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Trump on Obamacare

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.

Mnuchin Gets It Wrong

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.

Tax Increases and Decreases

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.

Tax Cuts: A Simple Lesson in Economics

Let’s put tax cuts in terms everyone can understand.

Suppose that every day, ten men go out for dinner. The bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:

>-The first four men (the poorest) would pay nothing
>-The fifth would pay $1
>-The sixth would pay $3
>-The seventh $7
>-The eighth $12
>-The ninth $18
>-The tenth man (the richest) would pay $59.

So, that’s what they decided to do. The ten men ate dinner in the restaurant every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. “Since you are all such good customers,” he said, “I’m going to reduce the cost of your daily meal by $20.” So now dinner for the ten only cost $80. The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still eat for free. But, what about the other six, the paying customers? How could they divvy up the $20 windfall so that everyone would get his “fair share?” The six men realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being “paid” to eat their meal. So the restaurant owner suggested that it would be fair to reduce each man’s bill by roughly the same amount, and he proceeded to work out the amounts each should pay. And so:

>-The fifth man, like the first four, now paid nothing (100% savings)
>-The sixth now paid $2 instead of $3 (33% savings)
>-The seventh now paid $5 instead of $7 (28% savings)
>-The eighth now paid $9 instead of $12 (25% savings)
>-The ninth now paid $14 instead of $18 (22% savings)
>-The tenth now paid $49 instead $59 (16% savings)

Each of the six was better off than before. And the first four continued to eat for free. But once outside the restaurant, the men began to compare their savings.

“I only got a dollar out of the $20,” declared the sixth man. He pointed to the tenth. “But he got $10!”

“Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar, too. It’s unfair that he got ten times more than me!”

“That’s true!” shouted the seventh man. “Why should he get $10 back when I got only $2? The wealthy get all the breaks!”

“Wait a minute,” yelled the first four men in unison. “We didn’t get anything at all. The system exploits the poor!”

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn’t show up for dinner, so the nine sat down and ate without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes also get the most “benefit” from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up at the table anymore.

Author Unknown

Tax Cuts are Not the Problem; Overspending is!

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.

Why Voters Voted For Trump

On Election Day, many people were willing to overlook Donald Trump’s personal weaknesses because they realized that the biggest factor in this election was the economy — it affected their day-to-day lives more than anything else.

Many people – uniformly partisan Democrats – have accused Trump’s supporters of being bigots; but facts dispute this. A simple look at the voting changes between 2008/2012 and 2016 shows that fully one-third of counties that went for Obama in both 2008 and 2012 went for Trump in 2016. Clearly these Obama supporters were not bigots, and show that the move to Trump was based on real issues. You can hardly play the race card with such data. The electorate understood and believed that Trump’s economic policies were superior to Hillary’s, and they would be better off economically going forward with a President Trump instead of President Clinton.

Every single policy that Clinton advocated would have made the standard of living worse for the poor and the lower middle class – her major constituency. And this would have substantially increased inequality, the opposite of what she had promised. Her policies included:

  1. raising taxes on the upper middle class and the wealthy (who are already at an obscenely high tax rate). This stifles new growth by reducing the capital that would otherwise have gone into new or expanding businesses, and the jobs they would have created.
  2. increasing regulations, including overtime, sick pay, child care, union rules, environmental restrictions, etc. This places huge additional costs and burdens on job providers and creators, reducing the likelihood that they could provide new jobs.
  3. raising the minimum wage. This makes it too expensive for businesses to keep the least productive people on their payroll, as well as incentivizing business use of technology instead of people to grow.

Those that voted for Trump have been left behind or worse by Obama’s economic strategies. A vote for Hillary meant a vote for more of the same. So much of America is tired of that status quo, and wants to be able to not just try to survive — but thrive once again. For those who want to cast aspersions and heap cries of racism and other -isms upon the Americans who voted for our next President, they would be wise to remember the famous slogan of the other Clinton Era: “It’s the economy, stupid!”

New Yorkers Leaving in Droves

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!

IRS Finally Issues Tea Party Status: DENIED

As we’ve been following this story regarding the IRS for years, here’s the latest update from the Washington Times:

Nearly seven years after it applied to the IRS for nonprofit status, the Albuquerque Tea Party has finally been given a decision: Denied.

The tax agency, under orders from a federal judge, is belatedly tackling the remaining tea party cases that it delayed for years, and so far the tea party isn’t doing well. Only one of the three groups in the case was approved, and the other two, including Albuquerque, got notices of proposed denials last week.

The applicants will have a chance to appeal, but the denials aren’t sitting well with the groups, whose attorney said it’s more evidence that the IRS continues to single out the tea party for abuse.

“It is clear that we still have an IRS that is corrupt and incapable of self-correction,” said Jay Sekulow, chief counsel at the American Center for Law and Justice, which represented a number of tea party groups in a case against the tax agency.

The one group that was approved was Unite in Action, a Michigan-based organization that first applied for tax-exempt status more than six years ago. The Albuquerque Tea Party and Tri Cities Tea Party from Washington state were notified of proposed denials.

“It is clear that we still have an IRS that is corrupt and incapable of self-correction,” said Jay Sekulow, chief counsel at the American Center for Law and Justice, which represented a number of tea party groups in a case against the tax agency.

Still to come is a decision on Texas Patriots Tea Party, a group that is part of a separate class-action lawsuit out of Ohio. A judge in that case ruled late last month that the IRS was likely violating the group’s First Amendment rights by delaying its application and ordered the tax agency to process and decide on the application.

The IRS, which declined to comment on the new decisions, admitted in court that it did subject the tea party groups to intrusive scrutiny, singling them out because of their political viewpoints and forcing them to go through hurdles that other groups didn’t face.

IRS officials over the summer promised both the courts and Congress that the agency would begin to process all outstanding applications after years of delay that it blamed on a “litigation hold” policy.

Under that policy, the IRS said once a group sued, the agency stopped work on its application. Federal courts held that policy was both ill-advised and not a hard-and-fast rule and ordered the agency to get back to work.

In a notice filed last week, the IRS said it has now met its first deadline.

“As of November 8, 2016, the Internal Revenue Service has issued determinations with respect to each of the Plaintiffs whose applications for tax exempt status had been pending,” the agency said.

Mr. Sekulow said the groups never should have faced the delays, adding that they showed “continuing problems inside the IRS.”

In a court filing this weekend Mr. Sekulow asked a federal judge in the District of Columbia to officially declare that the IRS violated groups’ First Amendment rights.

The groups also said they are worried that the IRS decision-making in applications that were denied might have been skewed by the entire history of the targeting.

The Albuquerque Tea Party first applied on Dec. 29, 2009. Four months later, it got a two-page, 10-question reply from the IRS, beginning years of back and forth. It has faced a series of follow-up questions, the years long delay in court and an offer to be approved — if the group would agree to limit its political advocacy to 40 percent of its activities.

Jay Cost on Obama: Disintegrating Coalitions

Jay Cost is one of my favorite writers these days, blending history and analysis in a straightforward tone. Here’s his take on why Clinton lost: 

“Political coalitions are tricky things to manage in the United States. Ours is a country of more than 320 million people but only two major political parties—so each side’s voting bloc tends to be unstable at the margins, where national elections are actually won and lost. It is hard to build a winning coalition, harder still to maintain it during the laborious process of governing, and hardest of all to hand it off to a designated successor. It takes a politician of the highest caliber—a Roosevelt, a Reagan—to accomplish all this.

As last week’s results clearly demonstrated, Barack Obama is not cut from such an Augustan cloth. The political coalition he built in 2008 burst apart in spectacular fashion. His successor will not be Hillary Clinton, his secretary of state, but Donald Trump, the man who accused him of being a foreigner.

No lame duck president has ever had to suffer such ignominy. If Obama were to quietly steal out of town on January 20, as John Adams and John Quincy Adams did upon their defeats, nobody could blame him. Even so, Obama’s coalition fell apart because he failed utterly to maintain it during his tenure.

For eight years, we have heard stories about Obama’s “coalition of the ascendant.” Single women, millennials, Latinos and Asians, gays and lesbians, and so on, drove Obama to a fantastic electoral victory in 2008 and would power the Democrats for a generation—or more—to come.

While these blocs were integral to Obama’s triumph in 2008, there were other, more humdrum factions as well—the typical ones that every Democratic politician, be he as cool as Obama or as boring as John Kerry, has to win over. The suburban women of Florida’s I-4 corridor. The blue-collar workers in Dubuque and Erie. The African Americans in Detroit and Milwaukee, who are always counted on to deliver an enormous haul for the party. These voters are not the stuff of highfalutin’ think pieces for liberal magazines, but they were nevertheless an essential part of Obama’s victory.

They abandoned his successor last week. Not altogether, of course—but enough to serve the Democrats a shocking defeat.

There had been warning signs from virtually the start of Obama’s tenure. He won a smashing victory in 2008 by sweeping the traditional swing states and adding new ones to the list—Colorado, Florida, Iowa, Michigan, Nevada, New Hampshire, North Carolina, Ohio, Pennsylvania, and Virginia. But voters in all these states signaled at some point over the last seven years that their loyalty was not unconditional. Starting with Bob McDonnell’s whopping victory in the Virginia gubernatorial race in 2009, then Scott Brown’s surprise Senate triumph in Massachusetts, and finally to the Tea Party wave of 2010—it was evident by the halfway point of Obama’s first term that personal affection for him did not necessarily translate to support for his policies or other Democrats. Then came 2012, in which the president was reelected with 3.6 million fewer votes than he received four years prior. The admonition was repeated in 2014, when the Republican wave that hit the House of Representatives in 2010 wiped the Democrats out of their Senate majority.

Obama’s response to these electoral setbacks was to pretend they did not happen. Again and again, he stubbornly refused to change course. When he lost his filibuster-proof Senate majority in 2010, he passed an unfinished version of Obamacare through the budget reconciliation process. When he and House speaker John Boehner were on the cusp of striking a grand bargain on taxes and entitlements in the summer of 2011, he insisted on additional tax hikes at the last minute, skunking the deal. When he won a narrow victory in 2012, he called for extensive gun control legislation, framing the debate in Manichean terms that alienated those Midwestern voters who had the gall to support him and the NRA simultaneously. When the Democrats lost the Senate in 2014, he enacted immigration reform through executive fiat and brokered a highly unpopular deal with Iran.

Last but not least, he handed off leadership of his party to Hillary Clinton. Weighed down by personal and professional issues, she was his opposite in almost every way. During the Democratic primary battle of 2008, she had been a useful foil for Obama, illustrating his point that it was time for a new approach to governance. Now, she was the heir apparent—as if his voters would not care either way. Turns out they did.

Much of the blame for last week’s defeat obviously belongs to Clinton, who was a terrible candidate. But one cannot overlook Obama’s responsibility in this epic debacle. He blessed Clinton’s candidacy early in the cycle, despite the fact that she was under investigation by the FBI. And for years prior, he had acted as though he could do as he wished and retain the loyalty of his voters.

He was wrong. Clinton dramatically underperformed with the white working-class in the Midwest. She did not receive sufficient margins from African Americans in the Rust Belt or the South. And though she had the noxious Trump as her opponent, she failed to make up for these setbacks with swing voters in places like suburban Charlotte or Philadelphia. Nor did she make many inroads with traditional GOP constituencies in Milwaukee and Grand Rapids, who had been turned off by the bombastic Republican in the primaries. Even the Latino vote disappointed, leaving Florida out of reach and Colorado surprisingly close. Only the Harry Reid “machine” in Nevada functioned as expected.

When Obama leaves the White House in two months, the Republican party will hold more public offices than at any point since the Great Depression. The president’s greatest political ambition will therefore go unrealized: He is not the 21st century’s Ronald Reagan; he is its Woodrow Wilson.

The 28th president was quite a bit like Obama, a cerebral type with unceasing confidence in his superior intellect and moral purity. But Wilson’s ambition to recast society in his own image outstripped his political acumen. Elected in a landslide in 1912, he only narrowly squeaked by in 1916. Four years later, his would-be successor lost to Warren Harding, one of the most unspectacular specimens ever to occupy the Oval Office. Wilson tarnished the reputation of progressivism so badly that the GOP would enjoy complete control over the government for the ensuing decade. It was Franklin Delano Roosevelt—a pragmatic man who lacked Wilson’s scholarly disposition but had an intuitive grasp of what the people expected of him—who would become modern liberalism’s hero.

Maybe some Democrat down the line will re-create Obama’s coalition and reshape it in a durable way. After all, Obama was on to something back in 2008. There are common interests among working-class whites in the Midwest, college kids, minority voters, and suburban women. Democrats have thought for a decade that this coalition was waiting to emerge. Not so, but a gifted politician could unite that group and build a coalition for the long haul. Such a leader would have to be more like FDR or Reagan than like Wilson—or Obama.”

Trump Wins — Here’s His Tax Proposal

Over the next week or two, I’ll do a more thorough analysis of portions of Trump’s tax plan. Here it is in full, so that you don’t have to go searching for it:

DONALD J. TRUMP’S VISION

  • Reduce taxes across-the-board, especially for working and middle-income Americans who will receive a massive tax reduction.
  • Ensure the rich will pay their fair share, but no one will pay so much that it destroys jobs or undermines our ability to compete.
  • Eliminate special interest loopholes, make our business tax rate more competitive to keep jobs in America, create new opportunities and revitalize our economy.
  • Reduce the cost of childcare by allowing families to fully deduct the average cost of childcare from their taxes, including stay-at-home parents.

 

TAX LAW CHANGES

The Trump Plan will revise and update both the individual and corporate tax codes:

Individual Income Tax

Tax rates

The Trump Plan will collapse the current seven tax brackets to three brackets. The rates and breakpoints are as shown below. Low-income Americans will have an effective income tax rate of 0. The tax brackets are similar to those in the House GOP tax blueprint.

Brackets & Rates for Married-Joint filers:
Less than $75,000: 12%
More than $75,000 but less than $225,000: 25%
More than $225,000: 33%
*Brackets for single filers are ½ of these amounts

The Trump Plan will retain the existing capital gains rate structure (maximum rate of 20 percent) with tax brackets shown above. Carried interest will be taxed as ordinary income.

The 3.8 percent Obamacare tax on investment income will be repealed, as will the alternative minimum tax.

Deductions

The Trump Plan will increase the standard deduction for joint filers to $30,000, from $12,600, and the standard deduction for single filers will be $15,000. The personal exemptions will be eliminated as will the head-of-household filing status.

In addition, the Trump Plan will cap itemized deductions at $200,000 for Married-Joint filers or $100,000 for Single filers.

Death Tax

The Trump Plan will repeal the death tax, but capital gains held until death and valued over $10 million will be subject to tax to exempt small businesses and family farms. To prevent abuse, contributions of appreciated assets into a private charity established by the decedent or the decedent’s relatives will be disallowed.

Childcare

Americans will be able to take an above-the-line deduction for children under age 13 that will be capped at state average for age of child, and for eldercare for a dependent. The exclusion will not be available to taxpayers with total income over $500,000 Married-Joint /$250,000 Single, and because of the cap on the size of the benefit, working and middle class families will see the largest percentage reduction in their taxable income.

The childcare exclusion would be provided to families who use stay-at-home parents or grandparents as well as those who use paid caregivers, and would be limited to 4 children per taxpayer. The eldercare exclusion would be capped at $5,000 per year. The cap would increase each year at the rate of inflation.

The Trump Plan would offer spending rebates for childcare expenses to certain low-income taxpayers through the Earned Income Tax Credit (EITC). The rebate would be equal to 7.65 percent of remaining eligible childcare expenses, subject to a cap of half of the payroll taxes paid by the taxpayer (based on the lower-earning parent in a two-earner household).

This rebate would be available to married joint filers earning $62,400 ($31,200 for single taxpayers) or less. Limitations on costs eligible for exclusion and the number of beneficiaries would be the same as for the basic exclusion. The ceiling would increase with inflation each year.

All taxpayers would be able to establish Dependent Care Savings Accounts (DCSAs) for the benefit of specific individuals, including unborn children. Total annual contributions to a DCSA are limited to $2,000 per year from all sources, which include the account owner (parent in the case of a minor or the person establishing elder care account), immediate family members of the account owner, and the employer of the account owner. When established for children, the funds remaining in the account when the child reaches 18 can be used for education expenses, but additional contributions could not be made.

To encourage lower-income families to establish DCSAs for their children, the government will provide a 50 percent match on parental contributions of up to $1,000 per year for these households. When parents fill out their taxes they can check a box to directly deposit any portion of their EITC into their Dependent Care Savings Account. All deposits and earnings thereon will be free from taxation, and unused balances can rollover from year to year.

Business Tax

The Trump Plan will lower the business tax rate from 35 percent to 15 percent, and eliminate the corporate alternative minimum tax. This rate is available to all businesses, both small and large, that want to retain the profits within the business.

It will provide a deemed repatriation of corporate profits held offshore at a one-time tax rate of 10 percent.

It eliminates most corporate tax expenditures except for the Research and Development credit.

Firms engaged in manufacturing in the US may elect to expense capital investment and lose the deductibility of corporate interest expense. An election once made can only be revoked within the first 3 years of election; if revoked, returns for prior years would need to be amended to show revised status. After 3 years, election is irrevocable.

The annual cap for the business tax credit for on-site childcare authorized by Sec. 205 of the Economic Growth and Tax Relief Reconciliation Act of 2001 would be increased to $500,000 per year (up from $150,000) and recapture period would be reduced to 5 years (down from 10 years).

Businesses that pay a portion of an employee’s childcare expenses can exclude those contributions from income. Employees who are recipients of direct employer subsidies would not be able to exclude those costs from the individual income tax and the costs of direct subsidies to employees could not be used as a cost eligible for the credit.