Interpreting GOP Moves On Tax Bill
The most popular game in Washington right now is trying to figure out where the Republicans are on their tax-cutting plan, and what they're about to do next. This game exists because nobody is really sure what's going to happen, leaving lots of room for rampant speculation. But the moves the Senate is apparently making right now (or, reportedly, at least seriously considering) either show that Republicans are pretty confident of their ability to get the legislation passed or that they're essentially creating excuses for why it isn't going to pass at all this year. Since these positions are so contradictory, it's worth examining the developing GOP politics over the tax bills.
The House moved first in the Republican rush to get something (anything!) done before the end of the calendar year. Their plan is tilted overwhelmingly towards Wall Street and the wealthiest Americans. Something like four out of every five dollars in the House plan go straight to those two groups, while almost all the "belt-tightening" (or "closing loopholes") has been at the expense of regular working families who will see a whole slew of deductions disappear.
The Senate plan hasn't been finalized yet, but in broad terms it achieves exactly the same goals as the House plan -- enormous reductions on the taxes for big businesses and the one percent, with plenty of added pain for millions of middle-class taxpayers. Both plans, in fact, would cause tens of millions of American families to wind up paying more in taxes each year, while Donald Trump would see an immediate 81 percent cut in the taxes he owes.
There are significant differences between the two plans, but with one exception they all boil down to how much pain the middle class will endure in order to fund this lavish giveaway to those who need it least. The exception is the one-year pause the Senate is considering before slashing the corporate income tax rate -- which should be seen as an accounting gimmick rather than any sort of ideological debate within the GOP.
Now, tax cuts are easier for Republicans to work out than their efforts to repeal and replace Obamacare proved to be. With a tax-cutting bill, there are endless opportunities to tweak the numbers this way and that in order to satisfy any remaining holdout votes within the Republican caucus. We've already seen some of this in the House, with the pushback against getting rid of the mortgage interest and property tax deductions. So one assumes that any remaining hurdles would be handled in a similar fashion, adjusting the numbers slightly to allow certain members to claim to have "fought for their constituents" come election time. This is all pretty much par for the Republican course.
Tax cuts, after all, are what Republicans do best. They are seen as an absolute panacea within the party -- there is simply no problem under the sun where cutting wealthy people's taxes doesn't seem to be the preferred solution, according to Republicans. So you'd think they could get together on this core GOP issue, especially since they hold the House, the Senate, and the Oval Office. There might be some drama and some infighting, but at the end of the day they could claim (inaccurately, but also inevitably) to have "cut everyone's taxes" just in time for the midterm campaign season.
That was the plan, at any rate. But whether it comes to fruition or not is still a very open question. Republicans are constrained by the fact that they are attempting to pass major legislation without any Democratic votes, and further constrained by the way they are passing it (to avoid the 60-vote filibuster requirement in the Senate). This has tied their hands more than normal, and narrowed the path to victory considerably. But they still had a fighting chance to get their sweeping tax bill passed in the next few months.
Two developments, however, may preclude this from happening. The first was the introduction of anti-abortion legislation into the mix, and the second was the Senate deciding to end the Obamacare individual mandate (in order to pay for some of those tax breaks to Wall Street). This further complicates passage for a bill that already was questionable.
Republicans have a further external problem, one that few have so far noticed when talking about the pure politics of the bill. The public just isn't convinced that cutting taxes on the wealthy is all that great an idea, right now. The GOP plan is overwhelmingly seen as the giant giveaway to big business and the one percent that it truly is, and even Republican voters are noticeably lukewarm about the prospect of a tax cut solving all problems.
This is odd, because Republicans are used to tax cuts being a pretty easy sell to the public at large (and especially to their base). But this time around, two things may have changed dramatically in the public's perception. The first is that Donald Trump campaigned so heavily on "helping the little guy." The Republican tax plan does not achieve this goal -- far from it. It is not "populist" in any way, shape, or form. So the hardcore Trump base is watching Paul Ryan and Mitch McConnell with a lot of skepticism. Added to this shift is, perhaps, the memory of being promised similar rosy results during past Republican tax-cutting binges, and the little guy never actually seeing any money "trickle down" into his pockets. Both these perceptions tend to reinforce one another, which is probably why even the Republican base is not very fired up about another big tax cut for their bosses.
Republicans in Congress are feeling the heat on their inability to get much of anything done all year long. They have convinced themselves that the tax cut bill is the last train out of the legislative station, and if they can't even succeed on such a basic GOP agenda item, then the voters will severely punish them next November -- meaning many of them will lose their seats. The flip side of this coin, according to congressional Republicans, is that if they do manage to pass tax cuts, then (of course) the voters will shower them with adulation and they will cruise to re-election next year and continue holding both chambers of Congress.
This may be pure delusion, in a number of different ways. First, even if they do pass a tax bill, if the voters are not impressed with it, then it won't improve the standing of Republicans much (if at all). It will serve to assuage the Republican donor class, of course, which is really what the GOP congresscritters care about. But if the Trumpian base is unimpressed by the tax bill, then bragging about passing it isn't going to win too many votes -- something the Republicans so far have not even seemed to consider. And none of it may matter all that much anyhow. If the voters are about to unleash a Democratic "wave" election, then it may not matter in the slightest whether Republican voters stay home because they are disgusted with all the bills which didn't get passed, or whether they are disgusted with the bills that did actually pass.
Seen through this light, the recent moves on abortion legislation and killing off Obamacare one piece at a time would only make political sense in one of two ways. The first is that Republicans are incredibly confident that the bill will pass, and the second is that the Republicans are incredibly confident that it is not going to pass.
Congressional Republicans are feeling more pressure to pass this bill than they've felt in probably at least a decade. The stakes are sky-high, their leadership is telling them, and if they fail to pass a bill they can just kiss their majorities goodbye next year. The biggest motivating factor for any individual in Congress is the threat of losing their next election, and this card is being played in a big way to convince every Republican to get on board. So if they are supremely confident that their caucus will be all but forced in the end to vote "yes," then the temptation immediately arises to throw the kitchen sink into the bill. After all, if this is the only major bill that Congress is going to pass all year (and, quite possibly, all of next year as well), then why not load it up with all kinds of items on the GOP wish list? Because the pressure will be so great, no Republican will even be able to vote "no," and large chunks of their agenda can pass in one fell swoop. President Trump is so desperate for a win he's going to sign absolutely anything Congress sets in front of him, so why not shoot for the moon?
That's one way of looking at it. The other is that the Senate has already realized that it will be impossible to get enough Republicans on board with the basic tax bill. All it takes is three GOP holdouts, after all, and the bill will be dead. There is no built-in deadline to passing tax cuts (the way there is with the budget or the debt ceiling), so if they fail to pass anything the sky will not fall in any way (although the stock market might). This margin might even shrink, if Roy Moore screws up what was considered a safe Republican seat. If Alabama's Senate seat flips to the Democrats, then all it will take will be two GOP senators crossing the aisle to kill the bill.
Assume, just for the sake of conversation, that behind the scenes three Republicans are already refusing to vote for the tax bill. If Mitch McConnell sees this as a losing issue already, then he's going to get the lion's share of the blame. Which is why loading the bill up with extraneous issues could be a way for him to explain the bill's failure, should the need for a scapegoat arise later. Reportedly, the Obamacare change was offered up by none other than Rand Paul, one of McConnell's chief nemeses in the Senate. Normally, McConnell would just ignore Paul, and never even let his issue come up for a vote. But if the bill is already in trouble, then it sure would be handy to have Paul's amendment teed up to point to when the blame game begins, wouldn't it?
Repealing and replacing Obamacare failed numerous times in the Senate, because a handful of Republicans were aghast at the horrendous results the GOP plans would have caused. On the abortion issue, there are at least two Republican women in the Senate who routinely fight back against extreme anti-abortion provisions in major bills. With the margin for McConnell standing at only two allowable defections, the inclusion of both of these issues could guarantee that the bill does not pass. Even before considering these two tangential issues, there were already one or two GOP senators publicly warning they didn't want to vote for any bill that would increase the deficit and debt -- which all the Republican bills do, to the tune of at least $1.5 trillion. If these turn out to be hard "no" votes, then the bill may already be doomed to failure no matter how much the committee tinkers around the edges of it. And if it's doomed to failure anyway, then losing another two or three votes simply doesn't matter.
Of course, this is all nothing but speculation. As noted at the start, this is the most popular game in Washington right now -- trying to predict the outcome of the Republican tax-cutting efforts. The recent moves being made, however, should spur a whole new round of such speculation. The House is slated to vote on their version of the bill by the end of the week, and from what everyone can tell, it appears that Paul Ryan has the votes to pass their version. That will increase the momentum and increase the pressure on the Senate Republicans to follow suit. So why introduce last-minute complications that could lose support? It's a mystery, to be sure, but as I see it there are multiple possibilities as to why McConnell would be making such moves so late in the game. We'll all have to see how it all plays out, so in the meantime speculation's all we've got.
-- Chris Weigant
Follow Chris on Twitter: @ChrisWeigant
"Their plan is tilted overwhelmingly toward Wall St and the wealthiest Americans."
No surprise there! When the bottom half of American earners only pay a whisker over 2% of all the income taxes paid, what other direction could tax cuts BE "tilted toward"?
Liberals think that wealth (meaning REAL wealth, as in goods and services that people can consume, NOT money, which is simply an exchange medium) is 'distributed', kinda like manna from heaven, except that it is 'distributed' unfairly (meaning unevenly).
They seem unable to recognize that real wealth represents the fruits of somebody's labor (mental or physical), and has to be first produced before it can be 'distributed'.
Of necessity, society is forced to confiscate from the more productive, in order that the less productive and the unproductive can exist. The whole taxation debate always distills down to "How much can we confiscate" without causing the highly productive to quit producing?
C. R. Stucki -
You, at least, are honest in your assessment and what you are advocating. So why can't the Republicans do the same?
Why aren't they explicitly making the same case you are? Instead, they are lying about who their tax plan would benefit, and lying about how "it'll pay for itself."
As for tax cuts, it would be pathetically easy to change the tax system with cuts targeted to those on the lower end of the scale, without impacting those on the upper end of the scale much (if at all).
How about doubling the standard exemption, instead of the standard deduction (while removing the exemption)?
That would raise the bar for who pays taxes (by $4000 per family member), but wouldn't give much of a benefit at all to someone in the upper income brackets.
Or you could boost the AMT to say "all deductions phase out from $150K to $250K a year -- after that point, no deductions at all, while lowering the rate the bottom two or three brackets pay. That would do exactly the same thing.
You make it sound like it's impossible to adjust the tax code without showering all the benefits on the upper income levels. This is just not true at all, sorry. In fact, it's quite easy to do -- if that is your actual goal.
Like I said, I at least give you credit for being honest and defending your viewpoint. But I can't give the same credit to the GOP, who insists that this is a "middle-class tax cut" when it is anything but.
-CW
OK, I'm going back and answering comments, but I just had to bring this thread forward. Here is the original comment, and here is my response:
TheStig [7] -
Wow, I hadn't even though of "Moore's Law." Man, we could have all kinds of fun with that!
Let's see... Moore's Law: the acceptibility of previoiusly-disqualifying (and downright dehumanizing) qualities of a Republican candidate will double with every 300 days Trump spends in office.
Heh. Man, there's all kinds of ways to have fun with that!
[Note: for non-computer-geek types, here is the real Moore's Law]
:-)
-CW
Oh, sorry, here's where my Friday comments begin:
http://www.chrisweigant.com/2017/11/10/ftp461/#comment-110373
Answered some Monday comments, too...
http://www.chrisweigant.com/2017/11/13/freelance-democratic-autopsy-document-released/#comment-110370
-CW
Reply to CW [2]
Chris, you're a treasure. Much too good for one or two of the regular commenters in here.
If anybody doubts the power of a boycott, just look at Hannity's hand brake 180 turn on Moore!
If anybody doubts the power of a boycott, just look at Hannity's hand brake 180 turn on Moore!
Chris
There was no advocacy intended in my comment. My purpose (as almost always) was to educate/explain to those who have little or no understanding of how the real world actually works (which is damn near everybody, but liberals most particularly.)
I didn't say, or even intend to convey the thought that "Its impossible to adjust the tax code without showering all the benefits on the upper income levels."
I actually said it's pretty much defacto impossible to CUT taxes without benefitting the upper income levels, 'cause that's where the income taxes come from It certainly IS possible to "adjust the tax code" without benefitting the upper income levels, but that basically amounts to tinkering.
[2]
Chris Weigant wrote:
C. R. Stucki -
You, at least, are honest in your assessment and what you are advocating. So why can't the Republicans do the same?
Why aren't they explicitly making the same case you are?
Because not enough people would buy the idea that trust-fund babies are "the most productive".
In any modern economy the facilities, equipment, infrastructure, institutions, and natural resources used in producing something have more effect on the level of output than the personal qualities of the equipment operator. That being so, we have two options: we can pay people for already owning wealth, or we can introduce massive fictions into our systems of accounting.
The second option wouldn't work well. Sure, the current distribution of wealth at any moment is largely the result of previous generations' plunder, fraud, "conspiracy against the public, or ... contrivance to raise prices.” But we've got the distribution we've got, and that's what we need to use in determining the incentives that markets need in order to function.
So we're left with paying people for already being wealthy, and dealing somehow with the injustice of it. By the way, there's a reason that the most affluent pay such a high percentage of federal income tax: they receive a correspondingly high percentage of income.
The tax burden should be allocated so as to do the least harm. That means vastly higher top rates.
Chris
The three factors involved in the production of real wealth (NOT money!) are land, labor and capital (savings). The capital is productive in its own right, same as the land and the labor, and its output is not generally considered "payment to the person who owns it".
The fact that the capital in question often represents the savings of some ancestor of the current owner causes liberals to think of it as being somehow 'unfair', and thus more subject to 'redistribution', or transfer to the less fortunate.
"Fairness" in an arbitrary concept, about which the laws of economics have no opinion. However, without the accumulated capital of previous generations, we would not be nearly as productive or as materially well-off as we currently are. Liberals denigrate savings and capital accumulation at society's peril.
"The reason that the most affluent pay such a high percentage of income tax: they receive a correspondingly high percentage of income." OK, you're back to the standard liberal 'manna from heaven' distribution thing again. They do not RECEIVE that "correspondingly high percentage" they EARN (produce) it!
[11] dsws: Yep!
[12]: C.R.: Your lectures come out of economics textbooks and don't reflect a number of factors.
You completely skip over all the ways tax and other laws FAVOR passive wealth and penalize earned income. You conflate "investment" (i.e. gambling) with "production". You skip over the part played by the "consumers", without whom the "producers" would have nothing but pixels listing numbers that represent their "wealth". What is their wealth but the ability to purchase land, buildings, goods and services? What value would the building have if the owner was the only person on earth? In any meaningful, living way? How "wealthy" would the person be if he/she still had to perform all the functions the "low/non-producer" has to do every day? Much of the value of wealth comes from being able to pay other people to perform functions for the wealthy person.
You talk about denigrating savings and capital accumulations -- while YOU denigrate working people and earned income and judge people's value in terms of the level of federal income tax they pay. The family sitting in the WH right now are, in your schema, "producers". But they aren't. They are parasites and thieves. And they are explicitly trying to work the system this minute to make the rules -- the rules working people have zero control over -- favor them even more than the existing rules already do.
C.R.: CW linked to this article (in comments from Friday): https://www.washingtonpost.com/news/wonk/wp/2017/11/14/why-arent-the-other-hands-up-a-top-trump-advisers-startling-response-to-ceos-not-doing-what-hed-expect/?utm_term=.e58108fda98d
Big business hasn't been investing in anything except their own stock buybacks for years now. The notion that there's this "productive" class of entrepreneurs out there creating new businesses is out-of-date. Certainly there ARE entrepreneurs and all that, but what there isn't is any evidence that rich-people take extra money and invest it in main street. Investing has become financialized and decoupled from the world the 99% inhabits.
Building real businesses takes too long and loses money on the front end. People who do that are not the same as the people who make billions in investments. The Investor types ARE people who spend a lot of money, in multiple ways, ensuring they can keep as much money as possible and ensuring wages for the 99% remain stuck in the 1970s.
In your economic theory, how do economies flourish when incomes not only become unequal, but a majority of citizens become poor? Or near-poor? WORKING POOR? Because those non-producers working all those crappy jobs are making money for the "owners" but not enough from themselves. And contrary to this theory of "producers" these folks aren't sitting on their asses collecting welfare. They're working long hours for low pay .
C.R.: CW linked to this article (in comments from Friday): https://www.washingtonpost.com/news/wonk/wp/2017/11/14/why-arent-the-other-hands-up-a-top-trump-advisers-startling-response-to-ceos-not-doing-what-hed-expect/?utm_term=.e58108fda98d
Big business hasn't been investing in anything except their own stock buybacks for years now. The notion that there's this "productive" class of entrepreneurs out there creating new businesses is out-of-date. Certainly there ARE entrepreneurs and all that, but what there isn't is any evidence that rich-people take extra money and invest it in main street. Investing has become financialized and decoupled from the world the 99% inhabits.
Building real businesses takes too long and loses money on the front end. People who do that are not the same as the people who make billions in investments. The Investor types ARE people who spend a lot of money, in multiple ways, ensuring they can keep as much money as possible and ensuring wages for the 99% remain stuck in the 1970s.
In your economic theory, how do economies flourish when incomes not only become unequal, but a majority of citizens become poor? Or near-poor? WORKING POOR? Because those non-producers working all those crappy jobs are making money for the "owners" but not enough from themselves. And contrary to this theory of "producers" these folks aren't sitting on their asses collecting welfare. They're working long hours for low pay .
CRS
How do you quantify an individual's productivity? Both mental and physical productivity. Provide your measurement units. Does productivity encompass quality? Can the same units of measurement be applied to productivity that results in different products in macro economy? What I'm getting at is that I think your basic argument is going to prove to be circular reasoning.
CRS
More questions about your basic model.
Rate in terms of productivity
Einstein
Henry Ford
Lady Gaga
Jesus (assuming he is historical)
Hank Aaron
Trump
Paul Manafort
Weinstein
Salk
Vanderbilt
Units please.
Paula
I don't denigrate anybody. I try to explain realities to people who have no understanding of how the real world works, without passing any moral judgments or getting involved with arbitrary constructs such as 'fair/unfair', 'generous/selfish, etc. If that comes across to you as morally inadequate, heartless, uncaring, compassionless, etc. I cannot really help you.
The three factors involved in the production of real wealth (NOT money!) are land, labor and capital (savings).
The three factors are labor, capital and rents (e.g. monopoly laws).
All your certainty that only you understand reality comes across more as a textbook case of Dunning Krugers rather than credibility.
TheStig
I make no personal productivity ratings, the marketplace does that, seemingly based on the relative abundance/scarcity of the talent in question. And the units are dollars.
I'm aware of the fact that the way the marketplace seems to value the uncanny ability to throw a round ball through a hoop, knock a baseball out of the park, or sing songs others have written, doesn't seem 'fair' compared to its evaluation of the contributions of a Salk or a Mother Theresa. But as I've consistently pointed out to liberals, 'fair' is an arbitrary concept which the marketplace does not and cannot recognize.
Sorry, but once again, that's how the real world works.
neilm
Rents have nothing whatsoever to do with the production of real wealth (defined as goods and services that can be consumed to sustain life.)
Rents are simply another form of redistribution of the fruits of other people's labors, pretty much the economic equivalent of taxation.
Believe me, I am fully aware that the economically ignorant perceive my 'textbooky' lectures as something they cannot understand and don't really want to hear about, because they contradict personal concepts that the ignorant wish were reality.
P.S. Sorry, I've no idea what a "Dunning Kruger" is.
[17] Stucki: I didn't talk about fair/unfair, generous, etc. I'm saying your economic theory is an abstraction that isn't borne out in the real world, in part because it doesn't take into account the entire playing field -- it ignores all the ways the economy is stacked in favor of the top and against everyone else. You don't address that point.
Paula
Unless you're talking about the uneven distribution of talent, skill and ambition among people, I suppose the reason I didn't address it because I don't believe it exists.
If you'd care to identify specific ways you believe the economy is "stacked in favor of the top", I'd probably be happy to address it.
Stucki [20]: real wealth [is] defined as goods and services that can be consumed to sustain life.
Errp. By that definition, hedge fund managers aren't actually wealthy. Maybe that's why they're taxed at a significantly lower rate?
If you'd care to identify specific ways you believe the economy is "stacked in favor of the top", I'd probably be happy to address it.
C'mon Stucki, even Christ addressed that one, coming down in favor of those who would demand more of the rich, radical redistributionist that he was.
Perhaps we should assign you re-readings of "Gatsby" and Steinbeck to jog your memory of what the argument is actually about.
You have overvalued the role of capital and undervalued the role of labor in your calculation. When Obama said in 2011 in response to Mitt, "You didn't build that", he didn't mean that the wealthy didn't have a role in getting things built, but rather that they seemed to be taking all of the credit, while ignoring or undervaluing the role of labor, existing infrastructure, and government in creating for that investor an environment in which that thing could be built.
If you dispute that, ask yourself why Somalia isn't an investor's paradise. Low cost labor, cheap land, and land and sea access to raw materials abound, and there are zero regulatory hurdles to surmount. According to libertarian and conservative dogma, the place ought to be Silicon Valley East by now.
Meanwhile, New York and London, two cities with the highest land cost, highest labor cost, and among the highest local taxes in the world, are also the two cities on the planet that create the most wealth.
Figure that.
Balthazar
Give me a break man, you make me feel like I'm discussing economics with a 7th grader.
One of the biggest reasons economic illiterates don't understand how the real world works is because they aren't smart enough to differentiate between money (a medium of exchange for purposes of the facilitation of trade) and real wealth (goods and services capable of being consumed to sustain life).
Hedge fund managers provide a service (managing savings)to investors, for which they are well paid, at least as long as they are successful. They are not manufacturing money, they are providing a service, just like the dentist that fills your cavities or the barber that cuts your hair They are accumulating money, not manufacturing it. Obviously if they accumulate a lot of it, they will be wealthy, because they can trade it for things to eat, wear, drive, etc.
I have not "overvalued" nor "undervalued" anything. Once again, that functions is performed by the marketplace (meaning by you and me and everybody else, as we trade our production for the production of others.
See my [19] above to hear that explanation again. If you feel, as most liberals do, that the marketplace overvalues some things and undervalues others, blame yourself, me, and everybody else, but get used to it, cause it ain't gonna change!
Re Somalia - I'm guessing that talented labor and skilled labor are a helluva lot more important to economic progress than cheap labor. ALL poor places are overflowing with cheap labor, but not with talented and skilled labor.
Rents are simply another form of redistribution of the fruits of other people's labors, pretty much the economic equivalent of taxation.
How are rents different from capital then - ownership of capital is also simply another form of redistribution of the fruits of other people's labors, pretty much the economic equivalent of taxation?
If you feel, as most liberals do, that the marketplace overvalues some things and undervalues others, blame yourself, me, and everybody else, but get used to it, cause it ain't gonna change!
Wow, that is completely naive - it is a long time since I've met a proponent of the "perfect" market - do you believe in homo economicus as well?
Of course the market overvalues some things and undervalues others - it is almost the definition of a market.
Have you ever worked on Wall St. or in the City? A dose of reality might help you a lot here Stucki.
neilm
If I understand that, you seem to be saying that people who have savings (aka 'capital') must have stolen it, most likely I'm gonna guess from poor people.
Sorry man, that doesn't merit a response.
But as I've consistently pointed out to liberals, 'fair' is an arbitrary concept which the marketplace does not and cannot recognize.
Anthropomorphizing markets is not unique to "liberals" (whoever they are in your mind, usually when that term is used pejoratively it is by a weak minded individual who creates their own granfalloons to contrast their own inadequacies).
However I'm really interested in the unfair markets you think exist, and why only "realists" like yourself would willingly participate in them. Doesn't sound like realism to me. If I can choose between a fair market and a rigged market, I think, realistically, I'd choose the fair one. Which would you choose?
neilm [28]
The market that "overvalues and undervalues" is not a person, it is the collective doings of all of us casting our dollar votes together. If "it overvalues and undervalues", that really means WE overvalue and undervalue, right?
I suppose you can make that claim, but it has no meaning!!
C.R. Stucki: I will not take the time/effort needed to list/describe how the system is stacked. Not worth my time. You can write me off as a 7th Grader while I will write you off as someone who's information is woefully out-of-date and on we merrily go.
If "it overvalues and undervalues", that really means WE overvalue and undervalue, right?
Basically that is the essence of a market. I value something you have more than you do, and you value what you have less than what I'm willing to give you for it. Both sides "overvalue" and "undervalue" at the same time, thus we get a trade.
[26] C. R. Stucki
"I'm guessing that talented labor and skilled labor are a helluva lot more important to economic progress than cheap labor. ALL poor places are overflowing with cheap labor, but not with talented and skilled labor."
Which poses the question: If anyone, including Republicans, were actually really interested in creating wealth and fostering economic growth, why then aren't they investing in the education and training of a labor force, instead of tax cuts? How many corporations ask; If only we could find qualified individuals?
Tax cuts only make people richer, they don't make them invest more in production. In fact, quite the opposite seems to be the case, as corporations sit on piles of money and increase stock values, but don't hire more people or produce more goods and services or pay people more. (Except for executives whose wealth increase due to stock portfolios.)
Maybe because those corporations are waiting for the government to increase investment in infrastructure, like education? While government can no longer do so to the extent it should because of declining or restrictive revenue because of endless tax cuts leading to endless borrowing and deficit spending?
Sen. Johnson (R-Wis) doesn't like the tax bill and claims he won't vote for it. He will probably get his arm twisted by some pork, but if he doesn't this is the first shoe to drop. I'd expect McCain to twist the knife a bit as well, and Rand Paul probably has some whacko issue we haven't heard about yet.
This could be entertaining.
neilm -30
"If I can choose between a fair market and a rigged market, I think, realistically, I'd choose the fair one. Which would you choose?"
Neil, I take your point, but I would go a with rigged market. Insider trading gives you a real edge, and if you play the insider game right it is completely legal...but still rigged, if not totally rigged, or even mostly rigged (can't have everything Martha). I hope to god (should I say Mammon?) that my mutual fund managers are playing a legally rigged game, using info and info processing beyond the reach of mere mortals. Otherwise, you might as well be selecting with darts....which is probably almost as good, and what I used to do.
I’m too simple-minded when it comes to the discussion of taxes, I guess, as it just seems obvious that money that gets put in tax shelters is money that should be taxed by our government. These are blatantly dishonest methods for avoiding paying what you owe in taxes! That a corporation can claim that a P.O. box on a tiny island is its corporate headquarters that somehow earned billions of dollars despite not exporting any product from the island and not producing any products locally is dishonest. Why are these needed? Who benefits from this except those that are avoiding paying what they owe? Ending tax shelters would be a huge help in funding our government’s programs for years to come.
When an industry is found to have violated the law and the public’s trust, the fines they are forced to pay out should NOT be able to be written off by the corporation. Fines are punishment!
Corporate welfare is the another one that I do not understand. Exxon is given millions in subsidies because they claim that they need the money to be competitive in the global oil market... the same claim they have made since the 1970’s! This despite Exxon being in the top 3 of wealthiest corporations for the last two decades! Helping those that already have the means to help themselves, that’s the GOP’s way!
LWYH
Those oil company subsidies are a total myth. A subsidy is defined as a cash payment from the government to the company in question. Oil companies receive NO direct cash subsidies.
Liberals can, and frequently do, claim that the oil companies, (or any other companies for that matter), are "undertaxed", regardless of how much taxes they actually pay, but the subsidy claims are a total fabrication.
If you don't believe that, Google 'government subsidies to oil companies'.
C. R. Stucki [10] -
OK, let me see if I've got this straight...
There was no advocacy intended in my comment. My purpose (as almost always) was to educate/explain to those who have little or no understanding of how the real world actually works (which is damn near everybody, but liberals most particularly.)
Ah. So you're just here to be supercilious. Got it.
I didn't say, or even intend to convey the thought that "Its impossible to adjust the tax code without showering all the benefits on the upper income levels."
I actually said it's pretty much defacto impossible to CUT taxes without benefitting the upper income levels, 'cause that's where the income taxes come from It certainly IS possible to "adjust the tax code" without benefitting the upper income levels, but that basically amounts to tinkering.
But you seem to have missed a key fact. I am not advocating for any tax cuts, or even tax reform. The GOP is, but they're lying about it. I am pointing that out.
As for your last paragraph, that's just ridiculous. Guess all that "real world" you live in isn't actual reality.
It is perfectly possible to cut taxes without cutting taxes on the upper income levels. There are indeed many ways to do so.
Cut the rates for the bottom three or four brackets, and slightly (less than a percent) raise taxes on the top bracket. Voila! You have cut taxes, but only on those in the lower income brackets. Or you could cut the SS tax rate, but remove the cap on earnings -- that would actually increase taxes on the top earners but reduce them for everyone making less than $110K. Those are just two quick examples.
I guess in your self-described "real world" cutting taxes is impossible without showering all the benefits on the one percent, but that is not actual reality. In reality, it is quite easy to do. I've now given three examples of how to do so (the other being doubling the personal exemption).
Most of these tax cuts would in fact benefit the upper brackets, but extremely minimally. Since the top bracket in effect pays all the other brackets on their way up to the top bracket, any tax cut which gives the benefits to the lower brackets will (quite minimally) also benefit the upper brackets -- but it would only add up to peanuts in tax breaks for the wealthy, whereas it would be a significant reduction for those at lower incomes.
Take the "double the exemption" idea. This would exclude an extra $4K in income from any taxes at all -- per person. A married couple would see $8K in extra tax-free income, and for a family of four, it would be $16K. If your salary is in the $25-50K range, that is a significant percentage of your total income (or your taxable income). For someone making $10 million, an extra $4K tax-free isn't going to reduce their tax bill much at all, because most of their tax bill falls into that top bracket anyway.
As for the rest of your economics lectures, I have to wonder why you're even giving them. The subject at hand is the GOP tax plan, not some abstract theory. You seem to be arguing that their tax plan is beneficial, and that tax cuts in general are a good thing to do right now. I disagree with both of those ideas, personally. That is the subject which apparently hasn't intruded on your own personal "real world" that you feel the need to explain to ignorant liberals.
I certainly don't think a massive tax cut is necessary right now, or that cutting taxes on anyone is of pressing urgency. I'm not sure what gave you the impression that I agreed with that sentiment.
My main point is that Republicans are lying to the American people. They're trying to sell their tax plan as "a big middle-class tax cut" when that is simply laughable on the face of it. I thought you were being more honest, but it seems I was mistaken. My apologies.
-CW
C. R. Stucki [12] -
Wow, that's a head-spinner of a contradiction:
The fact that the capital in question often represents the savings of some ancestor of the current owner causes liberals to think of it as being somehow 'unfair', and thus more subject to 'redistribution', or transfer to the less fortunate.
"Fairness" in an arbitrary concept, about which the laws of economics have no opinion. However, without the accumulated capital of previous generations, we would not be nearly as productive or as materially well-off as we currently are. Liberals denigrate savings and capital accumulation at society's peril.
"The reason that the most affluent pay such a high percentage of income tax: they receive a correspondingly high percentage of income." OK, you're back to the standard liberal 'manna from heaven' distribution thing again. They do not RECEIVE that "correspondingly high percentage" they EARN (produce) it!
So, people who inherit wealth from their ancestors have "earned" it? By winning the sperm/egg sweepstakes? Because that doesn't seem to fit in with your whole "the most wealth is produced by the most talented and skillful" argument...
Personally, I don't consider Eric Trump very talented or skillful, but he's going to wind up with a lot of wealth. Please enlighten me how he "earned" this...
-CW
neilm [30] -
Nice use of "granfalloons." Just had to say that.
:-)
-CW
CW
87 {moved forward}
Did you see this, about a (different?) Gary Cohn speech?
...
Cohn looked surprised. “Why aren't the other hands up?” he said.
Look, Ma. No hands!
OMG, CW... right! I just about fell out of my chair when I saw the video on this. It should be required viewing for every American who believes the BS and utter fallacy that the Benedict Donald Trump trickle down is actually a middle class tax cut and/or that an employer's big tax savings will translate into an average $4,000 rise in salary that will shower down upon the American working class.
CW
You assure me it indeed IS possible "to cut taxes without cutting taxes on the upper income levels", and then proceed to suggest cutting the SS tax.
I claim anything other than cutting taxes on high income people would be tantamount to tinkering, and you contradict me by mentioning minor bracket shifts etc. that wouldn't amount to .001% of the total tax collections.
The current Republican tax cut being so hotly debated concerns ONLY income tax. I have consistently stated/implied in all my comments on the subject (i.e., the fact that the bottom half of Americans pay only a whisker over 2% of all the taxes collected) that we're talking about the federal income tax only.
Perhaps some intellectual dishonesty to go with my "superciliousness" (superciliosity?)??
Don; you have to stop being pathetic, trolling, and come back with a real idea that has some actual merit, and isn't based on your own delusions.
Maybe you shouldn't have quit your job.
@STucki I have consistently stated/implied in all my comments on the subject (i.e., the fact that the bottom half of Americans pay only a whisker over 2% of all the taxes collected) that we're talking about the federal income tax only.
Okay, and what percentage of US wealth does that bottom half of the US have?
If they've only got 10% of the money, would it be fair to ask them to pay half the taxes?
Don H
Can't speak for CW, but just a guess, how about it's boring and unrealistic?
MH
There isn't enough space on this page to accommodate all the zeros that would have to precede the 1 to express the "percentage of US wealth" (presuming you refer to savings, or 'capital' as economists say) held by the bottom half of Americans.
However, that is, mostly at least, beside the point. We're talking income tax in this discussion, and while I don't know the exact number, the percent of income received by the bottom half of earners is actually a very high number, simply because there are millions of them, and only several thousand ultra-high earners.
I try to not get too involved in "fair", because it's a totally arbitrary definition. One man's 'fair' can be entirely different than another man's. I try to stick with things like 'practical', 'realistic', 'necessary', etc., such as, It's necessary to tax higher incomes more in order to get enough to do the jobs required of gov't.
neilm
Granfaloons? Those anything like pantaloons?
Don, you're just being a troll.
Being a troll won't get you what you want.
If you can't respond to OUR points that tear your whole group apart (and you don't) then why would CW bother?
Still waiting for you to show me exactly when "Big Money" started.
Still waiting for evidence that "Big Money" is the source of the Dems rightward drift.
Still waiting for evidence that "Small Money" Dems are inherently better.
Still waiting for evidence that "Big Money Dems" are always bad.
Still waiting for evidence that you can actually mobilize this mythical 20% of the population you want to support your candidates.
Still waiting for evidence on anything really.
What statements have I made that are baseless and delusional?
That you're a troll? You literally said you'd quit posting inane questions when CW answered you.
You're threatening to harass people online to get what you want. That's a troll.
Sorry if you DISAGREE with that assessment, but it's hardly baseless (your own claims that you're basically spamming the comments to force CW to answer you) or delusional (see the first)
And you don't get to post things in public and then say they are only for one person. That's not how public comments work.
I'm going to keep calling you out, because it's the right thing to do.
@Stucki
I never said fair I don't believe.
But I'm asking what SENSE does it make for people who get 10% of the money to pay 50% of the taxes?
Just because that other 50% manages to hide their wealth generation as non-income shouldn't mean that their wealth and value shouldn't count toward their contribution.
What you have to decide is what the fundamental reasoning is between your tax rates.
Why are your tax rates what they are? Why are they different for different brackets?
The clear intent is to tax those who make more, because if you make 5% more than it takes to survive, a 10% tax might kill you.
But if you make 5000000% more than it takes to survive, a 20% tax will not affect your life or liberty in any significant way.
In this scenario, the 10% the poor person pays (which is likely .00001% of what the rich person makes) is effectively worthless compared to the 20% the rich person makes. So it's effectively 99.99999% to .00001% on the distribution of the financial burden of the taxes.
But what sense would it make to try and say that poor person needs to pay more, when if you took every nickel and dime they made for the year it STILL wouldn't amount to 1% of what the rich person made?
I'm not asking you about fair. I'm asking you about long term fiscal sense.
MH
You're right, rich folks need to pay more.
I notice that you keep refusing to answer my points.
Where's your evidence?
And you ignored the fact that I shot your examples of my delusions down.