Heads Up

Be very heads up, this fall.

The coronavirus pandemic shook the US economy. It hasn’t shaken Democrats’ fervor for trillions of dollars in tax increases, and significant income redistribution is still likely as soon as 2021 if Joe Biden wins the White House and Democrats control Congress.

Senator Ron Wyden (D, OR):

It’s all the more important to protect the retirement and security of working [people] and make sure the wealthy pay their fair share. We’ll be ready to go in January of 2021.

Do This In Parallel

There’s a movement afoot in Congress to subsidize employees, lost employees, and prospective employees through employers and prospective employers.

The House plan would give employers enough money to cover up to 80% of their wages and benefits, up to $45,000 per worker, plus a credit for fixed expenses like rent. Eligible companies would simply keep taxes withheld from employees’ paychecks. If that isn’t enough to equal the credit, they could get additional money from the Internal Revenue Service.
Smaller businesses would get the subsidy for all workers, while larger ones would get it only for furloughed workers still receiving wages or benefits. The break would be scaled to each employer’s revenue loss during the coronavirus pandemic.

Land of Taxes

New York City is suffering from loss of reduction in tax revenue as a result of the city’s and the State’s economic shutdown by government fiat during the Wuhan Virus situation.

One 49-year-old tech entrepreneur told The Wall Street Journal he and his family have moved permanently to their second home in the Hudson Valley from Manhattan. …
For tax purposes, he says, he and his peers are aware that if their children still attend school in the city, it is hard to argue the family has left. The man is considering pulling his children from the city’s elite private schools and is looking at public and private schools in the suburbs. He estimates that if he can persuade the city he is no longer a resident he will save more than $100,000 a year in city taxes alone.

A Tale of Two States

A Wall Street Journal editorial provided the comparison.

Since 2010

  • New York’s population has grown from a skosh under 19.4 million to a skosh over 19.4 million
  • Florida’s population has grown from 18.8 million to 21.5 million
  • New York’s spending has increased by $43 billion—about $570,000 for each additional person
  • Florida’s spending has increased by $28 billion—a $10,400 increase per new resident
  • New York’s spending on worker retirement benefits has nearly doubled
  • Florida’s spending on worker retirement benefits has grown by one-sixth of that
  • New York’s Medicaid consumes 40% of the state budget—twice as much as education

A Taxing Error

The European Union is making one. Again.

Of the EU-27, France, Poland, and Denmark have so far proposed barring companies that are based, or have subsidiaries, in tax havens from receiving coronavirus-linked bailouts. Italy may soon join them after Foreign Minister Luigi Di Maio added his voice to calls to tackle tax havens.
Meanwhile, the European Commission confirmed on April 24 that its existing rules allow individual EU countries to block coronavirus aid from going to companies based in tax havens.

Whether such companies should be eligible for Wuhan Virus-related bailouts is a separate question. Whether there should be Wuhan Virus-related bailouts at all is yet another separate question.

Export Incentives Coupled with Domestic Disincentives

The People’s Republic of China has moved to shut down the domestic marketing of wild animals on fears [wild animal traders’] goods sparked the coronavirus pandemic. This is a seeming response to growing international pressure on the PRC to cut that out for that reason.

[The People’s Republic of] China’s National People’s Congress on February 24 imposed a ban on the sale and consumption of wild animals in the country.

However.

Tariff Relief

Several US companies are saying that the existing tariff regime that’s applied to imports from the People’s Republic of China is hurting imports of chemicals necessary for the manufacture of disinfectants and sanitizers. Accordingly, medical supply companies and other businesses have filed dozens of applications for tariff relief/exception related to those imports.

If such relief is granted to an importing company, it should be contingent on that company acting expeditiously to move its supply chain out of the PRC. The move also must include non-PRC suppliers that import their own component supplies from the PRC. “Expeditiously” should be explicitly defined in the relief document as a time frame or a production milestone, and the relief should automatically expire if that deadline/milestone isn’t met.

Paying Their Fair Share

Progressive-Democrats, including their Presidential candidates, are fond of saying the Evil Rich aren’t paying their fair share in taxes; they should pay more.  Those same Progressive-Democrats also carefully decline to say what that fair share should be, other than their “more.”

Here’s a graph of what those Evil Rich do pay, compared with the income those same Evil Rich earn, courtesy of the Center of the American Experiment:

Notice that. That’s even after those Evil Rich have taken all the adjustments to their top line income that our tax code allows them to take, including the Progressive-Democrats’ much disliked preferential tax treatment for capital gains and interest income.

The Right Answer

Progressive-Democratic Party Presidential candidate and Senator Bernie Sanders (I, VT) is outraged. Outraged, he says.

It is outrageous that the wealthiest corporate executives in America get unlimited, special tax privileges on hundreds of millions of dollars in savings, while ordinary workers can only get tax deferment of up to $19,500 on their 401(k)s[.]

Of course, the (Democratic) Socialist’s answer is to raise taxes on those executives’ savings, their executive retirement and deferred compensation accounts.  He wants to “sharply curb” the tax benefits associated with those accounts. Because, after all, there comes a time when they’ve made enough money. And they didn’t earn that money, anyway; they had help.

Bernie Budget

Progressive-Democratic Party Presidential candidate and Senator Bernie Sanders (I, VT) has released the outline of his budget, which he claims would pay for all of his Free Stuff spending.  Here are a couple of the high points of his budget.

  • tax the investing process
    • 5% tax on stock trades
    • 1% fee on bond trades
    • 005% fee on derivative trades
  • wealth tax on the “top 0.1%”

These, without inhibiting investments, including those of the mutual funds in our 401(k)s, 403(b)s, etc, are supposed to raise more than $6 trillion over ten years, and—poof—there go all college expenses and housing costs. Never mind that this would drive up the cost of investing by a factor of five—but no, there’d be no effect on investing.