issue, but it seems that the jail and prison managers haven't either, and they have no excuse.

Forged videos and fake news. The fakers now have even better tools for the lies they may want to spread. Yikes!

The internet remembers everything. And Twitter rewards 'mean,' so you're screwed if you've used it, and you're nobody if you haven't.

Image: giphy.com

Monday, January 8, 2018

Republican accomplishments in 2017

The GOP had undivided power in the US federal government: presidency, House, Senate, and even a mostly sympathetic Supreme Court. They started the year with all kinds of bragging, but didn't manage to do some major pieces of legislation, including repealing Obamacare, overhauling immigration laws, defunding the horrid Planned Parenthood, reworking trade agreements, etc.

The misses have been well-discussed. What might be overlooked is what was accomplished by these latter day Keyston Kops. (A good summary is here. A summary from a conservative site here.)

Tighter enforcement on immigration. Many groups, including Haitians, have lost special status and are now subject to deportation. DACA for children brought to the US wasn't renewed. Flow across the border seems to be down (a trend over several years). Democrats are being pounded by their constituents over their failure to stop these immigration changes. But that just shows the unrealistic hopes of certain groups since the Dems have almost no power.

The tax reform/tax cut bill was passed, with major changes for both businesses, individuals, and households. It's hard for me to predict how this will affect the country in the long term. It may cause a big increase in deficits. However, if the increases are kept to around $100 billion a year, that's not too large in the scheme of things. So far businesses have responded in positive ways, so there is a chance that the economic benefits will outweigh the economic downsides. We'll have to wait to see, though not everyone agrees. Some are presuming it will be a failure, though partisanship is probably the motive.

Changes in regulations, and a big slowdown in new regulation. I personally think that the stability of much less new regulation is mostly a benefit. I'm not a business owner, but wonder how many are relieved with this change in particular. And I'm not talking about businesses that hope to drill in sea coasts or pollute.

No huge disasters. There haven't been any crises that have started and gotten worse. No blunders that ballooned into disasters. Does that count as an accomplishment? No, but I'm still grateful.

Image: magapill.com

Extras. Not a close fit except for the aspect of a roundup of 2017. The most underreported news stories.

Saturday, October 21, 2017

October roundup of links

GOP releases a tax plan outline summary thumbnail. In keeping with GOP inability to deal with reality including policy making, the tax plan is 5 pages stretched onto 9 pages. It doubles the standard deduction! Cheers! And quietly takes away exemptions. It's the usual cake for the wealthy with a bit of frosting for the middle class. A good list of misleading sales pitches.

Admitted fake news author dies.  He wasn't trying to be a con artist, but rather a satirist. But, according to him: "[Trump's] followers don't fact-check anything — they'll post everything, believe anything. His campaign manager posted my story about a protester getting paid $3,500 as fact. Like, I made that up. I posted a fake ad on Craigslist."

Fake news generators on Facebook outed by Facebook. At some point, most reality-based GOPers will have to stop pretending that there wasn't Russian interference in the US election. Facebook announced more than 3000 fake ads were purchased by accounts that appear to be Russian.

The new world order that didn't happen. Interesting thought. The world was supposed to gradually accept American values by acclamation amid peace and prosperity. Ooops, it didn't happen. The inevitable wasn't inevitable.

Amazing short summary of Islamic terrorism. Maybe it's too simple, but it holds together in my opinion.

The media misreports probability. The problem includes how media reports weather predictions and the 2016 election predictions. The fact of uncertainty isn't clearly conveyed.

Critique of  The Bell Curve. The 1994 book contained the thesis that blacks were genetically cognitively inferior to other groups. The book caused an uproar. Cognitive scientist formed a committee and wrote this critique of what was wrong with the book and its handling of evidence. I've had to refer to this critique several times.

Image: fivethirtyeight.com


Monday, August 7, 2017

A bundle of important stories

Conservative media fabrication revealed. This should be so big. Fox News fell for a peddled fake story about (murdered) Seth Rich and Wikileaks. Now there's a suit, and the papers filed contain a wealth of evidence about how the lies got on the air. Update 8/2/18. The suit was dismissed by the judge for not being egregious enough--not rising to the necessary standard of 'intentional infliction of emotional distress.'

CNN skews its reporting. "Federal investigators ... seized on Trump and his associates' financial ties to Russia as one of the most fertile avenues for moving their probe forward... The web of financial ties could offer a more concrete path toward potential prosecution than the broader and murkier questions of collusion..." This is supposed to be an investigation, not a fishing expedition bent on prosecution. CNN seems to have forgotten that.

Sessions skews his condemnation of leaks. Great story with analysis of a logical trick that Sessions uses. He probably does it knowingly.

Lies are the family business. Donald jr. lied about a meeting with a Russian lawyer. Well, lied at first and then told the truth. It turns out Donald sr. lied about it too. Is anyone surprised?

Stats about the cost of tax deduction. This is important hard information. What costs the government more: mortgage interest deduction, 401K's, or the earned income tax credit? It didn't know, and I was a bit surprised.

Trump the wimp. Putin is disrespecting America, and what is Donald doing about it? Why?

Image: thecoldplayer.deviantart.com

Saturday, June 17, 2017

The Great Kansas Experiment ended

The great experiment in cutting taxes to spur growth has ended. Kansas governor Sam Brownback massively cut taxes in 2012. The state legislature just raised them back up over his veto.

Many GOP elected officials realized what Brownback refused to acknowledge--the experiment failed. Even though Republicans are still the majority in Kansas (and Kansas is by tradition is a Republican state through the decades), they overrode the governor to raise taxes to pay for services and stop piling up debt.

Cutting taxes isn't like cutting wheat.
Image:farmfutures.com

Sunday, January 31, 2016

Cruz lies about his tax plan

This is no surprise. All politicians lie. Most of them lie a lot about budget issues. So, despite what Cruz' idiotic adoring fans think, Cruz has told some whoppers about his tax plan. I got the scoop from Vox, and checked it out myself.

Cruz has a plan that favors the wealthy to an incredible degree. It starts with a flat 10% income tax. It eliminates payroll taxes. Both of these may sound great to working and middle classes, but they shouldn't celebrate yet. Cruz also proposes a 19% national sales tax which he pretends is a replacement for business taxes. This will hit consumers very hard, but it's a type of tax that's very popular with conservatives. They want to tax as much consumption as possible, saying that then the drug dealers and other criminals will have to pay taxes too.

Will this bring in enough money? Of course not. So Cruz, abetted by the Tax Foundation, waves a magic wand and predicts astonishing levels of job growth and wage growth.

Do his supporters know about his tax plan? Not that I've ever seen among his supporters/commenters on the threads I read. But even if they did know, they'd probably blindly have faith. The growth will happen. It happens every time a true conservative is in the White House. DON'T YOU KNOW THAT!!!!!

Image: motherjones.com

Saturday, October 10, 2015

Hillary panders on the Cadillac tax

This is disappointing but not surprising. Hillary Clinton is calling for the repeal of the Cadillac tax provision of ACA. And like many repeal proposals, she's vague on what she'd do to make up for the lost revenue. Actually, she's silent on what she'd do.

This is just bad, typical pandering. Some unions want to protect their benefits as much as possible, and they don't want members hit with the punishing 40% excise tax on the primo health benefits. However, the premium must be over $27K for a family. That's pretty damn high. How many people really have such generous health benefits?

I couldn't readily find any numbers. Companies have been trying to change their plans in preparation for the Cadillac tax starting in 2018, but also to rein in health insurance costs and to get employees to share the burden. I don't think that's at all bad. It's better for employees to be aware of healthcare costs, rather than treating it like a perk that someone else pays for.

The arguments for repealing the Cadillac tax aren't very strong. Opponents claim that it will hit 82% of all employers by 2023 because of the indexing (if they don't make adjustments, which they are). That leaves plenty of time to adjust the indexing if needed. Opponents also don't answer about how to make up for the lost revenue, which is just so typical.

Image:freerepublic.com

Extras. Forbes complains about higher cost or lack of choice, ignoring responsible decision-making. The Fiscal Times seconds that. A different author calls it 'modest.'  The typical economist response here.

Tuesday, September 29, 2015

Trump plans to blow up the budget. Conservatives don't notice.

Trump continues to pretend to be a serious candidate, at least part of the time. In that vein, he threw together a tax plan, cribbing a lot of it from Jeb Bush, and announced it yesterday. It's got lower tax rates, it's got more breaks for low-income people, it's got lower corporate tax rates.

What's interesting is that he seemed to choose the rates only to beat those proposed by Bush. That seems to be the extent of his math--just underbid Jeb.

Plenty of conservatives commented on the similarity to Jeb's plan, but few bothered to ask whether the plan would lead to huge deficits. Among the see-no-evil brigade are Mark Levin (who is possibly evil incarnate), the Daily Caller, and Breitbart.

Among the ludicrous praise:
  • "Trump’s plan appears to be economically sound and is very clever politically in building a broader Republican coalition."
  • "I did the plan with some of the leading scholars and economists and tax experts that there are in this country," he said. "They love it, they say, 'Why hasn’t this [been] done before?'" -- The Donald praising his own plan.
One conservative writer, a no-namer on HotAir, mentioned at the end of his piece that the tax plan might not be revenue-neutral, so The Donald might have trouble paying for his grand plans of military superiority and healthcare for all. But even the writer didn't mention that deficit spending would soar.

How much could the deficit soar? Maybe by $10 trillion over the next 10 years. So Obama-sized deficits. But when did Trump ever go small?

Image: townhall.com

Saturday, March 7, 2015

A new conservative tax plan

In a week where the big news was Netanyahu applauded (must click!) as the most popular person in Congress, it's important to notice a new tax plan from Marco Rubio and Mike Lee. This plan (already in version 2.0) is supposed to represent new thinking among Republicans, specifically the group called 'reformicons.'

Reformicons like conservative principles, but they also realize that the working class has gotten a raw deal in our economy in the last 15+ years and struggle so much more than the upper classes. This reform-minded minority within the GOP also see some social spending as a worthy safety net that really is needed.

So what do these compassionate reformicons put into their spanking new tax proposal? I got an interesting lesson in media bias when I looked into this. According to Jonathan Chait (a liberal), the plan is a give-away to the wealthy, who'll get an extra $40K on average from the plan, or maybe more if their income is mostly capital gains and dividends, which wouldn't be taxed at all. In Chait's description, this doesn't sound like a tax plan with any reform elements at all.

What do some conservatives say? Chait helpfully links to reformicon pundits. Yuval Levin at the National Review hails the plan as "pro-growth," a must-have descriptor among Republicans. They use that moniker without irony, as though they forgot how Bush's 'pro-growth' tax cuts worked out.

I didn't notice, until James Pethokoukis pointed it out, that the top tax rate in the Lee-Rubio proposal is 35%, down a moderate amount from the current 40%. It's not the usual 28% or 25%. That is significant. However, it's less of a change in conservative tax policy than it looks. That rate will affect the poor millionaires who earn their money as paychecks from even wealthier folks and corporations. The wealthiest will still receive some major bonuses from this proposal--not least the end of capital gains taxes and inheritance taxes.

Oh, and the decline in revenues, it's only $2.4 trillion over the next ten years. No, maybe $4 trillion, according to Pethokoukis. Well, just add that on to the national debt, like all our governments (conservative or liberal) do. Excuse me if I don't stand up and cheer, but a less-bad GOP tax proposal is not enough to cheer about.

Image: paxonbothhouses.blogspot.com

Wednesday, February 4, 2015

"Democrats want your 401k" came true, a little

I almost missed this story because there was no way I would listen to another State of the Union speech. Obama floated the idea of taxing 529 college accounts to help pay for his proposed program for free community college tuition.

The current law says that money placed in 529 account isn't tax deductible when it goes in, in contrast to an IRA, where you get to exclude the contribution from your taxes for that year. However, all the earnings that accumulate are tax-free. So, the principle is that you're taxed either at the beginning or at the end, but not both.

I haven't been able to verify that Obama proposed to tax the earnings in 529 accounts because the proposal is already dead. This is no surprise. The upper middle class doesn't want to lose some of their tax advantages, like deductions for mortgage interest, pre-tax contributions to IRAs and 401k's, or 529 college savings accounts.

Progressives would take your 401k

So who was Obama listening to when he made such a blunder? I don't know, but I have to guess that it was typical progressives--the kind who think a 70% tax rate on high incomes is fine. There are progressives who don't know how much the middle class cherish their tax breaks. They imagine that the middle class feel wealthy, and don't mind giving more to help those much closer to poverty. These progressives are quite wrong--the middle class doesn't want to give up more, and they definitely don't want to pay more tax.

I know there are a lot of progressives like this because I live in a town with way too many of them. According to them, we can't build or improve soccer fields because we must direct the money to the poor and underserved. We can't preserve a beautiful parcel of land, because that money should go to build affordable housing. Teachers and town workers shouldn't get a raise because, well, they already have paychecks. These progressives have never seen a poverty program they didn't want to fund at a higher level and have never seen anything other than poverty programs that deserve a little more money.

Would these progressives like to tax my 401k? Indubitably.

I'm not so crazy about the idea of giving them free rein to put a siphon in my retirement savings, and I have a lot of company. The people who share my view include a lot of Dem supporters--especially in academia and in liberal states. That explains the pushback and fast reversal on the 529 proposal.

Limiting deductions is not confiscation

So the idea of taxing 529 accounts was quashed. I assume that no powerful Dem will listen to progressives who want to do something similar to Roth IRAs. But how about regular IRAs and 401k's. These programs have a different kind of tax advantage--you get to deduct contributions from your taxable income, saving 15% or 25% or even more, depending on your tax bracket.

It's possible to lower the amount that people can deduct, and that's not the same as double-dipping with the taxation. Limiting deductions is already happening. Deductions of many types phase out for those earning over $100K. There are limits on the amount of 401k contributions that can be deducted on your tax return. Fiddling with limits of deductions isn't the same as double taxation, or confiscation--though some mindless conservative media outlets don't seem to know the difference.

Image: swordattheready.wordpress.com

Extras. I noted back in 2011 that some conservatives warned that Dems want to confiscate your 401k savings. It was based on a Big Brother-like proposal to limit the types of retirement savings plans and have them all managed by the government. That sounds scary, but the proposal didn't go anywhere. If you're scared, this article tries to talk you down. Jared Bernstein evaluates the tax breaks from 529s. No surprise who gets most of the benefits.

Wednesday, April 16, 2014

Who pays taxes?

Do lower income people pay their fair share of taxes? Look at this graph from the Heritage Foundation, a conservative think tank:

Image: heritage.org


Wow, the lowest 20% of earners pay almost nothing in taxes. The top 20% bear, let's see, 69% of the tax burden. How horribly unfair.

Until you look at this graph:

Image: mayfieldeconclass.blogspot.com

Here we see that the top 20% may pay 69% of taxes, but they also suck up 50% of all the income. The richest fifth get half of the pie. How much of the pie do the lowest fifth get? Just 3%. How much of the tax burden should we expect them to bear?

Before you complain about how little some folks pay into the system, look at how little is paid to them.

Old question: Who benefited the most from tax cuts?

Back in 2012, one of the issues was who benefited the most from the Bush tax cuts. Dems said the rich did. Repubs said it was everyone. Now, finally, here's a graph that shows who benefited: (Click on the graph to enlarge.)

Image: nytimes.com

Look at the left-most 10% of the graph and see that rates declined much more steeply for higher incomes than for lower. This graph is based on effective tax rate and includes payroll taxes.

Low-wage workers are more affected by changes in payroll taxes and much less by income tax rate cuts. It's the opposite for high-income earners. Since the Bush tax cuts lower income taxes, but not payroll taxes, low-income workers saw little benefit. This was also shown by figures on how the end of the tax cuts would affect different earners. Again, lower-income workers would see less of an increase by percent (about 4%). Higher income earners would see a 8% increase.

Here's another interesting tax-related graph: Who gains from tax breaks--those credits, deductions, and exclusions that lower our tax bills. This graph shows the actual shares of these tax breaks and how much accrues to different segments from the lowest 20% to the highest 0.1%. The biggest winners (in light blue) are the 80-99% of top earners. However, look at the share that the top 0.1% (in dark blue) get. An excellent aspect of the graph is that the areas (dark brown, tan, light blue, etc.) directly represent the actual share of the money. You could imagine them as stacks of bills given to the groups.


Image: theatlantic.com

However, this isn't just a give-away of tax dollars to the well-off. Higher earners pay much more of taxes than do lower earner. They also pay marginal rates (currently running 38%) that are much higher than tax rates on lower earners. If exclusions came down, marginal rates probably should too.

Tuesday, March 18, 2014

Short: What I missed in the Camp tax proposition

I missed a huge story concerning Dave Camp's tax reform proposal. What I saw was that Camp couldn't make the math work for a 25% highest tax bracket. I also thought at the time (though I didn't write it), that Camp's tax reform was doomed because other Republicans won't accept the reality of the numbers.

Here's what I missed:

  • Wall Street took exception to taxes on too-big-to-fail banks. Their lobbyists brought out the big guns (albeit behind the scenes) and made lots of GOP reps denounce or disavow Camp's tax proposal. 
  • The anti-Wall Street populists in the GOP (Tea Partyers) are true to form. They don't understand and don't care about policy, so they aren't supporting these provisions on banks ... because all Tea Partyers know how to do is scream or bluster. (Confirmed again by the only article in HotAir on the issue, and its cra-aa-azy comments.)
  • Tax reform was always a long shot, but we can kiss it good-bye. The chairmen of the applicable committees are changing, and the incoming ones aren't likely to pursue tax reform. 
Did we gain anything? Did we learn anything? TBD but not likely.

Image: cpn-news.com

Hat tip: Jonathan Chait again.

Tuesday, March 11, 2014

Republicans can't make a flat tax work either

Yes, this headline is an exaggeration. Not many Republicans are running on a flat tax, but they do pretend that tax rates could be significantly lower. Then one of the serious guys (Dave Camp, chairman of the House Ways and Means Committee) crunched the numbers and got a nasty surprise.

Dave Camp wanted to cap the marginal tax rate at 25%, but the numbers didn't work out. He had to settle for 35% for the top bracket, and that was even with limiting deductions.

Why wasn't the 25% goal attainable? Because it was based on a fantasy. Our spending is too high to lower taxes, and our efforts to lower spending haven't gone so well. Camp aimed for all the revenue we're currently getting now, and he didn't use the questionable 'dynamic scoring' that lets legislators project overly optimistic numbers. (I'm referring to you, Paul Ryan.) This is what the reality of tax cuts looks like.

I don't know if it will have any impact on GOP campaigns this year or in 2016. GOP budgets and tax proposals have been pie-in-the-sky for 14 years now. This is the one exception, so can I really project that it will make a difference? No, I can't. Kudos to Dave Camp nonetheless.

Image: jdsrockinreaders.blogspot.com


Extras. I couldn't get a flat tax to work either, and now I have company. Herman Cain's plan was a farce. A conservative calls for the end of special treatment for capital gains. Good for him, but I beat him by several years.

Sunday, January 12, 2014

The New Year of Inequality

Welcome to another election year. Even though it's only a mid-term election, it's going to be nasty because all elections are nasty now.

The Dems have a major vulnerability in the various troubles of Obamacare, but that's not enough for an entire campaign season. It's too bad for the conservatives who thought they could run non-stop bashing Dems on Obamacare and Benghazi. Those really aren't enough for a campaign when the economy is weak and people need jobs. Somehow, when you or someone in your family needs a job, that trumps political talking points. Maybe because people do have a sense of the real priorities.

The Dems see this, or perhaps they desperately want to talk about something other than Obamacare. They decided that they're going to talk about inequality--the fact that some people are making millions in this economy while you or someone close to you struggle to find a job. The argument has a lot of potential, but also some risks, like "what can you (the Dems) do about it?"

Lies, Damned Lies, and Exaggeration

Before looking at what the Dems actually say on the issue, it's fun to look at how the GOP characterizes what the Dems really want:
  • Dems are just stoking envy, that most terrible of sins. 
  • This is class warfare, I tell you!
  • This is a prelude to confiscating wealth.
  • Well, maybe they won't seize wealth, but they'll end personal savings.
  • They'll nationalize healthcare, banks, the auto industry, and... No, wait, they already did. 
It never ceases to amaze me how conservatives shoot themselves in the foot with such exaggerations, and then do it again in the next election cycle too.

What do "they" really want?

So what are the Dems actually saying they'll do about inequality? To start, they want to extend unemployment benefits beyond the standard 20-some weeks. They want to maintain social programs like food stamps at the higher levels enacted as part of the stimulus. They want to enact higher minimum wages, both locally and nationally. They want to maintain healthcare for all, so you can still see a doctor even if you can't find a job. Maybe they still want universal pre-K, or perhaps that was just last year's failed social agenda item. I doubt they'll revive the half-trillion-dollar jobs program, which was 2011's failed agenda item.

The Dems aren't saying how they'll fund the programs that aren't already funded--that's a return to type for the Dems. One exception is the new progressive mayor of New York City, Bill de Blasio. He wants to fund pre-K through a minuscule tax on the wealthy of NYC. The wealthy in NYC already pay higher federal taxes, higher state income taxes, and even city income tax. Why worry about taxing them even more? After all, INEQUALITY!!!!!!  (Rhymes with BENGHAZI!!!!!!)

Sorry for all the snark. Briefly, I support an increased minimum wage, healthcare for all rather than a return to the pre-Obamacare mess, but not a national pre-K program or maintaining the bonuses to social programs given out in the stimulus. I think one year of unemployment insurance is the maximum people should receive, not year after year.

From the Party of the 1%

Somehow, a few in the GOP realized that they might have some vulnerability on the inequality issue. It is hard to dismiss it purely as envy when what people want are jobs, not to throw the rich out of their mansions and behead them. Some in the GOP thought that Romney lost the presidential race over his 47% remark--I disagree, but it doesn't help when the billionaire Koch brothers are on one side of the GOP's internal war and the Chamber of Commerce and establishment/CEOs are on the other side. The GOP could stand to appear more compassionate, both for the 2014 election and the next general election (thanks, Atlantic Wire, for pointing this out).

So this was the week that the GOP trotted out their ideas for anti-poverty initiatives. They include no minimum wage increase, a reworked Earned Income Tax Credit (questionable whether it would be better), repeal of Obamacare (because it's part of every GOP domestic proposal), turning anti-poverty programs into block grants, and more school vouchers.

What We Need More Than Anti-Poverty Plans

Neither the Dem nor the Republican proposals sound very effective to me. A wage increase puts a bit more money in workers' pockets, unless it costs you your job, but that doesn't happen often. As for block-granting anti-poverty programs like food stamps, housing subsidies, etc., I don't care strongly. None of these programs seem to help people get out of poverty, they only help them endure it.

What's really needed are a lot of jobs with decent pay, but that is what our economy has been exporting for four decades. The Dems don't have a plan to change it, neither do the Republicans, and neither do I. When wages are so much lower in other countries, no one is going to have a good plan.

I wish we could be Germany or Sweden, having a mixed economy of high-margin, high-quality goods and good-paying jobs. But I don't think we can do that. That niche may not be large enough to accommodate a nation of 300 million. So I wonder whether we're actually on our way to being a middle-income country like Brazil.

Maybe we were always bound in that direction. When factory owners encouraged lots of immigration, they weren't trying to turn them all into middle-class consumers. No, they wanted cheap labor. So we accidentally became a rich country, but we've always had a large pool of cheap labor. If there weren't enough cheap American-born workers, we managed to bring cheap workers in, legally or illegally. So being part of a pool of cheap, excess labor is more our birthright than being a rich country. Ironically, they don't teach you that in school or say it on the campaign trail.

If we really want to be a rich country, we may have to change in fundamental ways, including ending our tradition as a nation of immigrants seeking the American dream. I don't think any of our candidates will get close to that particular discussion. It's probably political suicide to say the American dream is over.

Image: frumforum.com

Sunday, May 19, 2013

Short: Tax-Exempt Status Denied

While following up on some issues related to the recent IRS scandal, I found this at a Tea Party site:
Chris Long. President, Ohio Christian Alliance Email: chrislong@ohioca.org 330-329-0105 Cell. Chris’s group can prove actual damages from the IRS Action. They filed for a 501(c)3 tax status in January of 2011 and waited thirteen months to get approved. During that time, he has documentation of significant donors who withdrew their donations because he was unable to get the 501(c) 3 certification in a timely manner.
Look at the website and tell me whether this looks like a political group, or more like a charitable group, which is what 501(c)3 organizations are supposed to be:

Image: ohioca.org

I think that donations to this organization should be treated like political donations, not like donations to schools, libraries, or the Salvation Army. Donors to this organization shouldn't have their donations subsidized by taxpayers. Organizations like this, on the left and the right, deserve greater scrutiny. It's not going to be hard to make this point to the persuadable public. 

Sunday, February 24, 2013

Why do Democrats love tax increases?

So the Democrats got a substantial tax increase on the wealthy at the beginning of the year. That should be enough for the fiscal health of the country, right?

Not according to most of the Dems out on speaking tours these past few weeks. From Obama on down, they are saying that the federal government needs even more revenue. If that's true, we have to wonder why the Dems didn't get that extra revenue in the fiscal cliff negotiations. Here some speculative ideas about why the Dems want that revenue:
  1. The Dems want to set the precedent that all deficit reduction will be a mixture of spending cuts (cuts below the current baseline, which is in an upward trajectory) and revenue increases.
  2. Dems want to kill off the GOP preferred method of deficit reduction, which is by spending cuts only, with no revenue increases except from economical growth.
  3. Dems want to force the GOP to capitulate to the Dem's preferred deficit cutting approach, and thereby humiliate the GOP.
  4. Dems don't want to be humiliated by the GOP if it ends up that government can be cut significantly without huge gaps opening up in the social safety net.
  5. Dems are concerned about the growth of income inequality and the reduction in broad, well-paying employment, and they want to even out the inequity using taxation to supporting public provision of standard benefits.
  6. Dems are protecting their loyal constituencies of government workers and those who received federal benefits.
  7. Dems honestly believe that the cuts will be devastating to government services that we depend on, so the sequester is too deep.
  8. Dems always want to raise taxes and spend more on government programs, and they don't even remember why.
Obviously I don't know the talking point reasons the Dems give for needing higher revenue, and I'm getting more and more exasperated as I try to figure out the reason. If you're wondering why I can be so nasty to the Dems just 4 months after supporting Obama's reelection, I'll remind you that the GOP proposals were even more dangerous and ridiculous.

I may be getting the government I voted for, but I never had a chance to vote for the government I really want. (That's true for lots of people--just ask a libertarian.)

Image: democrats.org

Thursday, February 14, 2013

The Unfair Tax

[From my backlog of interesting topics. It's not particularly newsworthy now, but it's still a worthwhile topic, so I finally finished it.]

What is the Fair Tax?

It's the politically expedient label for a consumption tax. It's also a misleading label because nothing about this tax makes it 'fairer' than other forms of taxes. However, that's not the first thing that comes to mind when you hear the term. No, the first thing you're likely to think is that you want a taxation system that is 'fair' and especially one that is fairer than what we have now.

When you look beyond the branding, what is clear is that it is a tax designed to change our economic fundamentals. It taxes consumption, but leaves labor, investment, savings, and business untaxed. This means that the tax falls heaviest on those who consume the most. Unless basics are exempted, this means it will be a heavy burden on those who just barely scrape by. This doesn't sound particularly 'fair' to me.

However, it's a good exercise to ask why we tax what we tax. Is it a historical fluke, or maybe a reasonable system that evolved by trial and error? This prompted me to think about the nature of taxation. In pre-modern times, the taxing authority would take a share of your goods, or would demand a share of your labor, or might take one of your children. In the 1800's, liquor taxes and custom taxes were the biggest share of federal taxes.

I can see certain advantages to taxing income. It is a monetary exchange, so money is changing hands anyway. That's a convenient place to exercise a tax. Work payrolls are less cyclical than consumer spending, so tax revenue will be less affected in recessions. Perhaps there are other good reasons to tax income. However, the point is that the so-called "fair tax" isn't obviously a good tax. To make a determination of whether it's a good tax, you have to look beyond the label, and see how the tax functions. You also have to compare it to the alternatives. When I do that, the 'fair tax' has a lot of problems. We need to take a good, hard look at it, not just jump on the bandwagon.

This one (and a bunch more) for the tax collector
Image: scoop.it

Sunday, December 30, 2012

Countdown to capitulation

So it's Sunday afternoon, and the GOP are still trying to get something (I don't know what) for the junk cards they hold in their hand. (For those you need a recap, the Bush tax cuts expire on January 1, and to a lesser extent the sequester starts.  The GOP would like to stop both, but they didn't win the presidency or the Senate, so that scrapped their plan.)

Today, the Dems refused to give the GOP the index that will allow Social Security payments to grow more slowly. The GOP will be lucky if the Dems give them a fig leaf. The GOP may have to totally capitulate and allow all the tax increases now scheduled for those earning over $250,000. Capitulation is what they did earlier this year on the 2% Social Security tax holiday.

Some conservatives are calling for letting all the tax hikes take place. This is a brave position since it won't be popular with people getting smaller paychecks. In the meantime, Democrats have been promising in two presidential campaigns to maintain those lower tax rates for the 98%. If the Republicans don't go along, they will likely be seen as the enemies of the common man at worst, or hard-nosed realists at best.

The GOP hasn't resisted the 'common man' pressure before, so I don't predict it happening now. But you never know. This is a strange time for the GOP, being on the brink of the first tax increases for over 15 years, in the era that has brought us Norquist, Rove, and the Tea Party populism.

Maybe the GOP will try something new--hard-nosed fiscal conservatism. But my money is on capitulation. I won't know how complete until we see non-core issues such as estate tax, tax rates on incomes between $250 - 400K, unemployment insurance extensions, and low income credits.

Throw in the cards, save the chips for the next round
Image: apowerpoint.blogspot.com

Correction 12/31/12. According to this article, the GOP wants to keep the sequester, and the Dems want to delay it until 2015. When I wrote that the GOP wanted to avoid the sequester, it was based on their presidential campaign stance, which was against cuts in defense spending. I remain in favor of the sequester.

Note: I first described on Dec. 22 (in comments on this post) that the GOP would end up capitulating. They're getting closer.



Update 1/1/13 9PM. The final timeline for capitulation is nearly certain now.  

Quick Capitulation - Tonight

The House is going to vote this hour on whether to amend the Senate-negotiated deal. They need 217 votes to pass an amendment of $330 billion in spending cuts added onto the Senate bill (a package from someone's files, no doubt). 

Any Republican who doesn't vote for the amendment has a target on his back and can expect a primary challenge. However, maybe enough Republicans will have the courage to defy the pack, and defeat the amendment. If so, the Senate bill as is will be (or should be) voted on and pass.


Drawn out Capitulation - Thursday
 
If the amendment passes, presumably the amended bill will also pass. Then it will sit untouched in the Senate--a piece of political theater that won't be going on the road.  The House will be forced to act on the Senate bill without amendment.


Outcome -- Slighter Quicker Capitulation

That didn't take long at all. Almost all of the House voted to debate the Senate bill without amendment. The Senate bill passed 257-167, with 85 GOP and 172 Dems voted yea. 

 

Thursday, December 20, 2012

Negotiation box score update - more FAIL

Well, this isn't as much fun as I hoped it would be. The GOP is hopelessly mired in the idea that they can get a lot by giving a tiny bit.

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Boehner's offer circa 12/16/12
  • Tax increases on those with incomes $1 million and over. 
  • Increased revenues of $1 trillion if there are spending cuts of $1 trillion. 
  • GOP keeps the leverage of further negotiations on the debt ceiling. (source)
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Obama's offer circa 12/17/12
  • Tax increases on those with incomes over $400,000. 
  • Increased revenues of $1.2 trillion. 
  • Certain savings in the big entitlement programs, but not a particular numerical promise. 
  • Automatic debt ceiling increases based on this deal for 2 years. (source)
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Both are bad deals, asking for too much while offering much less. So Boehner is turning to Plan B, writing a bill that will extend  most of the Bush tax cuts for non-millionaires. This bill may pass the House, but then go nowhere, except perhaps as butt-covering for House members. Sigh.


Image:  epic-fail.blogspot.com

Previous offers:
_______________________________________________________
Boehner/Ryan 11/14/12
  • New revenue only through GDP growth.
  • All the spending cuts in the Ryan 2012 budget. (source)
_______________________________________________________
Boehner 11/15/12
  • Ok, maybe some new revenue.
  • All the spending cuts in the Ryan 2012 budget. (source)
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Obama 11/29/12
  • $400 billion in entitlement cuts.
  • $1.6 trillion in tax revenue.
  • $50 billion stimulus program. (source)
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Boehner 12/3/12
  • $800 billion in tax revenue.
  • $600 billion in Medicare and Medicaid cuts.
  • $300 billion in savings from programs like farm subsidies.
  • $200 billion to slow growth of government, including Social Security.
  • $300 billion cut to federal agency budgets. (source)
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