B12 Solipsism

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The GOP Tax Cuts Are a Blatant Scam

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Tax Refund Received

Joshua Holland of The Nation reports:

But it’s the brazenness with which the Republican Party abandoned any last remaining pretense of caring about deficits or federal spending that may come back to haunt them, and mark a shift in the political landscape around taxes and spending. It goes further than the $1.9 trillion in additional deficits, including higher payments on the national debt, that the Congressional Budget Office (CBO) projects will result from the tax bill over the next 10 years. When the nonpartisan number crunchers evaluated the fiscal impact of all of the legislation passed since mid-2017, including new spending, their analysis found that the GOP will add $2.6 trillion to the deficit over that period. What’s more, as Catherine Rampell noted in The Washington Post, that assumes that the economy will continue growing apace, and that the “temporary” individual tax cuts will expire according to the written law. But recent history suggests otherwise—most of George W. Bush’s budget-busting cuts were made permanent under Obama. In CBO’s worst-case scenario, “deficits would be larger by an average of a full percentage point of GDP, rising by a total of $2.6 trillion to yield a cumulative deficit of nearly $15 trillion” over the next 10 years.

Then, having created massive deficits for as far as the eye can see, House Republicans had the chutzpah to try to pass a constitutional amendment that would bar future Congresses from running any deficits at all. It’s a remarkably stupid policy. Running deficits isn’t inherently a bad thing if the purpose is to stimulate the economy during a recession or address a national emergency. The problem with these deficits is that they come at a time when the economy is growing and mostly just enrich the wealthy and pump up corporate profits.

(click here to continue reading The GOP Tax Cuts Are Such a Blatant Scam That They Might Change the Whole Conversation | The Nation.)

Paul Ryan’s real legacy is this. GOP-style austerity only applies to social safety net programs, not corporate tax give-aways.

And as Holland mentions in his article, Democrats like Senator Brian Schatz note the GOP fiscal hypocrisy.

Look At All These People Who Care About Your Taxes 

Vox reports on Senator Schatz’s plan for making college more affordable, and includes this exchange:

But overall, Schatz sees little appetite from his Republican colleagues to reform the system. And with hastily passed GOP tax cuts estimated to add $1 trillion to the national deficit over the next decade, Schatz said he’s not yet going to wade into details of how he’ll pay for his plan because he thinks there’s a double standard with Republicans and Democrats.

“I don’t play the pay-for game. I reject the pay-for game,” he said. “After the Republicans did the $1.5 trillion in unpaid-for tax cuts, and as we’re doing a bipartisan appropriations bill — which I support — which is also an increase in federal spending [that’s] unpaid for … I just reject the idea that only progressive ideas have to be paid for. We can work on that as we go through the process, but I think it’s a trap.”

And he’s under no impression that his bill will gain traction in the current Republican-controlled Congress, especially given the tumult of news swirling around President Donald Trump and few signs from Republicans that they’re going to seriously entertain the issue.

“One of the things I have observed among Republicans — and part of it is that they’re just unserious about governing in the first place, but I certainly observed on health care that they had no actual legislative program once they got the gavels,” Schatz said. “And I think it’s important for us to draw a clear contrast with Republicans over the rest of the year, but also be ready to govern.”

 

(click here to continue reading Exclusive: Sen. Brian Schatz’s ambitious new plan for debt-free college, explained – Vox.)

Written by Seth Anderson

April 17th, 2018 at 9:27 pm

Posted in politics

Tagged with , ,

What’s the Matter With Trumpland?

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No One Will Know How Things Are Between Us
No One Will Know How Things Are Between Us

Paul Krugman writes:

Many of the states that have refused to expand Medicaid, even though the federal government would foot the great bulk of the bill — and would create jobs in the process — are also among America’s poorest.

Or consider how some states, like Kansas and Oklahoma — both of which were relatively affluent in the 1970s, but have now fallen far behind — have gone in for radical tax cuts, and ended up savaging their education systems. External forces have put them in a hole, but they’re digging it deeper.

And when it comes to national politics, let’s face it: Trumpland is in effect voting for its own impoverishment. New Deal programs and public investment played a significant role in the great postwar convergence; conservative efforts to downsize government will hurt people all across America, but it will disproportionately hurt the very regions that put the G.O.P. in power.

(click here to continue reading Opinion | What’s the Matter With Trumpland? – The New York Times.)

Not a brand new phenomena, but relatively new. I call it the Fox News effect: the conservative red states who have been bamboozled to reflexively refuse the exact government help that would assist them in their lives because their spiritual/cultural leaders yelling at them on the tee-vee have convinced them that tax cuts and a smaller government is panacea, plus it will “trigger the liberals”. Yeah, those liberals, always trying to help, what’s wrong with them?

So Kansas1 and Oklahoma have cut taxes so much that teachers are having to strike for living wages. In my ideal world, teachers would be paid as much as least as much as investment bankers. Teachers should at least get a living wage, preferably more so that the “best and brightest” choose the teaching profession. Good teachers are important to our civil society, essential even, why should they get sub-poverty wages just so the Koch Brothers can pay slightly less in taxes?

South River Public School
South River Public School

The Guardian reports:

While Oklahoma has the country’s lowest tax on oil and natural gas production, teachers’ salaries remain stubbornly low, at 49th in the nation. According to data provided by the National Education Association (NEA), teachers make $45,276, nearly $13,077 below the nationwide average of $58,353 and well below the nationwide high of New York at $79,152.

“Over a decade of neglect by the legislature has given our students broken chairs in classrooms, outdated textbooks that are duct-taped together, four-day school weeks, classes that have exploded in size and teachers who have been forced to donate plasma, work multiple jobs and go to food pantries to provide for their families,” said the Oklahoma Education Association in a statement. “We are saying enough. No more empty promises. The governor and legislature need to act now to fix this.”

It’s a feeling shared by teachers in places like Arizona, New Jersey, Pennsylvania and other states, who are all also considering action.

The strikes are unique in that they are not being called for by the leadership of the unions, but often through direct appeals of rank-and-file members using social media and their own personal networks to organize across entire states and now the country.

(click here to continue reading Wave of teachers’ wildcat strikes spreads to Oklahoma and Kentucky | US news | The Guardian.)

Not to mention the whole conservative pushback to the Affordable Care Act:

A new wave of teacher strikes has highlighted a growing problem for all US workers – growing health costs which have become a “hungry tapeworm” on Americans’ wages.

In the most expensive health system in the world and the only industrialized nation without universal healthcare, more than 177 million Americans get health insurance through an employer. But insurance is rarely free.

“They’ve shifted the healthcare costs and the pension costs on to employees, so employees are making less and they’re spending less,” said Randi Weingarten, president of the American Federation of Teachers, which represents 1.7 million members. “It’s a double whammy.”

Conservative legislatures’ push to shift health and pension costs on to individual teachers means in some states, teachers take home less pay than they did five years ago.

(click here to continue reading ‘Double whammy’: teachers strike as healthcare costs cut into earnings | US news | The Guardian.)

I hope these teachers get their raises, and that they vote in 2018 for Democrats.

Footnotes:
  1. which we’ve discussed before []

Written by Seth Anderson

April 3rd, 2018 at 9:59 am

Posted in government,politics

Tagged with , , ,

Democrats to unveil $1 trillion infrastructure plan, seek reversal of GOP tax cuts to finance it

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Jammed Up

Speaking of the Democrats alleged “lack of an agenda1, here’s one item that sounds good to me…

As the White House struggles to finance an ambitious infrastructure plan, Senate Democrats are proposing one alternative — albeit one unlikely to pass muster with President Trump: rolling back the recently passed Republican tax overhaul.

The proposal unveiled by Democratic leaders Wednesday would plow just over $1 trillion into a wide range of infrastructure needs, including $140 billion for roads and bridges, $115 billion for water and sewer infrastructure and $50 billion to rebuild schools.

The spending would be offset by clawing back two-thirds of the revenue lost in the Republican tax bill by reinstating a top income tax rate of 39.6 percent, restoring the individual alternative minimum tax, reversing cuts to the estate tax, and raising the corporate income tax from 21 percent to 25 percent.

Senate Minority Leader Charles E. Schumer (D-N.Y.) said in an interview Tuesday that the plan sets up a stark contrast for voters ahead of the midterm elections.

“We believe overwhelmingly the American people will prefer building infrastructure and creating close to 15 million middle-class jobs than giving tax breaks for the wealthy,” he said.

(click here to continue reading Democrats to unveil $1 trillion infrastructure plan, seek reversal of GOP tax cuts to finance it – The Washington Post.)

We’ve long lamented about the lack of infrastructure investment in America. Whatever happened to our can-do attitude that built railroads where there were none, built the Hoover Dam, built the interstates, yadda yadda. The Koch Brothers and their minions would rather have the tax cuts, but the rest of us would rather have bridges that didn’t fall down and water supplies that don’t have lead.

Footnotes:
  1. which is an obviously false statement []

Written by Seth Anderson

March 8th, 2018 at 2:14 pm

Shocker: Democrats’ predictions about the GOP tax cut are coming true

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We Pronounce Joy Like A Word Of Our Own
We Pronounce Joy Like A Word Of Our Own

It is strange that one party in our two party system doesn’t believe in facts, nor seemingly pays much of a penalty for blatant lies about a plethora of topics. Climate change, immigration, gun control, trickle-down1 economics; the list of Republic falsehoods injected into the public discourse could go on for hours, if one were so inclined.

Even worse, in my estimation, is that much of the corporate media does what Paul Waldman of the Washington Post calls out in his column -by reducing GOP falsehoods to “critcs say”, aka “both sides” aka “false equivalency2, the GOP’s non-factual assertions are treated as serious, when they really are not…

Among the things Democrats pointed out was that even before the tax cut, corporations were making near-record profits and sitting on mountains of cash; if they wanted to invest, create jobs and raise wages, they already had the means to do it. They also observed that even before the tax cut passed, corporations were saying publicly that they intended to use the money for stock buybacks.

But what about those bonuses that companies announced and that Trump kept touting? It’s true that some companies did give workers one-time bonuses. But it was essentially a PR move. Take Walmart, for instance. It made a splashy announcement that it would be giving bonuses of up to $1,000 to workers, which sounded great. But then it turned out that you’d only get that much if you’d been working there for 20 years, and the average worker would get around $190. Which is better than nothing, but it isn’t exactly going to transform your life.

And as ThinkProgress noted, the total value of Walmart’s bonuses was $400 million, which seems like a lot until you learn that over 10 years the value of the tax cut to the corporation will be $18 billion. In other words, about 2 percent of its tax cut is going to workers, at least in the short run.

How many times do we have to play this game? When a new policy debate emerges, Democrats try to make an argument that has some connection to reality, while Republicans make absurd claims in the knowledge that even if they get debunked in the occasional “news analysis” piece, on the whole they’ll be treated with complete seriousness, no matter how ridiculous they are.

It’s in part because lies about the future — and that’s what they are when you know that what you’re saying is utterly bogus — will not be policed with nearly the same vigor as lies about the past. If Trump claims that he had the largest inaugural crowd in history, it will immediately get shot down and subject to mockery even from neutral reporters. But if he says that all the benefits of his corporate tax cut will flow to workers, which is no less a lie, it will usually be met with “Critics question whether there is evidence to support his assertion.” When Republicans said that their tax cut wouldn’t increase the deficit because it would create so much economic growth that revenue would actually increase, it was treated as a questionable claim, not an assertion on par with “If I flap my arms, I can fly to the moon” or “With a week of training, my dog will be able to do a perfect rendition of ‘Enter Sandman’ on the electric guitar.”

(click here to continue reading Shocker: Democrats’ predictions about the GOP tax cut are coming true – The Washington Post.)

The Illustrated Police News  October 17 1896
The Illustrated Police News – October 17,1896

In an ideal world, the same reporters and television talking heads would aggressively come after the GOP liars, quoting their words back to them and demanding answers, as if the journalists were high school children from Parkland, FL, or Dutch questioners of Ambassador Hoekstra. If only our corporate media courtiers were as persistent as the Dutch press, we’d all be better off.

 

Peter Hoekstra, the newly minted U.S. ambassador to the Netherlands, held his first news conference with the Dutch media at his new residence in The Hague on Wednesday.

It did not go well.

Dutch journalists peppered Hoekstra with questions on unsubstantiated claims he made in 2015 about chaos that the “Islamic movement” had allegedly brought to the Netherlands.

“There are cars being burned. There are politicians that are being burned,” he said then, at a conference hosted by a conservative group. “And yes, there are no-go zones in the Netherlands.”

The comments have widely been described as inaccurate, and seem to reflect certain conspiracy theories about sharia law that crop up in some circles of the far-right in the West. When pressed by the Dutch reporters, Hoekstra declined to retract the comments or give specific examples to back them up.

In fact, after saying that he would not be “revisiting the issue,” he simply refused to answer the question at all.

 

But the reporters were not done with the line of questioning. Instead of moving on, another reporter would simply ask a variation of the query again.

“Everybody there had one question: That crazy statement you made, are you going to withdraw it?” Roel Geeraedts, a political reporter at the Dutch television station RTL Nieuws, said in a phone interview about the event. “We were not getting answers, so we all kept asking it.”

 

(click here to continue reading Trump’s Netherlands ambassador Peter Hoekstra grilled by Dutch press over Islam comments – The Washington Post.)

I would so love if this style overcame the “access journalism” practices by many Washington-based journalists.

Footnotes:
  1. Supply-side []
  2. as Jay Rosen often notes []

Written by Seth Anderson

February 27th, 2018 at 7:59 pm

Posted in News-esque,politics

Tagged with ,

Another College Sports Boondoggle

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The Twelfth Player in Every Football Game
The Twelfth Player in Every Football Game

In addition to the elimination of property tax exemptions for rich nonprofits that we’ve mentioned previously, here’s another piece of tax reform I support – the repeal of the tax payer subsidy to college sports…

Eric Zorn writes:

College sports is a big-time business, tickets are in high demand at major universities and charging what the market will bear is the American way. In fact, judging by the secondary market on StubHub, where single seats to the Ohio State game are going for more than $2,000, tickets to Michigan football games are still vastly underpriced.

What I don’t understand, however, is the law that allows ticket buyers to write off 80 percent of their “preferred seating donation” as a charitable contribution for federal tax purposes.

That’s right. High rollers in the swankiest suites can subtract $4,500 from their taxable income, a benefit worth up to $1,782 off their tax bill, as though they had given that money to a soup kitchen or hurricane relief.

Put another way, for each such privileged fan, the federal government effectively provides a $1,782 ticket subsidy.

And, in the mid-1980s, when these preferred-seating donation scams first arose, the Internal Revenue Service issued a common-sense ruling that a mandatory donation linked to the purchase of seasons tickets was a quid pro quo and so not deductible for tax purposes.

Legislators representing schools in the powerful Southeastern Conference “went crazy,” said University of Illinois emeritus law professor John D. Colombo, a specialist in tax laws governing charitable organizations. And in 1988, Congress added subsection 170(l) to the IRS code that specifically allowed for an 80 percent deduction on donations to “institutions of higher education” that granted “the right to purchase tickets for seating at an athletic event.”

In 2015, the Obama administration asked Congress to repeal subsection 170(l), claiming it will drain at least $2.5 billion from public coffers over the next decade. Duke University law professor Richard Schmalbeck estimated the 10-year tax receipts loss at $20 billion.

Congress ignored the suggestion.

(click here to continue reading If Congress can’t eliminate the college football ‘charity’ scam, what hope is there for a tax overhaul? – Chicago Tribune.)

Ain’t that a bitch? Our tax dollars hard at work, inflating college coaches salaries, fancy high-tech training facilities, inflating player salaries, oh, wait, the colleges don’t even pay their athletes a stipend, the players work for basically, “exposure”.  Hmmm, maybe there are deeper issues that need to be solved with Division 1 teams. 

Oklahoma vs Texas
Oklahoma vs Texas

Written by Seth Anderson

September 2nd, 2017 at 7:58 am

Abolish property tax exemptions for rich nonprofits

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Dom Sub Invoc S Hedwigis
Dom Sub Invoc S Hedwigis.

David M. Simon elaborates on a point I’ve made before: wealthy non-profits like churches and universities shouldn’t be tax exempt.

Illinois is the land of special favors for those with lobbyists, connections or clout. Just look at the state’s property tax laws and the exemptions for rich nonprofits.

Retired homeowners living on fixed incomes pay hefty property taxes, despite the so-called “senior exemption.”

On the other hand, real estate owned by many rich nonprofits is completely exempt from property taxes. This includes private university campuses and their sports facilities, the gleaming skyscrapers of qualifying private hospitals and magnificent church cathedrals. And lots of other expensive real estate owned by other qualifying nonprofits. All completely exempt — and unfair.

Wealthy nonprofits with expensive real estate use and benefit from the same law enforcement, fire protection and other basic services as other property owners. These nonprofits may not principally use their real estate to make money, but neither do most families.

This system also dumps the hefty shares of the tax burden that these nonprofits should pay on the rest of us.

(click here to continue reading Abolish property tax exemptions for rich nonprofits – Chicago Tribune.)

Jesus Is A Hoarder
Jesus Is A Hoarder

What are these organizations doing for our society? Is it justified for them to be takers on the basis of whatever their so-called mission is? For instance, Scientology? Or college and professional sports stadiums? Not if I had a vote.

I had a 3 A.M. thought. Mayor Daley the Younger was bad for the city in a lot of ways1 but inarguably there was one aspect he was better at than the current administration: keeping the city gleaming, especially downtown, but everywhere really. Today, in many nooks and crannies of the city, there are mounds of McDonald’s wrappers, Starbucks coffee cups, cigarette butts, puddles of stale urine that haven’t been touched in years. Rain washes some of this detritus off the streets and sidewalks, but then it accumulates in stairways, alleys, and other locations. Nobody is power-washing the sidewalk, nobody is picking up the garbage that doesn’t make it into a garbage can.

What if in exchange for tax-exempt status, a non-profit had to adopt a city block and keep it clean? There could be some formula based on the annual financial report of the organization and the total number of city blocks. So the Heritage Foundation would be required to keep clean 5 blocks on the South Side somewhere near the Koch Brothers coal dust repository, while Northwestern Memorial Hospital would be responsible for 23 blocks in a cluster near Garfield Park. Or however the math works. 

Impractical, unlikely, and unwieldily, like most 3 AM thoughts…

Footnotes:
  1. enthusiastically privatizing city assets, allowing the police free rein to ride roughshod over civil liberties, frequently walking right up to the line of corruption, and even putting his toe over the line, and so on []

Written by Seth Anderson

July 12th, 2017 at 9:27 am

Posted in government,politics,religion

Tagged with ,

IL Supreme Court Weighs Whether Hospitals Can Avoid Property Tax

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Sun Setting On A Sacred Cow
Sun Setting On A Sacred Cow

Personally, I don’t think hospitals should be exempt from property tax. What exactly is the standard here, that if a corporation “does good” they don’t have to pay their fair share of tax? Who defines what the good is? Who monitors it? 

Lisa Schencker reports:

Illinois not-for-profit hospitals currently are exempt from having to pay hundreds of millions of dollars in property taxes so long as the value of their charitable services is equal to or greater than their estimated tax liabilities.

But some municipalities argue that many not-for-profit hospitals are more like businesses, making handsome profits. They say hospitals should have to contribute their fair share of taxes to their communities, like any other business. A 2009 report by the Center for Tax and Budget Accountability said 47 Chicago-area not-for-profit hospitals had property tax exemptions worth a total of $279 million.

About 156 of Illinois’ more than 200 hospitals are not-for-profit.

In the case before the state Supreme Court, the city of Urbana and others argue that Carle Foundation Hospital in Urbana should not be exempt from paying property taxes. They say the 2012 state law allowing hospitals to be exempt if they provide charity equal in value to their property tax liabilities is unconstitutional. The state constitution only allows such exemptions if the property in question is used exclusively for charitable purposes, they say.

Urbana Mayor Laurel Prussing said after oral arguments Thursday that regardless of what the court decides — or doesn’t decide — the issue is one the legislature should weigh.

The hospital association might work with lawmakers to craft a new law if the court strikes the current one down. Association President and CEO A.J. Wilhelmi has said the group will “assess all options” once a ruling is made.

“Why should the most profitable companies in the state be shifting their burden onto every other business and homeowner?” Prussing asked.

Last year, a study published in the journal Health Affairs named Carle the 10th most profitable hospital in the country when it came to patient care services, with $163.5 million in profits in fiscal year 2013.

 

(click here to continue reading Illinois Supreme Court weighs whether hospitals must pay property taxes – Chicago Tribune.)

There Are Some Things To Talk About
There Are Some Things To Talk About

I don’t believe that churches should be exempt either, unless they can scientifically prove that god exists. Are medical cannabis dispensaries tax exempt? Planned Parenthood clinics? Is Feeding America’s offices on Wacker Drive tax free? What about ACLU headquarters? Union halls? Bars and taverns? Wrigley Field? Seriously, where does it end? Our society would be much better off and more equitable if corporations didn’t get so many freebies from taxpayers. I’ve always liked the idea of a “mandatory minimum” for corporations above a certain size – the idea that Boeing and Archer Daniels Midland and all the rest can’t evade taxes by exploiting shell corporations and loopholes.

Written by Seth Anderson

January 16th, 2017 at 10:12 am

Chicago to Tax Streaming Providers

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Netflix Streaming July 2015

Wow, 9% is rather a large increase to my Netflix bill. I wonder if databases like Hoover’s  will be affected? Seems like they might. 

Chicagoans who pay to stream movies and music from services like Netflix and Spotify will now need to fork over an additional 9 percent for the privilege, as will Chicago businesses that pay to use everything from real estate to court databases online, under a decision the city quietly made recently to expand its taxing power.

The added costs are the result of a ruling by the city Finance Department that extends the reach of ordinances governing two types of taxes — the city amusement tax and the city personal property lease transaction tax — to cover many products streamed to businesses and residents alike.

According to the Finance Department changes, the 9 percent amusement tax, which has mostly been tacked onto tickets to concerts and sporting events, also now applies to paid subscriptions for streamed digital music and to streamed rental movies or TV shows, and “for the privilege of participating in games, on-line or otherwise,” if the person paying to receive the data is in Chicago.

 …

The personal property lease transaction tax expansion also applies to professional services, like electronic property databases real estate agents use, court case databases lawyers rely on and various financial information networks.

 

(click here to continue reading City extends taxing power to online movies, music, more – Chicago Tribune.)

Could I get around this by using a VPN? 

Written by Seth Anderson

July 2nd, 2015 at 11:10 am

Posted in Business,Chicago-esque

Tagged with , ,

The Laffer Curve has flatlined

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Sketchy ATM Inside

It is almost amusing how much crazy economic policy was initiated by the expense account of Dick Cheney and Donald Rumsfeld. Without the Laffer Curve, there would be no Supply Side Economic Voodoo theory, and perhaps our country wouldn’t be on a downward spiral. Also, the Laffer Curve, as originally formulated, never claimed to know what the magical tax rate was, and in fact, could be interpreted as arguing that tax rates should increase! 

The Laffer Curve came about as the result of a lunch conversation in 1974 among conservative economist Arthur Laffer, Dick Cheney, and Donald Rumsfeld. The curve in question is the relationship between tax revenues and tax rates—at zero percent, no tax revenue will be collected because no income is taxed, while at 100 percent, no revenue will be collected because there is no incentive to work if all income is confiscated. Somewhere in the middle is a sweet spot: the perfect rate of taxation at which revenue is maximized, and where any tax increases past that point will actually result in a decrease in revenue.

The Laffer Curve has been consistently used as justification for the supply-side belief that tax cuts will pay for themselves through the increased economic activity that they will create. This belief is no longer simply a theory, but is now official federal policy: the 114th Congress changed the rules for how budget bills are evaluated from static scoring to what is called “dynamic scoring,” which will mask the actual cost of tax cuts by simply assuming that they will increase economic output.

(click here to continue reading The Laffer Curve has flatlined.)

As an aside, I’m amazed that for years, the PR slogan was that the Republican Party was the business party, despite much evidence to the contrary. 

Since World War II, there’s been a strikingly consistent pattern in American politics: The economy does much better when a Democrat is in the White House.

More specifically, since 1947, the U.S. economy has grown at an average real rate of 4.35 percent under Democratic presidents and just 2.54 percent under Republicans

(click here to continue reading The U.S. economy does better under Democratic presidents — is it just luck? – The Washington Post.)

Really though, it seems as if the GOP is better for business executives instead of businesses. The executives make more, by outsourcing jobs, enjoying reduced tax rates and increased tax loopholes for things like private jets and so on. More take-home pay, in other words, and less investing in the business itself. For non-executives, the GOP is not your party, nor are you even invited, except during election season. 

I Am A Lonely Visitor
I Am A Lonely Visitor

Reactionary conservatives like Governor Sam Brownback and Governor Scott Walker have put the Laffer Curve to work, slicing government revenue, with predictably dire results:

Kansas Gov. Sam Brownback brought on Arthur Laffer as an advisor to steer his radical experiment of cutting taxes to the bone under the assumption that the cuts would simply pay for themselves through economic expansion. The results, however, have been absolutely horrific: job growth on the Missouri side of the Kansas City metropolitan area is occurring at four times the rate on the Kansas side. Education is being vastly underfunded. And perhaps most tellingly, the state collected far less money in taxes than it expected in December, even after downgrading expectations. In other words, Laffer was wrong in every single way possible.

In Wisconsin, meanwhile, Republican Gov. Scott Walker has followed a path nearly has extreme as that of Brownback, but is being forced to scale his ambitions back because the theory just isn’t working:

Earlier this year, just before enacting the half-billion-dollar tax cut, Walker said it was just the beginning — that he wanted to eliminate income taxes. Now, a representative of Walker, asked about the elimination plan said the governor “has only said that he would explore other areas of tax reform.” The state has a projected $2.2 billion deficit for the next biennium, 2015 to 2017. There’s also a transportation funding problem.

Now, not even his top allies in the House think new cuts aren’t possible.

The situation is so bad in Wisconsin that to try to balance the budget in anticipation of a possible 2016 presidential campaign, Walker is rumored to be considering selling off public assets as a stopgap measure just to make the numbers look good. The contrast with states like California, which raised taxes to help balance its budget and cover a shortfall in education, couldn’t be clearer: California’s revenue is surging, while tax-cutting states are figuring out how to mitigate the damage.

(click here to continue reading The Laffer Curve has flatlined.)

Put Money in the Parking Meter or else!
Put Money in the Machine or else!

Will this example stop the next GOP executive branch from claiming that cutting tax rates will help grow economies? Probably not. In fact, I wouldn’t be surprised if newly elected Illinois Governor Bruce Rauner tries his best to lower tax rates on his own wealth during the next four years. If Rauner was such a good business man, perhaps he’d let facts and history convince him that perhaps the marginal tax rates are too low…

To maximize real economic growth in the United States, the top marginal income tax rate should be about 65%, give or take about ten percent. Preposterous, right? Well, it turns out that’s what the data tells us, or would, if we had the ears to listen.

This post will be a bit more complicated than my usual “let’s graph some data” approach, but not by much, and I think the added complexity will be worth it. So here’s what I’m going to do – I’m going to use a statistical tool called “regression analysis” to find the relationship between the growth in real GDP and the top marginal tax rate. If you’re familiar with regressions you can skip ahead a few paragraphs.

Regression analysis (or “running regressions”) is a fairly straightforward and simple technique that is used on a daily basis by economists who work with data, not to mention people in many other professions from financiers to biologists. Because it is so simple and straightforward, a popular form of regression analysis (“ordinary least squares” or “OLS”) regression is even built into popular spreadsheets like Excel.

(Click here to continue reading http://angrybearblog.com/2010/12/top-marginal-income-tax-rate-should-be.html The top marginal income tax rate should be about 65%…)

Written by Seth Anderson

January 12th, 2015 at 9:01 am

Posted in government,politics

Tagged with ,

Congress Extends Itself Tax Extender Style

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Relentless
Relentless

Gail Collins provides a good elevator pitch description of a tax policy tool called tax extenders…

One of the very, very few things the current Congress seems determined to deal with before it vanishes into the night is the problem of “tax extenders.” Extenders are strange but much-loved little financial mutants. Sort of like hobbits or three-legged kittens.

Congress, in its wisdom, has created a raft of temporary tax breaks for everybody from teachers to banks that make money overseas. Most are really intended to be permanent. But calling them short-term measures tricks the Congressional Budget Office into underestimating how much they cost.
“If you pass a new tax cut, you’ve got to find offsetting spending cuts. But these are in a sense free,” said Howard Gleckman of the Tax Policy Center.

After the election, both parties appeared inclined to just extend all the tax cuts for two years while making principled mumbling about reform down the line.

But then the Koch brothers roared into the picture. They feel that it’s wrong for the government to give a special benefit to an industry that’s one of their competitors. Especially a government that they and their associates devoted nearly $60 million to getting into office. Politico reported that their representatives have been meeting with Speaker Boehner’s staff.

And you know, they have a point. If Congress actually wanted to do serious reform, it should get rid of special tax breaks for the wind and solar energy sectors. While, of course, also removing all the tax breaks for drilling oil.

(click here to continue reading Congress Extends Itself – NYTimes.com.)

Written by Seth Anderson

November 17th, 2014 at 10:19 pm

Bruce Rauner channeled part of fortune to Cayman Islands To Avoid Paying Taxes

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A Mere Hint of Evidence
A Mere Hint of Evidence

Illinois Democratic governor Pat Quinn, the incumbent, is not someone to get excited about, but his opponent in the upcoming election is a non-Mormon clone of Mitt Romney, down to the off-shore tax havens. Bruce Rauner won’t release his tax returns either, basically thumbing his nose at the electorate.

Multimillionaire Republican Bruce Rauner has channeled at least part of his fortune into the Cayman Islands, a Caribbean paradise long criticized as a tax haven for American investors, the Chicago Sun-Times has confirmed.

A Rauner spokesman insisted that the former private equity investor has met his legal tax obligations and properly disclosed to the federal government information regarding at least five investments by him or his firm in a country that has no income tax and a financial system cloaked in secrecy.

Rauner’s campaign has refused so far to release a full set of his most recent tax returns to corroborate that and perhaps show the extent and value of those investments in offshore companies. No one has suggested Rauner has done anything illegal. In fact, offshore investments among the wealthy have been a common practice in recent years.

(click here to continue reading Bruce Rauner channeled part of fortune to Cayman Islands | Early & Often.)

Seem Never Satisfied
Seem Never Satisfied

Are people really going to vote for this plutocrat who is too good, too powerful, too rich to pay his fair share of taxes to a near bankrupt state? If you planned to run for political office, why would you do this? And worse, once news of Rauner’s lack of patriotism was exposed, he doubled down on it.

Republican gubernatorial candidate Bruce Rauner funneled part of his wealth to a Caribbean territory long considered a tax haven, a business practice he defended yesterday, stressing there was no impact on his personal tax rate.

A central part of Gov. Pat Quinn’s re-election bid has been scrutinizing how the multimillionaire Rauner made his money, and the Chicago Democrat’s campaign has alleged Rauner “stashed” money to avoid paying taxes. “I’d think someone who anticipates being in the public eye wouldn’t be in the Cayman Islands because the question to be asked is, ‘Why would you have invested there?'” Richard L. Kaplan, a University of Illinois law professor told the newspaper. “

AT NO POINT HAVE I TRIED TO AVOID TAXES’

Rauner dismissed the notion yesterday after speaking to Asian leaders in Chinatown.

“At no point have I tried to avoid taxes or done these things that they’re trying to spin,” he said…

“GTCR has its own structure for just a couple of investments. When they invest in overseas companies, they set up that particular structure. It doesn’t impact our personal tax rate whatsoever.”

Cayman, a British territory, is considered one of the world’s largest financial centers and a haven for mutual funds and private equity. International companies and ultra-rich investors have long taken advantage of offshore financial centers there, drawn by regulations and legal systems making it easy to move capital internationally. 

(click here to continue reading Rauner defends Cayman Islands money move – Government News – Crain’s Chicago Business.)

Not A Republican
Not A Republican

and as Aaron Cynic of the Chicagost writes, this isn’t trivial amounts of money, but most likely millions of dollars:

While Rauner might be in full legal compliance, the practice itself allows major corporations and other wealthy individuals to skip out on paying taxes in the United States. According to a June report from the group Citizens for Tax Justice, U.S. based multinational corporations booking profits in tax shelters like the Cayman’s has allowed them to skip out on an estimated $90 billion in federal income taxes. For someone trying to save the Illinois economy with a tax plan that targets professional and business services – many of which are smaller businesses – sheltering profits from a company boasting a $10 billion investment portfolio seems somewhat duplicitous, at best.

(click here to continue reading Rauner Defends Dumping Dollars Into Off-Shore Accounts: Chicagoist.)

Written by Seth Anderson

August 5th, 2014 at 8:13 am

Posted in politics

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Durbin bill to target corporate inversions

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Financial Blues Brothers
Financial Blues Brothers

As we mentioned, the anti-moocher bill is finally going to be announced by Senator Durbin, though the odds of it passing through the House are slim, unfortunately…

Sen. Dick Durbin said he and other Democrats today will unveil a bill aimed at curbing corporate tax inversions. No federal contracts would go to businesses that engage in corporate inversions (moving headquarters overseas to lower tax bills), the Illinois Democrat said.

The measure is called the No Federal Contracts for Corporate Deserters Act.

The bill would mean no federal contracts would go to businesses that incorporate overseas, are at least 50 percent owned by U.S. shareholders and do not have substantial business opportunities in the foreign country in which they are incorporating. The law now defines a company as being “inverted” if it is at least 80 percent owned by U.S. shareholders after it reincorporates overseas, according to Durbin.

Drugmaker AbbVie of North Chicago is among the corporations that recently have announced they are “moving their mailbox overseas to avoid paying their fair share of taxes,” according to a statement from Durbin and the other Democrats. Deerfield-based Walgreen Co. also is considering such a move.

The others legislators involved are Sen. Carl Levin of Michigan and Reps. Rosa DeLauro of Connecticut and Lloyd Doggett of Texas, who are to appear today with Durbin at the news conference.

The White House estimates that nearly $20 billion in corporate taxes could be lost over the next 10 years because of the corporate merger deals known as inversions.

 

(click here to continue reading Durbin bill to target corporate inversions – chicagotribune.com.)

Written by Seth Anderson

July 29th, 2014 at 5:34 pm

Posted in Business,politics

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Sleazy Walgreen considers headquarters move

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Walgreens Coming Soon
Walgreens Leaving Soon

As we’ve discussed previously, we don’t know how this is considered acceptable behavior. Are the shareholder pressures on Walgreen Co. really so intense that the board would consider this drastic move to shave a few pennies off of their operating costs? Really? Maybe they should look to fire management, and find more competent oversight. Oh wait, Walgreen Co. CEO Greg Wasson was paid $13,700,000 last year. How about returning some of that to shareholders instead? Not to mention, per Walgreens “Net earnings for fiscal 2013 ended Aug. 31 determined in accordance with GAAP were $2.5 billion”. I guess that’s not enough. More, more, more…

The nation’s largest drugstore chain is considering a move that would allow it to significantly cut its tax bill and increase profits. But it’s being painted by critics as un-American for looking to make money for shareholders through financial engineering at the expense of the communities that it grew up in. Walgreen is considering a so-called corporate tax inversion, in which an American company is able to incorporate abroad by acquiring a foreign company. The buyer, in effect, becomes a subsidiary of a foreign parent.

The average person who pays taxes cannot take advantage of the tax loopholes exploited by corporations, and they don’t think it’s fair, said Klaus Weber, associate professor of management and organizations at Northwestern University’s Kellogg School of Management.

“I do think people now more than before care because of rising issues of income inequality and justice and the fact that large companies have come under more scrutiny,” Weber said. “People expect corporations to fulfill their citizen duties as taxpayers like everyone else.”

While several U.S. companies have moved to lower-tax countries since 2012, Walgreen has caught the attention of taxpayer groups and unions that have criticized the potential tax maneuver. They have blasted Walgreen for contemplating fleeing the United States even though it benefits from government insurance programs. Nearly one-quarter of Walgreen’s $72 billion in sales in its last fiscal year came from Medicaid and Medicare, according to a report by Americans for Tax Fairness and Change to Win Retail Initiatives, a union-backed group.

“It is unconscionable that Walgreen is considering this tax dodge — especially in light of the billions of dollars it receives from U.S. taxpayers every year,” Nell Geiser, associate director of Change to Win Retail Initiatives, said in a statement. “Walgreen should show its commitment to our communities and our country by staying an American company.”

(click here to continue reading Walgreen considers headquarters move – chicagotribune.com.)

Hit the Jackpot
Hit the Jackpot

Walgreen Co. is busily calculating the cost of moving corporate infrastructure, relocating executives and staff, and the very real risk of losing their Medicaid/Medicare cash cow, not to mention the also very real risk of consumer boycott to save a few percentage points of tax revenue. Sleazy, no? And ironic, since Medicaid and Medicare is responsible for about 21% of our national budget. Why should Walgreen’s get any of taxpayer money for it when they refuse to pay in?

In honor of Tax Day
Things Walgreens Is Opposed To

Would shareholders care if Walgreen Co. was kicked out the the S&P 500? Probably, but Walgreens executives will get handsomely paid either way.

[The CtW Investment Group] said an inversion could hurt Walgreen’s stock price.

“Reincorporation carries risk of removal from the S.&P. 500 and other stock indices,” it said, citing the examples of Ace and Transocean, which were removed from the index after they moved to Switzerland. It added that some investors like big pension funds could be required to sell shares of the company if it were not included in the S.&P. 500-stock index.

If Walgreen reincorporated in Switzerland, where Alliance Boots is based, the influence of shareholders could be diminished, CtW said. Swiss law gives shareholders less protection, CtW said, making it harder for investors to seek remedies through courts in the event of fraud or a dereliction of board duties.

CtW also said it was sensitive to the brewing political debate about inversions. In recent months, several senators and President Obama have proposed legislation that would curtail the practice. No new laws are yet in place, but there is a belief on Wall Street that the window for such deals could close soon.

“In addition to the concerns outlined above, we fear that there could be political and reputational risks following an inversion, which would pose a clear contradiction with Walgreen’s quintessentially American brand,” CtW wrote. “Accordingly, we strongly urge you to end the controversy over Walgreen’s potential

(click here to continue reading Walgreen Shareholder Opposes Potential Deal to Reincorporate Abroad – NYTimes.com.)

Senator Dick Durbin is troubled by this cowardly plan as well:

As Walgreen Co, the largest U.S. drugstore chain, edged closer to potentially moving its tax home base abroad, the senior U.S. senator from its home state said on Wednesday that he hoped the company would not take such a step.

Illinois Democrat Richard Durbin told Reuters in an interview that he spoke with a Walgreen lobbyist on Tuesday. “I told him I hope that the rumor’s not true,” Durbin said.

Durbin, the Senate’s second-highest ranking Democrat, said Walgreen, now based in a Chicago suburb, would be ill-advised to pursue an “inversion” deal with Switzerland’s Alliance Boots Holding Ltd.

“Because of their national reach, they are a uniquely American company, and I think it would really hurt their image if they decided to give up on this country and to head overseas to make a couple extra dollars,” he said.

(click here to continue reading Exclusive: U.S. senator warns as Walgreen weighs overseas tax deal | Reuters.)

When Thinking Leads To The Unthinkable
When Thinking Leads To The Unthinkable

and despite the Patriot Employer Tax Credit Act bill having a slim chance of passing through the reactionaries in the US House, Sen. Durbin is at least trying:

Sen. Richard Durbin said Monday he will introduce legislation this week that would close tax loopholes for corporations that take jobs out of the country.

Durbin announced the “Patriot Employer Tax Credit Act” at Wheatland Tube in the Back of the Yards neighborhood. He plans to introduce the measure Thursday, a spokeswoman said.

The proposal would give tax credits to companies “that provide fair wages and good benefits to workers while closing a loophole that allows corporations to claim tax savings for activities such as building a manufacturing plant overseas,” according to a news release from Durbin’s office.

To qualify for the credits, a company must maintain its corporate headquarters in the U.S., maintain the same number or increase the number of U.S. workers compared with the number overseas and provide health insurance benefits that comply with the Affordable Care Act.

(click here to continue reading Durbin bill would close tax loopholes for corporations sending jobs overseas – chicagotribune.com.)

Written by Seth Anderson

June 29th, 2014 at 6:40 pm

Sting: My Children Won’t Inherit My Wealth

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Iota Eta Sigma
Iota Eta Sigma

Words I didn’t expect to type in the 21st C.E., “Good for Sting!”. If only Sam Walton had been as insistent upon his progeny finding their own way, or Donald Trump’s father…

Sting’s children cannot expect to inherit his multimillion-pound wealth, the rock star has said, joining the ranks of the super-rich who have claimed that passing on their vast fortunes to their offspring could do more harm than good.

The 62-year-old musician, who is estimated to be worth £180m and has three sons and three daughters, said he did not want “to leave them trust funds that are albatrosses round their necks”.

“They have to work,” he told the Mail on Sunday’s Event magazine . “All my kids know that and they rarely ask me for anything, which I appreciate. Obviously, if they were in trouble I would help them, but I’ve never really had to do that. They have this work ethic that makes them want to succeed on their own merit.”

Sting insisted there would in fact not be a huge fortune left for his children, who are aged between 18 and 37.

“I told them there won’t be much money left because we are spending it,” he said. “We have a lot of commitments. What comes in we spend, and there isn’t much left.”

(click here to continue reading Sting: My Children Won’t Inherit My Wealth – Business Insider.)

I Will Ransom Them From The Power of the Grave
I Will Ransom Them From The Power of the Grave

Speaking of estates, a couple years ago, my parents mentioned that they’ve executed their will, splitting their estate three ways between my brother, my sister and me, with my sister getting 34%. We are lucky in that we get along well, and that the amount we are talking about is certainly less than $2,000,000…

Some other wealthy folks of note also doing the right thing:

Bill Gates, the world’s richest man, has said that his children could not expect to inherit the vast majority of his estimated $76bn fortune.

“They won’t have anything like that. They need to have a sense that their own work is meaningful and important,” he has been quoted as saying. “You’ve got to make sure they have a sense of their own ability and what they’re going to go and do.”

Simon Cowell, the music mogul whose son Eric was born earlier this year, has said he will most likely leave his estimated £225 million fortune for charity, explaining: ““I don’t believe in passing on from one generation to another.”

British celebrity chef Nigella Lawson has said she was “determined” that her children should have no financial security as “it ruins people not having to earn money”.

Anita Roddick, the Body Shop founder, left her entire £51m fortune to charity after describing leaving money to one’s own family as “obscene”.

…And John Roberts, the chief executive of white goods retailer ao.com, has said he will not pass his estimated £500m wealth to his children, in order that they could have normal lives and a sense of achievement.

Written by Seth Anderson

June 23rd, 2014 at 10:10 am

Posted in News-esque

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When a Will Divides an Estate, and Also Divides a Family

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Don't Outlive Your Money
Don’t Outlive Your Money

More data about the need for estate reform in the US

she requested a copy of the will. It turns out her grandmother, who was suffering from severe Alzheimer’s, had signed a will in September 2012 that reaffirmed a 2007 will that split her assets among her five children, with her son’s share going to his children. Five days later — and a week before she died — the grandmother signed another will that disinherited her son’s children.

…And it raised common competing issues in these cases: Grandma may have had diminished capacity or been swayed by her daughters, he said. “But judges work very hard to protect individual rights to dispose of their property as they wish.”

The bar to overturn a will is high. “The capacity needed to make a will is very low, lower than to enter into a legal contract,” said Adam von Poblitz, head of estate planning for Citi Private Bank. “You could have someone who had dementia, but if they had moments of lucidity they could execute a fully valid will.”

For Kate, it wasn’t only about the money but about how her aunts treated her. “They started calling us greedy from the beginning,” she said.

Disinheriting family members is an extreme step and one that is not even allowed in many countries. John Davis, faculty chairman of the families in business program at Harvard Business School, has studied inheritance laws around the world and found that in most places people have limited discretion over leaving money to heirs.

“Whether it’s sharia in Muslim countries or the Napoleonic Code throughout Europe and parts of Latin America, what you give to your heirs is tightly prescribed,” Mr. Davis said. “Anglo-Saxon countries are the exception to this rule.”

In reality, Mr. Davis said, unequal inheritance is rare even in the United States, though he often advocates for it to be used more, particularly when a family business is involved.

(click here to continue reading When a Will Divides an Estate, and Also Divides a Family – NYTimes.com.)

All too frequently the lawyers are the ones who end up with the bulk of the inheritance, especially in cases where litigation is involved. Not to mention, the estate always seems to be smaller than anticipated by the aggrieved parties…

Written by Seth Anderson

June 22nd, 2014 at 11:00 am

Posted in News-esque

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