Tag Archives: taxes

Punishing Success

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Los Angeles has decided that the successful are too successful, and they must be knocked down. To that end, the city’s government has decided to tax the sales proceeds of the wealthy’s homes at 4% on homes sold for $5-$10 million and at 5.5% on homes sold for more than $10 million. This is on top of the real estate brokers’ ordinary 6% fee, and it’s paid by the buyer. Not that that will have any impact on the seller’s ability to sell at a fair price, or anything.

LA isn’t alone in this “mansion tax” move, either. Other jurisdictions, mostly at the State level (it won’t be long before California broadens LA’s move), are doing this, also. They’re all Progressive-Democrat-run, too, all but one of them exclusively so.

  • Connecticut: 2.25% on properties surpassing $2.5 million. Progressive-Democrat Governor, Senate, House
  • District of Columbia: 1.45% on properties sold for $400,000 or more. Progressive-Democrat Governor, City Council
  • Hawaii: Marginal rates ranging from 10% to 20% for estates valued over $5.49 million. Progressive-Democrat Governor, Senate, House
  • New Jersey: 1% on real estate transactions exceeding $1 million. Progressive-Democrat Governor, Senate, House
  • New York: 1% to 3.9% on residential acquisitions of $1 million or more. Progressive-Democrat Governor, Senate, House
  • Vermont: 16% on properties valued over $5 million. Republican Governor, Progressive-Democrat Senate, House
  • Washington: Graduated rates starting at 1.28% for properties sold at a minimum of $500,000. Progressive-Democrat Governor, Senate, House

And, to repeat,

  • Los Angeles: 4% on homes sold for more than $5-$10 million and 5.5% on homes sold for more than $10 million. Progressive-Democrat Mayor, City Council

This is behavior of the green-eyed jealous politicians of the Progressive-Democratic Party: seizing the produce of success and redistributing it for their own political gain. It’s also just one more incentive for the successful to leave these jurisdictions altogether.

Federal Revenue

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The Wall Street Journal is concerned about the IRS exercising its claimed authority to delay implementation of some tax requirements for which Congress had set strict enforcement deadlines. Apart from the question of whether the IRS actually has that authority, the concern centers on how the agency moves might impact revenues for the Federal government.

…the tax agency’s moves frustrate lawmakers’ attempts to raise revenue and plug gaps in tax compliance.

The real question, though, centers on an aspect of Federal revenues about which I’ve written before. This is the claim made in the linked-to article’s headline, and which is repeated in the body of the article:

It Could Cost $8 Billion

And

The Internal Revenue Service has now postponed them [certain rules for tax collections] all for two years—which could cost the Treasury more than $8 billion.

This is risible on its face. Aside from the fact that the Federal government has not established any need for the money, say the dollar value of the claim is accurate. Those $8 billion are the sole property of us taxpaying Americans. It doesn’t cost the Federal government one single copper penny—or copper-plated zinc penny in today’s currency—to not receive what doesn’t belong to it in the first place.

Further, while the IRS’ delays might reduce, in the immediate term, revenues to the Federal government, the delays result in those $8 billion being left in the hands of us taxpayers—who know much better than Government how to spend those dollars, or save them, on our individual needs and wants. That leads to increased activity in our private economy, and that leads, in the mid- to longer-term, to net increases in revenues to Government.

It would lead to even more revenues to Government were the IRS’ delays functionally made permanent by eliminating altogether those tax items for which the IRS is delaying collection. That increase in certainty regarding the reduction in Government confiscation of our dollars in the form of taxes would lead to even greater private economic activity, and so to even more revenue, on net, to Government.

So It Should Be with General Infrastructure

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The subheadline outlines part of the problem:

Companies often need to show progress to get government cash but struggle without it

In the body of the Wall Street Journal article at the link is this:

Some of the companies are in Catch-22 situations. Washington won’t issue them loans until they raise outside money and move ahead with projects.

It’s true enough that big, established companies are better able to game the situation. It’s also true that high interest rates—especially after an extended period of no- to low rates—and inflation have hurt, but these only emphasize my point in this post.

It isn’t just “clean” energy: the problem is both broader and more narrowly defined.

What needs to happen regarding Federal funds transfers needs to happen all across the infrastructure terrain, whether the transfers are to individual businesses or to States more generally. Contracts must be let and particular projects must have a minimum of six months of concrete, publicly measurable progress before any taxpayer money can be transferred to the individual business executing the project.

Regarding States in particular, any taxpayer money must be sent directly to the business carrying out the State-identified infrastructure project (and only after the business has satisfied the above criterion), and the State must have already transferred State taxpayer funds to the particular business. Finally, before any Federal taxpayer funds can flow, the business must have a minimum of six months of concrete, publicly measurable progress with the State’s taxpayer money before any Federal taxpayer money can flow to the business.

Sent directly to the business: it’s important, too, that Federal funds entirely bypass the State and go directly to the business in question. Even in honest circumstances, the State’s middlemen siphon off entirely too much of the Federal taxpayer’s money.

Federalism and State Taxes

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A Wall Street Journal editorial opens with this:

One great benefit of America’s federalist Constitution is policy competition among the states. Voters in Florida don’t have to live under New York’s laws, and Americans and businesses can vote with their feet by moving across state lines.

The editors proceeded to a description of State-level tax laws and the mobility of us Americans and our businesses in leaving States with high taxes in favor of States with, often markedly, lower taxes. But that lede overstates the case.

Federalism applies, often, with State taxes, but State-level business regulations are a different matter. It’s only necessary to see the outsize impact on our auto industry, for instance, or our pork industry, that California’s regulations have on vehicle requirements and on how hogs must be raised to see the lack of federalism in our regulatory environment.

With specific regard to California’s fuel requirements, there’s this from the Federal government’s EPA:

The Clean Air Act allows California to seek a waiver of the preemption which prohibits states from enacting emission standards for new motor vehicles.

The Federal government has long granted that waiver, and during the Biden administration, the feds made their latest move—overtly to refuse to rescind the waiver, effectively nationalizing a State regulation at the expense of federalism.

On the California’s hog-raising regulation, the Supreme Court upheld that regulation, which mandated the minimum space in which hogs must be raised, anywhere in the United States, in order for them to be marketable in California. The Court nationalized this State-level regulation—again at the expense of federalism.

If we’re going to preserve our federalist structure of governance, federalism must be restored to State regulations, as well as State-level taxes. Don’t look for any of that to happen under any Progressive-Democratic Party-dominated Federal government, though.

Racing to the Bottom

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So far, Ireland is winning, and that’s paying off big for the Irish.

In the past eight years, the country of five million has watched its corporate tax income triple to the tune of 22.6 billion euros last year, equivalent to almost $24 billion—giving it a budget surplus last year of a comfortable €8 billion euros when many governments are suffering from a postpandemic debt hangover.

And

Ireland became a hot spot for US companies by slashing its corporate tax rate from 40% to 12.5% starting in the late 90s, and offering a well-educated workforce and a tariff-free way into the European Union.

That’s a lower rate than the European Union wants, and it’s lower than the 15% tax, globally applied and agreed among some 136 countries, and that Yellen is so desperate to get the US trapped into.

The Irish, though, are raking in the tax revenues because of—not despite—their lower tax rate regime: they’re leaving business’ profits increasingly in the hands of those businesses for business use, they’re attracting foreign businesses, and all that lower tax-induced increasing economic activity produces, on net, more revenue for the Irish government.

This is the wealth and prosperity that Progressive-Democrat President Joe Biden, his Progressive-Democrat Treasury Secretary Janet Yellen, and the rest of the Progressive-Democratic Party cronies want to deny us ordinary Americans as they demand United States’ participation in a global tax cabal that lets the cabal avoid economic competition in favor of power.

One more thing: the Irish are considering throwing all of their prosperity into a cocked hat in favor of joining the high-tax cabal; they’ll do that at their own severe economic peril.