Soros Puts His Money in a Tax Shelter

And Stephen Moore’s knickers are in a twist.

Congress is still scrambling to find ways to pay for its tax cut, so perhaps it should pay closer attention to last month’s news that George Soros had transferred $18 billion of his fortune to a private charity that he controls. There it will be sheltered from the Internal Revenue Service forever. This may be the single biggest tax dodge in US history, yet no one on the right or left seems to have raised an eyebrow.

Obeying the Law

In a piece about President Donald Trump’s domestic business policies—specifically, his administration’s lawsuit to block the merger of AT&T with Time Warner Inc and his parallel move to facilitate other kinds of close relationships between companies like AT&T and Time Warner, The Wall Street Journal described a rationale for these apparently conflicting moves: follow existing law, rather than piling on regulation after regulation to govern (new) behaviors.

[T]he actions reveal one consistency, and what might be viewed as an emerging Trump administration regulatory philosophy: instead of new bright-line rules, such as those put in place under the Obama administration, it is stressing the enforcement of longstanding laws and regulations.

Missing the Point

In a Letter to the Editor last Thursday, one letter writer had this to say about a Wall Street Journal op-ed, The Great Progressive Tax Escape:

[T]he problem of interstate tax competition, like the continuing bids to draw Amazon to pick a favorable second headquarters, isn’t strictly speaking a problem of high progressive taxes, as your editorial asserts. Better to view it the other way, as a problem of low-tax jurisdictions using these devices to compete in a way that erodes the tax bases of other states. That is exactly what is happening globally as well, when Ireland, Panama, Malta, etc. make rock-bottom offers to global companies to do business there. Developed states and countries cannot run governments at the discounted prices offered by these tax havens….

More on Tax Reform

The House passed yesterday, 227-205, its version of tax reform, and the next milestone is in the Senate.  The Wall Street Journal is referencing some special interests who are expressing misgivings about it.

Both the House and Senate bills would cut the corporate tax rate to 20% from 35%. If that overall tax rate decreases, tax credits and deductions become less valuable.

Well, of course.  Credits and deductions get their value from how much they reduce taxes for the government-favored groups of Americans for whom those credits and deductions are targeted.  With lower overall tax rates, those credits and deductions have less tax value—as any graduate of 3rd grade arithmetic can see.

Another Reason

…to push for lowered State tax rates, empirically observed.

There are signs home buyers in metropolitan New York are pausing to consider the effects of proposed federal tax law changes, setting the stage for a possible chill in the market, brokers say.

The changes, in versions of bills in both the House and the Senate, likely would increase the cost of home ownership and reduce after-tax discretionary income for many mostly affluent home buyers in New York and other states with high state and local income and property taxes, brokers and analysts say.

TPP Light

President Donald Trump, on taking office, pulled the US out of the not-yet-finalized Trans-Pacific Partnership, which involved nations all around the Pacific rim including the US and Canada.  The TPP was far from perfect, but international trade is more about international relations and foreign policy than it is about economics, and it was a mistake to pull out.

The economic and political power of the coalition would have been a powerful brake against an acquisitively aggressive People’s Republic of China; the remaining 11 nations still represent some 17% of all world trade—and 30% of the world’s trade runs on sea routes the go through the TPP’s region—trade that is every bit as critical to the PRC’s economy as it is to Japan’s and the US’.

Death Panels?

The Affordable Care Act required Medicare to penalize hospitals with high numbers of heart failure patients who returned for treatment shortly after discharge. New research shows that penalty was associated with fewer readmissions, but also higher rates of death among that patient group.

Because sometimes readmission is necessary for quality care—whether that readmission was driven by later complications, by too-soon original discharge in the Medicare (which is to say Government) pressure to hold down costs first, or by some other factor—but that Government pressure to push the patient out the door also pushes against the patient’s return.  Even when necessary.

Tax Havens

Christian Reierman, writing for Spiegel Online, thinks tax havens are bad.

He began with the usual false premise, itself as usual unspoken: that Government is owed the money earned by private citizens or their privately owned enterprises, or that Government is somehow otherwise entitled to it.  His proximate vehicle is the Paradise Papers and their exposure of how widespread is the use of tax havens—entirely legal tax havens, mind you—by international businesses.

The German newspaper Süddeutsche Zeitung leaked a vasty number of documents—the so-called Paradise Papers—that exposed

So, What’s the Problem?

Don Peebles, Peebles Corp CEO, is worried about the Senate and House tax reform plans currently on offer.

…the GOP tax bill will have a catastrophic impact on New York City, leading to a mass exodus of business owners and entrepreneurs.

And

State income deductions and the local pressure on taxes that [Mayor Bill de Blasio] is calling for, an increase in taxes on millionaires and a mansion tax increase. I think that’s also going to be hard on real estate[.]

And

The Tax Proposals on Offer

The House has one, and the Senate has one.  The Wall Street Journal, oddly, is making out like the differences between the two are enormous.  Yet, here’s the WSJ‘s own chart illustrating these humongous differences.

The big differences the WSJ singles out are these:

The big ways the Senate version breaks with the House plan: the level of top individual tax rates, the number of individual tax brackets, the timing of a corporate tax-rate cut and the particulars of estate tax changes[.]