Tag Archives: taxes

Misguided Categorizations

Posted on by
Reply

The Wall Street Journal has them in its article concerning some outcomes of the just-passed House version of the budget reconciliation bill. The headline reads

The Biggest Losers in Trump’s Megabill

Some Medicaid users are categorized as losers. House-passed work requirements would mean some few millions would lose Medicaid coverage unless they show they’re working part time or are actively seeking work or they are volunteering. Separately, nearly a million and a half illegal aliens would lose coverage. It’s hard to see how these are losers. Those going back to work rather than coasting on our taxpayer handouts stand to gain morally and in the medium- and longer-term economically by having jobs and being able thereby to move up the economic ladder. Those volunteering will do much good for their community while gaining—if they volunteer seriously—valuable work experience. The illegal aliens being denied coverage can’t be losers, since it’s not a loss to no longer receive that to which they were never entitled in the first place.

Older food-aid recipients are categorized as losers from those same work requirements, here being extended to age 64. This is an especially wrong categorization since these folks actually gain in two ways. The first and immediate way is from the same gains as just above, for all that the longer-term part is absent. The second way these folks actually gain, though, directly addresses that longer term: by working those added years, they’re plussing up the Social Security payments they’ll receive when they actually retire.

Clean-energy projects are categorized as losers. The House-passed bill cancels these projects’ tax credits on an accelerated (relative to the originally proposed glacial) schedule. This time, the projects really are losers, but our economy gains enormously by cutting off those money wasters and by reducing the energy production and market distortions such credits have created.

Some student-loan borrowers are categorized as losers. The House-passed bill would put them on one of two offered repayment plans. This actually makes the borrowers winners, since it makes it possible for them actually to repay their loans and get those yokes off their necks.

EV/hybrid car owners and buyers are categorized as losers. Here, as with clean energy, the battery car buyers will lose out on subsidies, but our economy as a whole—and ultimately those battery car buyers—will gain sharply. These wastes of our taxpayer money will stop, and those subsidies’ production and market distortions will disappear.

While it’s true enough that the House-passed bill has much for which to be criticized—it doesn’t reduce tax rates enough, and it doesn’t cut spending nearly enough—these five items aren’t on that list.

Tariffs and Reindustrialization

Posted on by
Reply

This seems to be my day for letter-writers. Another writer in The Wall Street Journal‘s Sunday Letters section wrote about the current lack of effectivity of (protectionist) tariffs in stimulating moves toward reindustrialization in our economy.

Through initiatives such as Operation Warp Speed and strategic invocation of the Defense Production Act, the government took risk out of domestic production through substantial direct investment, guaranteed purchase agreements, prioritized allocation of critical materials and equipment, and streamlined regulatory processes.

He then proposed a similar program to spur reindustrialization.

He’s right as far as he went, but it’s too one-sided, lacking as it does any requirement for the targeted industries to do their part. Aside from the addictive nature of protectionist tariffs, it’s far too often the case that the “protected” industry companies merely take advantage of the increased prices of tariffed imports to raise their own prices accordingly, collect the increased revenue, and do nothing to improve their own competitiveness.

What’s also needed, as a part of these tariffs, is a requirement that the “protected” industry companies use the large majority (60%-75%, say, just to have a starting point for discussion) of the increased revenues accruing from the increased sales at their immediately pre-tariff prices to achieve the following:

• increase market share via their largely unchanged price
• increase spending on innovation
• increase spending on capital plant maintenance, improvement, and expansion
• increase spending on line worker wages
• increase spending on line worker hiring

And one more fillip: a hard expiration date of the protectionist tariff, in the range of 5-10 years, that cannot be extended except by Congressionally enacted statute.

That’s the route to actually reindustrializing: doing concrete things to achieve concrete goals.

Tariffs and Economic Growth

Posted on by
Reply

The good editors at The Wall Street Journal spent a lot of ink and pixels decrying President Donald Trump’s (R) tariff moves. They saved the money bit for the end, though maybe not in the way they intended.

The best response to the warning from the first-quarter GDP decline would be for Mr Trump to call the whole tariff thing off. Short of that, settle for 10% across the board and call it a day. If that’s too much of a come-down, Republicans will need to pass a pro-growth tax cut and accelerate their deregulatory push as their best chance to liberate the economy from its tariff kidnapping.

Those first two sentences are irrelevant, whatever one might think of Trump’s tariff moves. Republicans need to pass a pro-growth tax cut and accelerate their deregulatory push—and pass serious spending cuts—independently of any tariff moves.

Responsibility

Posted on by
Reply

The Republican caucuses in the Senate and House are considering restrict[ing] the [provider] taxes’ use to finance state Medicaid contributions entirely, which would have the effect of putting more of a State’s expenditures under Medicaid on the State itself: overall, the restriction would save the Federal government—which is us taxpaying citizens writ nationwide—some $600 billion over 10 years.

There are objections, of course, by those whose money tree would be severely pruned. Ryan Cross, Franciscan Missionaries of Our Lady Health System’s Government Affairs VP:

If you end provider taxes, you’re going to shift that burden to the state, either harming Medicaid patients and healthcare-provider reimbursement, or leading to higher state and local taxes[.]

This is disingenuous. Any harm done Medicaid patients, who as citizens of their State are the responsibility of that State, and of healthcare providers, who as operators in that State also are the responsibility of that State, is done by that State through its own decisions regarding the tax remittals of that State’s own citizens. Regarding those decisions, it apparently is inconceivable to Cross and the rest of the Leftists that the State could reallocate its spending to cover the costs rather than just knee-jerk and willy-nilly raise its taxes.

These are $600 billion dollars for which us taxpaying citizens of our nation have better use.

More on Birthright Citizenship

Posted on by
Reply

Jed Rubenfeld, Professor of Law at Yale Law School, had an op-ed in Sunday’s Wall Street Journal in support of the concept of birthright citizenship. In it, he hung his hat on the “visitor” aspect of our Constitution’s 14th Amendment jurisdiction phrasing.

The 14th Amendment guarantees citizenship to everyone “born or naturalized in the United States, and subject to the jurisdiction thereof.” The opacity of the “jurisdiction” language allows reasonable people to land on either side of this issue. But in 19th-century legal usage, being “subject to the jurisdiction” of the US had a long-settled, straightforward meaning. As Chief Justice John Marshall explained in Schooner Exchange v McFaddon (1812), it meant being subject to US law.
Could you be prosecuted in an American court and imprisoned in an American jail for violating American law? If so, you were subject to US jurisdiction.

That “vulnerable to prosecution and jail” means “subject to US law” is at the core of the misunderstanding here (I’m eliding the question of whether a then-56-yr-old “settled meaning” remained settled after the 14th Amendment was ratified), including to birth tourism—whereby a pregnant woman enters the US for the express and sole purpose of giving birth on US soil so as to garner citizenship for her baby, after which the now-mother leaves with her baby to return to her home nation. Such “visitors,” while so subject, are not subject to US jurisdiction, but only to US government power and authority.

Birth tourists subject themselves only to some of our laws—that small subset of them that lets them enter our nation legally and then avail themselves of our medical-related duty of care laws. They otherwise remain within the control of their home nation laws and so retain the jurisdiction of their home countries, to which they fully intend to return as soon as they’re able to travel after giving birth. They’re holding themselves apart from and outside of our nation’s full and complete jurisdiction—which is what our 14th Amendment requires, even for birth tourists.

Illegal aliens go even farther: they hold themselves completely outside our jurisdiction by holding themselves completely outside our laws: they’ve disregarded our laws from the outset by their entering illegally. They render themselves subject only to the power of our government even as they, too, are subject prosecution and jail—or deportation.

This misunderstanding by Rubenfeld (and others) expands on the matter:

When a foreign army invades and conquers another country’s territory, that land becomes subject to the conquering country’s laws.

Not at all. That conquered territory becomes subject only to the conquering country’s power and ability to impose its laws. Even as long ago as Emer de Vattel, in his The Law of Nations, this was well understood.

The Left’s repeated ignoring of these simple facts does not make those facts nonexistent.

Unfortunately (cynically?), Rubenfeld, like others pushing this argument, leave wholly unaddressed those last.