Auto Tariffs Revisited

EU Trade Commissioner Cecilia Malmström says the EU will respond to any increase in US tariffs on imported autos and auto parts with its own tariffs on autos and parts imported from the US.

And,

The EU cannot offer a bilateral deal only on autos, Ms. Malmström said, to address Mr Trumps complaints about the 28-member bloc’s 10% car tariffs—which are quadruple the US rate.

Never mind that applying its own auto and auto parts tariffs to imports from the US is precisely such a bilateral action.

Auto Tariffs

Auto makers, parts suppliers, and dealers are joining forces to push back against the Trump administration’s proposal to apply tariffs of up to 25% on vehicles and components imported into the US….

The auto industry is aiming at the wrong target.  The German auto industry and the US have already agreed in principle to a regime of no auto tariffs at all.  It’s the German government that’s waffling and the EU that’s ignoring the matter altogether.

These domestic execs need to be asking the German government and the EU why they’re so disinterested instead of whining about domestic matters.

A Good Start

Congress is considering RESA, the Retirement Enhancement and Savings Act, a bill that would represent a massive change to our retirement system, in particular our 401(k) system.  This bill would, among other things,

encourage more small employers to offer retirement savings plans and make it easier for companies to offer annuities that turn workers’ savings into a guaranteed annual income.

Among specific things that the House wants in such a bill are

  • a universal savings account, funded with post-tax dollars but with tax-free earnings and more flexible withdrawal rules than existing retirement accounts.

In a Contest of Tariffs

In a piece purporting to show Where the Trade Battle Hurts the Most, Julie Wernau and Ira Iosebashvili had this comment:

Renegotiations of the North American Free Trade Agreement are being closely watched in Canada, too. The Trump administration has used threats of auto tariffs to win concessions from Canada and Mexico, a strategy that hasn’t sat well with the two countries.

President Donald Trump also offered them, and the rest of the G-7, a regime of no tariffs at all. Their refusal even to discuss the offer doesn’t sit well with those of us outside the NLMSM.

Capital Gains Taxes

Folks styling themselves conservatives want Treasury Secretary Steven Mnuchin to index capital gains taxes for inflation—and to do it by Executive Branch fiat.  Mnuchin, though, is reluctant to do so, not least because he’s unsure whether Treasury actually has the authority.  He’s also not convinced that Congress shouldn’t set such a requirement.

Mnuchin is right, though—this sort of thing should be determined legislatively rather than by Executive Branch regulation, Executive Order, or other diktat.  That’s the Conservative position.

Too, Congress should not be allowed to duck the matter: put the Congressmen on the record with their words and votes—every single one of them.

It’s Not Your Company

Seattle wants to charge a head tax on businesses operating in the city, a tax whose amount would be just what it sounds like—a tax based on the number of hours worked by each employee the business has on its payroll.

In response to the proposal, Jeff Bezos, Amazon CEO, paused construction on a 17-story office tower in downtown Seattle.

In response to Amazon, the Left in Seattle, spearheaded by the Service Employees International Union-backed activist gang—Working Washington—wants Amazon charged with a felony.

Taxes and Deduction Caps

New York thinks it’s found a way around the tax reform act that cut Federal income taxes and capped the deduction taxpayers can take for State and Local Taxes (vis., State income and property taxes).

The idea, which became law last month, creates a new optional payroll tax that shifts the state and local tax deduction from individuals who can no longer fully take it to businesses that can.

However,

Employers are worried about compliance costs, interactions with union contracts, complexity across state lines, and the difficulty of explaining to workers how a plan that might lead to smaller pay raises still puts more money in their pockets.

It Still Is

The Supreme Court is hearing a case, South Dakota v Wayfair Inc, wherein South Dakota is looking to overturn a generation-old ruling that exempts out of state retailers from State sales taxes unless the retailers also have a physical presence in the State.  I wrote about one aspect of the matter here among other places.

Here’s another, more critical aspect of the matter [emphasis added].

In a 1992 mail-order catalog case [Quill Corp v North Dakota], the court held that, absent congressional approval, states could impose tax-collection duties only on retailers with a “physical presence” within their borders. Congress, with its constitutional power to regulate interstate commerce, was the place to balance state revenue needs with burdens on business, the court said at the time.

State Taxation of Internet Businesses

The Supreme Court is hearing a case, South Dakota v Wayfair Inc, that seeks to overturn an older precedent that prevents States from taxing businesses doing business in the State that don’t have a physical presence there.  South Dakota is claiming that

…the 1992 precedent harms state treasuries and disadvantages taxpaying home-grown businesses.

That argument might hold water if the States were powerless. They’re not. There’s nothing at all preventing them from lowering the tax rates they impose on the brick-and-mortar and home-grown businesses resident in those States so they can compete. There’s nothing at all preventing the States from lowering their spending rates and thereby protecting their treasuries.

Tax Cuts, Deficits, and Economic Growth

The hype is that the tax cuts enacted at the end of last year will lead to trillion dollar Federal government deficits.

On the other hand, there’s this bit about economic growth in the CBO’s report that also carried that deficit forecast [emphasis in the original].

  • Last June, the CBO said GDP growth for 2018 would be just 2%. Now it figures growth will be 3.3%—a significant upward revision. It also boosted its forecast for 2019 from a meager 1.5% to a respectable 2.4%.
  • [T]he CBO now expects GDP to be $6.1 trillion bigger by 2027 than it did before the tax cuts.