Tag Archives: taxes

Because, Tax

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In a further demonstration that the Progressive-Democratic Party knows only how to tax and to raise taxes, there’s this.

Senate Democrats on Wednesday proposed repealing major pieces of the just-passed tax law, in a plan that would raise taxes on corporations, estates, and high-income households to pay for $1 trillion in new infrastructure spending.

And the Progressive-Democrats actually are touting this for the mid-term elections this fall.  It’s not your money, after all, it’s Big Governments, and Progressive-Democrats Know Better how your money should be spent.

Can’t possibly pay for the infrastructure by cutting spending somewhere else.  Mm, mm.

That today’s Republican Party can’t figure out how to cut spending somewhere else (House Speaker Paul Ryan’s (R, WI) Social Security and Medicare reforms come to mind) just compounds the problem, it in no way excuses the Progressive-Democrats’ failure.

Online Retailers and Taxes

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The Trump administration is looking at forcing online retailers to pay the same taxes that their brick-and-mortar competitors must pay.

The Trump administration on Monday urged the Supreme Court to expand states’ authority to collect sales tax on internet transactions, joining a chorus of state officials seeking to overrule a 1992 precedent exempting many online retailers from having to add taxes to a consumer’s final price.

This is a mistake.

  1. This question is a political matter, not a legal/judicial one. If the administration thinks online retailers should pay the same taxes as brick and mortar retailers, then they should offer a bill to Congress (and State governors to their State legislatures) that fills in any gaps in existing statutes that allow online retailers to not pay. Judges cannot make law, as Art I, Section 1, makes clear—even if this is honored egregiously in the breach.
  2. If governments are worried that online retailers are competing unfairly by not paying the same taxes as their brick-and-mortar competitors, the far better solution is to lower the taxes charged the brick-and-mortar companies so they can compete. After all, that’s what was done with the Federal corporate tax rates, both for domestic consumption and to improve competitiveness with foreign competitors, and it’s working quite well.

An Economic Misunderstanding

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In the wake of Georgia’s decision to halt special tax treatment for Delta Air Lines, Inc, over the company’s decision to cut ties with the NRA, Fox News economics pundit Neil Cavuto asked whether the State’s action “was an example of government interfering in the free market”.

This misunderstands what’s happening.  The government interference in the free market was the State’s gerrymandering its tax code to give special treatment to a particular company.  Stopping a particular special treatment is a step back from that government’s interference, not an extension of it.

Buybacks and Tax Cuts

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Who benefits most and what was the value of the Trump administration’s tax cuts, if all that companies are going to do with their tax cut related income boost is use it to buy back shares?  This seems actually confusing to some folks on the Left.

Here are some of the happy totals.  Share buybacks have run to some $200 billion in the last three months.  Moreover,

Of the companies in the S&P 500, about 44% have said they plan to reinvest some portion of their tax gains into capital expenditures or wages, while 28% said they would use them to increase shareholder returns, Morgan Stanley found in an analysis of earnings transcripts. Its own analysts expect companies to spend about 43% of their savings on buybacks and dividends, and 30% on capital expenditures and labor.

Progressive-Democrats are making the argument that the buybacks benefit only the 1%.  Certainly, stockholders—those owners of the company—who choose to accept a buyback deal are better off: they get something of value to them that they didn’t have before, which is more cash in their pocket.

Progressive-Democrats actually think the money stops there.  Or so they imply.

It doesn’t.  The money doesn’t disappear under a rich man’s mattress; he didn’t get rich doing that.  No, the tax reduction money that goes to capital expenditures improves production efficiency, which lowers costs to the consumer, which raises demand for the product, which increases pressure to hire more workers to make more product.

Money spent on buybacks and dividends (another bugaboo of the Left—how dare a company return any of its money to its owners) is money received by the company’s owners, who include not only the stinking rich but ordinary folks like you and me, either as investors ourselves or as beneficiaries of company pension plans or as holders of 401(k)s and IRAs.  That money received by us, including the Evil Rich among us, then gets spent.  That’s increased consumer demand, which increases pressure to hire more workers.  Even the buyback and dividend money that goes into those retirement accounts gets spent—we’re all going to retire someday, and if we die, our heirs will spend the money.

It stretches credulity to believe that folks as undeniably brilliant as Progressive-Democrats hold themselves out to be don’t understand this.

But, hey—votes.

The 529 Plan Expansion

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Recall that the tax reform enacted last December expanded the usability of 529 Plans to include expenses for K-12 education.  Now some are worried that this will harm State tax collections.  It’s a bogus beef on a number of fronts.

In December, as part of a broad tax overhaul, Congress expanded the accounts to cover up to $10,000 a year in expenses for kindergarten through 12th grade.

State budget officials are now concerned that a large number of parents will use 529 accounts to pay private-school tuition, giving them a new write-off for their state taxes.

School choice—the horror.  How terrible it is that parents have a way to help their children escape failing public schools or simply to transfer them to schools of their choice rather than be faced with the often poor choice of public school or home school.

There’s this bit of disingenuosity, too:

That could result in potentially millions of dollars in lost tax revenue at a time when most states are struggling to close budget deficits.

“I’m worried that families could use these accounts to avoid paying state taxes,” said Illinois state treasurer Mike Frerichs, a Democrat. “This is only going to put a deeper hole in the budget.”

This is especially rich coming from nearly bankrupt Illinois and that State’s Treasurer.  What’s actually blowing a hole in Illinois’ budget is its profligate spending, in Illinois’ case wastrel spending on public union pensions and teachers union pensions in Chicago.  Beyond that, using 529s to defray the costs of educating a child in Illinois isn’t tax avoidance, it’s parents seeing to the welfare of their children.

Then there’s this bit.

The Cruz provision [the amendment that inserted the 529 expansion into the tax reform bill] is projected to cost the federal government $500 million over nearly a decade, but it could cost the states much more, research suggests.

This is nonsense. Aside from the fact that it doesn’t cost the Federal government anything to not get what doesn’t belong to it, it’s also not costing the States anything for the same reason: the money isn’t the States’; the money belongs to the citizens of the States.

Furthermore, instead of worrying about deficits caused by not getting revenue that isn’t theirs, the States should worry about deficits caused by their profligate spending—and that’s not just Illinois.

This misunderstanding by American Enterprise Institute‘s Deputy Director of Education Policy, Nat Malkus, is surprising.

It’s not federalist at all.  I don’t think that the federal government should be cavalierly making problems for states by messing with state taxes.

Federalism isn’t touched by the 529 expansion.  That expansion doesn’t impact State taxes in the slightest; those remain the sole decision of the State governments.  All that’s “messed with” is tax collections, collections of OPM.