Tag Archives: taxes

Be Like Europe?

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Emulate Germany?  That’s the constant refrain of the Left and of their Progressive-Democratic Party.  After all, Germany is running large budget surpluses, taking the second largest bite out of German wages of all the OECD nations, at nearly 50%, overcoming government spending running 45% of GDP.  Here is an indication of the contempt with which German politicians—both “conservative” and Leftist—view German citizens:

[T]he perception of tax cuts in the country’s political mainstream ranges from slightly shameful to outright evil. Many conservatives see them as overindulgent toward voters, while the center-left views them as morally indefensible gifts to the rich. All parties, with the exception of the pro-business Free Democrats, favor a high degree of redistribution.

“You need high taxes in order to be civilized,” said Sven Giegold, who represents Germany’s Green Party in the European Parliament. “We are very far away from the government having too much money.”

It seems Germans, like Herb Croly’s Americans, are morally and intellectually inadequate to serious and consistent conception of [their] responsibilities as…democrat[s].

And we should be like them.  Sure.

The New Tax Law and Bankruptcy

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The Wall Street Journal is quick to point out how the tax reform bill passed last December does little to help failing businesses.

The new tax law is a boon to most US businesses, but it will make life harder for one type of company: those that are struggling financially or at risk of filing for bankruptcy.

The new tax law was never intended to help failing businesses, though, it was designed to help the rest of us individuals and our businesses—and to help those who are failing do better next time.

The law eliminated a provision that gave money-losing companies a cash infusion in the form of a retroactive federal tax refund by applying current losses to past tax bills. Experts say these tax breaks, called net operating loss carry-backs, gave companies access to money at a critical time….

No, the provision helped current businesses paper over bad decisions and outright failure by letting them rewrite their history; there’s nothing that helped failing businesses do better in future.

The provision, in fact, was written in the aftermath of WWI, ostensibly to help our economy’s manufacturing sector.  On the contrary, though, the provision was enacted to bail out from Woodrow Wilson’s attempts to nationalize significant fractions of our industrial sector and to attempt recovery from Wilson’s drastically inflationary policies.  Any policy enacted for bad reasons always will fail in the end.

“It doesn’t fix the business, but it fixed the balance sheet,” she [Bankruptcy lawyer Cathy Hershcopf] said of the tax benefits.

Indeed.

Mid-Term Elections

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At their retreat last week, Republicans indicated that they intend to run heavily on the tax reform they got through at the end of last year.  It’s good to have something positive on which to run, especially since, at least for the near term, the Progressive-Democratic Party has nothing on which to campaign other than its #NeverTrump and #NothingRepublicanNoWay platform and its standard disparagement of ordinary Americans like House Minority Leader Nancy Pelosi’s (D, CA) claim that the tax reform’s aftermath of bonuses and pay raises are just crumbs.

As an aside, it must be good to be as rich as Pelosi, that a $1,000 bonus or an increase in take-home pay of some $2,000 per year is just chump change.  President Donald Trump is stinking rich, Vstly more so than Pelosi, and he doesn’t think this added money is trivial.  I’m not stinking rich; I’m not even as rich as Pelosi—not by a long shot—those $1,000 matter to me, as do the added $2,000/yr take-home.

Back to my point.  Republicans can’t only run on their tax reform, though.  They need to add three things to their campaign.  The first addresses, preemptively, the fact that the personal income tax rate cuts—that increase in take-home—expire in about eight years.  Republicans need to emphasize that the only way that rate cut expiration actually would occur would be if Progressive-Democrats in Congress (especially in the Senate where they can filibuster) block those cuts from being extended or made permanent.

The second thing is to go on the offensive regarding DACA.  Most Americans, and it’s pretty much evenly spread across party and independent lines, want the children who were brought by their parents into the US illegally dealt with compassionately and with finality: no more doubt hanging over these folks’ heads.  A couple of Republican proposals for achieving this are on offer. The Republicans currently in office need to push heavily and loudly one or the other or both of them this year, even though—even because—it’s an election year.  Demonstrate that they’re not the ones too timid to do something major and concrete in an election year.

Republicans also need to hammer on Progressive-Democrat Congressmen constantly saying “No.”  Republicans need to be asking loudly, both in their own districts, in their neighboring Progressive-Democrat incumbents’ districts, and in neighboring open districts why Progressive-Democrats so vociferously oppose any plan on offer that takes care of the DACA children—and that does so largely on Progressive-Democrat terms.  Or do the Progressive-Democrats see these folks only as a talking point and not as a group of human beings?

It would have been good if President Donald Trump, during his SOTU speech last week, had pointed to the Dreamers (not the same group as DACA, but there’s tremendous overlap) in the gallery as guests of Progressive-Democrat Congressmen and said to them, “I have a proposal put before Congress that addresses your needs, including a path to citizenship.  Why are the Democrats so opposed to that?”  But that’s water under the bridge, and he still has time to ask that.  Often.

The third thing Republicans need to add to their campaign is their plan for the future.  What do these guys want to do to make American lives better, and how—concretely, an aspect Republicans never have done well—will those things actually make our lives better?

Disparate Impact

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High-tax States, principally States run by Progressive-Democrat regimes, don’t like the tax reform’s cap on State and local taxes.

The governors of New York, New Jersey, and Connecticut said on Friday that they would sue the federal government to overturn the new US tax law, saying the measure unconstitutionally discriminates against Democratic-leaning states.

This is just the raw sewage of disparate impact being spread across a tax bill—never mind that the tax reform is uniformly applied across all States, across all businesses and individual taxpayers.  Never mind, too, that if some taxpayers, if some taxing jurisdictions, are impacted differently than others, it’s solely a result of the conscious individual, business, and State and local government choices.  At least when “disparate impact” is imputed to matters of race, the alleged victims have no choice in their position in the differences alleged.

Here’s an example of the foolishness and disingenuousness of the suit:

The legal action will argue that the new tax law’s cap on state and local tax deductions infringes on states’ rights and amounts to double taxation[.]

The States have no “right” to a Federal income tax deduction.  Beyond that, the cap can’t possibly represent double taxation; the only tax here is the SALT applied by those State and local jurisdictions.  Not being able to deduct a fraction of that (or any of it, come to that) from a Federal income tax bill is no tax at all.

One hopes the Federal trial judge dismisses the suit out of hand and strongly sanctions the governments and Attorneys General of New York, New Jersey, and Connecticut for bringing such a frivolous suit.  Failing that, one hopes the Supreme Court, where the suit will end regardless of the trial court outcome, itself firmly chastises the State governments and Attorneys General.

Taxing and Spending in New York

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Bookending (in more than one sense of the term) California’s move to confiscate business’ tax cuts, New York’s Progressive-Democrat governor Andrew Cuomo wants to increase the taxes levied on that State’s citizens by $1 billion.  He’s claiming, in all seriousness,

You can’t possibly get anywhere near where you want to be on education and health care unless you raise revenues.  It’s just too big a deficit, and the choice of cutting education or cutting health care I don’t think is a place anyone wants to go to this year. So you have to raise revenue.

This is a false choice.  The largest cause of the State’s deficit, after all, is its spending level, not the size of its revenue.  Thus, one choice Cuomo is carefully eliding is this: the State’s government could cut spending across the board; there is, after all, more going on in New York than just education and health coverage costs.

Alternatively (which Cuomo also avoids mentioning), the State’s government could simply reallocate existing spending into education and health care.

Still another alternative unmentioned, the State’s government could fix its runaway pension funds for its public unions by using accurate projections of investment return rates and increasing the contributions union members and the unions themselves make to the funds.  Along with this, the State’s government could fix its health coverage program, replacing its version of Obamacare with market-based solutions, and freeing the citizens to buy the health plans that suit them rather than suiting Government.  Or not buy at all.

There’s simply no need for more revenue for the State’s government, no need to take even more money out of the pockets of the State’s citizens.

Unfortunately, neither the man nor his Party cronies in the legislature are emotionally capable of conceiving of actually cutting spending, or even of reallocating existing spending.