Tag Archives: political economy

Disparate Impact

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High-tax States, principally States run by Progressive-Democrat regimes, don’t like the tax reform’s cap on State and local taxes.

The governors of New York, New Jersey, and Connecticut said on Friday that they would sue the federal government to overturn the new US tax law, saying the measure unconstitutionally discriminates against Democratic-leaning states.

This is just the raw sewage of disparate impact being spread across a tax bill—never mind that the tax reform is uniformly applied across all States, across all businesses and individual taxpayers.  Never mind, too, that if some taxpayers, if some taxing jurisdictions, are impacted differently than others, it’s solely a result of the conscious individual, business, and State and local government choices.  At least when “disparate impact” is imputed to matters of race, the alleged victims have no choice in their position in the differences alleged.

Here’s an example of the foolishness and disingenuousness of the suit:

The legal action will argue that the new tax law’s cap on state and local tax deductions infringes on states’ rights and amounts to double taxation[.]

The States have no “right” to a Federal income tax deduction.  Beyond that, the cap can’t possibly represent double taxation; the only tax here is the SALT applied by those State and local jurisdictions.  Not being able to deduct a fraction of that (or any of it, come to that) from a Federal income tax bill is no tax at all.

One hopes the Federal trial judge dismisses the suit out of hand and strongly sanctions the governments and Attorneys General of New York, New Jersey, and Connecticut for bringing such a frivolous suit.  Failing that, one hopes the Supreme Court, where the suit will end regardless of the trial court outcome, itself firmly chastises the State governments and Attorneys General.

PRC Economic Opening

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Liu He, head of the People’s Republic of China’s Office of the Central Leading Group for Financial and Economic Affairs, says,

We’ll open wider to the world across the board[.]

Liu promised that the PRC would

  • “substantially” open up the services industry, particularly the financial sector
  • let foreign securities firms own majority stakes in their Chinese ventures and…scrap foreign ownership limits on Chinese banks
  • reiterated past promises to relax restrictions on foreign companies in manufacturing, including in railway equipment, and to gradually lower tariffs on imported products such as automobiles

Even if they do these things (and that’s no certain thing: notice those past, unkept, promises), Liu’s—and Xi’s—rhetoric is just wind in the trees as long as the PRC demands that

  • foreign companies partner with domestic companies as a condition of doing business in the PRC
  • foreign companies are required to “share” technology and other intellectual property
  • foreign companies are required to give backdoors to the PRC government for the latter’s entry into those companies’ critical software and other proprietary information.

This not only is “legalized” theft, it’s backdoor protectionism.

More Jobs

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JP Morgan Chase says it’s going to spend its tax cut savings to

develop hundreds of new branches in the US, increase wages and benefits for hourly US employees, make increased small business and mortgage lending commitments, add 4,000 jobs, and increase philanthropic investments.

Nor is this a one-shot affair.  It’s a five year, $20 billion investment.  So much for pocketing the money and cutting out charity work, the loud Leftist refrain during the debates over tax reform.

As an aside, the pay raises are good and so are the additional jobs implied by the additional branches—400 of them (against an existing 5,130 branches, an 8% bump, which is also good for consumers)—openings.  But frankly, for my money, the additional jobs are more valuable than the pay raises for the existing employees.  The latter are getting a larger piece of the pie, which is good, but the former are getting their first slice—and making the pie itself bigger.

Here’s another datum.  Kim Lopdrup, Red Lobster’s CEO, is saying

Tax cuts, that’s clearly going to be stimulatory for the economy. We think that’s going to be great for the restaurant business[.]

More money left in the coffers of a small-margin business like a restaurant?  Yewbetcha.

Certainly, a couple of data points are little more than anecdotes, not a trend.  But they are promising anecdotes and well worth watching to see whether a trend develops.

This is the sort of thing, though, that the Progressive-Democratic Party opposed when they fought so hard against the just-passed tax reform bill.  It’s almost like they want Americans trapped in the Progressive-Democrat welfare cage.

Taxing and Spending in New York

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Bookending (in more than one sense of the term) California’s move to confiscate business’ tax cuts, New York’s Progressive-Democrat governor Andrew Cuomo wants to increase the taxes levied on that State’s citizens by $1 billion.  He’s claiming, in all seriousness,

You can’t possibly get anywhere near where you want to be on education and health care unless you raise revenues.  It’s just too big a deficit, and the choice of cutting education or cutting health care I don’t think is a place anyone wants to go to this year. So you have to raise revenue.

This is a false choice.  The largest cause of the State’s deficit, after all, is its spending level, not the size of its revenue.  Thus, one choice Cuomo is carefully eliding is this: the State’s government could cut spending across the board; there is, after all, more going on in New York than just education and health coverage costs.

Alternatively (which Cuomo also avoids mentioning), the State’s government could simply reallocate existing spending into education and health care.

Still another alternative unmentioned, the State’s government could fix its runaway pension funds for its public unions by using accurate projections of investment return rates and increasing the contributions union members and the unions themselves make to the funds.  Along with this, the State’s government could fix its health coverage program, replacing its version of Obamacare with market-based solutions, and freeing the citizens to buy the health plans that suit them rather than suiting Government.  Or not buy at all.

There’s simply no need for more revenue for the State’s government, no need to take even more money out of the pockets of the State’s citizens.

Unfortunately, neither the man nor his Party cronies in the legislature are emotionally capable of conceiving of actually cutting spending, or even of reallocating existing spending.

True Colors

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The Progressive-Democrats, especially those in the Senate, have shown their true colors as they voted last Friday to shut down the Federal government, voting to block a temporary funding agreement that would have kept the government open for another month.  I wrote earlier about that shutdown’s practical effects.

Here’s what the Progressive-Democrats voted to kill: six years of funding for CHIP, so now some millions of children in our poverty-level families will have no access to health insurance.  DACA reform so that those illegal immigrant children could have some hope for their future.

CHIP funding was in the stop-gap bill, but now there’s no funding for it, and the program has expired.

DACA reform was not in the bill, having nothing to do with funding, but the Progressive-Democrats, led by Senate Minority Leader Chuck Schumer (D, NY) demanded it be included or there would be no votes from his Party (in the event, five Progressive-Democrats from Republican States whose seats are in jeopardy in this fall’s elections, knowing their Party would kill the funding, cynically cast their meaningless votes for the bill).  It didn’t matter to these worthies that DACA had until early March to be negotiated or that there already exists bipartisan agreement on the outline and substance of a DACA proposal that could have been debated and voted up by the end of January in a separate bill.  Schumer and his Party cronies demanded their DACA right damn now.  Their attitude has badly poisoned any future DACA negotiations, perhaps fatally.

It gets worse.  There was nothing in the bill to which Progressive-Democrats actually objected.  It funded the government for a time, which the Prog-Dems claim they want.  It funded CHIP, which the Prog-Dems claim they want.  It funded defense, which even Prog-Dems claim they want.  The clean funding bill just didn’t have all the other, unrelated, things the Prog-Dems also demanded.

When Schumer went to the White House late Friday before the vote to deal personally with President Trump, he went with a Christmas tree of Progressive-Democrat demands beyond just DACA for inclusion in the stop-gap bill, including for instance, bailing out public union pension funds, added spending on opoid programs, and on and on.  That Christmas tree is what Schumer was talking about when he said after the meeting that progress had been made, but “we still have a good number of disagreements.”  All of these extras also could have been negotiated and voted on in the ensuing period.

Not good enough.  The Progressive-Democrats voted to shut down the government because the stop-gap didn’t have DACA and Schumer’s Christmas tree.  Party ego before national weal.

Remember this next fall.

Update: The Senate, on another cloture vote later this morning, voted 81-18 to end the filibuster and bring the bill to the floor for an up or down vote. The bill is changed trivially–the funding period is good for three weeks instead of four–but otherwise, it’s the same bill.  Because of that period change, though, it has to go back to the House, where I expect it’ll be voted up forthwith and sent to the President for prompt signing.

In return, Senate Republicans promised negotiations on DACA and on immigration and a vote on DACA. The DACA debate has been going on, all along, as noted above.