Tag Archives: taxes

Tariff Relief

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Several US companies are saying that the existing tariff regime that’s applied to imports from the People’s Republic of China is hurting imports of chemicals necessary for the manufacture of disinfectants and sanitizers. Accordingly, medical supply companies and other businesses have filed dozens of applications for tariff relief/exception related to those imports.

If such relief is granted to an importing company, it should be contingent on that company acting expeditiously to move its supply chain out of the PRC. The move also must include non-PRC suppliers that import their own component supplies from the PRC. “Expeditiously” should be explicitly defined in the relief document as a time frame or a production milestone, and the relief should automatically expire if that deadline/milestone isn’t met.

Tariff relief should be granted to all Wuhan Virus-related imports from the PRC, with the same “expeditious” criterion attached, and existing relief should be modified to include the criterion.

Paying Their Fair Share

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Progressive-Democrats, including their Presidential candidates, are fond of saying the Evil Rich aren’t paying their fair share in taxes; they should pay more.  Those same Progressive-Democrats also carefully decline to say what that fair share should be, other than their “more.”

Here’s a graph of what those Evil Rich do pay, compared with the income those same Evil Rich earn, courtesy of the Center of the American Experiment:

Notice that. That’s even after those Evil Rich have taken all the adjustments to their top line income that our tax code allows them to take, including the Progressive-Democrats’ much disliked preferential tax treatment for capital gains and interest income.

The graph shows the rates for the top 50%.  The top 10% pays a skosh over 70% of all income taxes paid Uncle Sugar, while earning only a bit under 48% of the private sector’s income.

Ninety per cent, seventy per cent—in what way are these not the Evil Rich’s fair share, much less more than their fair share?  Especially compared to those bottom 50% who earn a bit over 10% of the private sector’s income, but pay only 3%?

The Progressive-Democrats won’t say. The only conclusion is that they consider the fair share to be “all of it.”

The Right Answer

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Progressive-Democratic Party Presidential candidate and Senator Bernie Sanders (I, VT) is outraged. Outraged, he says.

It is outrageous that the wealthiest corporate executives in America get unlimited, special tax privileges on hundreds of millions of dollars in savings, while ordinary workers can only get tax deferment of up to $19,500 on their 401(k)s[.]

Of course, the (Democratic) Socialist’s answer is to raise taxes on those executives’ savings, their executive retirement and deferred compensation accounts.  He wants to “sharply curb” the tax benefits associated with those accounts. Because, after all, there comes a time when they’ve made enough money. And they didn’t earn that money, anyway; they had help.

Never mind that however earned, it’s certainly not Government’s money; it’s still the earner’s money. Never mind that Government has no business dictating to any of the citizens who employ it how much “enough” is.

Never mind, either, that yeah, they did earn the money. They took the risks—exacerbated by excessive Government regulation—they put in the time and sweat. And the help they had—their employees, not Government—were well paid. Even the low/no skill minimum wage worker was well paid for the value of his work—those, that is, who were able to stay employed or to find work in the first place after Government minimum wage diktats priced them out of low/no skill required jobs.

No, the right answer does not include capping the success of the most successful or increasing the tax bite on those most successful.  Success isn’t capped just on the Evil Rich, though.  The success on all of us is capped: that tax deferment limit doesn’t only apply to our 401(k)s; there are even more draconian caps on our 403(b)s, our Traditional IRAs, our Roth IRAs.  Those caps are not the right answer, either; they’re part of the same error.

Capping success, though, is all this (Democratic) Socialist and his Progressive-Democratic Party confreres know to do.

The right answer, the non-socialist answer, the free market capitalist answer, is to stop capping success.  Leave off the attempts to confiscate the proceeds of executive success and eliminate the caps on the tax deferability of the contributions the rest of us make to our savings and retirement accounts. The money in those accounts and the money we could contribute additionally, were those caps eliminated, also is not Government’s money. It’s ours.

And so is our success.

Full stop.

Bernie Budget

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Progressive-Democratic Party Presidential candidate and Senator Bernie Sanders (I, VT) has released the outline of his budget, which he claims would pay for all of his Free Stuff spending.  Here are a couple of the high points of his budget.

  • tax the investing process
    • 5% tax on stock trades
    • 1% fee on bond trades
    • 005% fee on derivative trades
  • wealth tax on the “top 0.1%”

These, without inhibiting investments, including those of the mutual funds in our 401(k)s, 403(b)s, etc, are supposed to raise more than $6 trillion over ten years, and—poof—there go all college expenses and housing costs. Never mind that this would drive up the cost of investing by a factor of five—but no, there’d be no effect on investing.

  • sue the lights out of fossil fuel companies

This is supposed to raise another $3 trillion. Never mind that with the courts being returned to ruling on the Constitution and the law rather than ruling on the feel-good social issue du jour, that’s a bit chancy.

  • cut defense spending by $1.215 trillion

This one, in the end, may be the most effective at eliminating concerns about paying for the Sanders Free Stuff industry. Once we’re no longer able to defend ourselves, we’ll be easy prey for our enemies. Or the least effective, depending on whether the perspective is ours or our enemy’s.

And as an aside, one non-economic cynical contradiction:

[A]fter arguing that people should not be judged solely by their skin color, Sanders promised that his vice president “definitively” would not be an “old white guy.”

Contradictions

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Japan raised its sales tax—consumption tax/value added tax—and promptly saw a 6.3% year-on-year drop in GDP in the last quarter of 2019. Consumer spending (did I mention that the tax was a consumption tax?) fell by 11.5% that quarter.

Color me—and hosts of others much smarter than me—unsrurprised.

Now come the contradictions, from the just US Congress-revived IMF, yet.

The International Monetary Fund thinks the consumption-tax rate will have to rise to 15% over the next decade, and to 20% by 2050. But first the fund’s wizards say Tokyo must expand its Keynesian spending to make the economy “strong” enough to bear the tax hikes to pay for the spending.

Increasing government spending, which is tax increases now or later, reduces consumption by a number of paths: it takes money out of consumers’ hands directly via those taxes; by competing for the same goods and services as consumers’, it drives up the prices of those goods and services to consumers, which reduces consumers’ purchase of them; by competing for the same resources that private enterprises need to produce it drives up the price of the resources, which drives up the prices of the end-product goods and services to consumers, which….; and it crowds out many private enterprises and consumers altogether.

And so, of course, it’s necessary to raise even further the taxes on all that reducing consumption.

Business is falling off. Gotta raise prices to make up for the decreased revenue.

Make sense? It does to the IMF. And to the Japanese government.