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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, ELECTIONS, FREEDOM, OBAMACARE, POLITICS
Following in the footsteps of several major insurance companies in the past two years, Humana announced today that it will not be participating in the Obamacare exchanges in 2018, citing rising costs and risk pools.
“The company said in a press release it has tried for the past several years to keep selling policies where it could offer “a viable product.” It said it increased premiums, exited markets and tightened provider networks in hopes of stabilizing its individual market business.
But an initial analysis of its 2017 consumer base found that it remained riskier than Humana could tolerate. So the company is exiting all 11 states where it sells individual policies, both on the Obamacare exchange and outside of it.
“We are again seeing signs of an unbalanced risk pool based on the results of the 2017 open enrollment period, therefore we’ve decided that we can’t continue to offer this coverage in 2018,” said Bruce Broussard, Humana’s chief executive, in a conference call with investors.”
This decision was done in conjunction with Humana’s possible merger with Aetna, which was canceled today as well. This in turn lead to the announcement of another merger breakup; in response to the Humana news, Cigna and Anthem decided not to pursue their changes as well.
Obamacare continues to spiral out of control. It’s telling that we have not heard any initial numbers regarding the amount of enrollees this year. Obamacare has consistently missed its target enrollment figures — some by nearly 50%. If we are going to repeal it, we need to replace it with something better.
by | ARTICLES, BLOG, FREEDOM, GOVERNMENT, HYPOCRISY, POLITICS, TAXES
When assets are seized during federal investigations, the proceeds can be shared with law enforcement agencies who participate with federal agencies during the process. This is called Equitable Sharing, and both the Justice Departments and Treasury Departments can do it. The funds received have rules that govern how they are spent.
Therefore it was surprising that a Power Point presentation created by the Justice Department in 2015 suggested a way to circumvent those rules; typically they don’t allow funds to be spent on salaries or raises but this presentation gave a clear way for an agency to get around that restriction. “The presentation advises that instead of using the seized funds money to fund raises, agencies can use it to cover routine costs — such as maintaining vehicle fleets — and then redirect money already budgeted for maintenance into salaries. The PowerPoint says redirecting money in that manner is acceptable “so long as your overall budget does not decrease.”
It appears the Virginia’s Attorney General, Mark Herring, took that suggestion to heart. The “AP raised questions about significant pay raises for several of Herring’s employees at a time when state workers’ pay was stagnant elsewhere. Some staff attorneys’ salaries rose as much as $15,000 in a year — one had a 30-percent increase.” This investigation revealed the existence of the Power Point presentation, and is the reason 64 attorney received a raise in their pay floor, with the median raise of $7,000.
“Virginia received more than $100 million in asset forfeiture money under a joint state-federal settlement with Abbott Laboratories for an anti-seizure drug’s off-label marketing. Herring spokesman Michael Kelly said raises were made possible in part by using some of the funds to pay allowable expenses involving the agency’s rent, vehicle maintenance and operational costs.
The Abbott settlement money was administered by the Treasury Department, but Kelly cited the PowerPoint as justification for using the funds to make raises possible. He said the PowerPoint was part of 2015 training for accountants in the state attorney general’s office.”
The AP noticed the pay raises in the Office of Attorney General and requested documents about the aberration; last year, the rest of the Commonwealth canceled pay raises that were scheduled for state employees when budget problems got difficult.
It is unfathomable that a state agency, under the guidance and direction of a federal agency, could move money around in a ploy to give themselves pay increases. If one state agency, as part of a training exercise for accountants, could conclude that this action was both just and allowable, how many other agency partners in the Equitable Sharing program have done this?
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The hostile New York City business environment has claimed a new victim: the legendary China Fun restaurant, which has been in operation for 25 years. A letter on left on the door of the restaurant on January 3, 2017, outlined the reasons:
“The climate for small businesses like ours in New York have become such that it’s difficult to justify taking risks and running — nevermind starting — a legitimate mom-and-pop business,” read a letter posted by the owners in the restaurant’s front door.
“The state and municipal governments, with their punishing rules and regulations, seems to believe that we should be their cash machine to pay for all that ails us in society.”
For 25 years, China Fun was renowned for its peerless soup dumplings and piquant General Tso’s chicken.
According to the NY Daily News, “the endless paperwork and constant regulation that forced the shutdown accumulated over the years.” Other reasons included: the requirement to provide an on-site break room, minimum wage increases, health insurance, business insurance, and onerous Health Department rules and regulations.
The government essentially acknowledges the burdens it places on small businesses; “free compliance advisors are available for on-sight consultation aimed at helping small businesses comply with regulations” are a part of the Small Business First initiative.
So instead of making it easier for a business to start, operate, and grow a business, NYC makes it easier to comply with overbearing regulation, rules, and taxes. Businesses go into business to make a product or provide a service — not to respond to government red tape. The loss of China Fun is a microcosm of the entirely hostile, anti-business environment that plagues the NYC government.
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Newt Gingrich warned that Trump’s “Drain the Swamp” verbiage was really a lot of bluster. His presidential appointments seems to be reflecting that — but is it really Trump’s fault? Or are his hands tied? Or a mix of both? Jay Cost over at The Weekly Standard, gives some insight into the history of presidential appointments and how the system works. It’s definitely worth a read in its entirety:
As a candidate, Donald Trump promised sweeping change in the way Washington functions. He would tell voters that the system is rigged, it’s broken, it’s run by losers, and only he could fix it. And yet, for all this rhetoric, it is striking how typical his presidential appointments have been: Jeff Sessions, Mike Pompeo, John Kelly, Rick Perry, Elaine Chao, Steve Mnuchin, Wilbur Ross, Andrew Puzder, Nikki Haley, Seema Verma. Most of these appointees are conservative, of course, but they are conventionally conservative. It is striking, indeed, that the most controversial appointment so far is Rex Tillerson to the State Department. He is an outsider to the ways of Washington but he is still the CEO of a company with $380 billion in total assets and 75,000 employees. A populist barbarian storming the establishment gate, Tillerson is not!
Little wonder that Politico reported last week, “Donald Trump’s White House-in-waiting is already being roiled by divisions, with the conservative outsiders who helped power his historic victory colliding with a Republican Party establishment muscling its way in.”
Something similar happened eight years ago. Barack Obama promised a major break with the previous practices of both parties. Still, his appointments were conventionally liberal: Hillary Clinton, Tim Geithner, Robert Gates (who was actually a holdover from the George W. Bush administration), Eric Holder, Ken Salazar, Tom Vilsack, Gary Locke, Kathleen Sebelius, and so on. Obama largely sampled from the upper echelon of Democratic politicians and policymakers in forming his cabinet—certainly an ideological change from the Bush era but not a fundamental break from past practices.
The system, as it turns out, is much more resilient than presidential candidates on the trail want voters to believe. Electing a new president certainly changes the course of public policy in Washington, but presidents are nevertheless constrained actors. Presidential candidates want us to think they have free rein to make over the government, but the truth is that the occupant of the Oval Office is boxed in from all sides, including in the appointment process.
Trump faces several challenges in using the appointment power to reshape the government. The first is Congress. The Senate possesses the constitutional authority to review certain appointments and reject those nominees it thinks are unfit. This could be why Trump passed over Rudy Giuliani for a cabinet appointment; he may have judged that the confirmation process would be a difficult one for the former mayor of New York City. This might also explain Trump’s decision to make Michael Flynn his national security adviser: The Senate does not review or confirm West Wing appointments.
Congress imposes broader constraints as well. The cabinet departments are, after all, legislative creations, and Congress has the power to write legislation regulating which employees are and are not subject to the appointment process. Starting with the passage of the Pendleton Civil Service Reform Act in 1883, Congress sharply curtailed the presidential nominating power, setting the overwhelming majority of executive department employees outside the discretion of the commander in chief. By and large, the same civil servants who worked under George W. Bush and Barack Obama will continue to work under Donald Trump, without worry that the president can dismiss them.
John F. Kennedy summarized the limits the president faces better than anybody:
The fact is that I think the Congress looks more powerful sitting here than it did when I was there in the Congress. . . . When you are in Congress, you are one of a hundred in the Senate or one of 435 in the House . . . but from here I look at . . . the collective power of the Congress . . . and it is a substantial power.
Executive appointments are just the tip of the iceberg. When Trump enters office, he will find Congress to be a potentially implacable foe on any matter where his will runs contrary to its own.
And Trump—or for that matter any outsider president looking to effect sweeping change—must confront the problem of asymmetric information. The federal government is so complicated that one must possess a great deal of technical, specialized information to manage it properly. The president typically does not possess that information, at least not outside a few policy domains (for instance, as Dwight Eisenhower did with the military). He must appoint officials who possess such knowledge. But where do people acquire this? They usually gain it from participating in the affairs of state—the very same affairs that the president has promised to alter.
There are, of course, experts who are nonetheless looking for big changes—for instance, Rep. Tom Price, whom Trump nominated to head the Department of Health and Human Services, and who came to Congress after a successful career as an orthopedic surgeon, is intent on rolling back Obamacare—but the president still faces a substantial challenge. Oftentimes, those whom he taps to change the system have been longtime participants in sustaining it. This problem is compounded when one considers the large number of lower-level appointments the president is authorized to make, where he can only afford to spend a small amount of face time with his nominees. Quite often, he is forced to trust that the people he has delegated responsibility to will, in turn, make good appointments.
Expertise, in other words, can create a subtle bias for the status quo, which was on full display in the aftermath of the 2008 financial crisis. As Ron Suskind reports in Confidence Men, President Obama wanted to reorganize Citigroup in 2009 and instructed Treasury Secretary Geithner to put together a plan. But, per Suskind, Geithner never followed through. As one high-level banking executive explained to Suskind: “The president had us at a moment of real vulnerability. At that point, he could have ordered us to do just about anything and we would have rolled over. But he didn’t—he mostly wanted to help us out, to quell the mob. And the guy we figured we had to thank for that was Tim. He was our man in Washington.”
The irony is that the president, in many respects, is less able today to fulfill his constitutional duty to “take care that the laws be faithfully executed” than he was in George Washington’s time. The Senate constrains him, via its advisory role, as always. But now the vast bulk of the executive branch is outside his aegis, easily able to resist his political or ideological agenda. Moreover, the technical expertise required to manage the government means that the relative handful of appointments he does get to make is often from the “establishment” he ran against.
All of this runs contrary to the image of the presidency that candidates wish to cultivate on the campaign trail. They want voters to think of the president as a kind of superman—able to work his will on any policy issue that confronts him. But this is just not the case. The president, in truth, is a restricted government agent, just as all officials are in our system of checks and balances. In this nomination process, we are witnessing an early glimpse of how our system of government will constrain and frustrate Trump, just as it has his predecessors.
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.
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Congress heard a report this week that evidenced interference by the Obama administration into Congressional process with regard to a piece of radiation legislation in 2014. The Administration appears to have used the Department of Energy to forward his particular climate change package while simultaneously remove opposing viewpoints and sour lawmakers on a certain bill that would possibly conflict with his agenda.
The Washington Free Beacon produced the overview; I have reprinted it below in its entirety so as to not leave out any pertinent details:
A new congressional investigation has determined that the Obama administration fired a top scientist and intimidated staff at the Department of Energy in order to further its climate change agenda, according to a new report that alleges the administration ordered top officials to obstruct Congress in order to forward this agenda.
Rep. Lamar Smith (R., Texas), chair of the House Committee on Science, Space, and Technology, released a wide-ranging report on Tuesday that shows how senior Obama administration officials retaliated against a leading scientist and plotted ways to block a congressional inquiry surrounding key research into the impact of radiation.
A top DoE scientist who liaised with Congress on the matter was fired by the Obama administration for being too forthright with lawmakers, according to the report, which provides an in-depth look at the White House’s efforts to ensure senior staffers toe the administration’s line.
The report also provides evidence that the Obama administration worked to kill legislation in order to ensure that it could receive full funding for its own hotly contested climate change agenda.
The report additionally discovered efforts by the Obama administration to censor the information given to Congress, interfering with the body’s ability to perform critical oversight work.
“Instead of providing the type of scientific information needed by Congress to legislate effectively, senior departmental officials sought to hide information, lobbied against legislation, and retaliated against a scientist for being forthcoming,” Smith said in a statement. “In this staff report based on lengthy record before the committee, much has been revealed about how senior level agency officials under the Obama administration retaliated against a scientist who did not follow the party line.”
“Moving forward, the department needs to overhaul its management practices to ensure that Congress is provided the information it requires to legislate and that federal employees and scientists who provide that information do so without fear of retribution,” Smith said.
The report goes into Congress’ efforts to regulate the Low Dose Radiation Research Program, or LDRRP, which sought to test the impact of radiation on human beings. The program, started in the 1990s, was meant to support research into waste cleanup and the impact of nuclear weapons.
In mid-2014, lawmakers introduced legislation, the Low Dose Radiation Act of 2014, to help regulate the program and minimize harmful side effects.
During an October 2014 briefing with senior DoE staff on the matter, lawmakers heard testimony from Dr. Noelle Metting, the radiation research program’s manager.
Less than a month later, lawmakers discovered that Obama administration officials had “removed Dr. Metting from federal service for allegedly providing too much information in response to questions posed by” Congress during the briefing, the report states.
Congressional investigators later determined that the administration’s “actions to remove Dr. Metting were, in part, retaliation against Dr. Metting because she refused to conform to the predetermined remarks and talking points designed by Management to undermine the advancement of” the 2014 radiation act.
Emails unearthed during the investigation “show a sequence of events leading to a premeditated scheme by senior DoE employees ‘to squash the prospects of Senate support’” for the radiation act, a move that lawmakers claim was meant to help advance President Obama’s own climate change goals.
“The committee has learned that one of DoE’s stated purposes for Dr. Metting’s removal from federal service was her failure to confine the discussion at the briefing to pre-approved talking points,” according to the report. “The committee has also established that DoE management … failed to exercise even a minimal standard of care to avoid chilling other agency scientists as a result of the retaliation against Dr. Metting for her refusal to censor information from Congress.”
The investigation concluded that “DoE placed its own priorities to further the president’s Climate Action Plan before its constitutional obligations to be candid with Congress,” the report states. “The DoE’s actions constitute a reckless and calculated attack on the legislative process itself, which undermines the power of Congress to legislate. The committee further concludes that DoE’s disregard for separation of powers is not limited to a small group of employees, but rather is an institutional problem that must be corrected by overhauling its management practices with respect to its relationship with the Congress.”
These moves by the administration were part of an effort to secure full funding for the president’s climate change agenda, the report claims.
“Instead of working to understand the value of the LDRRP for emergency situations, DoE Management engaged in a campaign to terminate research programs that could divert funds from the president’s Climate Action Plan,” the report states.
Congress is recommending a full overhaul of the DoE’s management structure in order to ensure this type of situation does not occur again.
by | BLOG, EDUCATION, FREEDOM, GOVERNMENT, POLITICS
In virtually every case where there is a voucher or charter school program, the amount of money provided for the students is significantly less than the public school is charging for educating kids. The fact that public school advocates are seething that these alternative forms of education are destroying the public school system is incredibly outrageous.
If a student in public school costs $15,000 to educate and the same student costs $10,000 for a charter school, it leaves the public school system $5,000 per student free and clear. Why isn’t this a good thing all around? It smacks of mismanagement. Schools should be thrilled at the arrangement; if a public school system loses 1,000 kids and they get $5,000 of funding — free and clear per kid — they actually end up with one one million dollars extra for the supreme price of educating less kids and enjoying a less kids in each classrom.
So why aren’t public schools happy about this kind of set-up? It exposes their incompetence and shows that, given a choice in education, many parents opt for the less expensive, smaller classroom model over the large, bureaucracy that is our public school system today.
