When The Numbers Just Don’t Add Up

Issues & Insights posted an article Monday about President Biden’s claims in his State of the Union address about the taxes the wealthy pay versus the taxes he thinks the wealthy should pay. The bottom line is ‘simply hang on to your wallet no matter how much you make,’ but the article refutes some of his claims.

The article reports:

First, consider his claim that the tax rate paid by billionaires is 8.2%. That plays well with soak-the-rich leftists. But where did he get this number?

Not from the IRS. It calculates the actual tax rate that various income groups pay, including the ultra-rich. Its data show that the 400 people with the biggest incomes in America were paying an average tax rate of more than 23%. Congress’ Joint Committee on Taxation figures that the tax rate on the top 0.4% of families is 26%.

So where does Biden come up with an 8.2% tax rate? He changes the definition of taxable income to include all unrealized gains from investments.

If you have money in the stock market, any gains in the value of those stocks would count as income to Biden, even if you don’t sell the stock. Presumably so would any gains in the value of your home. Or the value of any other assets you possess.

By artificially inflating income, Biden can make their tax burden seem tiny. 

The idea of taxing unrealized gains — in other words, extending the income tax to things that aren’t income — could very well be unconstitutional in addition to being economically reckless.

Just for the record, Americans are already taxed on unrealized gains–every year we pay a real estate tax on what the city or county assesses is the value of our house. We haven’t sold our house. The only actual gain from our house is having a place to live, yet every year we pay taxes on it.

The article concludes:

What about his claim that taxing the wealth — not the income — of billionaires would raise $500 billion?

Sounds like a lot, doesn’t it? Except Biden is hoping nobody notices the caveat — that it’s $500 billion over 10 years. In other words, $50 billion a year.

Even that might sound like a lot … until you put it in context.

That $50 billion wouldn’t even cover one month’s worth of interest payments on the national debt, which was $69.2 billion in January.

It wouldn’t even pay half of the increase in the deficit in the first five months of this year compared with last year. (The deficit from October through February was $830 billion, which is up $108 billion from the same months the year before.)

The idea that an extra $50 billion could finance a new childcare entitlement, paid leave, and home care isn’t just ludicrous, it’s insane.

We don’t expect Biden to know or understand what he’s reading on the teleprompter, but shame on anyone else for believing the lies he’s spewing.

Someone needs to explain the Laffer Curve to the Biden administration.

Keeping The SALT Limit Where It Is

On Wednesday, Yahoo News posted an article about a bill to change the SALT deduction. The bill failed in the House of Representatives. The SALT deduction is the State and Local Tax deduction that President Trump capped at $10,000. High-tax states like New York, New Jersey, California, and Pennsylvania want the limit higher. That way when they charge their residents exorbitant tax rates, the residents can deduct those taxes on their federal income tax. In some high-tax states, just the real estate taxes on an average home are over $10,000. Generally, allowing higher SALT deductions is a gift to wealthy people and to people who live in high-tax states. In a sense, lower-tax states are funding the spending of the higher-tax states.

The article at Yahoo states:

A bill called the SALT Marriage Penalty Elimination Act, which would have raised the tax cap for some married filers and ease some of the burden in high-tax states like New York, was on the table in the House of Representatives. But it was rejected before it could even be formally considered.

“I’m hopeful this can be a moment of unity among my colleagues on both sides of the aisle,” said Rep. Mike Lawler (R.-N.Y.), the bill’s lead sponsor, as the debate got underway on Wednesday afternoon.

But — as was widely expected — it was not to be, with both Republicans and Democrats voting against the bill as it failed to garner agreement in a procedural vote.

The final vote on adopting a combined rule was rejected in a tally of 195-225, a defeat that is likely the end of the bill for the time being.

While I agree that all of our taxes should go down, limiting the SALT deduction was a way to hold high-tax states more accountable.

When You Have Someone In The White House Who Does Not Understand Basic Economics…

On Wednesday, The Gateway Pundit posted an article about one of President Biden’s recent speeches. The President is most interesting when he is not reading his notes.

The article reports:

President Biden acknowledged Monday that prices are still “too high” and argued that companies should lower them after an 18% jump in consumer costs since he took office.

“We know that prices are still too high for too many things — that times are still too tough for too many families,” the 81-year-old said near the White House.

“We’ve made progress, but we have more work to do,” Biden added. “Let me be clear to any corporation has not brought their prices back down, even as inflation has come down, even supply chains have been rebuilt: It’s time to stop the price gouging and give the American consumer a break.”

The prices of some goods, such as food products, are expected to decline in the coming months, but periods of general deflation are rare in US history.

Biden previously used his bully pulpit to try to pressure oil companies to take action to lower gas prices last year.

The only one price gouging is the federal government–they call it taxing. The cause of our current inflation is government spending, but that is the one cause that Washington consistently refusing to examine.

We need a businessman in the White House and many more in Congress.

The Truth Eventually Comes Out

I have no idea what should be done about the Biden family corruption. It is becoming more obvious every day that there was an awful lot of money flowing to the Biden family from foreign countries with no apparent product in sight. The whistleblowers that the FBI and the DOJ claimed were lying are having their stories verified by other witnesses. What a mess.

On Wednesday, Just the News posted an article about some recent developments in the Hunter Biden scandal.

The article reports:

Delaware U.S. Attorney David Weiss has told Congress he sought special authority from the Justice Department in 2022 to file tax charges against Hunter Biden in other jurisdictions but was never granted it, House Judiciary Committee Chairman Jim Jordan disclosed Tuesday.

Jordan told reporters after a closed-door interview with Weiss that the prosecutor’s acknowledgement to lawmakers  that he sought “special attorney” powers in the Biden case amounted to a new change in the DOJ’s story and corroborated allegations made earlier this year by IRS whistleblowers Gary Shapley and Joseph Ziegler.

“He said Weiss maintains: I would have always been able to get it if I had to ask for it. But then his answer was: I asked for it and wasn’t given it,” Jordan said at an impromptu news conference in the House O’Neill building after finishing the interview with Weiss.

The whistleblowers told Congress earlier this year that Weiss told them at an October 2022 meeting with prosecutors that he sought “special counsel” authority to charge Hunter Biden with tax evasion charges in Washington, D.C., and Los Angeles and was turned down.

The article concludes:

In an interview Tuesday night with the Just the News, No. Noise television show, House Oversight Committee Chairman James Comer said the information from Weiss fits of pattern of consistency from the whistleblowers and changing stories from the Biden administration during his impeachment inquiry.

“Well, I’m not surprised, There have been so many lies by President Biden, by his administration, by the deep state actors who were supposed to be the ones to prevent this type of Vegas influence-peddling operation by our leaders at the highest level,” Comer said.

“The whistleblowers continue to be spot on in everything they said. … Not only do you have a massive crime by the Biden family, you also have a massive coverup. And you know, I think the deposition today was valuable information as we move forward,” he added.

President Biden will not be removed from office–even if he is impeached in the House of Representatives, the Senate will not vote to remove him from office. I honestly don’t know if he will ever be held accountable for his crimes.

The Key To Fixing Anything Is Individual Action

This is the type of letter we should all be writing:

July 30, 2020

Supervisor Joseph S. Saladino

54 Audrey Avenue

Oyster Bay, NY 11771

Subject:  Town of Oyster Bay Ice Skating Center at Bethpage

Dear Supervisor Saladino,

I am a longtime Town of Oyster Bay resident. I am the mother of two youth hockey players, a youth hockey coach and a hockey player. I would like to bring to your attention what I, as a taxpayer and longtime resident of the Town of Oyster Bay, consider a significant problem.

For approximately the past seven years, the Town of Oyster Bay has contracted the skating school at the Bethpage facility to The Rinx. I have personally observed they control approximately 60 plus hours of ice a week. I have heard from multiple sources that The Rinx pays approximately $10,000 a month for this ice. It is my understanding that the town receives zero percentage of The Rinx revenues; this is a flat fee. While these numbers may not be exact, I believe the difference to be immaterial with these numbers easily discoverable via the Freedom of Information Act.

Based on these numbers, The Rinx pays a little under $40 per hour of ice. It’s even less when you consider The Rinx has dedicated office space in the Town of Oyster Bay Skating Center at Bethpage, the building maintenance staff at its disposal, and free advertising as The Rinx programs often appear on town flyers and utilize wall space for promotional materials. I do not believe The Rinx as a corporate entity pays into the town’s tax base nor are the majority of its clients residents. This seven year relationship yields little or no benefit to your constituents even those that are members of the hockey community.

I, as a resident, can purchase ice for $300 an hour. There is very limited prime time ice available because it is monopolized by The Rinx. I am limited in what I can do with this ice because of restrictions placed as a result of this contract with The Rinx. The town would have to sell eight hours of prime time ice a week to break even with this contract. The ROI on this contract that was not only initially signed but also renewed after being evaluated by a consultant is ugly. It is either indicative of a complete lack of business intelligence or a signifier of graft that plagued the prior administration.

Supervisor Saladino, I believe you to be a man of integrity, working hard to uphold your promise to create transparency and root out corruption, and making sound fiscal decisions for the Town of Oyster Bay. On that basis alone, I have to believe you are not aware of how grossly lopsided this contract is. And if the town of Oyster Bay does not benefit, then most likely someone in your administration, (and likely held over from the prior administration), is benefiting personally at the detriment to your constituents.

I implore you to investigate this immediately so that the residents can benefit from having such a beautiful facility. As a taxpayer, I do not feel I should be forced to subsidize someone’s private business, and the people that established this precedent should be rooted out of your administration as well. Our economy is facing difficult times ahead and you cannot afford to carry anyone that puts their own self interests over that of the constituents they are supposed to serve.

Thank you for your time and attention to this matter. Please contact me if you would like to discuss this further.

Sincerely yours,

 

It will be interesting to see if this letter gets a response.

Beginning To Level The Playing Field In Trade

CNBC reported yesterday that China will lower tariffs on products ranging from frozen pork and avocado to some types of semiconductors next year.  The Chinese economy is slowing down, and lowering tariffs is seen as a way to bring back previous growth.

The article also notes:

 

  • Next year, China will implement temporary import tariffs, which are lower than the most-favored-nation tariffs, on more than 850 products, the finance ministry said on Monday.
  • That compared with 706 products that were taxed at temporary rates in 2019.

The article cites a few significant tariff cuts:

The finance ministry said the tariff rate for frozen pork will be cut to 8% from the most-favored-nation duty of 12%, as China copes to plug a huge supply gap after a severe pig disease decimated its hog herd.

…China will also lower temporary import tariffs for ferroniobium — used as an additive to high strength low alloy steel and stainless steel for oil and gas pipelines, cars and trucks — from 1% to zero in 2020 to support its high-tech development.

…The tariff rate for frozen avocado was cut to 7% from the most-favored-nation duty of 30%, the ministry said.

…Tariffs for some asthma and diabetes medications will be set at zero, the ministry said, while duties on some wood and paper products will be lowered too.

Import tariffs on multi-component semiconductors will be cut to zero.

China will also further lower most-favored-nation import tariffs on some information technology products from July 1, the ministry said.

China has long been an unfair trading partner–manipulating their currency, disregarding intellectual property, and generally behaving badly. Hopefully President Trump’s ‘trade war’ will bring some balance into our trade relationship with China.

 

The Arrival Of Robin Hood

Remember teaching your children that money doesn’t grow on trees and that they have to earn it? Evidently some of our members of Congress never learned that lesson.

Yesterday Breitbart posted an article about some recent statements made by Representative Rashida Tlaib, a Democrat from Minnesota.

The article reports:

Far-left “Squad” member Rep. Rashida Tlaib (D-MI) spoke at the NAACP convention over the weekend and railed against the GOP tax cuts in a pitch for her anti-poverty BOOST Act, promising to take money from the rich and give it “back to the people that earned it.”

Tlaib introduced her anti-poverty legislation – the Building Our Opportunities to Survive and Thrive (BOOST) Act – last month and spoke about it at the NAACP convention over the weekend. The proposal offers a guaranteed income – up to $6,000 per year – to families and individuals under certain financial thresholds via a “refundable tax credit that can be paid monthly.”

The Michigan lawmaker’s BOOST Act serves as her response to what she calls the “GOP Tax Scam,” despite the fact that two-thirds of Americans will pay less in taxes in 2018, thanks to the tax cuts.

“Recently, I introduced the Boost Act. This legislation completely repeals the GOP Tax Scam that is only helping wealthy individuals – the rich, the corporations,” she told the crowd.

“And do you know what I did with that money? Do you know what I said? We’re going to go ahead and put it in the pockets of folks like everyday Americans,” she said, noting that families making less than $100,000 could get up to $6,000 per year.

Taking the moral route, Tlaib said it is important to give money back to the people who actually “earned” it, suggesting that wealthy individuals do not earn or deserve to keep the fruits of their labor.

 I guess the Democrats have decided that class warfare works better than racism. Their playbook is getting very old.

The article notes the impact of the GOP tax cuts:

The economy has seen a boost from the GOP tax cuts, with companies issuing employee bonuses and announcing plans to invest billions in the U.S., thereby providing thousands of new jobs.

Last year, Exxon Mobil announced that it would invest $50 billion in the U.S. economy, adding 12,000 new jobs, thanks to the GOP tax cuts.

Even Starbucks, a notoriously left-leaning company, used millions of its corporate tax cut to raise the wage for existing workers.

Under Tlaib’s economic plan, the people who would benefit are the people who are not working; and the people who would lose are the people who work for a living. How long would it be before those who are working to give those who don’t work a free ride would see the folly of their ways and quit producing? That’s where socialism always winds up.

Good News–Temporary Good News, But Good News

Breitbart is reporting today that a White House study released on Friday found that President Donald Trump’s Obamacare reforms will save Americans roughly $450 billion over the next ten years.

That is wonderful news, but it is only temporary wonderful news.

The article reports:

A White House Council of Economic Advisers (CEA) study released on Friday found that Americans will save $450 billion through Trump’s Obamacare reforms. The CEA suggested that Trump’s repeal of the Obamacare individual mandate and the expansion of short-term insurance plans and Association Health Plans (AHPs) will save Americans billions over the next ten years.

The White House also suggested that the benefits of Trump’s deregulatory actions saved Americans billions, increased access to more health insurance options, and did not amount to a “sabotage” of the Affordable Care Act (ACA).

Unfortunately these savings are a result of Executive Orders, not legislative action. That means that the changes can theoretically be reversed by a future President. It would have been wonderful if Congress had stepped up to the plate and made the necessary changes.

The article concludes:

Many Americans have contended that because 80 percent of those who paid the Obamacare mandate made less than $50,000 a year, the individual mandate repeal serves as a significant middle-class tax break.

The CEA said about 87 percent of Obamacare exchange enrollees receive ACA subsidies and “only pay a fraction of their health insurance costs.”

Many Obamacare proponents suggested that the repeal of the individual mandate, as well as the expansion of short-term plans and AHPs, would lead to higher premiums on the Obamacare exchanges.

In contrast, the CEA contended that because more people will use AHPs and short-term plans and fewer people will use the ACA exchanges, the government will save $185 billion over the next ten years.

The CEA said that instead of sabotaging the ACA, the Trump administration offered millions of Americans more affordable health insurance options.

“The oft-expressed view that deregulation ‘sabotages the ACA’ by giving consumers more insurance-coverage options is misguided,” the CEA said.

The free market is always the best answer.

More Businesses Leaving California And Heading For Texas?

CNBC is reporting today that San Francisco’s Proposition C, which will tax the city’s biggest businesses to raise funds to combat homelessness, passed Tuesday.

The article reports:

Proposition C will increase gross receipts taxes for companies with more than $50 million in annual revenue by an average of 0.5 percent, generating up to $300 million a year to combat the city’s homelessness crisis through initiatives like new beds in shelters and increased mental health services.

…Critics of the proposition argued that it lacked proper accountability and oversight, and would unfairly affect financial services companies like Square. Outside the tech industry, San Francisco Mayor London Breed and state Sen. Scott Wiener opposed the measure as well.

In the weeks leading up to the election, the measure became a point of tension in a city where tech-fueled wealth stands in stark contrast with the human suffering on display on its sidewalks.

Overall, more than 7,000 people experience homelessness in San Francisco. The median house price hit $1.6 million earlier this year and one-bedroom apartments rent for an average of $3,300.

Although I agree with the idea of helping the homeless, has it occurred to the residents of San Francisco that if you increase taxes on companies, some of those companies will relocate? When those companies relocate, you will have fewer jobs, less tax revenue, more unemployment, and possibly more homelessness–exactly the opposite of your intention. The only good news is that as people leave the area, you might have a housing glut that causes the price of housing to go down. No one will want to live there because of the scarcity of jobs, but housing might become more available.

Preparing For The New Tax Bill

Newsmax posted an article today explaining how some taxpayers in high tax states can prepare for the changes in their deductions that will occur in the coming year.

The article explains:

Homeowners will be allowed to pre-pay their 2018 state and local real estate property taxes before the end of the year and deduct them on their 2017 returns only under limited circumstances, the Internal Revenue Service said Wednesday.

The announcement comes after many homeowners in states with the highest property taxes rushed to prepay their 2018 property taxes in hopes of saving on their federal taxes since the deduction will be scaled back in the tax law passed by Republicans last week.

The IRS in its statement said taxpayers can claim an additional property tax deduction on their 2017 returns if taxes are assessed and paid for before the end of the year. Some states and localities allow people to prepay their state and local taxes, including property taxes, but other states and localities that don’t will have to interpret exactly what that means for their residents.

Under the recently passed tax bill, residents in states with high taxes will be limited to $10,000 in state tax deductions. When you consider that some residents of New York, New Jersey, California and certain other states may pay as much as $30,000 in property taxes, that will be a significant change. What this change means to the people in states with reasonable taxes is that the residents of those states will no longer be subsidizing the people who live in high tax states. That is actually a more equitable system–even if the people in the high tax states don’t appreciate the change!

When All Else Fails, Do The Math

The Democrats are screaming that the tax bill will add to the national debt. It might. Or it might not–depending on the growth of the American economy unleashed by lower taxes. However, there are some numbers that those Democrats might want to consider before they scream too loud.

A website called The Balance posted the following and updated it earlier this month:

The Gateway Pundit reported the following yesterday:

The major complaint that the Democrats have with the tax bill is that it is projected to increase the U S debt by $1.5 trillion. However, when compared to Obama President Trump already nearly has it covered.

The article at the Gateway Pundit includes the following:

The Gateway Pundit also points out:

The FED kept interest rates at near zero percent for most of Obama’s eight year term. Since President Trump was elected the FED have increased rates four times by a total of 1%. Increases in the Fed Funds Rate increase the cost of borrowing and the largest borrower in the world is the US government. With $20 trillion in debt, a 1% increase in interest payments equals $200 billion in annual interest payment increases.

President Trump has already paid for nearly all of the tax cuts. Aside from that fact, whose money is it anyway? The tax cuts will allow Americans to keep more of what they have earned. That is a good thing.

How Does This Math Work?

CNS News posted an article today detailing which Americans pay our taxes under the current tax code. Please follow the link to article and read all of the statistics. It is amazing that America has prospered at all under this warped tax code.

The article reports:

Of the 150,493,263 filers who submitted individual income tax returns to the Internal Revenue Service for the 2015 tax year, only 99,040,729 paid any income tax at all.

Together, those Americans paid a record $1,457,891,441,000 in total income taxes — for an average of $14,720 per taxpayer.

The other 51,452,534 — or about 34.2 percent of all filers — did not pay a penny. Their average income tax payment was $0.

This is a fundamental divide in the American tax system. On one side are those who do pay taxes; on the other, those who don’t.

It gets worse:

So who paid the taxes the federal government needed to send that $89,614,669,000 to those 30,417,609 who paid no income tax?

One major contributor was a group the IRS calls “married persons filing jointly.”

In 2015, according to Table 1.2 in the IRS report, 54,294,820 belonged to this group — with 41,551,043 joining the side that did pay taxes, and 12,743,777 joining the side that did not.

Thus, while 34.2 percent of all filers paid no income taxes, only 23.5 percent of married couples filing jointly paid no income taxes.

The 41,551,043 married couples filing jointly who did pay income taxes accounted for only 27.6 percent of all 150,493,263 filers. But they made up about 42 percent of the 99,040,729 filers who did pay income taxes.

More tellingly, of the record $1,457,891,441,000 in total income taxes the IRS collected for tax year 2015, married couples filing jointly paid $1,040,684,097,000 of it — or about 71.4 percent.

So, married couples filing jointly constituted only 42 percent of filers who actually paid income taxes, but they paid 71.4 percent of the income taxes.

Obviously, this is a tax system that drastically needs to be overhauled. Hopefully the tax bill passed today represents that overhaul.

What Does The Senate Tax Bill Do?

Investor’s Business Daily posted an article yesterday detailing the tax cuts under the Senate Tax Bill currently being considered.

The article takes on some of the fiction about the bill currently being reported:

The Senate tax bill would reduce income taxes for people at every income level — even those who don’t pay taxes. That’s the official conclusion of the Joint Committee on Taxation. So why are Monday’s headlines screaming that the tax cuts would make the poor much worse off?

“Senate GOP tax bill hurts the poor more than originally thought, CBO finds.” That’s the headline in the Washington Post describing a Congressional Budget Office report released on Sunday.

The story claims that the “Republican tax plan gives substantial tax cuts and benefits to Americans earning more than $100,000 a year, while the nation’s poorest would be worse off.” Later, the Post story talks about the bill’s “harsh impact on the poor.”

The article explains why that story is false:

First of all, the CBO doesn’t describe the Senate bill as being “harsh” to the poor. That’s the spin put on by the reporter.

The report does, however, include a table that shows how the bill would affect federal revenues and spending by income group. And, indeed, it appears to indicate that those making less than $40,000 will take it on the chin, while those making more than $100,000 make out like bandits.

But note the word “spending” above. Since this is a tax-cut bill, why is “spending” part of the calculation at all?

That’s in there because the CBO includes the spending impact of the Senate bill’s repeal of ObamaCare’s individual mandate.

The CBO numbers assume that if the mandate is gone, people will drop their insurance. It does not consider the fact that many people pay the fine rather than the high cost of insurance. The tax bill returns the freedom to consumers to make their own choices about health coverage.

The article also includes a chart of tax savings (looking only at the tax cuts and savings in the tax bill):

If the tax cuts are passed, we can expect economic growth to return to our previous normal of about 3% (or more). We can expect people to leave welfare and join the work force because of a booming economy that results in higher wages. If the tax cuts fail, we can expect a Democratic Congress that will raise taxes, slow economic growth, and spend its time trying to impeach President Trump. It’s up to Congress to make the choice.

One Way To Save Taxpayers’ Money

The following is a press release from Congressman Steve King:

King, Colleagues Want King’s Commonsense “New IDEA” In “Tax Cuts and Jobs Act”

Nov 6, 2017

Press Release

Congressman Steve King announces today that he is asking Chairman Kevin Brady of the House Ways and Means Committee to include King’s New IDEA (Illegal Deduction Elimination Act) legislation as a component of H.R. 1, the Tax Cuts and Jobs Act. King’s legislation, HR 176- The New IDEA Act, amends the Internal Revenue Code to make it unlawful for employers to deduct wages and benefits paid to and on behalf of an illegal alien. New IDEA also makes the federal E-Verify Program permanent. King, joined by 11 of his colleagues, made the request in a letter sent to Chairman Brady today.

Including this legislation in the Tax Cuts and Jobs Act is the right action for the American taxpayer—it preserves the rule of law and provides a significant tax savings.  The Center for Immigration Studies (CIS) has estimated that eliminating deductibility for unlawful employment would increase federal tax revenues by approximately $25.4 billion per year, which is $254 billion over 10 years.  This amount more than pays for any increase in the deficit over the limit set by reconciliation.

As we continue to debate the merits of this bill, and attempt to establish a more equitable system of taxation while ensuring that it does not contribute to our nation’s fiscal challenges, I can think of no better single piece of legislative language to include in this landmark tax bill.”

The signatories to King’s letter asking King’s New IDEA be included in the tax reform legislation include: Rep. Louie Gohmert, Rep. Paul Gosar, Rep. Mo Brooks, Rep. Matt Gaetz, Rep. Andy Biggs, Rep. Randy Weber, Rep. Lou Barletta, Rep. Scott DesJarlais, Rep. Duncan Hunter, Rep. Brian Babin, and Rep. Scott Perry.

This is one of the best ideas to reform taxes and to begin to deal with the problem of illegal immigration that I have heard. E Verify would be a big step toward making sure that the workers in America are here legally.

The Heritage Foundation’s Analysis Of The Proposed Tax Plan

Below is the Heritage Foundation‘s analysis of the proposed tax plan:

Months ago, conservatives began pressuring their lawmakers to ensure that tax reform followed five conservative principles. Here’s how the bill stacks up to those principles:

Lowering and Simplifying the Individual Tax Rates: The GOP proposal provides long overdue relief to millions of Americans by simplifying and lowering the individual tax rates to 12 percent, 25 percent, 35 percent and 39.6 percent. For married couples, the 25 percent rate starts at $90,000, the 35 percent rate starts at $260,000 and the top rate starts at $1 million. The bill will also double the standard deduction to $12,000 for individuals and $24,000 for families.

Lowering the Corporate Tax Rate: This bill will immediately lower the corporate rate to 20 percent — the rate demanded by conservatives for months — making American businesses more competitive with the rest of the world and providing hard working Americans with a much needed raise. Rates for small business pass throughs were also reduced by 15 percentage points, down to 25 percent.

Tax Free Entrepreneurship (Full Expensing): The GOP proposal includes full expensing for some investments that phases out after 5 years. This is a necessary boost to investment in the short-term, though improvements could be made as the process advances.

Establishing a Territorial Tax System: This bill attempts to eliminate the double taxation that defines our current worldwide tax system, though there are some provisions that could undermine the full value of that reform. Stay tuned for a more in-depth analysis.

Ending Cronyism in the Tax Code: Conservatives have also been fighting back against big-government special interest groups. The plan eliminates many special interest provisions including the State and Local Tax Deduction (SALT), though it allows a write off for property taxes. If not for conservative pushback, the swamp creatures would have been far more successful in defending the broken, corrupt status quo.

Here are some other things included in the bill you should know:

  • Child tax credit goes to $1600 from $1000 plus additional $300 credit for parents and non-child dependents.
  • State and local deduction converted to property tax deduction with $10K cap
  • 401k’s are untouched
  • The Death Tax exemption will be doubled and eventually phased out after five years.
  • Preserves the home mortgage interest deduction for current mortgages and limits the deduction to $500,000 for new mortgages.
  • Preserves the Charitable Tax Deduction.

At first glance, the preliminary text released today has the potential to unleash economic growth, create American jobs, increase wages for American workers, allow families to keep more of their hard-earned money, and make U.S. businesses competitive across the globe.

According to documents released by Republicans on the House Ways and Means Committee, a typical middle-income family of four, earning $59K (median household income), will receive a $1,182 tax cut under this bill.

Cleaning Up The Federal Taxes And The Federal Budget

Yesterday The Washington Times posted an article about one aspect of the tax bill that will limit fraud and save the taxpayers billions of dollars.

The article reports:

The new GOP tax overhaul would strip illegal immigrants of the ability to claim several major tax credits, saving the government $23.1 billion over the next decade, according to the bill’s authors.

For years Republicans have complained that despite a general ban on taxpayer benefits flowing to illegal immigrants, the IRS has allowed them to collect the child tax credit, the American Opportunity Tax Credit and the Earned Income Tax Credit.

…But the new tax overhaul tries again, calling for taxpayers to have to submit work-eligible Social Security numbers in order to claim the credits.

Immigrant-rights advocates have complained about attempts to close the tax credits in the past.

In the case of the child tax credit, activists say that while the parents may be in the country illegally, their children are often U.S. citizens who deserve the credit.

…Many illegal immigrants pay taxes using Individual Taxpayer Identification Numbers, which the IRS issues to those who aren’t authorized to work in the U.S., but whom the government still wants to pony up to Uncle Sam.

The IRS pays out billions of dollars a year in tax credits to people filing using ITINs each year, according to the agency’s inspector general.

The inspector general has repeatedly urged the IRS to stop making the payments, but the agency has refused, saying it interprets the law related to those tax credits to cover illegal immigrants as well as other taxpayers.

The obvious question is why is the government making payments to people who are not in America legally and have no right to work here.

Some Facts About The Republican Tax Plan

The first fact to remember about the Republican tax plan is that what is eventually passed by Congress will be different than what was introduced today. How different we don’t know, but it will be different.

The Daily Signal posted an article today highlighting some of the proposed plan. The plan would simplify taxes, lower income tax rates, and positively impact business taxes.

The article reports:

The tax reform package would simplify and lower the current tax rate structure, from seven different rates ranging from 10 percent to 39.6 percent, to four rates: 12 percent, 25 percent, 35 percent, and 39.6 percent.

Most low- to middle-income earners would face lower marginal tax rates, which would help encourage more work and also put more money back into taxpayers’ pockets to spend more productively than the federal government.

Unfortunately, the plan maintains the top marginal rate of 39.6 percent (which reaches 43.4 percent when factoring in the Obamacare surtax).

While only 1 of every 150 taxpayers actually pays the top rate, more than 1 of every $5 of taxable income is subject to that tax rate. That means a lot of economic activity is affected by the top rate, and lowering it would have a significant and positive impact on investment, productivity, incomes, and job growth in the U.S.

Maintaining a high top rate for wealthy Americans may make the plan more politically palatable, more appealing to average Americans, and help reduce the alleged “costs” of the tax reform plan. In reality, though, it would not result in nearly as much revenue as static estimates project, and it would limit the plan’s ability to maximize job growth and boost incomes for everyday Americans.

One aspect of the tax plan that is going to meet with a lot of resistance is the change to state and local tax deductions.

The article explains:

The proposed tax plan would partially eliminate state and local tax deductions by getting rid of the deduction for income or sales taxes, and by capping the deduction for property taxes at $10,000.

State and local tax deductions provide no economic benefit. In fact, they are outright detrimental to the economy.

By allowing those who itemize their taxes to deduct property taxes as well as income or sales taxes they pay to state and local governments, these deductions shift the burden of high-tax states onto low-tax states, and spread a portion of high-income earners’ taxes onto lower- and middle-earners’ tax bills.

For example, just seven states (California, New York, New Jersey, Illinois, Massachusetts, Maryland, and Connecticut) receive more than 50 percent of the value of the state and local tax deductions.

And on net, the average millionaire receives 102 times as much benefit from the state and local tax deductions as a typical household that makes between $75,000 and $100,000.

Eliminating the sales and income tax deductions would be a huge benefit to at least 85 percent of Americans.

Please follow the link above to read the entire article. It explains how each part of the tax plan would impact families in all income brackets. What we are hearing in the mainstream media is not necessarily accurate.

 

 

Taxes Have Consequences

For some unknown reason, politicians love to spend other peoples’ money. And they love to raise taxes to get more of other peoples’ money to spend. However, raising taxes does not always work–sometimes it has unforeseen consequences. The Laffer Curve taught us that.

Last Friday, Investor’s Business Daily posted an article about the soda tax in Philadelphia. It just hasn’t gone as predicted.

The article reports:

That 1.5 cents per ounce doesn’t sound like a lot, but it is. The Tax Foundation notes that it’s “24 times the Pennsylvania excise tax rate on beer.”

“The high tax rate on nonalcoholic beverages makes them more expensive than beer in some cases,” the nonpartisan think tank wrote.

Some people, suddenly facing absurdly high costs for colas, root beers and other soft drink favorites, are turning to alcohol instead.

Probably not what was envisioned with the tax. And the tax has been put on diet drinks as well as sugared ones. So, if they had hoped to alter people’s consumption away from sugar-filled soda toward less-unhealthy, non-sugared alternatives, it was a failure.

Tax increases never sound like much–they are sold that way. Remember the luxury tax that went into effect in 1991 that nearly killed the boat industry. The tax was only supposed to impact the rich, but it caused a serious recession as the impact of the tax began to trickle down.

The article at Investor’s Business Daily further reports:

“Beverage tax collections were originally promoted as a vehicle to raise funds for prekindergarten education,” the Tax Foundation said, “but in practice Philadelphia awards just 49% of the soda tax revenues to local pre-K programs.” The majority of the money goes to government employees’ benefits and local schools that already have funding.

…the tax didn’t bring in the money the city thought it would. The city budgeted a “conservative” $46.2 million in revenues from the tax for fiscal 2017. At current projections, they’ll come up $6.7 million short. Many people are leaving Philly to do their shopping, while others have switched to other beverages, leaving a big unexpected hole in the tax revenue estimates.

“In July, city officials lowered beverage tax revenue by 14%, leaving the prekindergarten programs that the tax promised to fund in jeopardy,” the study said.

Meanwhile, local Coca-Cola and PepsiCo operations laid off nearly 150 workers and pulled some brands off Philly shelves. And angry local businesses are suing the city over the tax.

Raising taxes is never the answer. Cutting spending usually is.

The Need For Fiscal Responsibility In Washington

Yesterday The Washington Times reported that the Internal Revenue Service was extremely generous with taxpayer money–paying millions of dollars in refunds to people who were not legally entitled to them.

The article reports:

The IRS doled out more than $24 billion in potentially bogus refunds claimed under several controversial tax credits in 2016, according to a new audit that said $118 million was even paid to people who weren’t authorized to work in the U.S. in the first place.

Some $16.8 billion in payments were made on improper claims under the Earned Income Tax Credit, signifying a 24 percent error rate. Investigators also estimated $7.2 billion in improper payments for the Additional Child Tax Credit, representing 25 percent of the total, and $1.1 billion in improper payments, or 24 percent, for a higher education tax credit.

The totals and error rates for the earned income and child credits were comparable for 2015, while the education tax credit saw improvement.

The article explains that Congress passed a law in 2015 that was supposed to curb payments to people who were not entitled to them.

The article reports:

Both the inspector general and the tax agency said that steps have already been taken to try to prevent a repeat in the future, saying that a law passed in late 2015 should help.

Treasury Inspector General for Tax Administration J. Russell George said the IRS needs to follow through on the 2015 law, which imposes more restrictions on certain filers and delays refunds for people claiming the credits to give agents more time to flag suspicious returns.

One particular problem the IRS faces is checking people who have Social Security numbers but who aren’t authorized to work in the U.S.

This is one place that the federal budget could be easily cut. Tax refunds should only go to the people entitled to receive them.

 

Bringing The Federal Budget Under Control

The Washington Examiner reported yesterday that one of the steps President Trump will be taking to help balance the budget next year will be reining in tax payments to illegal immigrants.

The article reports:

Trump’s fiscal 2018 budget, set to be released Tuesday, will set higher eligibility standards for the earned income tax credit and the child tax credit, Office of Management and Budget Director Mick Mulvaney said Monday. According to the administration, the measures will save $40 billion over 10 years.

In May 2014, The Washington Examiner reported:

The Treasury Department has released its latest report on the fight against widespread fraud in the Earned Income Tax Credit program. The problem is, fraud is still winning. And there’s not even much of a fight.

“The Internal Revenue Service continues to make little progress in reducing improper payments of Earned Income Tax Credits,” a press release from Treasury’s inspector general for Tax Administration says. “The IRS estimates that 22 to 26 percent of EITC payments were issued improperly in Fiscal Year 2013. The dollar value of these improper payments was estimated to be between $13.3 billion and $15.6 billion.”

There is no reason to continue funding tax fraud.

The article concludes:

Some anti-illegal immigration groups have said that allowing workers to claim credits without providing a Social Security number amounts to paying illegal immigrants to stay in the country. Conservative lawmakers also have favored tightening the restrictions as a matter of fiscal conservatism.

Liberal groups, though, argue that illegal immigrants pay taxes, such as payroll taxes for Social Security, for which they won’t get benefits. More generally, the low-income tax credits generally benefit needy families, even if they technically did not qualify for the benefits they received.

Why are we running huge budget deficits to pay benefits to people who are not eligible to receive them? This doesn’t make sense to me. It would be nice to see that change.

It’s Not The Income–It’s The Spending

CNS News posted an article today about the tax revenue the government has received in the first six months of fiscal 2017 (Oct. 1, 2016 through the end of March). The government has collected $7,387,280,000 more in income tax revenue in the first six months of fiscal 2017 than were collected in the first six months of fiscal 2016.

The article reports:

The federal government also collected $547,491,000,000 in Social Security and other payroll taxes during the first six months of fiscal 2017. That is about $2,731,820,000 more than the $544,491,000,000 in Social Security and other payroll taxes (in constant 2017 dollars) that the government collected in the first six months of fiscal 2016.

Despite collecting record amounts of individual income taxes and payroll taxes, the Treasury still ran a deficit of $526,855,000,000 in the first six months of fiscal 2017. (The emphasis is mine)

No matter how much money we give them, it will never be enough. We need a budget (not continuing resolutions) that does the things that are constitutional for the federal government. All other functions need to be left for the states (as stated in the Tenth Amendment). Spending cuts are needed.

Remember The IRS Scandal? It Just Got Worse

Yesterday The Washington Free Beacon posted an article about the IRS Scandal of targeting tea party groups and their members.

The article reports:

The Internal Revenue Service has located 6,924 documents potentially related to the targeting of Tea Party conservatives, two years after the group Judicial Watch filed a Freedom of Information Act lawsuit for them.

The watchdog group intended to find records regarding how the IRS selected individuals and organizations for audits that were requesting nonprofit tax status.

The agency will not say when it will make the documents available to the public.

“At this time, the Service is unable to provide an estimate regarding when it will complete its review of the potentially responsive documents,” the agency said. “The Service will begin producing any non-exempt, responsive documents by March 10, 2017, and, if necessary, continue to produce non-responsive records on a bi-weekly basis.”

The IRS needs to be cleaned up from top to bottom. I am sure there are good people doing their job at the IRS, but it has become obvious that the agency has become politicized in recent years. The best solution would be to abolish the IRS and go to a use tax that did not require monitoring by the IRS.

Getting On Board With Building The Wall

Yesterday The Hill posted an article sharing some news about the wall Donald Trump plans to build on the southern border of America.

The article reports:

…The Hill reported late Tuesday that 225 companies — mainly construction and engineering firms — have voiced interest in building Trump’s proposed wall.

The list was compiled from a website for contractors interested in doing business with the federal government.

Contractors intrigued by the project have until March 10 to submit a prototype concept paper, followed by a formal request for proposal by March 24.

Interested parties so far include construction companies like Caddell and Raytheon, a top defense contractor.

A number of small businesses have also applied, including 20 owned by Hispanic-Americans who could come under scrutiny for helping create the structure.

…The Department of Homeland Security estimated last month that Trump’s could take 3.5 years to complete and cost up to $21.6 billion.

In November 2014, I reported:

“The Internal Revenue Service continues to make little progress in reducing improper payments of Earned Income Tax Credits,” a press release from Treasury’s inspector general for Tax Administration says. “The IRS estimates that 22 to 26 percent of EITC payments were issued improperly in Fiscal Year 2013. The dollar value of these improper payments was estimated to be between $13.3 billion and $15.6 billion.”

Fixing that problem would provide a major portion of the cost of building the wall. I am sure there are other costs to illegal immigration that could also be eliminated to pay for the wall.

Ronald Reagan said it best:

“A nation that cannot control its borders is not a nation.”
Ronald Reagan

Another Way To Interfere With The Profit Margins Of Businesses

What you are about to read is not the most ridiculous thing I have ever heard, but it is definitely close.

Yesterday The New York Post posted an article about a recent statement by Microsoft founder Bill Gates.

The article reports:

Bill Gates, the co-founder of Microsoft and world’s richest man, said in an interview Friday that robots that steal human jobs should pay their fair share of taxes.

“Right now, the human worker who does, say, $50,000 worth of work in a factory, that income is taxed and you get income tax, Social Security tax, all those things,” he said. “If a robot comes in to do the same thing, you’d think that we’d tax the robot at a similar level.”

How do you tax a robot? If he doesn’t pay his taxes, do you take out his battery?

This is another example of the government interfering in the free market. As some people in the government push to raise the minimum wage, certain businesses will have no choice but to replace human workers with robots.

The article further reports:

Recode, citing a McKinsey report, said that 50 percent of jobs performed by humans are vulnerable to robots, which could result in the loss of about $2.7 trillion in the U.S. alone.

“Exactly how you’d do it, measure it, you know, it’s interesting for people to start talking about now,” Gates said. “Some of it can come on the profits that are generated by the labor-saving efficiency there. Some of it can come directly in some type of robot tax. I don’t think the robot companies are going to be outraged that there might be a tax. It’s OK.”

Another example of the government finding new ways to take money away from people who have earned it.

The Government Doesn’t Need More Tax Revenue–It Needs To Cut Spending

CNS News reported the following today:

The federal government brought in a record of approximately $213,300,000,000 in individual income tax revenues through the first two months of fiscal 2017 (Oct. 1, 2016 through the end of November), according to the Monthly Treasury Statement released today.

That is approximately 36 times the $5,966,000,000 the federal government brought in from customs duties imposed on foreign imports over the same two-month span.

In constant 2016 dollars (adjusted using the BLS inflation calculator), the record $213,300,000,000 in individual income taxes the Treasury raked in during October-November of this year was up $6,432,550,000 from the $206,867,450,000 it brought in October-November of last year.

Meanwhile the website usgovernmentdebt.com posted the following:

The tax revenue is going through the roof and the deficit is rising. Would you run your household budget this way?