Christmas is almost here -- are you excited? Donald Trump (the Pretender President) says
he is giving the American people the greatest Christmas present ever! WOW!
Unfortunately, what
the Donald has delivered to the American people – at least to those in the
lower to middle income brackets – is lumps of coal, signifying the darkness of
this administration and its sponsors. Let’s
look at some of the Winners and Losers targeted by this legislation (with much
help from a summary published on Dec. 15th by The NY Times).
WINNERS
Donald Trump and the Trump Family – The Donald and Jared Kushner are both associated with
the Real Estate development business, which is treated very well in this Act in the form of “pass through” income -- money earned by partnerships and other types of businesses whose income is
passed through to its owner and taxed at the individual tax rate.
Under previous law, that income was taxed at rates as high as 39.6 percent.
Under this new Tax Law, much of that income will be taxed at a rate as low as
29.6 percent. Real estate also avoided new limits on interest deductions and
retained its ability to defer taxes on the exchange of similar kinds of
properties, and added language makes it easier for real estate owners to avoid
some of the pass-through provision’s restrictions and maximize the tax benefits
even more.”
This
is one major sign of an authoritarian leader – using government to feather
one’s own nest. This Blog predicted that
outcome back in 2015 when Trump decided to run for the GOP nomination (see Nov.
17, 2015 blog, and others). However, Trump is not the only elected official to benefit personally from
this Act. In all, 14 Republican senators (see list below) hold financial interests in 26
income-generating real-estate partnerships — worth as much as $105 million in
total. Those holdings together produced between $2.4 million and $14.1 million
in rent and interest income in 2016, according to federal records. Who are they?
The
provision was not in the original bill passed by the Senate on Dec. 1. It
was embedded in the final version by Sen. Orrin Hatch of Utah, who is
among the lawmakers that stand to personally benefit from the provision.”
“Republican Sen. Bob Corker, who owns up to $35 million in
“pass-through” real-estate interests, claimed he
did not know of the carve-out when he announced his support for the legislation
on Friday, after previously casting the only Republican vote against the bill
in the Senate, which did not then include the provision.”
So, let me ask you: Did YOU get any special treatment like this, so that you could lower the
taxes on your property assets? Of course
not; you got a piece of coal named SALT by which you can now only deduct
up to $10,000 of your property taxes.
YOU got a small cut on your income tax and a possibility of using the
increased standard deduction instead of having to itemize your expenditures in
certain categories. Lucky YOU. Those small benefits of $18-20 per week will
disappear quickly when your medical insurance premiums get raised by 10%,
mortgage and credit card rates go up by perhaps a full point, and other prices
like food begin to be inflated. And, by
the way, how do YOU like the fact that you are paying for the gains of these
congressmen and senators?
BIG CORPORATIONS – “Industries
like big retailers benefit from the
new corporate tax rate of 21 percent, since those companies were paying
relatively close to the full 35 percent (old rate). Other aspects of the
corporate tax cuts will be enjoyed by an array of multinational industries (particularly
technology and pharmaceutical companies), like Google, Facebook, Apple, Johnson
& Johnson and Pfizer. Such multinational companies have accumulated nearly
$3 trillion in offshore tax havens untouched by the United
States taxman. The tax bill will attempt to force those companies to gradually
bring that money home, but it will be taxed at rates ranging from 8 percent to
15.5 percent. That’s far lower than the previous 35 percent tax rate on
corporate profits and even lower than the new 21 percent rate. Plus, American companies will no longer owe
full corporate taxes on future profits they say they earn abroad, providing
more incentive to push income into tax haven subsidiaries. The law even
includes provisions that could encourage companies to move workers abroad,
despite pledges to do the opposite.
So again, let me ask YOU: did
YOU get anywhere near a 40% decrease in your tax rate? Of course not. You maybe got a new bracket and who knows
what that means. Incentives to bring
back that off-shore money – that’s what this is all about – this lowered rate
of repatriation tax (penalty).
BUT, what international corporations will bother, since they already receive top dollar for stashing the cash in the first place, and giving up 8-15% is not that appealing. Once again, that offshore money is not going to help you; it’s not going to trickle down; it’s not going to be invested in new employment. If it was, it would have been invested already in operations in other countries by these multi-national corporations. What’s more, several countries are now moving quickly to lower their rates on profits and financial investment, etc. Sorry, but the Trump Tax Code reformulation may have little effect on profit havens or investments in new jobs or bringing industries back to this country.
BUT, what international corporations will bother, since they already receive top dollar for stashing the cash in the first place, and giving up 8-15% is not that appealing. Once again, that offshore money is not going to help you; it’s not going to trickle down; it’s not going to be invested in new employment. If it was, it would have been invested already in operations in other countries by these multi-national corporations. What’s more, several countries are now moving quickly to lower their rates on profits and financial investment, etc. Sorry, but the Trump Tax Code reformulation may have little effect on profit havens or investments in new jobs or bringing industries back to this country.
MULTIMILLIONAIRES An exemption for estates that owe what Republicans call the “death
tax” was lifted to $22 million from $11 million. That means a big tax cut for
people with estates worth tens of millions of dollars. Plus, the top rate applying to wages and
interest income would be cut to 37 percent from 39.6 percent.
PRIVATE EQUITY MANAGERS -- wealthy
investment managers, thanks to the so-called carried interest loophole,
pay taxes on the majority of their pay at a lower capital gains rate. But the
purported reform to this tax provision will affect few if any private equity
managers, leaving the loophole intact.
Like so much in the Tax Code, the last two provisions
don’t apply to many of us because we don’t have enough money to qualify for
these special breaks, nor did we get anything comparable – like a break on
insurances (health, life, accident, property or estate) – or the 529 incentive
toward private education for our grandchildren or children, since it is
doubtful we will have enough personal income to send grandchildren to a private
elementary or secondary school, as incentivized below for those who can afford
it beyond the $10k per year.
PRIVATE SCHOOLS AND THE PEOPLE WHO CAN AFFORD THEM Parents are now eligible to use a type of
tax-deferred savings plan — known as the 529 plan — to save for their
children’s elementary and secondary education. Previously, those savings plans were
only eligible for college, but have now been expanded to allow for up to
$10,000 a year for tuition at private and religious schools. Simply another attack
by this administration on public education.
TAX ACCOUNTANTS AND LAWYERS Mr. Trump once said his “dream” was to put tax preparation services out of
business by simplifying the tax code. But the rushed legislation will probably
have the opposite effect…. tax preparers are sure to see a boom in business
advising clients on how to restructure their employment and compensation
arrangements to take advantage of the lower tax rates on income reported by
corporations and pass-through entities.
LOSERS
PEOPLE BUYING HEALTH INSURANCE -- According to the Congressional Budget Office,
healthier people are more likely to drop their insurance, leaving insurers
stuck with more people who are older and ailing. This is expected to make
average insurance premiums on the individual market go up by about 10 percent.
All told, 13 million fewer Americans are projected to have health coverage over
the next decade, according to the Congressional Budget Office.
Another
piece of COAL for YOU: average cost of
health insurance premiums going up by 10% -- that’s what you get simply because
one political party desires the denigration of the signature piece of
legislation of our first African-American President. The radical Republicans have removed one leg
of a 3-legged plan in Obamacare, but subsidies and Medicaid expansion remain. Note one thing – there is nothing to support
coverage by excellent health care – like incentives for insurance companies who
take on the sickest patients (the Republican Congress removed those incentives
back in 2014!)
INDIVIDUAL TAXPAYERS IN THE FUTURE To stay under the $1.5 trillion limit for
new deficits, Republican lawmakers opted to make the cuts for individuals and
families temporary, expiring at the end of 2025 — even though the
corporate tax cuts will be permanent. Republicans are
counting on a future Congress to extend the lower rates, but there are no
guarantees, and that could mean a big tax increase down the road. Moreover, the
use of a different, less generous measure of inflation (chained CPI) will push
taxpayers into higher tax brackets more quickly.
YOU
may have missed that last one – ‘the
chained CPI’. Wasn’t that something that
was defeated as an unreliable formula for determining the cost-of-living
increases for Social Security (even though President Obama favored it)? Yes.
“Application
of chained CPI has been suggested as a means of reducing the US federal budget
deficit by reducing the rate of growth of government benefits. The
Congressional Budget Office estimates switching to the chained CPI would save
$340 billion. However, moving to the
chained CPI would also reduce Social Security benefits by 3% for the bottom 60%
of Social Security recipients and 4% for the top 40% of beneficiaries (per
estimates for 2050 from the Social Security Administration ).
The
Tax Policy Center estimated that changing to the Chained CPI would increase the
taxes paid by 30% of the bottom 20% of the income distribution, 70% of the next
20% of the population, and nearly all the people in the top 60% of the income
distribution. “(Wikipedia). At any rate,
this formula for measuring inflation seems flawed enough to reduce Social
Security benefits and to increase taxes.
THE ELDERLY A
2010 law requires that any legislation that adds to the federal deficit be paid
for by spending cuts, increases in revenue or other offsets. Some cuts would be
automatic, and the biggest program to be affected is Medicare, the health
insurance program for the elderly and disabled. Dozens of other programs are
likely to be cut as well, but Medicare, which would face a 4 percent cut, is by
far the biggest. Republicans say that this rule will be waived, and the cuts
will be averted, but that will take a bipartisan deal.
Does
it occur to YOU that something is wrong here?
Social Security and Medicare – two of the most important social
insurance programs ever assembled to alleviate the poverty of Seniors and to bolster
the dignity of their lives: Both are
being cut to help fund the huge Christmas gift to the 1% in this country. And here is the statistic that should rattle
your cage if nothing else has done so: 80% of the benefits of this bill go to 1% of the population – the richest individuals
and corporations in the nation are being showered with more wealth taken from
the rest of us!
Meanwhile back at Reality Ranch --
LOW-INCOME FAMILIES who claim the earned-income tax credit
will lose out on at least $19 billion over the coming decade because of the
change in the way inflation is calculated. And a new requirement that families
claiming the child tax credit provide a Social Security number is projected to
mean a big reduction in the families claiming it, since those who are not in
the United States legally would be prohibited, even if their children were born
in the United States.
Now, that’s one way to get at DACA – by
having children of undocumented immigrant parents penalized by a subterfuge in
the Tax Code of having to present a SSN to receive an income tax credit.
When extracting your tax dollars from the U.S. Treasury by claiming a benefit or incentive or receiving a pass-through of assets to be taxed like wages -- are the people in the top 1% placed under the same degree of scrutiny? What if some of those 1% are frauds, felons or criminals preying on others to their own aggrandizement? What if some of those hedge fund managers benefiting from carried interest are cheating their clients? Isn’t that essentially what Donald Trump claims to be true of most undocumented aliens – that they are a criminal element? He never says that about the 1%. Yet, here’s the rub – as a group, the wealthiest 1% has harbored the richest thieves and crooks of all time. A few of note range from hardcore criminals like Al Capone to corrupt financiers like Bernie Madoff, and Leona Helmsley. What has Trump done to scrutinize this criminal element among the 1% to equal his scrutiny of immigrants?
When extracting your tax dollars from the U.S. Treasury by claiming a benefit or incentive or receiving a pass-through of assets to be taxed like wages -- are the people in the top 1% placed under the same degree of scrutiny? What if some of those 1% are frauds, felons or criminals preying on others to their own aggrandizement? What if some of those hedge fund managers benefiting from carried interest are cheating their clients? Isn’t that essentially what Donald Trump claims to be true of most undocumented aliens – that they are a criminal element? He never says that about the 1%. Yet, here’s the rub – as a group, the wealthiest 1% has harbored the richest thieves and crooks of all time. A few of note range from hardcore criminals like Al Capone to corrupt financiers like Bernie Madoff, and Leona Helmsley. What has Trump done to scrutinize this criminal element among the 1% to equal his scrutiny of immigrants?
And
let us not forget that The Donald has done nothing to make absolutely sure that
poor children are covered with excellent health care, are well-educated, are
given decent opportunities to succeed in life and are adequately housed. The EIC is not the answer nor the solution to
the ill effects of poverty upon our children (see my Blogs dated 10/10/17;
5/8/17)
PEOPLE IN HIGH PROPERTY TAX, HIGH INCOME STATES -- Homeowners in high-tax states like New
York, New Jersey and California could be big losers. Their ability to deduct
their local property taxes and state and local income taxes from their federal
tax bills is now capped at $10,000. In some cases, that could be offset by the
lower tax rates that all taxpayers will owe on their ordinary income.
[A
version of this article appeared in print on December 17, 2017, on Page A25 of
the New York edition with the headline: Is the Tax Bill a Christmas Gift for
You? Check the Fine Print]
The Sham and the Shame
To carry through on the new Tax law, it is estimated that
$1.4+ trillion is going to be added to the national debt because new (and some
old) tax loopholes for the wealthiest individuals and corporations remain in
this bill. Republicans have failed once
again to reduce the deficit and the debt because they believe that a fanciful
“Trickle-down” theory enhances everyone’s status and opportunities as the rich
get richer and invest in the broader economy.
Will someone please tell me why there is an accumulation of over $3
trillion in off-shore financial institutions where it is not helping anyone
except its owners and the banks in which it resides.
“Trickle-down” has always been a farce because the wealthy owners of such money do not see it going anywhere except into their own coffers and those of their administrators and lawyers, their boards of directors and their investors. They like the arrangement of paying lower taxes on assets, property, business operations (labor especially) and income from other than wages in certain tax-friendly countries, and having it to spend or leave to family when the time comes.
International corporations are doing just fine, and they won’t invest in the U.S.A. just because the Republicans need them. There is a report circulating on TV about a room filled with high-powered administrators from international corporations. When asked if they expected to increase investment in U.S. industries and communities because of the Tax Code changes, just one person raised his hand to indicate a Yes. The rest were reluctant to commit themselves or their companies to such an outcome.
“Trickle-down” has always been a farce because the wealthy owners of such money do not see it going anywhere except into their own coffers and those of their administrators and lawyers, their boards of directors and their investors. They like the arrangement of paying lower taxes on assets, property, business operations (labor especially) and income from other than wages in certain tax-friendly countries, and having it to spend or leave to family when the time comes.
International corporations are doing just fine, and they won’t invest in the U.S.A. just because the Republicans need them. There is a report circulating on TV about a room filled with high-powered administrators from international corporations. When asked if they expected to increase investment in U.S. industries and communities because of the Tax Code changes, just one person raised his hand to indicate a Yes. The rest were reluctant to commit themselves or their companies to such an outcome.
The sham is that the trickle-down theory has never been proven TO WORK. Tax cuts for the wealthy do not bring prosperity for all, just for the wealthiest. The low unemployment rate, and the stock market record-breaking sales are not measurements of anything except the fact that the rich are making more millions. They are the ones who play the stock market en masse and its results have relatively little to do with the middle class.
The
shame is that the concept of responsible philanthropy, or of a social contract
with the rest of society, is not generally accepted by the wealthiest people
and corporations. They exist to make a
profit, and sharing with others is not high on their list. (Take a look at my blog postings of 3/21/2017,
3/10/2016, 9/21/2015, 3/8/2014). Another
bit of shame is that Congress and the Great Pretender seem unable to practice equanimity. What is the problem with
having a rule that says that any cut or break given to one bracket must be
matched by similar actions in all other brackets. After all, if there can be a budgeting rule
that says increases in one area must be offset by similar cuts in other areas, an equity rule for benefits should not be that difficult to
employ!
Your Christmas present from this Congress
and pretend President is not only a sham and a shame – it is a sop, meant to appease
his followers and to solicit your vote.
Any cuts realized by middle class taxpayers will be offset by other provisions
of this sham – like cuts to personal deductions and to Medicare; use of the
chained CPI to measure inflation inadequately; a 10% increase in health care
insurance premiums caused by the elimination of one of Obamacare’s three
pillars – the individual mandate. The
latter will quickly return us to paying the increased administrative costs and
burgeoning salaries of insurance company executives, as well as paying for more
ill people using emergency rooms because they have no health insurance.
The Tax Cut Act is the gift of an authoritarian
leader whose quest is control of the working class, monetary support from the
oligarchs, and obsequious loyalty from the lesser mortals who direct his offices
and departments. AND PLEASE DON’T FORGET – REP. Claudia Tenney (R-NY22) voted in favor of this debacle!
Despite the pieces of coal that Trump and
One-Term-Tenney left in your stocking….
MERRY CHRISTMAS TO ALL, and may the
NEW YEAR bring new strength to enable us to persevere until November 6, 2018!
