The Biden Fed

Progressive-Democratic Party Presidential candidate Joe Biden has a plan for the Federal Reserve system of banks. This bit jumped out at me in the article at the link that describes his plan.

[T]he policy blueprint Team Biden cooked up with Bernie Sanders’s economic advisers argues, “the Black unemployment rate is persistently higher than the national average, which is why Democrats support making racial equity part of the mandate of the Federal Reserve.”

Because blacks are fundamentally incapable of competing in America without special treatment. This is the soft bigotry of low expectations.

This is the overt bigotry of the Progressive-Democratic Party and of Joe Biden—If you have a problem figuring out whether you’re for me or Trump, then you ain’t black—made manifest.

Opening Schools—Two Schools of Thought

California Governor Gavin Newsom (D) has ordered all schools—private and public—not to open until his Omnipotent State declares it safe to do so. This seems at the behest of California’s teachers unions, which fear competition from private schools—and which are losing that competition, as they’ve been doing for some years.

Catholic school tuition, for instance, costs $1,000-$4,000 per student less than the union public schools, and they provide better education—academic, discipline, moral values. And they’re ready, willing, and anxious to open on schedule.

In contrast, Oklahoma Governor Kevin Stitt (D) has sprung some of his discretionary education funds to cover school costs for families whose kids went to private schools last year, but for whom the Wuhan Virus situation has hammered their finances this year.

What’s really at stake? The virus risk to the kids in K-12 is vanishingly small: they’re simply unlikely to get infected, and among those who do, the severity of their infection very usually is slight.

The science is uncertain on how infectious the kids are when they are infected but asymptomatic. They appear not to be mutually infectious; the uncertainty is how infectious they are to the adults around them, the teachers, teacher aides (a relatively recent, and seeming featherbedding, addition to staff), administrators and staff, janitors. The data, though, are leaning increasingly in the direction of not very infectious.

There are occasional moves to stagger in-person schooling with half the students present some days, the other half the other days, at socially distanced desks, and with virtual schooling (a disastrous failure last spring, but maybe practice teaches) for the kids at home on those alternate days.

This is unnecessary. The kids are as safe from each other with the Wuhan Virus as they are with colds and flu. Bring them back.  All of them.

While the risks remain uncertain, it would be cumbersome but easily and straightforwardly doable to socially distance the teachers from the students in their classrooms. They spend a fair amount of their class time on the chalkboards at the front of the rooms, anyway. Or could easily go back to that.

Teachers unions holding out for deus ex cashina (I wish I’d thought of the term, but it’s the WSJ editors’) State and Federal interventions are acting in their petty interests rather than the interests of our children. Easier said than done, but these unions need to be decertified. Their selfish greed borders on child abuse.

Tax Misallocation

The misallocation, this time, is not in the way our tax monies are being spent.

It’s in what our money is not being spent on in lieu of paying those taxes in the first place.

According to a 2018 Bureau of Labor Statistics survey—before the 2017 tax reform bill had been able to percolate into our economy in any serious way—we Americans spent more on the taxes Government exacts from us than we did on food, clothing, and health care combined.

That survey found the average American unit, which consists of both shared and single households, spent an average of $9,000 on federal income taxes last year. Americans also spent an average of $5,000 on social security, more than $2,000 on state and local taxes, and another $2,000 for property taxes.

That’s $3,000 more than we spent on those aggregated necessities.

Aside from a low, flat personal income tax without the exceptions froo-froo currently present, as suggested for corporate taxes (see nearby),  the next tax reform target needs to be on Social Security—whose Trust Fund will be exhausted in a few years, leaving the stark choice of raising payroll taxes (or increasing taxation from other sources) to cover the shortfall, or lowering the payouts to fit within the existing (payroll) tax structure—a roughly 30% reduction in payout for each recipient.

That reform, as I’ve written before, needs to be an elimination of the payroll tax altogether—more wage money left in the hands of the earner, which is especially important for those earning the lowest wages—and privatizing both Social Security and Medicare, and making the payouts for the future benefit of the saver and his family rather than immediate payout to utter strangers. That will leave the saver responsible for his own money and, with his skin on the line, he’ll do a far better job of managing those monies than even the most well-intentioned collection of government bureaucrats ever can.

Oh, yeah: privatization also would eliminate the employer’s payroll tax bite, leaving him more money for R&D, marketing,…

Byzantine Taxing

Many companies, sitting on billions of dollars of tax credits, want to be able to cash them in promptly.

For example:

Duke has been unable to use all the corporate-research and renewable-energy credits it accumulated because it has been using accelerated tax deductions for capital investments to lower its taxable income, said Dwight Jacobs, the company’s chief accounting officer. That bumped it up against tax-code rules that limit tax credits, leaving $1.8 billion in unused credits on Duke’s books. Under the proposal, the company could get that within months instead of years.
The proposal “would give us more cash today and that would cause us to avoid borrowing money that we would otherwise have to borrow,” said Mr Jacobs.

And

Under the tax code, companies can claim credits for activities encouraged by the government. Among the largest are credits for conducting corporate research, funding low-income housing, and producing renewable energy….
Unlike deductions, which lower taxable income, credits reduce a company’s tax bill directly. But there are limits. Companies can generally offset only 75% of the taxes they owe by using credits. Any leftover credits can be used for one previous year or up to 20 years in the future.

Sound complicated? That’s the point. This isn’t a matter of helping out Duke, et al., with a particular section of the tax code. This is a matter of a too-complicated tax code.

We need, badly, to simplify it. A single, low rate, with no deductions, subsidies, credits, or other froo-froo would be suitably simple.

Better, would be eliminating corporate taxes altogether. In the end, the taxes a business pays are just costs passed on to customers in the form of higher prices; the taxed business doesn’t itself pay very much of its tax liability.

Either move would be doubly beneficial: more money left in the company’s coffers for R&D, marketing, capital improvement, jobs, wage increases from the reduced/eliminated taxes. More money also would be left in the company’s coffers for R&D, marketing,… from the reduced/eliminated tax compliance costs.

And all of that adds up to lowered prices for the company’s customers.

A Taxing Case

Apple won its appeal of a European Commission ruling that it owed €13 billion ($15 billion) in back taxes because Ireland had illegally subsidized the company.

The General Court agreed with Ireland’s argument that the matter wasn’t an illegal subsidy because the nation cut similar tax deals with all comers.

The EU, of course, is not happy. It’s Tax Justice Coordinator (no irony in that title), Tove Maria Ryding, said,

If we had a proper corporate tax system, we wouldn’t need long court cases to find out whether it is legal for multinational corporations to pay less than 1% in taxes.

She’s not far wrong, but not in the way she intends. If the EU had a proper corporate tax system, if it were truly interested in tax justice, if the rest of the member nations had proper corporate tax systems, the EU and its constituents would have far lower tax rates and be more effective competitors with Ireland, Luxembourg, and Netherlands on taxes and business attractions.

Then neither the EU nor its other constituent nations would need long court cases in efforts to force low-tax nations to raise their taxes, which would only be to the detriment of those nations’ businesses and citizens. And the EU and those other constituent nations’ citizens could share in the prosperity the citizens of the three enjoy, rather than forcing those to their prosperity and opportunities to the level of the rest.