Death Tax

Democratic Party Presidential candidate Hillary Clinton demurs from Republican Party Presidential candidate Donald Trump’s plan to repeal the death tax—the 40% tax on a man’s estate that the government currently claims because the man was rude enough to die.  Never mind that the man’s heirs might have a claim on the money—no, it’s Government’s money, says the Progressive Democrat.

Clinton claims she wants to build schools, cancel student loans, and provide health care to veterans with the proceeds from that death tax.

Let’s review the bidding.

Clinton has no intention of building voucher or charter schools; she only wants to build “public” schools run by her supporting teachers unions—crony capitalism in our education system.

Clinton’s wish to cancel student loans sends an equally terrible signal: that private citizens aren’t responsible for their own debts or their own actions: government will take care of it for them.  Which puts government in charge of those citizens’ choices, too, but carefully elides that part of her wish.

Clinton’s claims regarding our veterans’ health?  Compare that with the Democratic administration’s handling of the Veterans Affairs and its abject failure regarding our veterans’ health.  The Obama administration has taken no meaningful steps to correct that disaster (some might say refused to take steps), and she brags about wanting to continue President Barack Obama’s (D) policies.  And she says nothing to reconcile the opposition between her veterans-related claims on the one hand and her veterans-related claims on the other.

There’s another aspect to this death tax of hers, too.  Most of the estates being inherited (or which inheritance is blocked by the death tax) are in the form of small, family businesses and farms—businesses which usually have to be sold off to raise the cash to pay the vig tax.  And that leaves the surviving families, those heirs, without the means to earn their livelihood.

Well, Yeah

Here’s Gene Sperling, Bill Clinton’s and Barack Obama’s economic advisor, on Republican Party Presidential candidate Donald Trump’s tax proposal.

If you look at how [Trump’s] tax code has been judged, almost 90% went to the top 1%. What he has doubled down on is this ‘15% solution’. That means that not only will the biggest companies pay 15%, but everybody who has any type of pass-through income. More than half of the 400 richest people in the U.S. have pass-through income[.]

And

Anybody who has any kind of business income, whether you’re a consultant, a lobbyist, a hedge fund manager, investment banker, or corporate lawyer, you would now pay 15%, lower than most middle-income families. The largest multi-national companies that people think have paid too little would pay 15%.

Never mind that Warren Buffet already, proudly, pays only a bit more than those 15% (and while he demands that everyone like him should pay more, he refuses to make a donation to the Treasury—insisting that his views be imposed on those who disagree).  Never mind, either, that with our current gerrymandered tax code, folks like those 400 are driven to the breaks and deductions that lower the investment income portion of their tax bill.

Leaving aside Sperling’s politically motivated exaggeration about those 90%, here are some actual facts.

The top 1% of Americans in income pay nearly 47% of US income taxes—even after adjusting for capital gains and other investment-related income.

The top 20% pay roughly 84%% of US income taxes.

The bottom 50% pay roughly 4% of US income taxes.

It’s obvious to anyone with a 3rd grade lesson in arithmetic that any across-the-board cut in taxes—or even any cut that merely lowers tax rates without materially affecting the tax brackets—is going to yield a bigger dollar cut for the better off.  Sperling surely has at least that level of training in arithmetic.

The Left always demands that the rich should pay their fair share, but the Left always refuses to say what that fair share is.  Except per Sperling the Left insists, tacitly, that 47% or even 84% isn’t it.

At Least He’s Consistent

Recall that President Barack Obama (D) touts his Stimulus Bill, with its explosion in national debt (which is still growing these 7+ years later), as good for our economy.  That it’s an economy still mired, these 7+ years later, in a pseudo-recovery that’s the slowest since WWII and that has a smaller per centage of Americans in the labor force than at any time since the Jimmie Carter (D) years is lost on, or ignored by, him.

Now he’s making the same claim about our nation’s exploding student debt, a pile of markers reaching $1.3 trillion, a pile that has doubled in total size, and a pile that has seen a doubling of per-graduated student debt, all over these same 7+ years of Obama and his administration.  This growing pile is good for our economy, he says.

Maybe not.  That growing debt represents a number of drags on our economy beyond the broader national debt.

It drives up the cost of borrowing for the rest of us by competing for the supply of loanable funds, whether from government or from banks.

That’s fairly minor.  More importantly, money spent on debt repayment is money not spent on

  • consumption or on saving for the borrower’s emergency money needs (at least one such emergency is virtually inevitable over the course of a lifetime)
  • future retirement (which results in an increased reliance on a bankrupt, or nearly so, Social Security and Medicare public retirement system)
  • big ticket items like housing and cars (certainly these are routinely borrowed for, but added debt?)

And there’s this: money not spent on student debt repayment because the student (now adult) borrower has defaulted on his debt represents two more drags on our economy: increased general borrowing costs in order to cover the lenders’ costs of absorbing those bad loans, and increased taxes (which, among other drags, is money withdrawn from the private economy) to cover government-guaranteed privately extended student loans.

All of those drags represent reduced overall private demand and so lower business prosperity and so fewer jobs.  All those drags also represent higher taxes tomorrow or increased (yet again) borrowing tomorrow—and so higher taxes the day after tomorrow.

This is the level of understanding of basic economics held by Obama and the Democratic Party.

EU, Great Britain, and Taxes

Some…suggestions…from continental leaders regarding Great Britain’s departure from the EU and the Exchequer’s suggestions of British corporate tax rate reductions, via The Wall Street Journal:

  • German Finance Minister Wolfgang Schäuble: we can’t have a “race to the bottom, now can we?”

Why not, I ask—what are you so terrified might result from letting those who earned the money keep more of it?

  • Pierre Moscovici, European Commissioner for Economic and Financial Affairs, Taxation and Customs: let’s not have any of this “exacerbated(?) fiscal competition between ourselves” nonsense.

I ask—why not?  What’s so terrible about competition, which spurs innovation, holds down costs for the citizenry, limits government power.  Oh, wait….

  • French Finance Minister Michel Sapin: “Whether you’re in the union or yo’’re out, we should all adopt a friendly attitude.” Or else.

So I ask—when are you going to adopt that friendly attitude, M Sapin?

Cut the taxes, guys.  If the continent want to run, screaming, away from the terror of competition, you’ll still have the Irish and the Icelanders with whom to play.  And a whole, wide world outside the European continent and its special snowflakes.

Another IRS Assault

This time on private enterprise and a private economy company that’s nominally outside the scope of the government economy.

US tax officials sued Facebook Inc to force the company to hand over documents related a transfer of assets to Ireland in 2010, part of a yearslong investigation into whether some of those assets were undervalued “by billions of dollars.”

Because, of course, John Koskinen and his IRS minions know better how to value a private enterprise than does the private enterprise.

Alternatively, Koskinen has reason to believe the company has falsified its valuations, which raises the question: what’s your probable cause, Mr Koskinen?