Tag Archives: taxes

“Goosed” Paychecks

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Senator Ron Wyden (D, OR), Finance Committee Ranking Member, had this bit:

It looks like the Trump Treasury Department spent 2018, an election year, goosing people’s paychecks by under-withholding, and it should have been obvious that the bill would come due eventually[.]

Never mind that the IRS also warned taxpayers—and their employers—to carefully check their existing withholding arrangements, especially in this period of large changes to the tax code.

Senate Minority Leader Chuck Schumer (D, NY) was just as disingenuous:

Many Americans depend on their tax refund to pay bills and make ends meet….

Never mind that large tax refunds, far from being a savings account (that pays even less interest than a bank savings account), is an interest free loan to the government.  Leave it to a Progressive-Democrat, with his constant demands for OPM, to insist that this interest free loan to Government of a citizen’s money is entirely appropriate.

Keep in mind, too, that these are the same politicians who will work to prevent the tax reform’s current personal income tax cuts from becoming permanent.  Because the money in those paychecks isn’t the citizen’s; it belongs to Government.

Goosed paychecks?  Those could be permanently increased paychecks—because of the so far lowered income tax rates—but for those Progressive-Democrats.

You Need to Pay my Taxes

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No.  No way in H E Double Toothpicks.

New York Governor Andrew Cuomo [D] visited the White House on Tuesday to urge President Donald Trump to rethink a provision in the 2017 tax overhaul that Cuomo says is prompting a sharp decline in state revenues.
The Democratic governor met with the Republican president to discuss the $10,000 cap on the federal deduction for state and local taxes—known as SALT.
Cuomo said the cap is prompting wealthy residents to flee New York and contributing to a recent drop of more than $2 billion in tax receipts.

If there’s a drop in State tax receipts from this, there are two intertwined parts to the obvious solution, and they don’t include raising the Federal taxes on everyone else so New York (and New Jersey and California) can continue their profligate ways.  Those two parts are reducing the States’ current usurious tax rates to more reasonable levels and reducing spending to fit within those collection levels.

Then step back and watch the increased economic activity that will result increase the prosperity of all the citizens of the State—and enjoy the increased revenues to the State that will result from the increased economic activity.

Aside: the AP‘s own distortion: Residents in high-tax states such as New York, New Jersey and California could see substantial increases in their federal tax bills this year because of the deduction cap. No, they won’t.  They may well see their total Federal and State tax bill go up, but that’s due entirely to the increase taxes owed the States from their high tax structure.

More Government Intervention

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Shades of FDR, and a betrayal from the putative right of center.  Senator Marco Rubio (R, FL) wants Government to dictate to private enterprises what they must do with company profit.

The plan backed by Rubio encourages domestic investment by making full and immediate expensing permanent “as a way to discourage companies from pursuing share repurchases.”

Right move, wrong reason.  Immediate expensing ought to be a permanent item in tax code reform on its own right.  Delaying expensing or stringing it out is just another aspect of using our tax code for social engineering, which bastardizes our tax collections and distorts our market away from the most efficient use of our money—whether business money or personal.  And that most efficient use might well include stock buybacks; that’s a business decision with which Government has no business interfering.

“Discourage” companies?  That’s a fiction.  What Government starts as “discouraging,” it very quickly converts to barring.  Senate Minority Leader Chuck Schumer (D, NY) and Senator Bernie Sanders (I, VT) are pushing for precisely this sort barring of legislation,

to curtail the ability of companies to purchase stock buybacks[,]

and Rubio is just as enthusiastically joining with them on this.  A report released by Rubio’s Small Business and Entrepreneurship Committee had this in it:

Cash spent on share repurchases is not cash spent on capital investment, though the degree to which a relationship exists may vary by sector and firm type[.]

That’s not strictly true.  Money spent on buybacks is money not spent on that business‘ capital investment.  But do Rubio, Schumer, and Sanders really think that money goes under the mattresses of those now ex-shareholders?

Of course that money does not. It goes into one of three places, each beneficial to our economy. One is investments in other companies, facilitating those companies’ capital investments.

Another is spending on consumer and business goods, which enhances market demand, which increases cash flow into those producers’ coffers—which facilitates their capital investments.

The third is savings.  As anyone who didn’t sleep through their high school econ course knows, savings are banks’ and other lenders’ source of funds which they loan out—to businesses so they can carry out their capital investments.

Hence the need to let businesses make their own decisions without Government diktat.  It’s disappointing that a nominally Republican Senator doesn’t understand any of this.

If Amazon Pulls Out

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Progressive-Democrat strategist and pollster Doug Schoen is worried about new rumors that Amazon might pull out of its agreement to relocate a part of its HQ2 in New York City.  He’s hanging his hat on the commitment from Amazon to produce 25,000 jobs at an average salary of $150,000 per year.

It would be a “disaster for the city,” he wrote in the Fox News op-ed, for Amazon to pull out.

Burdened by a shrinking tax base, crumbling infrastructure, and a lack of good-paying middle-class jobs for the future, New York City needs innovators like Amazon.

Or, perhaps, New York City wants Amazon’s money.

Regardless, Schoen seems to be missing some important costs to New Yorkers in the deal currently in place between New York City and Amazon.  Immediate costs include

  • tax credits equal to $48,000 per new job—assuming new jobs by amazon could be measured
  • $1.5 billion in direct subsidies for Amazon

Potential additional costs include

  • $897 million through New York City’s Relocation and Employment Assistance Program
  • $386 million through a partial property tax abatement program
  • depending on the extent to which Amazon relies on renewables, additional credits through the New York State Energy Research and Development Authority

In return, Amazon committed to providing over the first 10 years 25,000 new jobs at an average annual salary of $150,000—high-paying jobs.

There are unaccounted-for costs in this arrangement, though.

  • that sharp influx of high-paying jobs will create demand for limited-supply items like homes and groceries that will inflation-price others—not just locals—out of those things. Aside from the small businesses and mom-and-pop businesses and their limited expansion opportunities, there’s little physical room left to build more, to increase supply of houses, business buildings, and so on.
  • the influx of those 25,000, along with the office buildings and the commuting and shipping traffic associated a business expansion of this size will sharply increase demand on utilities, public and private transportation, and other infrastructure—which, as Schoen has already noted, is crumbling and unable to handle today’s demands
  • locals—businesses and residents, and what’s left of Schoen’s dwindling middle class alike—don’t get those property tax abatements. Guess who will pay, at least partially, for those abatements

And, in the end, tax incentives rarely get paid back in contracted for outcomes; there usually is a net loss to the incentive-granting jurisdiction.

This isn’t a good deal for New York City, unless it’s looking to replace those folks with below-middle-class jobs with a better sort of families.

Cuomo Objects

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Or maybe whines.

During a Monday press conference, Mr [Andrew, D] Cuomo said wealthy individuals living in these areas were either moving or shifting their official residence to lower-tax states….

Cuomo’s whining continued:

SALT was an economic civil war.  It literally restructured the economy to help red states at the cost of blue states. That’s exactly what it did. It was a diabolical, political maneuver.

Yeah—it’s really diabolical to let folks—even the Evil Rich—keep more of their money.  It’s especially diabolical that those folks would want to keep their money and actually take steps to take advantage of the Federal tax reform and avail themselves, also of the benefits of living in lower-tax locales. I mean, really.

The fact that New York’s and New Jersey’s tax structure is explicitly, carefully structured to relieve the especially successful of their earnings should be a hint, but it has blown right by Cuomo and New Jersey’s Progressive-Democratic governor Phil Murphy.  Picking on New York, again,

the highest-earning 1% of taxpayers accounted for $17.8 billion of personal income tax revenue, or 45.8% of the total.

On the other hand,

[t]he vast majority of New York, New Jersey and Connecticut residents received federal tax cuts because of the changes. Many who have state and local taxes above $10,000 are benefiting from lower federal tax rates, larger child tax credits, the larger standard deduction and the narrowing of the alternative minimum tax.

But that doesn’t count.  Except to put a premium, in Progressive-Democrat eyes, on even more heavily taxing those rich folks.