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Post by the Scribe on Dec 22, 2020 7:40:06 GMT
GOP Battled To Nail Tax Break For 3-Martini Lunches In Stimulus Package: Reportwww.yahoo.com/huffpost/covid-stimulus-three-martini-lunches-600-check-065130982.html Mary Papenfuss·Trends Reporter, HuffPost Sun, December 20, 2020, 11:51 PM MST
Critics are slamming the unbalanced distribution of the nation’s resources in a draft of the new COVID-19 financial relief package after The Washington Post reported it includes a tax break for the “three-martini” business lunch. www.washingtonpost.com/us-policy/2020/12/20/meal-tax-deduction/
Regular workers, meanwhile, will get $600 in stimulus cash from the government, which could be the equivalent of a bill for a single one of those corporate executive lunches.
The tax deductions for the meals, expected to cost the U.S. Treasury billions in tax revenue, was pushed by the White House and Republicans, and denounced by congressional Democrats, according to the Post. It’s included in a summary of the stimulus deal circulating among congressional officials.
President Donald Trump backed the deduction as a way to revive the restaurant industry amid the pandemic. But critics have said it would do little to help restaurants and would largely benefit business executives who don’t need taxpayer help. www.huffpost.com/news/topic/donald-trump
Democratic leaders agreed to the provision in exchange for Republicans agreeing to expand tax credits for low-income families in the package, the newspaper reported.
“Republicans are nickel-and-diming benefits for jobless workers, while at the same time pushing for tax breaks for three-martini power lunches. It’s unconscionable,” Sen. Ron Wyden (D-Ore.), the ranking Democrat on the Senate Finance Committee, told the Post. www.huffpost.com/news/topic/ron-wyden
Executives since the 1980s have been able to deduct 50% of often extravagant lunches from their federal taxes. The provision in the stimulus package would hike that to 100%.
It was one aspect of the deal triggering critics. Another was the $600 payout to working Americans. Critics pointed out that Commerce Secretary Wilbur Ross once wore a pair of custom-made slippers worth $600 to the Capitol. www.huffpost.com/topic/wilbur-ross
Attorney Walter Shaub, former head of U.S. Office of Government Ethics, lashed the “stinking” $600 checks as “what you give Americans if you just don’t care about Americans.” He compared it to the hundreds of thousands of taxpayer dollars in farm subsidies reaped by Sen. Chuck Grassley (R-Iowa) and his family. www.huffpost.com/topic/walter-shaub www.huffpost.com/topic/office-of-government-ethics www.desmoinesregister.com/story/money/agriculture/2017/12/08/grassley-netted-nearly-370-000-farm-subsidies-environmental-group-says/932067001/ www.huffpost.com/news/topic/chuck-grassley
Shaub also pointed out the cost of Ross’ footwear.
$600 is what you give Americans if you just don’t care about Americans. This is what a Republican Senate gets you. And let’s all remember those times (plural) millionaire @chuckgrassley helped himself to the cash handouts for farmers. I bet he got more than $600 stinking dollars. t.co/BC5SlC0HQB twitter.com/ChuckGrassley?ref_src=twsrc%5Etfw t.co/BC5SlC0HQB
— Walter Shaub (@waltshaub) December 21, 2020
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Post by the Scribe on Dec 22, 2020 8:04:31 GMT
Groundbreaking Study Finds Tax Cuts Help No One But The Richwww.yahoo.com/lifestyle/groundbreaking-study-finds-tax-cuts-130023915.html Isabella Bridie DeLeo Fri, December 18, 2020, 6:00 AM MST
Remember when Trump only paid $1,500 in federal taxes over the course of 11 years? Well, it turns out that lowering taxes on the super-rich only really helps the super-rich. www.fatherly.com/love-money/american-families-cant-do-taxes-like-trump/
In other words, experts have just confirmed that trickle-down economics doesn’t really work. For individuals who support large tax breaks for the ultra-rich, one of their main arguments is typically the notion that cutting taxes for the uber-wealthy will have a “trickle-down” effect that would help society at large, since these cuts would supposedly allow the wealthiest folks to perhaps invest more in the economy or donate to charitable causes, according to Business Insider. www.fatherly.com/love-money/tax-bracket-breakdown-what-to-know/ www.fatherly.com/love-money/tax-season-advice-deductions-parents/
But a new, comprehensive study suggests otherwise: that tax cuts actually lead to more income inequality, and don’t improve employment or further economic growth.
A paper from researchers Julian Limberg of King’s College London and David Hope from the London School of Economics, called “The Economic Consequences of Major Tax Cuts for the Rich,” rigorously examines 50 years worth of tax cuts for the uber-rich in 18 countries, including the United States, Norway, and Japan from the years 1965 to 2015, and wrote that, “Our analysis finds strong evidence that cutting taxes on the rich increases income inequality but has no effect on growth or unemployment.” Limberg and Hope found that “Cutting taxes on the rich increases top income shares, but has little effect on economic performance.”
This study comes at a crucial time during the COVID-19 pandemic when countries across the globe are looking to fund COVID-19 relief bills. Argentina put in place a one-time “millionaire’s tax” that fewer than 100 of the country’s highest earners will pay, UK experts have called for a similar tax to be implemented, and dozens of multi-millionaires in the U.S. including Abigail Disney and Jerry Greenfield (the Jerry in Ben & Jerry!) have also asked for higher taxes on the ultra-wealthy to help with COVID-19 relief. www.fatherly.com/news/ffcra-sick-leave-paid-leave/
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Post by the Scribe on Dec 22, 2020 8:15:07 GMT
How much more proof does one need that CONSERVATISM is the cult created by the rich for the benefit of the rich? The CONS have been pushing this bullshit since Reagan, actually before by Libertarians who hijacked the Republican Party and Reagan who used this theme (supply side economics) to gain campaign donors for the corporate whore republicon politicians.
The FREE MARKET is another scam term they have been pushing for decades when in actuality there is NO such thing. www.huffpost.com/entry/free-market-economics-critique_b_1155820
That is why I created this website...to expose conservatism for the fraud it is. The RepubliCON Party is nothing more than a front group for the wealthy and transnational corporations. Conservatism is the CULT they created to do their bidding led by their corporate whores in Congress funded by these same wealthy elite and their global corporations. 50 years of tax cuts for the rich failed to trickle down, economics study sayswww.cbsnews.com/news/tax-cuts-rich-50-years-no-trickle-down/ BY AIMEE PICCHI
DECEMBER 17, 2020 / 12:43 PM / MONEYWATCH
Tax cuts for the wealthy have long drawn support from conservative lawmakers and economists who argue that such measures will "trickle down" and eventually boost jobs and incomes for everyone else. But a new study from the London School of Economics says 50 years of such tax cuts have only helped one group — the rich.
The new paper, by David Hope of the London School of Economics and Julian Limberg of King's College London, examines 18 developed countries — from Australia to the United States — over a 50-year period from 1965 to 2015. The study compared countries that passed tax cuts in a specific year, such as the U.S. in 1982 when President Ronald Reagan slashed taxes on the wealthy, with those that didn't, and then examined their economic outcomes.
Per capita gross domestic product and unemployment rates were nearly identical after five years in countries that slashed taxes on the rich and in those that didn't, the study found.
But the analysis discovered one major change: The incomes of the rich grew much faster in countries where tax rates were lowered. Instead of trickling down to the middle class, tax cuts for the rich may not accomplish much more than help the rich keep more of their riches and exacerbate income inequality, the research indicates.
"Based on our research, we would argue that the economic rationale for keeping taxes on the rich low is weak," Julian Limberg, a co-author of the study and a lecturer in public policy at King's College London, said in an email to CBS MoneyWatch. "In fact, if we look back into history, the period with the highest taxes on the rich — the postwar period — was also a period with high economic growth and low unemployment."
Because the analysis ends in 2015, the research doesn't include President Donald Trump's massive tax overhaul, which he signed into law in late 2017 and which slashed taxes for the rich and corporations while providing a moderate cut for the middle class. But Limberg, who co-authored the study with David Hope, a visiting fellow at the London School of Economics' International Inequalities Institute, said that he wouldn't expect the results of that tax cut to be much different.
Already, Mr. Trump's tax cuts have lifted the fortunes of the ultra-rich, according to 2019 research from two prominent economists, Emmanuel Saez and Gabriel Zucman of the University of California at Berkeley. For the first time in a century, the 400 richest American families paid lower taxes in 2018 than people in the middle class, the economists found.
The "careful" new research from the London School Economics "suggests indeed that tax increases on the wealthy should be considered post-COVID," Berkeley's Zucman said in an email to CBS MoneyWatch.
Engine for stronger economic growth?
To be sure, the economy was humming along before the pandemic struck the nation in March, with an unemployment rate that was at its lowest in about half a century. Conservative think tanks such as the American Enterprise Institute pointed to Mr. Trump's tax cuts as an engine for stronger economic growth. www.cbsnews.com/coronavirus www.aei.org/economics/the-trump-tax-cuts-considered/
Yet even so, millions of American families struggled to find jobs that paid living wages, while the cost of essentials such as health care, housing and education increased at far faster rates than the typical income. Even before the pandemic, income inequality had reached its highest point in 50 years, according to Census data. www.cbsnews.com/news/income-inequality-in-america-is-at-its-highest-level-in-more-than-50-years-census-report-today-shows/
In 2020, the pandemic has worsened inequities across all spectrums, touching racial, gender and educational divides. When the economy shut down in March, workers who couldn't transition to remote work — typically lower-paid employees involved in retail, service and hospitality jobs — were hit the hardest.
At the same time, white-collar workers generally fared better as they were more likely to maintain their jobs as they shifted to remote work. Investors also benefited as the stock market rallied on hopes for an economic recovery — a development that doesn't help most low- and middle-class workers. Only about half the U.S. population is invested in the stock market through their retirement and savings accounts, and even then more than 80% of all stocks are owned by the richest 10%. www.wusa9.com/article/news/verify/more-than-80-of-the-stocks-in-the-us-are-owned-by-the-wealthiest-10/65-4b8567c1-074b-4a30-bc28-dfb9d1271d7d
Since the pandemic began, the combined wealth of America's 651 billionaires has jumped by more than $1 trillion, reaching $4 trillion in early December, Americans for Tax Fairness said earlier this month. americansfortaxfairness.org/issue/net-worth-u-s-billionaires-soared-1-trillion-total-4-trillion-since-pandemic-began/
Meanwhile, almost 8 million Americans have fallen into poverty since the start of the pandemic through November, according to new data released by the University of Chicago and the University of Notre Dame. harris.uchicago.edu/files/monthly_poverty_rates_updated_thru_november_2020_final.pdf
Rebuilding the economy and household wealth for low- and middle-class families are among the issues facing President-elect Joe Biden after he's inaugurated next month. Raising taxes on the rich and corporations could provide trillions of dollars in resources for helping the economic recovery, Zucman told CBS MoneyWatch.
"This is not only a viable option, but also a fair option, because some of the wealthiest taxpayers have benefited from the pandemic — for instance large corporations such as Amazon and their shareholders," he noted. "These taxpayers could reasonably be asked to pay more to make up for pandemic losses."
First published on December 17, 2020 / 12:43 PM
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Post by the Scribe on Feb 7, 2021 2:01:24 GMT
Column: How often have tax cuts for the rich trickled down to the rest of us? Neverwww.yahoo.com/finance/news/column-often-tax-cuts-rich-213207007.html Michael Hiltzik Fri, February 5, 2021, 2:32 PM
Democratic presidential candidate Sen. Elizabeth Warren, D-Mass., speaks at a Get Out the Caucus Rally at Simpson College in Indianola, Iowa, Sunday, Feb. 2, 2020. (AP Photo/Gene J. Puskar)
Sen. Elizabeth Warren (D-Mass.) proposed a wealth tax during her presidential campaign in 2020. (Associated Press) We can probably stipulate that almost no one really believes that tax cuts for the rich are good for the economy.
The claim has become so closely identified with Republican ideologues and their patrons — that is, the rich themselves — that it no longer has much purchase in public debate.
It's still GOP orthodoxy, however, so a new study published by the London School of Economics debunking it with hard data is useful. eprints.lse.ac.uk/107919/1/Hope_economic_consequences_of_major_tax_cuts_published.pdf
The effect size of major tax cuts for the rich on real GDP per capita is close to zero and statistically insignificant.
David Hope and Julian Limberg
Its authors, David Hope of the LSE and Julian Limberg of King's College London, examined tax cuts enacted by 18 developed countries, including the United States, over the 50-year span from 1965 to 2015.
Their conclusion was that tax cuts for the rich succeeded in increasing the wealth of the top 1% and achieved absolutely nothing in terms of spurring growth or reducing unemployment.
"The effect size of major tax cuts for the rich on real GDP [gross domestic product] per capita is close to zero and statistically insignificant," they write.
The Hope-Limberg paper is especially important in the context of the COVID-19 pandemic. While the pandemic has damaged the financial health of middle- and working-class American families — and things would be much worse if not for the relief packages passed by Congress — it has affected the top 1% not at all.
Indeed, as determined by Americans for Tax Fairness, the wealth of the nation's billionaires has grown by more than one-third during the pandemic. americansfortaxfairness.org/issue/net-worth-u-s-billionaires-soared-1-trillion-total-4-trillion-since-pandemic-began/
That points to one way of funding further relief, including the $1.9 trillion in assistance proposed by President Biden: Raise taxes on the wealthy. Indeed, Hope and Limberg proposed exactly that in mid-December.
"Given the damage the pandemic has done to economies," they wrote, "the notion of getting the most affluent to help foot the bill is one that has many supporters .... Higher taxes on the rich could help to fund the substantial and potentially long-lasting expansion of government spending and social protection seen during the pandemic. They could also help address health and economic inequalities, which have only been exacerbated by COVID-19 and its economic fallout." theconversation.com/footing-the-covid-19-bill-economic-case-for-tax-hike-on-wealthy-151945
The authors' survey doesn't encompass the massive U.S. tax cut enacted in December 2017 by the Republican-controlled Congress and signed by then-President Trump. But their findings conform with other research that does cover the 2017 cut, such as that of UC Berkeley economists Emmanuel Saez and Gabriel Zucman.
As they pointed out in their 2019 book "The Triumph of Injustice," the 2017 cut finally brought the U.S. to the point where the 400 highest earners in the U.S. paid lower tax rates than the working class. "This looks like the tax system of a plutocracy," they wrote.
Hope and Limberg, like Saez and Zucman, observe that cutting taxes for the rich not only increases economic inequality, but delivers ever more political power into the hands of the affluent while increasing their incentive to lobby for even more tax breaks. (Tax cuts enable them to keep more of their income gains.)
"There is a large political science literature on the power of rich voters and organized business interests to shape public policies in their favor," Hope and Limberg write. "Lower taxes on the rich encourage high earners to bargain more forcefully to increase their own compensation, at the direct expense of those lower down the income distribution."
Within their sample countries, they found, the economic effects of tax cuts were consistent. They tended to increase the GDP share of the top 1% by 0.8 percentage points within five years of the cuts.
The lack of any discernible impact on economic growth or unemployment, moreover, debunks "supply-side theories that suggest lower taxes on the rich will induce labor supply responses from high-income individuals (more hours of work, more effort etc.) that boost economic activity."
This is the essence of the trickle-down theory and the lionization of rich people as "job creators." At best, Hope and Limberg write, statistics show "very slight indications of a flash in the pan effect ... on unemployment," but those indications are "neither statistically significant nor robust."
In fact, they write, their findings match those of other research indicating that "income tax holidays and windfall gains do not lead individuals to significantly alter the amount they work." Rather, "our analysis finds strong evidence that cutting taxes on the rich increases income inequality but has no effect on growth or unemployment."
The rising tide of economic inequality in the U.S. spurred Sen. Elizabeth Warren (D-Mass.) to call for a wealth tax during her campaign for the Democratic presidential nomination last year, in essence taking back some of the handouts the rich received from Republicans under Trump. The evidence is clear that gifting the rich with more money does no good for the economy or workers.
Making them pay their fair share of the cost of living in a society, however, could do a lot of good.
This story originally appeared in Los Angeles Times. www.latimes.com/business/story/2021-02-05/tax-cuts-for-rich-dont-trickle-down
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Post by the Scribe on Feb 10, 2021 23:11:16 GMT
Kansas tax-cut fight revives memories of past GOP experimentwww.yahoo.com/news/kansas-tax-cut-fight-revives-182802454.html JOHN HANNA Wed, February 10, 2021, 11:28 AM
Kansas state Sen. Carolyn McGinn, left, R-Sedgwick, confers with Senate President Ty Masterson, R-Andover, at the start of a debate over a Republican plan for cutting Kansas income taxes, Tuesday, Feb. 9, 2021, at the Statehouse in Topeka, Kan. Democratic Gov. Laura Kelly has denounced the plan as "particularly irresponsible" during the COVID-19 pandemic. (AP Photo/John Hanna)
TOPEKA, Kan. (AP) — Republican lawmakers in Kansas are struggling to contain their impulses to slash state income taxes, conjuring memories of a past, nationally notorious GOP tax-cutting experiment as they try to enact some reductions over Democratic Gov. Laura Kelly's objections.
Some Republicans worried Wednesday that action on a tax bill by the GOP-controlled Senate actually moved them a step backward in their efforts to provide relief to individuals and businesses paying higher state taxes because of federal tax changes in 2017. Senators on Tuesday tripled the size of a GOP tax relief bill so that it would cost the state more than $1.3 billion in revenues over three years — and possibly cause budget shortfalls.
Democrats quickly suggested that Republicans were moving Kansas back toward income tax cuts enacted in 2012 and 2013 under GOP Gov. Sam Brownback. Those cuts were largely repealed in 2017 following massive, persistent budget shortfalls that forced GOP lawmakers to repeatedly cut spending and boost other taxes to keep lower income taxes.
Sen. Ethan Corson, a freshman Kansas City-area Democrat, called the Senate's bill “a budget buster" and added: “This is a bullet train to Brownbackville.”
Brownback remains a potent political reference in his home state. Under him, Kansas became the example for other states of how not to do tax policy; he was deeply unpopular when he left office in 2018, and Kelly won the governor’s race that year largely by running against his fiscal policies. apnews.com/article/personal-taxes-financial-impact-kansas-topeka-state-budgets-6bb9f2c443684bb0b5ad61657764520c
Some Republicans had misgivings about this year's tax bill, and four joined the Senate’s 11 Democrats in voting no.
“Fool me once, but you won’t fool me twice,” Sen. Jeff Longbine, an eastern Kansas Republican, said in explaining his no vote, adding that he would support a “reasonable” plan.
The Senate's 24-15 vote sent the bill to the House and indicated that Republicans generally liked changes to extend tax relief to more individuals. But the bill fell three votes short of the two-thirds majority that would be necessary to override a veto from Kelly, who had earlier in the day criticized the smaller GOP plan as “unthinkable” and “particularly irresponsible” during the coronavirus pandemic. www.kslegislature.org/li/b2021_22/measures/vote_view/je_20210209202702_458858/
While Democrats invoked Brownback during the debate, this year's legislation doesn't embody his push to phase out state income taxes or include other policies he advocated. Instead, top Republicans are focusing on returning extra state revenues generated from the federal tax changes in 2017, which were championed by former President Donald Trump.
Those federal changes discouraged people from claiming itemized deductions on their federal tax returns. Kansas law doesn't allow people to itemize on their state returns if they don't on their federal returns.
Republicans have argued that the state’s revenue windfall is like finding someone’s lost wallet full of cash on the sidewalk. The Senate began with a bill that would allow people to itemize on their state returns whether they do or not on their federal returns. It also contained tax breaks for businesses, with the relief totaling $423 million over three years. apnews.com/article/9a8b10659b6b436980cf5fd0040e2860
Kelly vetoed two similar GOP tax relief bills in 2019, arguing that they would undermine funding for public schools and critical state services. Kelly and other Democrats also argue that the itemization and business tax relief proposals favor wealthy individuals and large corporations. apnews.com/article/02d4aa92788e4ef09d187211d949e2be
Anticipating a Kelly veto, Republicans and their allies are looking for a plan that garners supermajorities in both chambers — and that means keeping the cost to the state down, even as GOP lawmakers want broader cuts. Eric Stafford, a lobbyist for the Kansas Chamber of Commerce, said the Senate's debate “went in the opposite direction.”
“The endgame is to get something passed, to the taxpayers,” said Senate tax committee Chair Caryn Tyson, another eastern Kansas Republican. “If we're not producing products, then it's not good for anybody.”
During their debate Tuesday, senators added provisions to exempt Social Security and other retirement income from taxes and a proposal from Kelly to increase the state's standard income tax deductions by 35% over two years. But the Senate rejected Kelly's proposals to pay for her measure by imposing the state's 6.5% sales tax on online music, movies and streaming services and on the sale of goods on websites such as Amazon, eBay and Etsy. apnews.com/article/business-personal-taxes-legislature-kansas-coronavirus-pandemic-5382b51cadf728207a979823614f799b
Democrats said the changes broadened a bill that they initially saw as focused on helping wealthy individuals and large corporations.
Yet Sen. Tom Holland, a northeast Kansas Democrat, said, “Overall, I think it's got some massive problems.”
The GOP-controlled House has yet to debate a tax-cutting bill, and Taxation Committee Chair Adam Smith, a western Kansas Republican, said it's not clear yet what its Republican majority sees as its upper limit on tax relief.
But, he said of the Senate's bill, “that's probably not going to be feasible.”
___
Follow John Hanna on Twitter: twitter.com/apjdhanna
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Post by the Scribe on Mar 3, 2021 20:14:04 GMT
Until those who shill for and are funded by the wealthy elite are defeated in the Senate don't expect a reversal on tax cuts. As a senior who is on social security and a very small pension I can tell you my taxes went up by $2000 thanks to these RepubliCONS. I can ill afford that loss in income but it is nice to know the wealthiest of wealthy who fund the Republicon Party got that $2000 for some bottle of wine or traffic citation they violated. No Repeal of the $170 Billion Tax Break for Billionaires and No Change in Minimum Wage: Why Democrats Can't Keep Their Promises in the Relief Billwww.yahoo.com/news/no-repeal-170-billion-tax-160407460.html Alana Abramson Tue, March 2, 2021, 9:04 AM·9 min read
Nancy Pelosi, House Democrats Hold Press Conference On American Rescue Plan Act House Democrats passed a massive COVID-19 relief bill on Feb. 26. The Senate is expected to vote on the legislation within the next week. Credit - Drew Angerer—Getty Images
The Democratic party’s unified control of Washington has put them within striking distance of fulfilling a key campaign promise: a coronavirus relief package that will send $1,400 checks to lower and middle-income Americans, extend federal unemployment insurance through the fall, and allot nearly $130 billion to re-open K-12 schools.
But it’s also notable what won’t make it in the massive bill. The $15 minimum wage increase is now on the chopping block after the Senate parliamentarian ruled it fell outside the bill’s budgetary confines. Senate Democrats nixed an alternative plan to raise taxes on corporations that don’t pay employees a living wages to ensure the bill reaches President Biden’s desk before unemployment benefits lapse March 14. And in a break from the previous two packages the Democratic-led House passed last year, there is no language repealing two tax breaks that primarily benefited billionaires and millionaires. The tax breaks were initially estimated to cost $170 billion in lost revenue over the next decade. Lawmakers leading the repeal effort now claim revoking them would save the government $250 billion.
But these tax breaks were only in effect for 2020. And with the filing deadline for that year only six weeks away, many recipients have already reaped hundreds of millions in windfalls, according to to TIME’s review of Security and Exchange Commission filings and available federal data. Economists on both sides of the aisle say that hopes of clawing back that cash is a pipe dream. “The cow’s already left the barn on this one,” says Steve Rosenthal, a senior fellow in the Urban-Brookings Tax Policy Center, who criticized the tax breaks last year.
Still, lawmakers leading the charge to repeal argue that if the tax breaks remain intact, companies and individuals will continue to file for benefits with the remaining time left. “Republicans slipped special interest provisions that loot American taxpayers into must-pass COVID relief legislation. We ought to unravel that boondoggle, which mostly benefited millionaire hedge fund managers and real estate investors, and use the revenue to help the American people recover from the pandemic,” Senator Sheldon Whitehouse, who organized a Feb. 2 letter from 120 Democrats to Congressional leadership urging a repeal, said in a statement. “It’s basic fairness.”
For Democrats, including President Joe Biden, who campaigned on the promise to deliver an equitable economic recovery, the resulting legislation is emblematic of a broader challenge. Since the pandemic began last March, at least 150,000 businesses are estimated have closed and 1 in 4 Americans have had trouble paying their bills, but billionaires have gotten richer. According to a report from the Institute for Policy Studies and Americans for Tax Fairness, billionaire wealth has risen by $1.3 trillion since last March. Even as Democrats are poised to pass a vast relief package that economists predict will boost growth and provide welcome relief, the party will continue to encounter hurdles in ensuring the country’s wealthiest don’t continue to disproportionately benefit while the middle and lower classes struggle to simply get by. ips-dc.org/u-s-billionaire-wealth-grows-1-3-trillion-since-mid-march-2020/#:~:text=The%20664%20richest%20Americans%20are,shutdowns%20began%20in%20march%202020. www.moodysanalytics.com/-/media/article/2021/economic-assessment-of-biden-fiscal-rescue-package.pdf
What the Tax Breaks Are And How Companies Have Already Benefitted
The two provisions Democrats want to repeal deal with what’s known as net operating loss carrybacks (NOLs), an arcane tax provision that allows individual and corporate taxpayers to retroactively claim losses to receive tax refunds. The CARES Act allowed companies to carry back losses—and chalk up refunds—for five years back from the tax years 2018, 2019, and 2020 – so as far back as 2013. The bill also temporarily lifted the $500,000 cap (for a married couple filing jointly) on what non-corporate taxpayers could deduct to offset losses against their non-business income—a benefit that went primarily to the very rich, since average Americans generally don’t have that kind of excess income.
Democrats voted overwhelmingly for the CARES Act last March, but Democratic aides later acknowledged that, in the rush to pass the bill, they had not realized the full implications of the tax breaks. When the non-partisan Joint Committee on Taxation issued an analysis April 9 estimating that 80 percent of the beneficiaries of the provision dealing specifically with non-corporate taxpayers were millionaires and billionaires the backlash was fierce. The same day the JCT issued its analysis, then-candidate Biden called for a repeal, claiming he would use the excess money to fund up to $10,000 in student debt relief. House Democrats inserted repeal language into the HEROES Act, the relief package that passed the House last May and again in October, which would permanently reinstate the $500,000 limitation and only allow companies to offset losses from 2020 to two previous tax years. time.com/5836487/real-estate-tax-break-coronavirus-kushner/ www.whitehouse.senate.gov/imo/media/doc/116-0849.pdf
But the House Democrats’ repeal efforts did not stand a chance in the Republican-led Senate, and thousands of taxpayers flooded the IRS requesting refunds. According to a November report from the Government Accountability Office, more than 8,400 taxpayers had applied for NOL refunds by mid-October, costing the government roughly $632 million in lost revenue. (For that estimate, the GAO grouped NOL and alternative minimum tax refunds). While the GAO noted that the average refund for these refunds was less than $100,000, SEC disclosure filings show some companies received much more than that. In an August filing, the life insurance company Global Atlantic Financial Group disclosed that it had recorded a $33 million windfall that June. The retail chain Kirkland’s recorded a $12.3 million refund in August. The Fortune 1000 oil company Adams Resources and Energy received an approximate $2.7 million refund in June. (None of the companies immediately responded to request for comment). www.gao.gov/reports/GAO-21-191/
Congressional Republicans defended these tax breaks on the grounds that they would bolster companies’ liquidity, but some of these recipients have weathered the same pandemic relatively unscathed. In the same filing disclosing its $33 million tax refund, Global Atlantic Financial Group said that, as of June 30, it “has not experienced significant disruptions to its business, its ability to serve its customers, or its financial condition as a result of COVID-19.” In July, the global investment firm KKR announced it was acquiring the company. By February 1, when the acquisition officially closed, the company’s assets had grown 25 percent, according to a press release from KKR. “Since we announced this transaction, Global Atlantic’s success has been remarkable, and in many ways we are well ahead of our initial expectations,” Joseph Bae and Scott Nuttall, Co-Presidents and Co-Chief Operating Officers of KKR, said in the press release. media.kkr.com/news-details/?news_id=3e1b3196-cce7-4dc5-a67c-623078f079fd
The Battle For This Repeal
For tax experts who both supported and opposed the provisions, these examples are precisely why it’s too late to repeal them. Garrett Watson, a senior policy analyst at the Tax Foundation, a non-partisan organization that supported the tax breaks, says that any repeal would disadvantage taxpayers who are in the process of receiving the funds. “The time for deciding whether this made sense was probably last year just so there was certainty for firms, particularly smaller ones,” he said. “Theoretically If you did want to selectively change this right now that could be another way to get at it but it’s not clear why that would be the priority, especially when you compare it to changes that are more forward looking.”
The fiscal incentive for repeal is also dwindling. Democrats were in agreement in drafting the package that the need for relief prioritized any need for budgetary offsets, according to one Democratic aide. And while the JCT estimated in October that a repealing the tax breaks could save the government $250 billion, that was assuming these refunds could be clawed back, according to a Senate aide. Since experts now agree that’s exceedingly unlikely, the fiscal calculus changes. “As soon as it was passed, there were taxpayers in a position to file amended tax returns and get refunds,” says Robert Lord, a tax lawyer and associate fellow at the progressive Institute for Policy Studies. “It was a travesty,” he adds, “but once it happened, they filed their amended returns and received the refunds, it seems like it’s pretty hard to undo that.”
The politics of repeal are also tricky, particularly when implementing it would become easy fodder for Republicans to paint Democrats as raising taxes during a recession. Tax increases are still on the table for a subsequent recovery package later this year, and Sen. Elizabeth Warren introduced a proposal for a wealth tax on March 1. But aside from the letter Democrats circled on Feb. 2 there seems to be a tacit acknowledgement, that with such a slim majority in both chambers and expirations for relief deadlines rapidly approaching, this just isn’t a fight worth having. Congressional Democrats were in agreement that this package should focus on relief, and that measures to offset spending was not a focus, according to one Senate aide. “It really hasn’t been something people have gotten behind as much as they should, because there are other issues which are important,” says Tennessee Rep. Steve Cohen, one of the leading signatories on the Democrats’ letter calling for a repeal. Cohen says he pushed the repeal on caucus calls, but hasn’t gained any traction. “It’s not going to score political points,” he says. “It’s not a deliverable. All you’re going to do is p-o people and you’re going to p-o people who are wealthy and probably contribute a lot of money.”
All of which underscores the longer term challenges facing the Democrats. Even with the party’s newfound power and promises to address the ever-widening wealth gap, it still remains much easier for corporations and individuals to chalk up hundreds of millions in tax breaks than it is to increase workers’ minimum wage. It’s a structural problem the party will have to grapple with long after the last IRS refund from these tax breaks have been issued.
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Post by the Scribe on Mar 3, 2021 20:17:37 GMT
U.S. Billionaire Wealth Grows $1.3 trillion Since Mid-March 2020The 664 richest Americans are now worth a collective $4.2 trillion, up 44 percent since COVID shutdowns began in March 2020.ips-dc.org/u-s-billionaire-wealth-grows-1-3-trillion-since-mid-march-2020/#:~:text=The%20664%20richest%20Americans%20are February 24, 2021 Chuck Collins
Originally in Inequality.org
As the US crosses the threshold of half a million deaths from the COVID-19 pandemic, the nation’s billionaires continue to reap extraordinary financial gains. After 11 months of pandemic misery, where millions have lost their jobs, health and wealth, total US billionaire wealth increased $1.3 trillion since mid-March, 2020, an increase of 44 percent.
As of the market close on Friday February 19th, the country’s 664 billionaires now have combined wealth of $4.3 trillion, up from just under $3 trillion on March 18, 2020. These findings based on Forbes data compiled in this report by Americans for Tax Fairness (ATF) and the Institute for Policy Studies (IPS). [See table of top 15 billionaires at the end.]
March 18 is used as the unofficial beginning of the crisis because by then most federal and state economic restrictions responding to the virus were in place. March 18 was also the date that Forbes picked to measure billionaire wealth for the 2020 edition of its annual billionaires report, which provided a baseline that ATF and IPS compare periodically with real-time data from the Forbes website. PolitiFact has favorably reviewed this methodology.
The billionaires’ $1.3 trillion pandemic wealth gain alone could pay for over two-thirds of President Biden’s proposed $1.9 trillion COVID rescue package, which Congressional Republicans have attacked as too costly. At $4.2 trillion, the total wealth of America’s 664 billionaires is also more than two-thirds higher than the $2.4 trillion in total wealth held by the bottom half of the population, 165 million Americans.
The $1.3 trillion wealth gain by U.S. billionaires since March 2020 could pay for a stimulus check of more than $3,900 for every one of the roughly 331 million people in the United States. A family of four would receive over $15,000. Republicans in Congress resisted sending families stimulus checks most of last year, claiming we couldn’t afford them.
Indeed, ordinary Americans have not fared as well as billionaires over the past 11 months:
Over 28 million have fallen ill with the virus and more than half a million have died from it. [Johns Hopkins Coronavirus Resource Center] Collective work income of rank-and-file private-sector employees—all hours worked times the hourly wages of the entire bottom 82% of the workforce—declined by almost 3% in real terms from mid-March to mid-January, according to Bureau of Labor Statistics data. Over 76 million lost work between Mar. 21, 2020, and Jan. 23, 2021. [S. Department of Labor] 18 million were collecting unemployment on Jan. 30, 2021. [S. Department of Labor] Nearly 100,000 businesses have permanently closed. [Yelp/CNBC] 12 million workers had likely lost employer-sponsored health insurance during the pandemic as of August 26, 2020. [Economic Policy Institute] Some 24 million adults reported between Jan. 20-Feb. 1 that their household had not had enough food in the past week. From Jan. 6-18, between 7 and 11 million children lived in a household where kids did not eat enough because the household could not afford to fully feed them. 2 million adults—almost 1 in 5 renters—reported in January being behind in their rent. [CBPP] Because of long-standing racial and gender disparities, low-wage workers, people of color and women have suffered disproportionately in the combined medical and economic crises. Latinos are more likely to become infected with COVID-19 and Blacks to die from the disease than are white people. Billionaires are overwhelmingly white men.
The stock market surge and lock-down economy have been a boon to tech monopolies and helped create multiple U.S. “centi-billionaires.” Jeff Bezos, Elon Musk, and Bill Gates were each worth more than $100 billion on Feb. 19 (and Mark Zuckerberg was close, at almost $96 billion). Prior to this year, Bezos had been the only U.S. centi-billionaire, reaching that peak in 2018. Bezos and other billionaires have seen particularly astonishing increases in wealth over the past 11 months:
Elon Musk’s wealth grew by nearly $158 billion, from $24.6 billion on March 18 to $182.6 billion on Feb. 19, a nearly eight-fold increase, boosted by his Tesla The boost in wealth of the SpaceX founder over the past 11 months is more than twice that of any other billionaire. That $154 billion growth in wealth is also about seven times NASA’s $22.6 billion budget in FY2020, the federal agency Musk has credited with saving his company with a big federal contract when the firm’s rockets were failing and it faced bankruptcy. Jeff Bezos’s wealth grew from $113 billion on March 18 to $189.3 billion, an increase of over two-thirds. Adding in his ex-wife MacKenzie Scott’s wealth of $57 billion on Feb. 19, the two had a combined wealth of almost a quarter of a trillion dollars thanks to their Amazon If Bezos’s $76.3 billion growth in wealth was distributed to all his 810,000 U.S. employees, each would get a windfall bonus of over $94,000 and Bezos would not be any “poorer” than he was 11 months ago. Mark Zuckerberg’s wealth grew from $54.7 billion on March 18 to $96 billion, a three-quarter’s increase fueled by his Facebook
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Post by the Scribe on Mar 11, 2021 0:53:36 GMT
To contrast the BIG REPUBLICONSERVATIVE 2.3 TRILLION STIMULUS/TAX SCAM & GIVEAWAY TO THE WEALTHY 1% to this Demoliberal STIMULUS GIVEAWAY to the middle and lower income Americans:Biden's $1.9 Trillion Rescue Plan Set To Turbocharge U.S. Economywww.npr.org/2021/03/10/975617565/bidens-1-9-trillion-rescue-plan-set-to-turbocharge-u-s-economy March 10, 20213:51 PM ET Heard on All Things Considered SCOTT HORSLEY
4-Minute Listen ondemand.npr.org/anon.npr-mp3/npr/atc/2021/03/20210310_atc_bidens_19_trillion_rescue_plan_set_to_turbocharge_us_economy.mp3?orgId=1&topicId=1017&aggIds=812054919&d=254&p=2&story=975617565&dl=1&siteplayer=true&size=4073475&dl=1
A pedestrian on Feb. 25 walks past the window of a restaurant with a sign promoting its re-opening in Boulder, Colo. Congress on Wednesday passed a $1.9 trillion stimulus plan, which is expected to provide a strong boost to economic growth. David Zalubowski/AP
The U.S. economy is about to get a shot of its own.
The $1.9 trillion relief package passed by Congress on Wednesday is expected to give a substantial boost to the world's largest economy once it's signed by President Biden, putting more money in people's pockets just as an improving pandemic outlook opens new avenues for them to spend it. www.npr.org/2021/03/10/975030323/house-gives-final-approval-to-1-9-trillion-covid-19-relief-package
According to the Centers for Disease Control and Prevention, 61 million people in the United States have gotten at least one shot, with 32 million already fully vaccinated.
The rollout of vaccines offers the promise of more normal travel and entertainment options later in the year, further boosting the outlook of an economy already showing signs of improvement.
"The key engine of growth is going to be that powerful cocktail of both a healthier economy along with fiscal stimulus," said Gregory Daco, Chief U.S. Economist at Oxford Economics.
The Organization for Economic Cooperation and Development projects the U.S. economy will grow by 6.5% this year. That's more than twice the growth rate it was projecting in December — thanks in large part to more robust federal aid.
Daco himself believes the U.S. economy will grow by 7% this year, while also adding 7 million jobs – a level of growth not seen since about the 1980s.
"It's been about four decades since we've seen such strong growth in real GDP," he said. "But you have to remember that we're coming out of a very deep hole when it comes to the damage that's been done by the COVID crisis."
A sign is shown at a COVID-19 vaccine site in San Francisco on Feb. 8. The rollout of vaccines is raising the prospect of increased travel and spending by Americans. Haven Daley/AP
Also helping turbocharge growth is how President Biden's plan is structured, according to experts.
The American Rescue Plan — which Democrats pushed through Congress with no Republican support — includes $1,400 payments for most Americans, extended unemployment benefits and increased subsidies for children. www.npr.org/2021/02/26/971438274/democrats-say-relief-programs-could-become-this-generations-new-deal
The benefits are heavily weighted towards low- and moderate-income families, in marked contrast to the 2017 tax cut, which Republicans championed on a similar, party-line basis.
Rather than waiting for benefits to trickle down, the COVID relief package showers money on lower-income households, boosting income for the poorest 20% of families by an average of 20%, according to the Tax Policy Center's analysis, while top earners would see their income rise less than 1%. www.taxpolicycenter.org/taxvox/pandemic-bill-would-cut-taxes-average-3000-most-relief-going-low-and-middle-income-households
Because low-income families are more likely to spend the extra money, it's expected to provide a significant lift to the broader economy.
"There was a big question about the [2017] Tax Cut and Jobs Act, whether or not it would over time have much of a stimulative effect," said Howard Gleckman, a senior fellow at the non-partisan Tax Policy Center. "This one, there's no question. Everyone agrees it will stimulate the economy. The question is will it stimulate the economy too much?"
Lower-income families get the biggest boost from the tax benefits in the American Rescue Plan, in contrast to the 2017 tax cut which primarily benefited the wealthy. Tax Policy Center
The center's analysis looked only at the tax provisions of the latest bill, not measures like unemployment benefits or aid to cities and states.
But the question of whether it will prove too stimulative and trigger inflation has raised concerns among other analysts.
Former Treasury Secretary Larry Summers, who served in different positions in the Clinton and Obama administrations, has been one of the most prominent Democratic critics of the plan.
Summers is concerned that with consumer spending already on the rise, a surge in new federal spending could overwhelm businesses, triggering a rise in prices.
"We need to make sure we're concerned with not overheating the economy," Summers told NPR's Weekend Edition last month. www.npr.org/2021/02/06/964764257/larry-summers-says-latest-coronavirus-stimulus-needs-restraint
Summers also warned that deficit-financed spending now on a short-term relief package could make it harder for the Biden administration to find money later for long-term investments in things like infrastructure.
The Labor Department said Wednesday that consumer prices had risen just 1.7% in the last year — below the Federal Reserve's annual target of 2%. www.bls.gov/news.release/pdf/cpi.pdf
While prices are expected to increase faster in the months to come, Fed officials have said repeatedly they expect that acceleration to be temporary.
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Post by the Scribe on Mar 16, 2021 1:43:48 GMT
This is where we are headed. Making those who benefit most from our system pay for that privilege. It won't do any good unless the loopholes they always use are closed. If they threaten to move overseas because of it let them but forbid them to do business in the USA. Let them earn their profits elsewhere and be replaced by new business that are patriotic and willing to jump at the opportunities while paying their fair share.Biden Planning First Major Tax Hike Since 1993: Reportwww.yahoo.com/news/biden-planning-first-major-tax-165212122.html Brittany Bernstein Mon, March 15, 2021, 9:52 AM
President Joe Biden is expected to propose a number of tax increases in the first major federal tax hike in nearly 30 years to pay for the long-term economic program that will follow the COVID-19 response bill, according to a new report. www.nationalreview.com/2021/03/like-the-irs-then-youll-love-elizabeth-warrens-new-tax-bill/
Sources reportedly told Bloomberg that provisions currently under consideration include raising the corporate tax rate to 28 percent from 21 percent; paring back tax preferences for so-called pass-through businesses, such as limited-liability companies or partnerships; increasing the income tax rate on individuals earning more than $400,000; expanding the estate tax; and a higher capital-gains tax rate for individuals earning at least $1 million annually. www.bloomberg.com/news/articles/2021-03-15/biden-eyes-first-major-tax-hike-since-1993-in-next-economic-plan
An analysis by the Tax Policy Center of Biden’s campaign tax plan estimated it would raise $2.1 trillion over ten years.
The next economic plan is expected to be larger than the $1.9 trillion COVID-19 relief bill that Biden signed into law last week after it passed Congress with zero Republican support.
Treasury Secretary Janet Yellen has warned that unlike the first bill, which relied upon government debt as funding, that at least part of the future provision will need to be paid for.
The White House has yet to unveil the new program, which it has said would follow the signing of the COVID-19 response bill. It could cost between $2 trillion and $4 trillion, the report says.
It could prove difficult for Democrats to find the support of ten Senate Republicans that would be needed to move the measure forward.
Senate Minority Leader Mitch McConnell said last month that lawmakers would “have a big robust discussion about the appropriateness of a big tax increase.”
However, a number of tax initiatives could receive Republican support, including a move from a gasoline tax to a vehicle-miles-traveled fee to help fund highway projects as well as efforts to revise tax laws that don’t go far enough in keeping U.S. companies from moving jobs and profits offshore as another way to raise revenue.
If the tax measures were to pass, they would likely take effect next year. However, some lawmakers have urged the president to hold off on any tax hikes while unemployment remains high due to the pandemic.
More from National Review Biden Rejects GOP COVID Relief Counterproposal, Dems Move Forward With $1.9T Plan www.nationalreview.com/news/biden-rejects-gop-covid-relief-counterproposal-dems-move-forward-with-1-9t-plan/ House Committee Approves $15 Federal Minimum Wage Despite CBO’s Job Loss Projections www.nationalreview.com/news/house-committee-approves-15-federal-minimum-wage-despite-cbos-job-loss-projections/ Biden Signs $1.9 Trillion COVID-Response Bill www.nationalreview.com/news/biden-signs-1-9-trillion-covid-response-bill/
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Post by the Scribe on Apr 1, 2021 8:40:39 GMT
The way I look at it if the wealthy 10% own 90% of the wealth in the country they should be paying 90% of the taxes every year.Yahoo Finance One tax break Democrats should grant the wealthy www.yahoo.com/finance/news/one-tax-break-democrats-should-grant-the-wealthy-170817749.html Rick Newman·Senior Columnist Wed, March 31, 2021, 10:08 AM
With President Biden rolling out his big infrastructure plan on Wednesday, Congress will now debate the tax changes that should go along with it. One of those changes should be a tax cut that would benefit wealthy taxpayers, mostly in blue states. www.yahoo.com/finance/news/biden-infrastructure-plan-details-113700242.html
You read that right. Yes, Biden rode to the White House promising to raise taxes on the wealthy, not cut them. Polls show voters strongly support higher taxes on those who earn the most. But first Congress should rectify a mistake Republicans made when they targeted a 2017 tax change at blue-state taxpayers and changed the rules many homebuyers thought were sacrosanct when they committed to long-term purchases. thehill.com/policy/finance/528442-poll-most-americans-support-raising-taxes-on-those-making-at-least-400000
The 2017 Trump tax cuts included a new cap of $10,000 on the deductibility of state and local taxes, known as the SALT deduction. Before that tax law, there was no limit on the amount of state and local taxes, including income and property taxes, that filers could deduct from what they pay at the federal level. taxfoundation.org/tag/salt
Republicans passed the 2017 tax cuts with no Democratic support. To meet Senate budgeting requirements, they needed some tax hikes to offset a sharp cut in the corporate tax rate and cuts in individual income tax rates that mostly benefited the highest earners. Capping the SALT deduction provided the revenue they needed, with a bonus: It would hit Democratic states harder than Republican states, because those states tend to have higher taxes for filers to deduct. The SALT deduction also acts as a subsidy for state and local taxes, which, again, confers the most benefit to states with the highest taxes. www.washingtonpost.com/news/wonk/wp/2017/11/02/the-gop-tax-plan-limits-deductions-used-in-blue-states/
I live in blue New York, so maybe I’m just lobbying for a tax cut for myself. As far as I can tell, however, I came out about even after the 2017 tax changes. As a homeowner who pays property taxes, I’d be able to deduct more than $10,000 from my federal taxes if the SALT cap were gone. But I benefited from other changes in the 2017 law and my federal payment stayed about the same. That's good enough for me.
Two reasons Congress should repeal the SALT deduction cap
Congress should repeal the SALT cap for two reasons unrelated to my own taxes. First, it’s terrible policymaking to target political opponents for more pain than your own tribe. It’s not especially logical, either. While reporting on the change in 2017 and 2018, I interviewed people in red states such as Iowa and Texas who ended up paying more because of the new SALT cap. It didn’t hit blue states exclusively, it just hit more residents of blue states than red states. Republicans controlled both houses of Congress in 2017, but Democrats control both houses now. They should kill this tax hike to emphasize the vulnerability of petty, punitive, partisan policies. www.yahoo.com/finance/news/giant-flaw-trumps-tax-plan-162336794.html
U.S. Senate Majority Leader Chuck Schumer (D-NY) adjusts his face mask as he holds a news conference at the U.S. Capitol in Washington, U.S., March 25, 2021. Schumer has blasted the SALT cap. Bill Clark/Pool via REUTERS.
The second reason to repeal it is Congress shouldn’t upend core parts of the tax code that Americans take into account when making big financial decisions such as buying a home — even if they’re wealthy buyers. When most people buy a home, they account for all the tax effects to calculate a bottom-line monthly and annual cost. Property taxes are one of the biggest factors, and there can be a large differential if once-deductible taxes suddenly aren’t. Congress clearly changes tax rates from time to time, but taxes affecting home purchases deserve special protection because a home is not a liquid asset and homeowners can’t easily change what kind of home they own or where they live based on unexpected tax changes.
Before Congress changed the SALT deduction, it had been in place more or less the same since 1913, when the federal income tax first went into effect. The 2017 change was temporary; the $10,000 cap expires after 2025. That makes the change even worse, since taxpayers leading up to that time would have to make home-buying and related decisions wondering if Congress will extend the law or let it lapse. Better to clarify now and restore the full deduction. www.taxpolicycenter.org/briefing-book/how-does-deduction-state-and-local-taxes-work
A tax break for wealthy homeowners
This would undeniably be a tax break for wealthy homeowners, and it would cost Uncle Sam about $80 billion per year in foregone revenue — at a time when Biden and his fellow Democrats need new funding for infrastructure and social programs. So offset the full restoration of the SALT deduction with other taxes on the wealthy. www.brookings.edu/blog/up-front/2020/09/04/the-salt-tax-deduction-is-a-handout-to-the-rich-it-should-be-eliminated-not-expanded/
There are plenty of options. The Tax Policy Center has identified four alternative tax changes that would raise the same amount as the $10,000 SALT cap, with the simplest being a hike in the top income tax brackets. Biden himself has proposed tax hikes that would raise around $200 billion per year, including higher income tax rates on those earning more than $400,000, higher capital gains taxes on those earning more than $1 million and higher inheritance taxes. Democrats generally favor a higher corporate tax and some back a tax on financial trades. www.taxpolicycenter.org/sites/default/files/publication/159223/alternatives_to_the_tcja_limit_on_the_state_and_local_tax_deduction_0_0.pdf www.taxpolicycenter.org/taxvox/tpc-revises-its-revenue-estimate-bidens-tax-plan-downward-21-trillion-over-10-years
Democrats face an obvious dilemma on the SALT deduction, since it seems hypocritical to call for soaking the rich, with this one exception for home-state rich. At least they’ve been consistent. Prominent Democrats such as Senate Majority Leader Chuck Schumer of New York have blasted the SALT cap since Republicans first proposed it in 2017. They’ve also been strident. A group of House Democrats from states such as New York and New Jersey say they won’t support Biden’s infrastructure bill unless it repeals the SALT deduction cap. Democrats have such slim majorities in both houses that they can afford essentially no defections on bills, if Republicans oppose them en masse. So it's plausible and maybe likely Congress will kill the SALT cap this year. www.schumer.senate.gov/newsroom/press-releases/schumer-and-gillibrand-launch-new-push-to-permanently-restore-new-york-states-full-salt-deduction-with-average-upstate-ny-deduction-of-13k-senators-introduces-legislation-to-allow-upstate-taxpayers-to-fully-deduct-state-and-local-taxes-on-federal-income-returns thehill.com/policy/finance/545632-democrats-have-a-growing-salt-tax-problem
The artful political move would be for Democrats to repeal the cap while at the same time raising other taxes on the wealthy. On net, it would have to be a tax hike on higher-income taxpayers, to withstand the inevitable demagoguery from Republicans. The larger the net tax hike on the wealthy, the more defensible the whole thing will be, politically.
If the state and local tax deduction has outlived its usefulness, then it should be repealed or reformed as part of bipartisan legislation that one party won’t be tempted to undo when it has the power to do so. Right, I know: Congress doesn’t seem to do anything that’s bipartisan any more. Since that’s the case, it shouldn’t force partisan changes on taxpayers, either.
Rick Newman is the author of four books, including "Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman. You can also send confidential tips, and click here to get Rick’s stories by email.
Read more:
Bernie Sanders is still running against Joe Biden www.yahoo.com/finance/news/bernie-sanders-is-still-running-against-joe-biden-200435927.html Why Congress is bringing back "pork" www.yahoo.com/finance/news/why-congress-is-bringing-back-pork-184519151.html Why Amazon backs Bernie Sanders on the minimum wage www.yahoo.com/finance/news/why-amazon-backs-bernie-sanders-on-the-minimum-wage-193010411.html A better way to raise the minimum wage www.yahoo.com/finance/news/a-better-way-to-raise-the-minimum-wage-123520433.html Obamacare will soon help more middle-class families www.yahoo.com/finance/news/obamacare-gets-a-makeover-192140275.html Get the latest financial and business news from Yahoo Finance
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Post by the Scribe on Apr 9, 2021 12:07:51 GMT
Yahoo Finance It’s Biden’s turn to repeal and replace—the Trump tax planwww.yahoo.com/finance/news/its-bidens-turn-to-repeal-and-replacethe-trump-tax-plan-193530205.html Rick Newman·Senior Columnist Thu, April 8, 2021, 12:35 PM
One of former President Trump’s unfulfilled campaign promises from 2016 was to “repeal and replace” the Affordable Car Act. Trump tried, but a Congressional vote failed in 2017, in part because Trump and his fellow Republicans never had a coherent plan to replace the ACA with. abcnews.go.com/Politics/fact-checking-trumps-repeal-replace-obamacare-timeline/story?id=46360908
President Biden is now trying to repeal and replace a signature Trump achievement—the 2017 Tax Cuts and Jobs Act. Biden isn’t using Trump’s language, but a series of tax changes he and his fellow Democrats want to make would essentially dismantle the 2017 tax law, which Republicans passed with no Democratic votes. And unlike Trump, Biden has detailed alternatives plus a solid rationale for overturning a law that has never enjoyed majority support. www.realclearpolitics.com/epolls/other/public_approval_of_tax_cuts_and_jobs_act-6446.html
The first part of Biden’s tax overhaul is a higher corporate tax rate and other changes meant to bring revenue from business taxes back to historical levels. Those higher taxes would finance some of the infrastructure programs in Biden's “American Jobs Plan.” In a few weeks, Biden is likely to call for higher taxes on wealthy individuals to help finance social programs in the forthcoming “American Family Plan.” home.treasury.gov/system/files/136/MadeInAmericaTaxPlan_Report.pdf www.yahoo.com/finance/news/americas-broken-tax-system-160504033.html www.whitehouse.gov/briefing-room/statements-releases/2021/03/31/fact-sheet-the-american-jobs-plan/
Republicans and business groups, surprising nobody, are slamming these proposed tax hikes as job-killing government overreach. But the problem they face is that the Tax Cuts and Jobs Act was poorly designed in some ways and hasn’t come close to delivering what its backers said it would. Even with super-slim majorities in the House and the Senate, Democrats have a good case for killing a tax law that enriched businesses and the wealthy with no discernible improvement in growth, employment, wages or federal revenue. www.yahoo.com/finance/news/nobody-wants-to-pay-for-bidens-build-everything-plan-202743458.html
'Substantially flawed' and 'regressive'
WASHINGTON, DC - DECEMBER 20: U.S. President Donald Trump waves to guests at the conclusion of an event to celebrate Congress passing the Tax Cuts and Jobs Act on the South Lawn of the White House December 20, 2017 in Washington, DC. The tax bill is the first major legislative victory for the GOP-controlled Congress and Trump since he took office almost one year ago. (Photo by Chip Somodevilla/Getty Images)
At 35%, the U.S. corporate tax rate was too high before the TCJA went into effect, because many other countries had lowered their rates, undercutting the United States. A new draft paper by William Gale and Claire Haldeman of the Tax Policy Center finds that lowering the tax rate from 35% to 21% did improve efficiency. But the analysis also finds that many other changes in the TCJA were “either ill-conceived or substantially flawed. TCJA is regressive and reduces federal revenue substantially.”
Defenders of the tax cuts point to a burst of growth in 2018 as evidence that the tax cuts stimulated the economy. But that was ephemeral. Overall GDP growth in 2018 was a respectable 3%, but that was still a tick lower than the 3.1% growth in 2015, before the tax cuts. In 2019, GDP growth fell back to 2.2%, clearly not a boom. Data from 2020 isn't meaningful because the coronavirus pandemic dominated the economy.
Gale and Haldeman document other changes in the economy following the tax cuts that reveal no stimulus effect whatsoever. The annual growth rate in employment was 1.68% in the two years prior to the TCJA, and 1.55% in the two years following. So job growth slowed. Annual growth in median earnings was 1.35% before the TCJA and 1.14% after. That fell, too. There was much fanfare about companies that got tax cuts and gave bonuses to workers in 2018, but at companies that gave bonuses the typical worker got just $225. Averaged across all workers, the bonus amounted to $28.
The annual growth rate in new business formations was 6.8% during the two years prior to the TCJA, and 4.7% during the two years after. Another decline. Business investment grew modestly after the TCJA, but that seems to have been driven mostly or completely by rising oil prices and subsequent investments in the oil and gas sector. Big multinational companies did repatriate nearly $1 trillion after the tax cuts, but most of that went to stock buybacks and there’s no evidence it boosted investment, as intended. budgetmodel.wharton.upenn.edu/issues/2018/12/14/the-price-of-oil-is-now-a-key-driver-of-business-investment?rq=oil
Trump and his fellow Republicans claimed the 2017 tax cuts would “pay for themselves” through stronger growth, more earnings and more tax revenue. Nothing like that happened. Before the law passed, the Congressional Budget Office estimated the tax cuts would cost the federal government $1.5 trillion in foregone revenue. After two years, revenue loss was worse than forecast. The CBO forecast for revenue loss in 2018 and 2019 was $416 billion. The actual decline in revenue was $545 billion. That suggests the ultimate loss could be well above $1.5 trillion. Gale and Haldeman conclude that “the Act reduced revenue and did not raise output growth.” www.reuters.com/article/us-usa-trump-budget-mnuchin/despite-1-trillion-deficits-trump-tax-cuts-will-still-pay-for-themselves-mnuchin-idUSKBN20634K
Biden obviously thinks he can do better, and if he gets much of what he wants it will essentially erase the Tax Cuts and Jobs Act. Here are major changes Democrats are proposing:
Raise the corporate tax rate from 21% to 28%. The TCJA cut the business tax rate from 35% to 21%, but some tax experts think that went too far. Even Gary Cohn, Trump’s former chief economic adviser, thinks it would be fine to push it to 28%. This tax hike could raise around $73 billion per year during the next decade and $121 billion per year during the following decade. Congress might not approve a 28% rate but could probably approve at least 25%. www.yahoo.com/finance/news/gary-cohn-would-back-bidens-proposed-28-corporate-tax-rate-172828437.html
Stricter rules on overseas earnings. The TJCA included changes meant to reduce profit-shifting to other countries with lower tax rates, but there’s little evidence that worked. Some changes may even have given U.S. firms more of an incentive to move money out of the United States. Biden wants to tighten these rules so U.S.-based multinational firms pay more taxes at home. repository.law.umich.edu/cgi/viewcontent.cgi?article=3032&context=articles
A minimum tax on big companies. Biden wants to prevent U.S. firms with more than $2 billion in net income from using legal tax breaks to pay less than 15% of their income in taxes. As a candidate, Biden wanted to impose a 15% minimum tax on companies earning more than $100 million. But he’s now raised the net income threshold to $2 billion, probably to exempt smaller companies claiming tax breaks much as Congress intended them. Only about 200 large companies have more than $2 billion in net income and perhaps only one-fourth of them would pay the 15% minimum tax. www.yahoo.com/finance/news/analysis-taxing-multinationals-leaves-stocks-165604983.html
These are just the business tax changes Biden wants to make. He has already identified changes in tax rates for individuals he’s likely to seek later this year as well, including:
Higher income tax rates for households with more than $400,000 in income. The TCJA cut the top individual rate from 39.6% to 37%. Biden wants to restore it to 39.6%, which seems plausible given that the wealthy have thrived during the coronavirus pandemic, while lower-income workers have borne the brunt of job and income losses.
President Joe Biden speaks during an event on the American Jobs Plan in the South Court Auditorium on the White House campus, Wednesday, April 7, 2021, in Washington. (AP Photo/Evan Vucci)
Higher capital gains taxes on millionaires. For households with $1 million in income or more, the capital gains rate would rise from the low-20% range to the top rate for income, which Biden wants to raise to 39.6%.
Higher estate and inheritance taxes. The TCJA raised the exemption threshold from $5.45 million to $11.4 million. Biden would lower it to $3.5 million and raise the estate tax rate from 40% to 45%. He’d also require estates to pay capital gains on assets that are now exempt from that tax when the owner dies.
Eliminate the $10,000 cap on state and local tax deductions. The TCJA put a new cap of $10,000 on the amount of state and local taxes filers could deduct from their federal tax payments, a move that hit blue states harder than red states. Biden hasn’t called for undoing this, but some Democrats in Congress have said repealing the so-called SALT cap is a requirement in any Democratic tax package. A possible compromise is repealing it up to incomes of $400,000, and leaving the cap in place for higher earners.
If Congress were to pass most or all of these provisions, what would be left of the TCJA? Republicans could still claim credit for lowering the corporate tax rate in the first place, even if it didn’t stay at their preferred level of 21%. Modest tax cuts for middle-income taxpayers would remain. And some provisions lowering taxes for “pass-through” businesses could survive. But the TCJA as we know it may end up having a very short life span of less than five years. Many voters won’t miss it.
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Post by the Scribe on May 2, 2021 11:46:29 GMT
Why a $10,000 Tax Deduction Could Hold Up Trillions in Stimulus Fundswww.yahoo.com/news/why-10-000-tax-deduction-142529982.html Conor Dougherty Sat, May 1, 2021, 7:25 AM
The fight over the state and local tax deduction, known to policy wonks as SALT, is a case study in the age-old conflict between constituent politics and national policy. (Party of One Studio/The New York Times)
In 2017, congressional Republicans capped a tax break that benefits America’s highest-earning households and people with multimillion-dollar homes. Coastal Democrats have been trying to get it back ever since.
The break, the state and local tax deduction, known to policy wonks as SALT, does what it says it does. It allows people to deduct payments like state income and local property taxes from their federal tax bills. The deduction, previously unlimited, was capped at $10,000 as part of the 2017 tax bill, which was former President Donald Trump’s main domestic achievement.
Republicans added the cap to reduce the cost of a tax package that gave more than $1 trillion in breaks to corporations and wealthy families, while increasing the federal deficit despite claims that the cuts would pay for themselves. But the move also struck many Democrats as punitive, because its greatest impact was felt by a very specific kind of taxpayer: people who live in heavily Democratic areas.
The debates over SALT are a case study in the age-old conflict between constituent politics and national policy. They are also emblematic of how the Democratic Party’s increasing reliance on high-income professionals and suburbanites has complicated its longtime difficulty bridging its progressive and moderate wings.
Almost since the law was passed, lawmakers from high-tax states have made various attempts to get one of their voters’ favorite tax breaks back. A bill to restore full SALT deductions was introduced in 2019 after Democrats regained a House majority, but it went nowhere in what was then a Republican-controlled Senate. Proposals to raise or undo the cap have since been discussed as part of the stimulus packages passed during the COVID-19 pandemic.
Four states sued the federal government, arguing that the cap is an “unconstitutional assault” on their sovereignty, but were unsuccessful. And in recent weeks, legislators from high-tax states like California, New Jersey and New York have formed a SALT Caucus to further champion a full repeal of the provision, particularly as Democrats contemplate significant changes to the tax code to pay for Biden’s infrastructure plan.
The most vocal of them are from New York state — where voters claimed the nation’s highest SALT benefit before the tax cuts — who wrote an open letter to House Speaker Nancy Pelosi saying they “reserve the right” to oppose any new tax legislation, including Biden’s infrastructure bill, that doesn’t include a full repeal of the SALT cap. It’s the issue that refuses to die, and with slim Democratic control of both chambers of Congress, even a small amount of dissent would be significant.
“I want to get all this stuff done, but no SALT, no deal,” said Rep. Thomas Suozzi, D-N.Y., a former certified public accountant. “This is existential for my state.”
As the Democratic Congress moves to raise taxes on capital gains so that the wealthiest pay their “fair share,” SALT could imperil more progressive priorities. Noticeably absent from the 17 New York Democrats who signed the recent letter was Rep. Alexandria Ocasio-Cortez.
“I think it’s a giveaway to the rich,” she told reporters last month. “So, I do not believe in holding the entire infrastructure package hostage for a full repeal and abolishing the cap. I think we can have a conversation about the policy, but it’s a bit of an extreme position, to be frank.”
There’s no debate that the SALT deduction goes mostly to wealthier taxpayers. About 85% of its benefits accrue to the richest 5% of households, according to an analysis by the Institute on Taxation and Economic Policy in Washington. Were the cap to be repealed, about two-thirds of the benefits — about $67 billion — would go to families making over $200,000 a year.
Exactly how that is distributed is subject to an overlapping crosscurrent of tax policies whose effects vary from place to place. Since the 2017 tax cut broadly lowered taxes, even for residents of high-tax states, the $10,000 cap meant that affluent people in blue states ended up with smaller tax cuts than those in lower-cost red states.
But the political bottom line is that capping a very visible benefit angered the sorts of ordinary affluent voters on whom high-tax states rely — families in a place like Long Island or Orange County, California, who might make a six-figure income, own a home and pay tens of thousands a year in state income and local property taxes. In the psychology of paying taxes, a slightly smaller savings might seem worse than no savings at all, particularly if you feel singled out, as blue state taxpayers clearly were.
Giveaway or not, there is political logic in trying to restore the unlimited benefit. Affluent suburban voters helped Biden win the White House, and there is even some evidence to suggest that anger over the lost deduction helped Democrats flip a handful of Republican seats in 2018.
Although the debate affects Democratic districts disproportionately, SALT is less about rote partisanship than about representing voters from wealthy areas with high housing costs. The handful of Republicans who voted against the 2017 tax cuts mostly did so because of the loss of tax breaks like SALT, and today Rep. Young Kim, R-Calif., who is from Orange County, supports a repeal of the cap.
There’s also little doubt that the cap falls much harder on blue states. Before the 2017 tax cuts, the average SALT deduction in New York was $22,169 — twice the national average of $10,233 — according to data compiled by the Government Finance Officers Association. It was $19,664 in Connecticut, $18,437 in California and $17,850 in New Jersey.
It’s also true that the cost — about $90 billion in lost revenue if the full break was restored — could imperil other policy choices. The $90 billion is roughly the amount it would take to finance another Democratic priority: expanding the Section 8 housing program, which gives low-income tenants a voucher to help cover the rent, so that it covers the roughly 9 million qualifying families who cannot get vouchers because the government has not allotted enough funding.
“When you look around at the world, it’s hard to come up with the idea that this is the best use of $90 billion,” Carl Davis, research director of the Institute on Taxation and Economic Policy, said of proposals to remove the SALT cap.
Today’s debates over SALT recall earlier, equally fractious debates over taxing employer health plans, which inflamed unions whose members often have high-cost health insurance, or President Barack Obama’s proposal to tax college savings accounts. That was also opposed by Democratic legislators from high-income cities.
Such benefits are known as “tax expenditures,” or tax breaks that flow mostly to the highest-earning households and consume about $1.4 trillion a year. Christopher Faricy, a political science professor at Syracuse University, wrote a 2015 book criticizing many of these breaks. Its title is “Welfare for the Wealthy.”
Taxes finance the government, but they are also used to shape behavior. Tax breaks encourage people to buy homes and health insurance, send their children to college, save for retirement and give money to charity. An old argument in favor of SALT is that it subsidizes programs like public schools and state health departments. Now, in the aftermath of the pandemic, it is being framed as a way to help high-cost states hold on to high-income workers.
Over the past year, as remote work has untethered millions of white-collar employees, migration out of high-cost regions like New York and San Francisco has surged. Lawmakers and governors pay the necessary lip service to SALT as a middle-class tax break — governors who wrote to Biden urging him to repeal the cap said it would help “middle-class families” — but the fear that high earners might not return has become the larger concern.
“Even if they’re wealthy people, we can’t afford them to leave, because they subsidize the cost of government in our state,” Suozzi said.
Whether that will happen is another matter. Tom Kozlik, a municipal credit analyst at HilltopSecurities in Dallas, said a repeal of the SALT cap would be unlikely to stop an exodus of high earners from those states.
“There are many reasons why workers move, and an overall tax burden may be one variable, but the SALT cap is unlikely to be the reason, especially for high earners,” he said.
The fear is still real. Find a state whose residents benefit greatly from the SALT deduction and you’ll find a state that is more than normally dependent on rich people. The top 1% of New York City earners — a group that combined made about $133 billion in 2018 — pay a little over 40% of the city’s taxes.
With numbers like that, even a small increase in out-migration would have a large impact on the budget. It’s not the sort of money that could finance a large infrastructure package but maybe enough to halt it.
This article originally appeared in The New York Times.
© 2021 The New York Times Company
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Post by the Scribe on May 2, 2021 18:05:26 GMT
It's Not Just the Really Wealthy Who Face Tax Increaseswww.yahoo.com/news/not-just-really-wealthy-face-152044328.html Paul Sullivan Sun, May 2, 2021, 8:20 AM
President Joe Biden addresses a joint session of Congress at the Capitol in Washington on Wednesday, April 28, 2021, as Vice President Kamala Harris, left, and Speaker of the House Nancy Pelosi (D-Calif.) look on. (Doug Mills/The New York Times)
President Joe Biden this week proposed significant increases in taxes on the wealthy. And while the details are likely to change as the legislation makes its way through Congress, wealthy Americans were scrambling to lock in tax savings before they even knew what the proposal was.
The proposed higher taxes on income and capital gains — which would nearly double for the highest earners — were expected. But the American Families Plan, as the White House calls it, was silent on an anticipated increase in estate and gift taxes. Instead, it included a provision requiring heirs to pay capital gains taxes on assets above a certain amount that they inherit.
Advisers to the wealthy say they have been flooded with requests to make plans for what any eventual tax changes will be. And assuming that the president’s proposal will not go into law as is, they have been asking their advisers for help in understanding what could be added from the “For the 99.5%” plan floated by Sens. Bernie Sanders and Elizabeth Warren and others.
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“I don’t know where we’re going with any of these taxes,” said Bill Schwartz, managing director of Wealthspire Advisors, which advises clients with $5 million to $20 million in assets. “But I do know it’s really difficult right now to justify what people call a loophole or what I call using the tax code to your advantage. In fact, it’s really hard to justify any of these techniques for the affluent right now, not that I think they’re right or wrong.”
Since Biden won the election in the fall, I have written a couple of columns on the expected tax increases. Here’s what we know now, with planning thoughts for each one.
Income tax: The top marginal rate would go up to 39.6%, from 37%. That is where it was during President Barack Obama’s administration.
While marginal rates are calculated on income bands, Biden’s proposal would raise taxes not just on people currently subject to the highest rate of 37%. That rate currently starts when someone earns more than $518,000 or a couple earns more than $622,000.
The 39.6% rate would start with people earning $400,000 a year, which was where it was during part of the Obama administration. It would affect many people on the high-earning but high-cost coasts who might not consider themselves wealthy.
To avoid the higher tax, people who have the ability to determine when they collect income could accelerate it now when the rate is lower.
This could include collecting a bonus or negotiating a future payment early, said Michael Nathanson, chief executive of the Colony Group. It could also mean converting an individual retirement account to a Roth IRA in order to pay the lower taxes now.
Capital gains: The proposed capital gains increase doubles the rate that high-earners would pay when they sold their investments. But it would also affect people who have one-time, big-dollar events — like selling a family business.
The current rate is 20%, and Biden has proposed increasing it to 39.6%. Added on top of both rates is a 3.8% surcharge to help pay for the Affordable Care Act.
Wealth planners raised a couple of issues with this proposal. First is how the increase would influence people’s behavior. Planners critical of the increase say the lower capital gains tax was meant to give an incentive to save and not spend.
“The capital gains increase is not just for the consistently high, $1 million-a-year earner,” said Mallon FitzPatrick, head of financial planning at Robertson Stephens Wealth Management. “It’s impacting people who are depending on this money for retirement as well, from selling a business or from selling a home.”
The proposal also highlights the need to run the math before making any snap decisions. The decision to sell now or hold on to assets that are going to be taxed more heavily depends on when someone needs the money, said Pam Lucina, chief fiduciary officer and head of the trust and advisory practice at Northern Trust Wealth Management.
“If you need those assets to fund short-term goals — less than 10 years — you’re slightly better off selling than holding,” she said. “But it’s different if you have a concentrated position of stock. What do you assume it is going to grow at? That could be a shorter time horizon.”
Lucina said that comparing the projected growth with the possible increase in the capital gains tax would help people make a decision. “Oftentimes, they end up not selling,” she said.
Estate and gift tax: A change that was widely expected but not included in Biden’s proposal was lowering the level of estates and gifts that would be exempt from taxes. Biden was also expected to increase the tax rate. The current exemption level is as generous as it has ever been, at $11.7 million per person, indexed to inflation, while the 40% tax rate for any amount above that is historically low.
While the president’s proposal left the estate tax untouched, Lucina said she had still been getting calls from wealthy clients this week. She said she was telling them to think about their options, but not try to predict, when it comes to estate and gift taxes.
Biden did, however, propose eliminating a provision that values the assets in someone’s estate at whatever they were on the date of death. That provision, known as a step-up in basis, wiped out years of capital gains that were never declared, depriving the Treasury of significant tax revenue.
“It’ll raise a fair amount of money,” said David Pratt, chairman of the private client services department at the law firm Proskauer. “But it’s a double whammy. You still have the estate tax.”
The wealthiest will still have to worry about the limit on the estate tax exemption and the tax rate above that. But they will also have to look at whether they can pass along assets whose value is close to their purchase price, and that will probably be difficult. Another option is to put them in vehicles like trusts or retirement accounts, where the unrealized capital gains are less of an issue.
The potential loss of the step-up in basis is likely to be a bigger deal for middle-class Americans. Their estates would be exempt from the estate tax, but their heirs would have to calculate the appreciated gains on the assets they inherited.
Biden has cleared up some issues for the middle class in his proposal. He has recommended an exemption of $1 million on the capital gains of assets transferred to heirs. He has also left in place the $250,000 exemption on taxable gains in the value of a person’s primary residence. (These exemptions would double for a couple.)
But in many cases, this would affect people who would not have had to think about paying any tax at death, whether the estate tax exemption remained the current $11.7 million or dropped to $3.5 million, which had been expected to happen.
“The changes to the step-up in basis — that’s the curveball,” said Paul Saganey, the founder and president of Integrated Partners, a financial advisory firm. “It’s really going to surprise people. People don’t know what it is or what it means, so how can they quantify the impact of it?”
Also missing was any mention of reinstating the full deduction for state and local taxes, known as SALT. The cap on these deductions in the 2017 tax law hurt people living in the Northeast and West Coast states, where the property and state taxes are higher.
Biden has proposed limiting a break on real estate transactions. He would cap at $500,000 the value of 1031(b) exchanges, which have essentially allowed real estate investors to roll gains from the sale of buildings into new buildings without ever paying capital gains taxes on them. Coupled with the step-up in basis at death, which wiped out all the gains in value of the buildings, this was a large tax break for families whose wealth rested on real estate investment and ownership.
What is less known is what, if anything, may be adopted from the “For the 99.5%” plan. The plan would close some popular tax-reduction strategies, many of which were targeted during the Obama administration.
Three of the proposals would be relatively easy to enact. One would end short-term trusts that allow people to pass tax-free to their heirs expected appreciation — say from the sale of a private business. Another would limit tax-free gifts that can be given each year to trusts to fund things like life insurance to pay estate taxes. A third would curtail special tax treatment that family partnerships receive, even when they own liquid securities and not an operating business.
“They already have the regulations written for these,” Lucina said. “I don’t want to scare anyone that these will be enacted. But some of these could be enacted quickly and looked at as loophole closers.”
This article originally appeared in The New York Times.
© 2021 The New York Times Company
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Post by the Scribe on May 10, 2021 19:09:17 GMT
What if We Actually Taxed the Rich? | Robert Reich 171,546 views•Apr 1, 2021 Robert Reich 306K subscribers
Former Secretary of Labor Robert Reich breaks down seven ways to tax the rich and raise trillions in revenue.
Watch More: 12 Myths About Taxing the Rich ►►https://youtu.be/pnoLAMHwf2I
Income and wealth are now more concentrated at the top than at any time over the last 80 years, and our unjust tax system is a big reason why. The tax code is rigged for the rich, enabling a handful of wealthy individuals to exert undue influence over our economy and democracy.
Conservatives fret about budget deficits. Well, then, to pay for what the nation needs -- ending poverty, universal health care, infrastructure, reversing climate change, investing in communities, and so much more -- the super-wealthy have to pay their fair share.
Together, these seven ways of taxing the rich would generate more than $6 trillion over 10 years -- enough to tackle the great needs of the nation. As inequality has exploded, our unjust tax system has allowed the richest Americans to hoard wealth, at the expense of the rest of us.
It’s not radical to rein in this irresponsibility. It’s radical to let it continue.
12 Myths About Taxing the Rich | Robert Reich
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Post by the Scribe on Apr 17, 2022 15:42:27 GMT
Today, in the United States, the two wealthiest people own more wealth than the bottom 42 percent of our population – more than 130 million Americans. And the top one percent now owns more wealth than the bottom 92 percent.
In my opinion IF the top one percent owns more wealth than the bottom 92 percent THEY OUGHT TO BE PAYING AT LEAST 92% OF THE TAXES EACH YEAR and NOT just the 40 percent as claimed in the outrage from the wealthy elites whom are the RepubliCONservative OVERCLASS.
THE NATIONAL INTEREST SEPT. 16, 2021 No, the Richest One Percent Don’t Pay 40 Percent of the Taxes. nymag.com/intelligencer/article/fact-check-richest-1-dont-pay-40-of-the-taxes.html#comments By Jonathan Chait or read here: conservatism.freeforums.net/thread/7792/richest-percent-pay-40-taxes
from Bernie Sanders:
If you watch the corporate media, you'll often hear the word 'oligarch' preceded by the word 'Russian.' But oligarchs aren't uniquely a Russian phenomenon or a foreign concept. No. The United States has its own oligarchy.
Today, in the United States, the two wealthiest people own more wealth than the bottom 42 percent of our population – more than 130 million Americans. And the top one percent now owns more wealth than the bottom 92 percent. During the last 50 years there has been a massive transfer of wealth in our country, but it’s going in the wrong direction. The middle class is shrinking while the people on top are doing better than ever.
Further, in terms of the global economy, there is no question that we are seeing a huge and destructive increase in income and wealth inequality. While the very, very richest people become much wealthier, ordinary people struggle and the most desperate starve.
While massive levels of inequality existed before the rise of COVID, that situation has become much worse over the past two years.
Today, around the world, the wealthiest 10 multi-billionaires now own more wealth than the bottom 3.1 billion – almost 40 percent of the world’s population. Unbelievably, the wealth of these ten multi-billionaires has doubled during the pandemic, while the income of 99 percent of the world’s population has declined. The oligarchs spend huge amounts of money buying fancy yachts, mansions and great paintings while 160 million people throughout the world have slipped into poverty. According to Oxfam, global income and wealth inequality has led to the deaths of more than 21,000 people each and every day throughout the world as a result of hunger and the lack of access to healthcare. Yet the world’s 2,755 billionaires saw their wealth go up by $5 trillion since March 2021 – increasing from $8.6 trillion to $13.8 trillion.
But it’s not just the increased income and wealth gap between the very rich and everyone else. It’s a growing concentration of ownership and brute economic and political power. Something which is not talked about much, either in the media or political circles, is the reality that a handful of Wall Street firms, Black Rock, Vanguard and State Street, now control over $21 trillion in assets – roughly the GDP of the United States. This gives a tiny number of CEOs enormous power over hundreds of companies and the lives of millions of workers. The result: in recent years we have seen the ultra-wealthy significantly increase their influence over media, banking, health care, housing and many other parts of our economy. In fact, never before have so few owned and controlled so much.
Add it all together and what you see is a nation and world trending very strongly toward oligarchy – where a small number of multi-billionaires exercise enormous economic and political power.
So, in the midst of all of this, where do we go from here?
Clearly, while we face oligarchy, COVID, attacks on democracy, climate change, the horrific war in Ukraine and other challenges it is easy to understand why many may fall into cynicism and hopelessness. This is a state of mind, however, that we must overcome – not only for ourselves, but for our kids and future generations. The stakes are just too high, and despair is not an option. We must come together and fight back.
What history has always taught us is that real change never takes place from the top on down. It always occurs from the bottom on up. That is the history of the labor movement, the civil rights movement, the women’s movement, the environmental movement and the gay rights movement. That is the history of every effort that has brought about transformational change in our society.
That is the struggle we must intensify today.
We must bring people together around a progressive agenda. We must educate, organize and build an unstoppable grassroots movement that helps create the kind of nation and world we know we can become. One that is based on the principles of justice and compassion, not greed and oligarchy.
We must never lose our sense of outrage when so few have so much and so many have so little.
We must not allow ourselves to be divided up based on the color of our skin, where we were born, our religion or our sexual orientation.
The greatest threat of the billionaire class is not simply their unlimited wealth and power. It is their ability to create a culture that makes us feel weak and hopeless and diminishes the strength of human solidarity.
Yet, as a result of the horrific Russian invasion of Ukraine, and the extraordinary courage and solidarity of the Ukrainian people, countries throughout the world are waking up to the fact that there is a global struggle taking place between autocracy and democracy, between authoritarianism and the right of people to freely express their views.
Now is the time to build a new progressive global order that recognizes every person on this planet shares a common humanity and that all of us – no matter where we live or the language we speak – want our children to grow up healthy, have a good education, breathe clean air and live in peace.
What we are seeing now is not just the incredible bravery of the people in Ukraine, but thousands of Russians who have taken to the streets to demand an end to Putin’s war in Ukraine, knowing that it’s illegal to do so and that they will likely be arrested and punished.
We have seen the courage of working people here in our country who are coming together to take on corporate greed and organize for better wages, benefits and working conditions.
Sisters and brothers, right now we are in a struggle between a progressive movement that mobilizes around a shared vision of prosperity, security and dignity for all people, against one that defends oligarchy and massive global income and wealth inequality.
It is a struggle we cannot lose. And it is one that we can overcome, as long as we stand together.
In solidarity,
Bernie Sanders
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