Tag Archives: taxes

A Good Idea?

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Progressive-Democrats are looking at “adjusting” Party’s proposed child tax credit in order to appease Senator Joe Manchin (D, WV).

Some Democrats have started exploring how to pare back their proposed expansion of the child tax credit in ways that are aimed at winning the critical support of Sen. Joe Manchin (D., W.Va.), according to people familiar with the matter.
Among the possibilities: Reducing the size of the credit’s expansion and limiting which Americans are eligible for it, according to the people.

Tweaking to appease a single Senator. Never mind any effort at looking for bipartisan support.

If the child tax credit, in any form, were a good idea, the Progressive-Democrats would put it into a separate, stand-alone bill and put that up for debate and a vote.

It’s instructive that Party won’t do that. It’s instructive that Party can’t even conceive of such a move.

Monthly Child-Tax Credit Payments at an End

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The Wall Street Journal wrote about the end of the child tax credit payments and the impact on families’ financial cushion during last year’s Wuhan Virus-related dislocation. What Ensign and Rubin missed in their piece, though, is what those payments actually are, and their upcoming impact.

Those monthly child-tax credit payments were advances on 2021’s income tax refunds. In addition to the cash flow (not income) drop from the payments’ cessation, payback of those advances on or about mid-April (or later, should the IRS decide to delay the due date for tax returns, again) will be a cast iron bitch for those lower income families whom the Progressive-Democrats were pretending to help with the advances.

Just a Thought

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California is running a very large budget surplus—$31 billion worth—and the men and women of that State’s government really and truly don’t know what to do with it. Especially since the voter-approved Gann Limit doesn’t let the government run that big a surplus.

Here’s a thought.

Maybe pay a tax refund to the citizens of California, and sock the rest of the surplus away in a State rainy-day fund.

Nah. Waste of money. Those citizens would only waste it on their own needs and wants, rather than spending it properly. And who needs a rainy-day fund? California has droughts.

One More Reason

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The last two administrations have dumped $3.5 trillion of supposed Wuhan Virus relief funds into our economy since the virus situation began in early 2020.

Now we’re learning that almost $100 billion of it has been stolen. That doesn’t seem like a large per centage of the total. However, as numbers have a quality all their own, and while those $100 billion are a small per centage of the trillions, they would have had their own use. Fighting the Wuhan Virus’ entry into our nation via our southern border, for instance, by building more of the wall that Biden-Harris has been so desperate to stop. Generating more—many, many more—of the home tests that Biden-Harris has been lying about producing. Plusing up our police forces so as to reduce the rate of crime that Progressive-Democrats like Congresswoman Alexandria Ocasio-Cortez (D, NY) insist are no big deal and that other Leftists insist is justified reparations. Plusing up our military. The list goes on.

In the end, this is just one more reason to not use the Federal government to handle, centrally, such handouts. Instead, make block grants to the States.

That won’t stop the graft of this sort, but it at least would divide the money up across the States so that it would be harder to steal, and the governments making the disbursements would be closer to the problem—and to their constituents for accountability.

Better yet would be to tot up the total of all Federal transfers to each State and roll those into block grants—no strings attached—to the States. Then reduce the size of the block grants each subsequent year by 10% of that first year’s block until no more monies are being transferred to the States from Federal coffers.

After all, those monies, the Federal coffers, are the tax monies sent to the Feds by each State’s citizens. Let each State keep those tax funds in the first place, and eliminate the middle man. Each State will use the money more efficiently and more directly for that State’s citizen needs and wants and not for another State’s purposes.

The Federal government should collect, and use, only that which it needs for the only Constitutionally mandated purposes extant: to pay the Debts and provide for the common Defence and general Welfare of the United States. That general Welfare, too, is enumerated in (and limited to) the purposes delineated in the next 16 clauses of Art I, Sect 8; the last clause being not a spending purpose but an authorization for Congress to make specific laws for specific spending.

If It’s a Good Idea….

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One sub-bill in the Progressive-Democrats’ reconciliation bill would have removed a loophole that lets foreign purchasers of US real estate dodge a tax that could reach 30% on the profits generated by those holdings.

The loophole works like this:

Instead of buying a building directly, a foreign investor creates a shell company in an offshore location like the Cayman Islands.
That shell company then lends money to a US entity called a blocker corporation, which in turn buys the building. Instead of paying any profits from the building directly to the foreign investor, the blocker corporation sends interest on its loan to the offshore shell company, which then passes it on to the foreign investor. By taking this detour, the foreign investor avoids the tax on foreign real-estate owners.

It works because the blocker is a corporation domiciled in a territory that’s a US tax haven, and so those corporations avoid the tax.

There are a couple of implications from closing this loophole.

[P]roponents say it could raise billions in tax revenue.

That works for me. On the other hand,

Property owners worry it could also lead to fewer foreign purchases of US commercial real estate.

I’m having a hard time seeing any serious downside to that beyond a temporary (I say) downward pressure on real estate prices, or more likely, a slowing of increases in real estate prices, in the initial period following the closure of the loophole. After that initial period, though, the real estate market would adjust to the new regime, and real estate prices would resume their normal behavior.

If this sub-bill is a good idea—and I think it is, at least in principle—than it should be excised from that reconciliation foolishness and presented by itself in a clean, stand-alone bill. In January.