Trump wants credit

The tax bill that gives the vast majority of its benefits to the rich and corporations has passed and President Trump is worried he won’t get the credit:

President Trump signed the most consequential tax legislation in three decades on Friday, even as he complained that he has not been given credit for his administration’s accomplishments during a turbulent first year.

In typical Trump fashion, he cared more about appearances than the actual thing:

There was some discussion in Congress and at the White House that Trump should consider delaying the signing until early 2018 as a way to delay automatic spending cuts that could have been triggered by the tax cuts.

In addition, some companies said that delay would give them more time to adjust to the major changes that the new tax code will mean for their businesses.
However, once Congress reached a deal this week to avoid the possibility of the spending cuts, White House officials signaled that Trump wanted to sign the bill into law as soon as possible.

Also in typical Trump fashion he only wants the credit for the good stuff:

Gary D. Cohn, the director of the White House’s National Economic Council, said Wednesday the administration tried more than two dozen times to eliminate the carried interest loophole and that, as recently as this week, Trump asked why it was not gone.
Cohn, a former top Goldman Sachs executive, said opposition from lobbyists and lawmakers on Capitol Hill was intense and that the best that could be done was to extend the “holding period” for investments that qualify for the tax break to three years from one.
“The president strongly believes, and he ran on this, that carried interest is a loophole,” Cohn said at an event sponsored by Axios.

He was powerless to do anything, but he should get credit for the bill anyway.

The bill contains many things that have been shown to be bad for the economy, such as:

Kansas eliminated state taxes on pass-through income in 2012, and the outcome was not what backers had expected.
In the three years after the law took effect in Kansas, the number of residents claiming pass-through income jumped 20 percent. As a result, the state lost $200 million to $300 million in tax revenue a year, according to estimates by The Tax Foundation, with most of the gains going to wealthy business owners, some of whom simply restructured existing companies to take advantage of the lower rates. Facing a budget crisis, Kansas lawmakers repealed the tax cut earlier this year.

So, no problem Mr. Trump, we will give you all the credit for this awful bill.

Republican Tax Cuts

So the Republicans have passed their Tax Cuts for the rich bill in the Senate and it’s everything you have come to expect in a Republican bill:

With the Senate split 52 to 48, Republicans barely had votes to spare. But the bill’s passage was made possible by a near-complete Republican embrace of the idea that about $1.5 trillion of tax cuts will pay for themselves, by producing enough economic growth and additional federal revenue to offset their costs to the Treasury.

That belief was contradicted by several studies, including one from Congress’s official economic scorekeeper, which Republicans dismissed as overly pessimistic.

Mr. McConnell waved off any deficit concerns. “I’m totally confident this is a revenue-neutral bill,” he said. “I think it’s going to be a revenue producer.”

Ignore Senate rules: check; ignore facts: check; help the wealthy: check. And look at the actual bill which was made public about two hours before voting began (of course lobbyists helped write the thing so had it long before that) and included pages such as (click to see the pdf):

Doc1

Kevin Drum lists some the things added to get some votes:

The senator from Texas is getting a break for private (i.e., mostly Christian) school tuition. The senator from Kentucky won passage of a provision allowing car dealers to deduct interest paid on loans to stock showrooms. The senator from Missouri, whose son is a lobbyist for MillerCoors, scored a provision that cuts taxes on imported beer and liquor. The senator from Georgia, home of Delta Airlines, got a provision that penalizes foreign airlines. This is all being done via handwritten notes at the last second, and the result is that about $600 billion of taxing and spending has been redirected within 24 hours without a single hearing.

Congratulations Republicans, you have passed a horrible bill.

Republican tax cuts

Hey, it seems that Donald Trump’s tax ‘proposal’ (basically one page of notes) has been analyzed. Take a look:

A new analysis by the Tax Policy Center finds that the tax cuts included in the Trump administration’s outline for tax reform released in April could cut federal revenues by as much as $7.8 trillion over 10 years, and that the benefits would go almost exclusively to the top 5 percent of earners.

Even if the plan included some very large tax hikes to offset the cuts (like doing away with personal exemptions and other common deductions) and taking into account effect on economic growth, the cost still comes to $3.4 trillion over 10 years.

The revenue raisers also serve to make Trump’s plan even more regressive. If you just look at the tax cuts he’s proposing, 60.9 percent of the benefits go to the top 1 percent of Americans. That’s a pretty astonishing tilt toward the rich. But if you look at the combined effects of the cuts and the revenue raisers, 76.3 percent of the benefits go to the top 1 percent, and 94.8 percent go to the top 5 percent.

Trump’s proposal gives the vast majority of the tax cuts to the rich and blows a hole in the budget? I’m stunned. Or the opposite of that.

Senate version of Tax Cut bill cuts insurance for 22 million

So the CBO score for the Senate Republican’s tax-cut err healthcare bill is out and it’s about as bad as the House version:

CBO and JCT estimate that, in 2018, 15 million more people would be uninsured under this legislation than under current law—primarily because the penalty for not having insurance would be eliminated. The increase in the number of uninsured people relative to the number projected under current law would reach 19 million in 2020 and 22 million in 2026. In later years, other changes in the legislation—lower spending on Medicaid and substantially smaller average subsidies for coverage in the nongroup market—would also lead to increases in the number of people without health insurance. By 2026, among people under age 65, enrollment in Medicaid would fall by about 16 percent and an estimated 49 million people would be uninsured, compared with 28 million who would lack insurance that year under current law.

They also note that the ACA is not failing:

Although premiums have been rising under current law, most subsidized enrollees purchasing health insurance coverage in the nongroup market are largely insulated from increases in premiums because their out-of-pocket payments for premiums are based on a percentage of their income; the government pays the difference between that percentage and the premiums for a reference plan (which is the second-lowest-cost plan in their area providing specified benefits). The subsidies to purchase coverage, combined with the effects of the individual mandate, which requires most individuals to obtain insurance or pay a penalty, are anticipated to cause sufficient demand for insurance by enough people, including people with low health care expenditures, for the market to be stable in most areas.

Nevertheless, a small number of people live in areas of the country that have limited participation by insurers in the nongroup market under current law.

The rest of that second paragraph explains why there is a problem in small areas:

Several factors may lead insurers to withdraw from the market—including lack of profitability and substantial uncertainty about enforcement of the individual mandate and about future payments of the cost-sharing subsidies to reduce out-of-pocket payments for people who enroll in nongroup coverage through the marketplaces established by the ACA.’

Yup, they conclude it’s because of the actions of Donald Trump (who has told the IRS not to enforce the penalty for the individual mandate and has said he might cut the future payments for the cost-sharing subsidies) and Republicans in general.

So, the final analysis is we have to cut insurance for 22 million people so there can be large tax cuts for the rich, the ultra rich, and major corporations.

The GOP Tax Cut is here

The Senate GOP has finally released its plan for massive tax cuts for the rich, what they call their healthcare bill. Other places will look at all the details, so I’ll just look at the important bits:

The 400 highest-income taxpayers alone would receive tax cuts worth about $33 billion from 2019 through 2028, which is more than the federal spending cuts from ending the Medicaid expansion in any one of 20 expansion states and the District of Columbia.  In fact, the tax cuts for the top 400 roughly equal the federal cost of maintaining the expansion in Nevada, West Virginia, Arkansas, and Alaska combined.  (See Figure 1.)  Policymakers face a stark choice: maintain the Medicaid expansion coverage for 726,000 people in these four states, or advance the pending legislation and cut taxes by millions of dollars a year for 400 households whose annual incomes average more than $300 million apiece.

I left that last bit in just for laughs–the choice for Republicans is clear: tax cuts for the ultra rich.

Households with incomes above $1 million a year would get annual tax cuts averaging more than $50,000 apiece

Meanwhile, the House-passed bill would spend about $700 billion from 2019 through 2028 on tax cuts mainly for high-income people and wealthy corporations from repealing the ACA taxes that fall on them, we estimate based on Joint Committee on Taxation data.

Now if you cut taxes by $700 billion you’re going to have to cut benefits by about the same amount. Since Republicans are back in power they no longer care about the deficit but Reconciliation rules (this bill is going through the Senate using this) means it can’t increase the deficit by much.

So, remember that this is what Republicans are for: cutting benefits to millions of who are poor or middle-class to pay for massive tax cuts for the rich and especially the ultra-rich.

But it helps the rich

It seems the Trump administration is contemplating a tax break so corporations will repatriate cash:

Drug makers are promising to create tens of thousands of American jobs if President Donald Trump follows through on his promise to give them a big tax break if they “repatriate” cash they’ve stashed overseas.

The article points to a Senate report: repatriatingoffshorefundsreportoct202011wexhibitsfinal. Here are the conclusions in the executive summary:

1. U.S. Jobs Lost Rather Than Gained. After repatriating over $150 billion under the 2004 American Jobs Creation Act (AJCA), the top 15 repatriating corporations reduced their overall U.S. workforce by 20,931 jobs, while broad-based studies of all 840 repatriating corporations found no evidence that repatriated funds increased overall U.S. employment.
2. Research and Development Expenditures Did Not Accelerate. After repatriating over $150 billion, the 15 top repatriating corporations showed slight decreases in the pace of their U.S. research and development expenditures, while broad-based studies of all 840 repatriating corporations found no evidence that repatriation funds increased overall U.S. research and development outlays.
3. Stock Repurchases Increased After Repatriation. Despite a prohibition on using repatriated funds for stock repurchases, the top 15 repatriating corporations accelerated their spending on stock buybacks after repatriation, increasing them 16% from 2004 to 2005, and 38% from 2005 to 2006, while a broad-based study of all 840 repatriating corporations estimated that each extra dollar of repatriated cash was associated with an increase of between 60 and 92 cents in payouts to shareholders.
4. Executive Compensation Increased After Repatriation. Despite a prohibition on using repatriated funds for executive compensation, after repatriating over $150 billion, annual compensation for the top five executives at the top 15 repatriating corporations jumped 27% from 2004 to 2005, and another 30%, from 2005 to 2006, with ten of the corporations issuing restricted stock awards of $1 million or more to senior executives.
5. Only a Narrow Sector of Multinationals Benefited. Repatriation primarily benefited a narrow slice of the American economy, returning about $140 billion in repatriated dollars to multinational corporations in the pharmaceutical and technology industries, while providing no benefit to domestic firms that chose not to engage in offshore operations or investments.
6. Most Repatriated Funds Flowed from Tax Havens. Funds were repatriated primarily from low tax or tax haven jurisdictions; seven of the surveyed corporations repatriated between 90% and 100% of their funds from tax havens.
7. Offshore Funds Increased After 2004 Repatriation. Since the 2004 AJCA repatriation, the corporations that repatriated substantial sums have built up their 5 offshore funds at a greater rate than before the AJCA, evidence that repatriation has encouraged the shifting of more corporate dollars and investments offshore.
8. More than $2 Trillion in Cash Assets Now Held by U.S. Corporations. In 2011, U.S. corporations have record domestic cash assets of around $2 trillion, indicating that that the availability of cash is not constraining hiring or domestic investment decisions and that allowing corporations to repatriate more cash would be an ineffective way to spur new jobs.
9. Repatriation is a Failed Tax Policy. The 2004 repatriation cost the U.S. Treasury an estimated net revenue loss of $3.3 billion over ten years, produced no appreciable increase in U.S. jobs or research investments, and led to U.S. corporations directing more funds offshore.

So it worked very well for the rich. I can see why the Trump administration would be for it.

Apple CEO makes a funny

The European Union decided that a tax deal that Ireland gave to Apple Computers was illegal and says they have to pay money back to Ireland. Tim Cook, the CEO of Apple, is upset:

Timothy D. Cook, the Apple chief, defended the company’s tax practices in Ireland, countering European officials’ ruling this week that the Irish government provided illegal incentives which allowed the technology giant to pay essentially nothing some years. In an interview with the Irish broadcaster RTE, Cook said the company paid its fair share in Ireland, the United States, and elsewhere.

Cook noted that Apple planned to send some of its enormous amount of cash overseas back to the United States next year, although he did not specify how much. Those international reserves have been particularly divisive as they remain out of the reach of US tax authorities.

“The finding is wrongheaded,” Cook told RTE. “It’s not true — there wasn’t a special deal between Ireland and Apple.”

He continued, “When you’re accused of doing something that is so foreign to your values, it brings out outrage in you.”

That last bit is a joke, I assume, and it’s quite funny. Apple specifically moved its operation to Ireland to save billions of dollars in taxes and has basically said they’ll bring the overseas cash back to the US only if they get a special deal on taxes. But cheating on taxes is “foreign to their values”. Ha ha, good one Tim.

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