Tag Archives: political economy

Estate Tax and Tax Reform

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Senate Republicans seem unable to understand this subject, also.

Others [Republicans] say their desire to eliminate the [estate] tax must be balanced against other priorities including tax cuts for businesses and middle-class families.

This is disingenuous. Eliminating the estate tax explicitly favors middle-class families and businesses: it’s the small businesses and farms that are owned by middle class families that are the most harmed by this death tax.

Aside from that is this piece of irrelevancy:

Estate tax repeal would reduce federal revenue by about $239 billion over the next decade, according to the Tax Policy Center.

Interesting, but unimportant here. Government has yet to show a need for that money.

Another Example

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…of government regulatory failure.  The Financial Industry Regulatory Authority, which regulates, among other financial institutions, brokerage houses, has its own investment portfolio.  FINRA charges fees from those it regulates for their privilege of being regulated.  And

In years when FINRA’s fee revenue exceeds forecasts and investment gains are strong, the regulator can rebate fees paid by firms it regulates.

Investment gains are strong.  However, FINRA turns out to be a crappy investor, getting just two-thirds of the return since 2004, when the regulatory body’s investment portfolio was created, that a simple-minded standard portfolio mix of 50% each of bonds and stocks would have gotten in the same period.  Its return shortfall, 3.4% vs that standard portfolio’s 6%, is a real money shortfall: $440 million for a portfolio of $1.6 billion.

And that has real impact on the regulatees that are so privileged: not only have there been no fee rebates since 2014, FINRA is raising fees on its regulatees to make up for its failure as an investor.

Go figure.

Some Early Thoughts on the Tax Reform Proposal

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…triggered by Laura Saunders’ piece in Wednesday’s Wall Street Journal.

Beginning with the headline and thesis of her piece: Winners and Losers Under the Trump Tax Plan. Because Government should be about picking winners and losers instead of just protecting a level free market for all.  Sure.

Now a couple of specifics.

People with large medical or disaster deductions. Each of these write-offs on Schedule A has significant hurdles and is only available to taxpayers with large unreimbursed expenses

This one isn’t particularly relevant to tax reform. It just means that four Republican Senators who prefer preserving Obamacare intact over even a first step toward repealing/replacing it need themselves to be replaced with Republican Senators who are serious about getting rid of Obamacare and its destructiveness.

Losing the State tax deduction? That only impacts a couple of States with enormous spending habits; those citizens need to correct their State government errors.  The citizens of the other States don’t need to be dragooned into indemnifying the foolishness of those couple of States.

The mortgage deduction loses value under tax reform? Yeah, and? Punish those who don’t itemize by taxing them more (vis., not raising the standard deduction) so others can have a deduction? Beyond the cynicism of this special interest nonsense, our tax code shouldn’t be in the business of social engineering in the first place.

This proposal is a good first step in tax reform.

Now we just need to disabuse politicians that every bill is the last word on a subject rather than an interim as we move toward our goal: a flat tax in the neighborhood of 10% on all income, regardless of source, and the elimination of all deductions, credits, and other froo-froo.

Hacks and Hack Disclosures

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Equifax took six weeks to get around to bothering to tell us about it so we individual consumers could begin to take our own corrective and defensive action.  That’s unconscionable, Equifax isn’t alone in delaying telling us about hacks into personal information those companies are holding for us, and it’s giving impetus to legislation that would force companies to disclose such hacks much sooner.  One such proposed bill is Congressman Jim Langevin’s (D,RI) reintroduction of the Obama era’s Personal Data Notification and Protection Act.

I don’t like regulations, but one here is necessary. The hacks aren’t exposing company property; they’re exposing individual personal property entrusted to the company. Companies have an obligation to safeguard that personal property, and that obligation is strongly expanded by a company’s demand for that personal property as a condition of doing business with it.

Companies don’t want to be embarrassed…[by] having to disclose when people’s data is leaked….

People don’t want to be harmed by those leaks or by delays in finding out their data have been leaked. I’m trying to weight the one against the other in my balance. Oh, wait….

Under this proposed legislation, Equifax would have had to disclose its breach within 30 days….

No, there’s no need for any delay, indeed, delay simply compounds the damage that can be done to us individuals.  As Christopher Mims put it at the end of his piece at the link,

When Equifax was breached, hackers got birthdates, Social Security numbers, and other hard facts about most of us. This data has the power to ruin our financial lives….

Any delay, let alone 30 days, is far too long to be held defenseless against that.  The legislation’s proposed 30 days are forever in today’s information and financial world, an entire month within which hackers could work their nefarious ends without our being able to defend against those ends.  Equifax, et al., should be required to disclose on the day the hack is discovered and then to keep us current on developments with frequent updates that, at the least, explain what’s being done about the hack to reduce the likelihood of a subsequent hack, what’s being done to mitigate the damage to us of the present hack, why the hack wasn’t discovered sooner, and what’s being done to speed discovery for next times.

We need to be able to act in our defense, too.

And contra the attitudes of those who defend delay, we Americans are not too stupid to understand what we’re being told—so long as it’s prompt and truthful—and we can make good use of the information which, aside from our being better able to defend ourselves, would let us see quickly what companies develop a history of exposing our personal information and so are unworthy of our business.

Hacking

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Germany has been struck by a wave of hackers from the People’s Republic of China as the PRC moves to steal from cutting-edge manufacturers.

The German government

is now moving to shield companies from state-backed hackers and criminal gangs, offering to pay to harden the defenses of Germany’s most vulnerable firms.

This is a start, but it’s insufficient.

Hacks like this, originating as they do from a fundamentally autocratic nation, can only be taken as state-sanctioned, if not outright -directed, as such they are overt acts of aggression, and so they require commensurately serious responses.

Germany—and the US where we’re hacked against—need to engage in sterner, more concrete responses to the PRC’s hacks.  Such responses should include sanctions against PRC companies in the same or similar industries as the hacked companies that range from punitive tariffs to barring those companies from doing business in Germany or the US to blocking their access to deutschmarks and dollars.  Further responses should include cyber attacks against PRC companies in the same or similar industries as the hacked companies with goals ranging from temporarily blocking their operations to permanently damaging them.