by | ARTICLES, BLOG, ECONOMY, GOVERNMENT, OBAMACARE
With the narrow passage of the GOP Healthcare bill this week, Michael Cannon wrote his critique of the legislation (GOP Healthcare Bill Is Not Repeal — It Is ObamaCare-lite, or Worse, May 4, 2017). Cannon is considered one of the foremost experts on Obamacare over the last 7 years. His displeasure with the bill focuses on problem of “community rating” inherent in Obamacare — which remains in the ACHA. Here are his principle concerns:
“House Republicans went behind closed doors and emerged with a bill that does not repeal the core provisions of ObamaCare, and therefore cannot begin to repair the damage those provisions are causing.
ObamaCare’s core provisions are the “community rating” price controls and other regulations that (supposedly) end discrimination against patients with preexisting conditions.
How badly do these government price controls fail at that task?
Community rating is the reason former president Bill Clinton called ObamaCare “the craziest thing in the world” where Americans “wind up with their premiums doubled and their coverage cut in half.”
Community rating is why women age 55 to 64 have seen the highest premium increases under ObamaCare. It is the principal reason ObamaCare has caused overall premiums to double in just four years.
Community rating literally penalizes quality coverage for the sick, to the point where Harvard economists found patients with multiple sclerosis and other high-cost conditions “cannot be adequately insured” under ObamaCare. It is the driving force behind ObamaCare’s narrow networks and the exclusion of premier hospitals.
Worst of all, community rating is taking health care away from the sick. Community rating has driven every last insurer from the Exchange in east Tennessee, leaving 43,000 Americans – including many with expensive conditions – with no coverage after December. It may soon do the same in Iowa, and another 1,000 counties that have only one insurer remaining in the Exchange.
Why? Because community rating forces insurance companies to cover the sick below cost, which simply isn’t sustainable. The only solution ObamaCare supporters offer is to keep throwing more money at the problem – which also isn’t sustainable.
ObamaCare is community rating. The AHCA does not repeal community rating. Therefore, the AHCA does not repeal ObamaCare. In fact, Republicans are modifying ObamaCare’s community-rating price controls and other regulations in ways that will accelerate ObamaCare’s race to the bottom.”
There is much more to Cannon’s piece than this, and it’s worth it to read in its entirety. The original piece was published on The Hill (Online) and reprinted via the CATO Institute.
For a different perspective on the ACHA, see my piece noting the list of Obamacare taxes abolished with this legislation.
by | ARTICLES, BLOG, ECONOMY, GOVERNMENT, POLITICS, TAXES, TRUMP
From the WSJ: “With Wednesday’s proposals—which include a 15% tax rate for all businesses, lower individual rates, a bigger standard deduction to benefit middle-income households and the repeal of the estate and alternative minimum taxes—Mr. Trump hopes to speed up economic growth and make his mark as a historic tax cutter.
What the administration delivered Wednesday largely hews to tax-cut proposals Mr. Trump made during his campaign last year, but includes some crucial changes. Most notably, he is proposing to repeal a provision of the tax code that allows individuals to deduct the state and local taxes they pay from their reportable income. That will hurt residents of high-tax states such as Mr. Trump’s home state of New York, New Jersey and California, and is already spurring objections from Republican lawmakers in those largely Democratic states.
Such a repeal has the potential to raise more than $1 trillion over a decade, which would help fund the reduction in rates and get the tax plan through Congress, which is focused on deficits in part because of budget rules.”
“Unless Mr. Trump can attract votes from Democrats—which appears unlikely—the plan must comply with legislative procedures that allow for a party-line vote in the Senate, where Republicans have 52 seats out of 100.
The key to those procedures: Any tax plan can’t increase budget deficits beyond a 10-year period. The Committee for a Responsible Federal Budget said Wednesday that the plan would cost about $5.5 trillion in lost revenue over a decade. Those limitations could lead Republicans to make some or all of the tax cuts temporary to limit the long-run fiscal effect.
Mr. Trump’s team intends to argue that his tax cuts will spur economic growth and increase revenue, which would help avert increased deficits. Lawmakers and Congress’s nonpartisan tax policy scorekeepers—the Joint Committee on Taxation—need to agree for the plan to proceed. Independent experts cautioned that the administration’s growth assumptions appear optimistic.”
As more details of this plan emerge, we can assess its merits and pitfalls.
by | ARTICLES, BLOG, ECONOMY, GOVERNMENT, OBAMACARE, POLITICS, TAXES, TRUMP
I’m sick and tired of reading over and over again in places both liberal and conservative that Trump’s (as well as the Republican’s) proposed tax reforms are going to give the lion’s share of the cuts to the top 1%. The entire concept is totally distorted.
In fact, nobody has been talking about the series of tax changes that occurred when Obama and his Democrat cronies passed the Obamacare increases. These raised the Bush tax rates on only the wealthiest from 36% – 39.6 % and then again raised the tax rates on the wealthiest by adding a net investment income tax (NIIT), otherwise known as the “Obamacare tax,” which covered all investment income. The increase also raised capital gains on the wealthiest ones from 15% – 20%. When the 3.8% tax would get tacked on, capital gains rates effectively went from 15%- 23.8% — an increase of about 55%. That’s ridiculous!
Those ludicrous tax increases were principally responsible — along with the hemorrhage of regulations coming out of the Obama administration — for the horrific economic performance since Obama took office. The first step of any meaningful tax reform should be to reverse those Obamacare tax increases, which went 100% to the higher income individuals, and 0% to the middle class and lower income. The reversal of those insane tax increases should in no way be considered a tax cut. It is just restoring what was in fact an egregious toxin on our entire economy.
by | ARTICLES, ECONOMY, FREEDOM, GOVERNMENT, POLITICS, TAXES, TRUMP
The clearest example yet of Media abuse of Donald Trump has surfaced in connection with the recently released excerpts from Pres. Trump’s 2005 federal income tax return. The return shows clearly and unambiguously that he paid an effective federal tax rate of 78.2%. Yet the press twisted the truth- outright lied – in reporting a tax rate of 25%, or even less.
It is outrageous that the media is distorting the true tax rate that Donald Trump paid for the 2005 tax year. His 1040 that was released last week showed that he paid an effective tax rate of 78.2% — not the 25% that some outlets are reporting (or the 5.3% figure that even other uninformed pundits have tried to peddle).
Let’s break this down: Trump’s Adjusted Gross Income (AGI) was reported to be $48.6 million. The AGI is an important number for all taxpayers, because it is derived from a taxpayer’s gross income net of allowable, rational, and legal adjustments to it. Every taxpayer reports an AGI and is the base figure from which taxable income amounts are calculated. Trump’s tax was $38million. Trump’s tax rate was effectively 78.2%: 38 million in federal taxes/48.6 million AGI = 78.2% tax rate.
In a clear attempt to avoid admitting that Trump paid such a high rate of tax, the pundits began manipulating and distorting the data. AGI was raised from $48.6 million to $152 million by arbitrarily – and inappropriately – adding back what appeared to be a $103 million perfectly legal carryover loss. Carryover loss provisions are necessary in that prevent people from paying taxes on profits that just restore losses that were actually incurred in a prior year.
Because Trump is a high income earner, he must calculate his taxes both by the regular tax rate and the Alternative Minimum Tax (AMT). The AMT is a parallel tax rate used by the IRS that disallows some or all legal deductions and credits that other taxpayers enjoy to ensure that such taxpayers pay “at least their fair share.” The AMT has been used for decades to collect more taxes by denying or minimizing income-reducing tax benefits that lower income-earners use. In Trump’s case, most of his deductions, including the carryover loss, were disallowed or reduced, resulting in his federal tax liability ultimately rising to $38 million.
That means on Trump’s AGI of $48.6 million, he paid $38 million in federal taxes.
It is always standard procedure to calculate one’s tax rate using the AGI as the starting point — not the gross income amount. No other politician (Romney, Obama, Clinton, etc.) has had tax rates calculated and published with other than their adjusted gross income as the base. Applying the standard used by the media for all other important figures, Trump’s tax rate was effectively 78.2%: 38 million in federal taxes/48.6 million AGI = 78.2% tax rate.
Continuing to focus on the $153 million as the starting point serves the media two purposes: 1) it makes Trump sound like a greedy capitalist who earned gobs of money and is out-of-touch with the average American; and 2) they want to highlight his $103 carryover loss as something that is unethical or wrong or a “sneaky loophole” that Trump should not have been allowed to do — even though virtually every business and investor makes uses of such tax provisions. Carryover losses are a necessary tax tool that is used as a means to continue to encourage investors who put up capital for long-term investments in the economy and deal with the ebb and flow of the market.
The real story here is this glaring example of the AMT creating yet another unfair and irrational burden on a taxpayer by siphoning extra tax revenue through the elimination and reduction of basic tax law provisions that other taxpayers enjoy. A 78.2% tax rate is extremely outrageous — about as outrageous as the media who ignores basic tax calculations in an effort to sensationalize and demonize Trump.
by | ARTICLES, ECONOMY, OBAMA, OBAMACARE, POLITICS, TAXES, TRUMP
After telling the American electorate that he wants to repeal and replace Obamacare, Trump has now stated that he may not do this entirely. The way he worded his remarks indicates that he is willing to keep “ObamaCare’s preexisting condition and the 26 year old provision to stay on their parent’s plan” to remain.
These two provisions are not “Obamacare” provisions – they are provisions that could – and maybe should – be part of a new health care law. The new replacement for Obamacare could have provisions for people with preexisting conditions to get insurance and even keeping 26 year olds on the plan — but it should be funded in a new healthcare plan that is able to charge competitively using a Health Saving Account structure, with tort reform, interstate competition, no mandated coverage that people don’t want – and government subsidies for the needy – and not by mandates and intentional overcharges.
The fact that some provisions of ObamaCare are also in the new plan does NOT mean that part of ObamaCare remains. Socialism and Capitalism are not the same just because they both have a police force.
ObamaCare must go in its entirety.
by | BLOG, ECONOMY, GOVERNMENT, TAXES
Last week, Steven Mnuchin, Trump’s Treasury Secretary pick, announced that high earners won’t receive an “absolute tax cut” suggesting that any tax reductions would also be coupled with less deductions. Unfortunately, Mnuchin doesn’t know or pretends to ignore the fact that high income earner have faced brutal tax increases during the Obama Administration, and thus any decreases are really just a return to the more appropriate rates of the Bush years.
Obama raised the Bush tax rates on only the wealthiest earners from 36% – 39.6 % and then again raised the tax rates on only the same wealthiest by adding a Net Investment Income Tax (NIIT) of 3.8%, — otherwise known as the “Obamacare Tax” — which covered all investment income of individuals, estates, and trusts. What’s more, Obama also raised capital gains on the wealthiest earners from 15% – 20%, but when the NIIT 3.8% tax was added to it, it actually raised the capital gains rates on the highest earners from 15 – 23.8% — an effective increase of nearly 59%! Rolling back the marginal rates and eliminating the Obamacare tax are not tax reductions at all, so to suggest offsetting them with a change in tax deductions is terribly misguided.
The United States has far and away the most progressive income tax in the world. Simplifying the code, ending the war on the wealthy, and lowering corporate and individual taxes are the keys to jump-starting the economy and restoring economic growth and prosperity.
by | ARTICLES, BLOG, ECONOMY, ELECTIONS, GOVERNMENT, OBAMA, OBAMACARE, POLITICS, TAXES, TRUMP
I’m sick and tired of reading over and over again in places, both liberal and conservative, that the Trump and GOP-proposed tax reforms are going to give the lion’s share of the cuts to the top 1%. The entire concept is utterly distorted, especially in light of the fact that nobody talked about the litany of tax increases that occurred when Obama and his Democrat cronies passed the Obama and Obamacare increases.
Obama raised the Bush tax rates on only the wealthiest earners from 36% – 39.6 % and then again raised the tax rates on only the same wealthiest by adding a Net Investment Income Tax (NIIT) of 3.8%, — otherwise known as the “Obamacare Tax” — which covered all investment income of individuals, estates, and trusts. What’s more, Obama also raised capital gains on the wealthiest earners from 15% – 20%, but when the NIIT 3.8% tax was added to it, it actually raised the capital gains rates on the highest earners from 15 – 23.8% — an effective increase of nearly 59%!
Those ludicrous tax increases that no one talks about were principally responsible — along with the hemorrhage of regulations coming out of the Obama administration — for the horrific economic performance we’ve experienced since Obama took office. The first step the new Trump administration should take would be to reverse those very tax increases that Obama inflicted, which went 100% to the higher income individuals, and 0% to the middle class and lower income earners. The reversal of those insane tax increases should in no way be considered a tax cut as part of any tax reform package. Such a change would be a mere restoration of more reasonable rates from what was in fact an insane toxin on our entire economy.
by | ARTICLES, BLOG, ECONOMY, ELECTIONS, FREEDOM, NEW YORK, POLITICS
Competitive Enterprise Institute (CEI) won a major court victory last week in a lawsuit against New York Attorney General Schneiderman. They demanded he disclose documents under New York’s Freedom of Information Law that outlines agreements he made with other attorneys general and allied non-profits regarding Attorneys General United for Clean Power – the coalition which subpoenaed CEI about our climate and energy work.
CEI’s General Counsel, Sam Kazman noted: “CEI’s court victory is a blow to the anti-free speech campaign led by New York Attorney General Eric Schneiderman. While the campaign by him and his cohorts that began in March continues against those who disagree with him on global warming, we are glad to see that it is being held subject to the basic laws of the land. By requiring Schneiderman to fully comply with our freedom of information request, the court is ensuring that agencies cannot use shortcuts as a means of skirting New York’s Freedom of Information law.”
While the litigation victory gained attention across several media platforms, my favorite headline came from The New York Post editorial yesterday, “The disclosure that could end Eric Schneiderman’s career.” Read the full editorial below:
State Attorney General Eric Schneiderman’s witch hunt against supposed “climate-science deniers” became an even more embarrassing debacle late last month — and just might wind up ending his career.
A state judge ruled in favor of the Competitive Enterprise Institute, a think tank whose Freedom of Information request the AG had denied. That gave Schneiderman 30 days to cough up documents concerning his agreements with other states’ AGs, and with a group of green activists, about their joint persecution of ExxonMobile and other entities for supposed “climate fraud.”
CEI had been targeted by one of Schneiderman’s co-conspirators, the Virgin Islands AG, with legal demands that plainly aimed at suppressing free speech and scientific inquiry that the nonprofit sponsors.
The think tank’s lawyers believe the documents could show improper conduct by the AGs. If they do, Schneiderman faces serious trouble.
Oh, and New York taxpayers are out some more cash over the AG’s bid to dodge the Freedom of Information Law: The court ordered Schneiderman to cover CEI’s court costs, because his defense of his denial of the FOIL request was so transparently lame. (His brief merely quoted New York law, without even making any argument as to why it applied in this case.)
It all began in March, at a press conference where Schneiderman and 16 other AGs seemed to join Al Gore to announce joint operations against Exxon. In fact, more of the AGs were never on board — they’d shown up for a far less ambitious announcement.
And both of the two AGs who did mean to work with Schneiderman have now backed out, with the Virgin Islands AG completely abandoning his suits and the Massachusetts AG “suspending” her work until further notice.
Schneiderman, meanwhile, has dropped his initial claims that Exxon covered up scientific findings. He had to: The evidence is clear that for decades the company’s been publishing scientific results that fit neatly into the mainstream.
Instead, the AG is now (supposedly) chasing a legal case based on the company’s failure to report the value of its oil reserves in the way he thinks it should.
(Seriously: The charge is that Exxon is overvaluing its oil reserves, because it doesn’t note the risk that anti-warming laws might make the petroleum worthless. Hmm: How is that going to fly with “climate science skeptic” Donald Trump sitting in the White House?)
Schneiderman maintains he shouldn’t have to come clean because he signed confidentiality agreements with the other AGs. But his office won’t say whether it’s going to appeal the FOIL ruling or obey the judge’s order.
If he does keep refusing to comply with the Freedom of Information Law, you have to think he’s worried about what those documents will reveal.
by | ARTICLES, BLOG, ECONOMY, GOVERNMENT, OBAMA, POLITICS, TAXES, TRUMP
Nick Timiraos’ recent article in the Wall Street Journal ( Donald Trump’s Spending Push Rankles Fiscal Conservatives, 11/28/16) , is rather disingenuous with his so-called analysis of Trump’s fiscal roadmap. He clearly aims to torpedo Trump’s plan to cut taxes by tying the discussion to deficits — though correlation, of course, does not necessarily mean causation. Timiraos’ analysis is full of half-truths, but it is not entirely certain if that is willfully written or just plain economic ignorance.
First, Timiraos suggests that budget deficits “fell from 2010” but “are on track to climb in the next decade,” yet doesn’t even give any hard data to back that up — because their really isn’t any. A deficit is still a deficit. Going from a $1.4 trillion budget deficit, as Obama had in 2009, down to a $600 billion deficit in 2016, is still a massive deficit. And of course, Timiraos also doesn’t even mention that the “the total national debt nearly doubled to $19.3 trillion from $10.6 trillion when Obama took office.” Those two data points indicate an enormous spending problem on the part of Obama, something Timiraos totally ignores.
Timiraos then has the audacity to try to link rising deficits to tax cuts by Republicans. Timiraos writes, “the last two times Republicans reclaimed the White House from Democrats—in 1981 and 2001—they also successfully pushed for large tax cuts. Deficits nonetheless rose during their administrations.” Again, another instance of Timiraos telling only part of the story. Both tax cuts resulted in huge revenue increases, but it was even greater spending that created larger deficits. The tax cuts were not the problem; the deficits were not caused by a lack of revenue. Even Republicans can overspend.
Once more, near the end of the article, Timiraos tries again to make Obama’s economics to be the pinnacle of fiscal responsibility, when he writes, “Concerns about deficits over the past few years have faded because economic growth remains disappointing and because Washington took several steps to cut spending and increase taxes after deficits jumped in 2009. Deficits have also fallen below projections in recent years due to a surprising decline in the growth rate of health care spending and because interest rates have been lower than projected.” Only the Democrats are unconcerned about deficits — because their deficit spending is so astronomical, it’s better not to talk about it at all! Suggesting that Obama “cut spending and increased taxes” and that “Deficits have also fallen below projections in recent years” again ignores Obama still spent $600 billion – $1.4 trillion more than his revenue receipts were. When deficits are projected to be $1 trillion, and the actual deficit comes in a bit lower than that (but still in the hundreds of billions), you still have a deficit problem! Timiraos also ignores the fact that Obama regularly had record tax receipts each month (noted on this blog numerous times), and yet Obama still could not control his overspending.
To ignore this economic reality of the past eight years, and the simultaneously try to suggest that a tax plan with tax cuts will alarmingly increase the deficit is reckless. Timiraos ought to be ashamed at such blatant hypocrisy.
by | ARTICLES, ECONOMY, GOVERNMENT, NEW YORK, RETIREMENT, TAXES
The New York Post had an article recently regarding the continuous stream of New Yorkers leaving the state. An analysis found that “in 2014, 126,000 tax filers moved out of New York,” more than any other state in the nation. Also significantly, “The Empire State also lost the most “high earners,” who reported making more than $200,000 a year.”
This particular phenomenon has been going on for years, as I have written about in previous articles. But it seems like some people and groups want to downplay the exodus. The executive director of the Fiscal Policy Institute, Ron Deutsch, was sure to point out “that those who earn at least $1 million per year are more likely to stay put.”
It was a curious observation from the The Fiscal Policy Institute (FPI), which purports to be “an independent, nonpartisan, nonprofit research and education organization committed to improving public policies and private practices to better the economic and social conditions of all New Yorkers.” It is curious because their observation proves our point. Of course those who earn more than one million a year would be more likely to stay put. They are the ones who can afford to be abused by the NY government – its outrageously high taxes, nanny state rules, and public education and other cronyism that creates ridiculously high prices- that is borne disproportionately by NY’s well-off. The super-wealthy put up with it because they don’t want to give up their luxuries — the theater, the restaurants, museums and attractions – and they have the super-wealth to afford it. That $200,000 – $1 million threshold? It’s really New York’s well off upper middle class, the backbone of the City. They refuse to tolerate the burden of staying, and vote with their feet by leaving.
If Texas ever did to their oilmen, or Kansas ever did to their farmers, what New York does to its well off financial community, they’d be run out of town on a rail!
