“You are a slow learner, Winston.”
“How can I help it? How can I help but see what is in front of my eyes? Two and two are four.”
“Sometimes, Winston. Sometimes they are five. Sometimes they are three. Sometimes they are all of them at once. You must try harder. It is not easy to become sane.”
— George Orwell in 1984
Our current president has always had a problem with the facts. Past presidents have often had an adversarial relationship with the press. We now reach new levels of concern as both trends continue to grow under one man. This week they reached very troubling levels.
In case you missed it, the president has been busy on Twitter again. Not content to fume and attempt to merely belittle the press, he now actively undermines it. Today Press Secretary Sarah Huckabee Sanders reached the same troubling level as did Presidential Adviser Kellyanne Conway’s infamous declaration that “we feel compelled to go out and clear the air and put alternative facts out there.”
Hardly anyone, whether paying attention or not, can be unaware of the president’s constant attack on the news media — except Fox and Friends of course. Constant. Fake news. Liars. On and on. You’ve heard it. It is far beyond normal criticism. Many of his tweets I take to be based either on his ego, or his perverted sense of humor, or some mostly spontaneous spasm of mind that causes him to blast the world with another tweet. I think his attacks on the media fall into a different category. The attacks have been relentless and continuous from well before his election. They have escalated in the time since he took office. I think the attacks are considered, premeditated, and part of a larger plan to make it difficult to separate truth from fiction and thus cover up his shenanigans and wrong doings in and out of government. It reached a new peak this week.
This past weekend he tweeted out (in this and all other tweets quoted the capitalization is all his):
“Fox News is MUCH more important in the United States than CNN, but outside of the U.S., CNN International is still a major source of (Fake) news, and they represent our Nation to the WORLD very poorly. The outside world does not see the truth from them!”
Another mindless attack? I think not. Especially I think not because the international reaction was swift. Those that support a free press were quick to condemn the tweet and those that would prefer to hide the truth from their populations — and the BBC and CNN International are the main reliable sources of information for many around the world as those of us that travel frequently know — can now point to the president of the United States as saying it is all fake and no one should believe it. Reckless behavior on the part of our president. This sure does help us promote democratic ideals. By the way, this week President Putin, the only person in the entire world our president refuses to criticize, required all U.S. reporters to register in Russia as “foreign agents”– reinforcing the idea that all news is propaganda and not real.
And it keeps getting worse.
Two days ago he tweeted:
“We should have a contest as to which of the Networks, plus CNN and not including Fox, is the most dishonest, corrupt and/or distorted in its political coverage of your favorite President (me). They are all bad. Winner to receive the FAKE NEWS TROPHY!”
Of note is the fact that a merger between AT&T and Time-Warner is blocked by the Justice Department. Time-Warner owns CNN. Whether or not you think the merger is a good idea for us as consumers we might be concerned that at one point the suggestion was made that if Time-Warner sold off CNN the merger would be approved. The issue is now heading to court and one can be sure that the lawyers on the side of the corporations will certainly bring up the many, many, many attacks on CNN from the president. In the military this is called “command influence.” The person in charge by deed or dialogue influencing, directly or indirectly, the outcome of what is supposed to be an impartial hearing.
It has now been widely reported that according to private conversations the president had with some friends and advisers, he now doubts the “authenticity” of the Access Hollywood tapes where he admits assaulting women. Additionally, to many of those same people he continues to espouse his belief that President Obama was born in Kenya. One wonders if he is Orwellian or just losing his grip.
And it keeps getting worse.
Today the president re-tweeted three inflammatory videos from “Britain First”, a white nationalist organization in the United Kingdom. All three were anti-Muslim. They have proven to be false and/or out of context. They were distributed by a hate group intent on enraging non-Muslims, perhaps to violence. British Prime Minister Theresa May felt compelled to put out a statement condemning our president for tweeting these videos, saying that it was “wrong.” The statement said in part:
“Britain First seeks to divide communities through their use of hateful narratives which peddle lies and stoke tensions. They cause anxiety to law-abiding people. British people overwhelmingly reject the prejudice of the far right, which is the antithesis of the values that this country represents: decency, tolerance, and respect. It is wrong for the president to have done this.”
Way to go Mr. President! And that’s from our closest ally.
Besides wondering why he would re-tweet something from that group in the first place, one might wonder what he is doing on a white nationalist web site anyway. Why? Why would the president patrol hate group web sites? Doesn’t he have other things to worry about such as, oh I don’t know, maybe that the North Koreans tested an ICBM that can reach all of the United States? Or maybe he has a staffer that patrols such web sites for him. Not really much better. Where are the filters? Oh, yea, I forgot. His is not a “conventional presidency.” Conventional or not I would think that there are certain conventions of human decency that should also apply to the President of the United States.
And it keeps getting worse.
After the realization set in of what the president had done, reporters asked White House Press Secretary Sarah Sanders — the voice of the president to us as citizens and to the world as the voice of our nation — about it and she said that it didn’t matter if the videos are real or not. “Whether it’s a real video, the threat is real.” Mrs. Sanders, welcome to the Kellyanne Conway Club.
All of this in the span of a few days.
And it will keep getting worse.
Our president, and apparently those that work for him, have no respect for the First Amendment. We should be very concerned. His antipathy for anything even remotely critical of him is more than troublesome. He is creating an atmosphere where nothing can be trusted by anyone unless he says it is true. This is the first, most basic move of any autocrat.
Also recall that the president only allowed Russian media into his office when he met with the Russian Foreign Minister and Ambassador. (Where he famously — perhaps eventually infamously — bragged he fired FBI Director Comey and said “I just fired the head of the F.B.I. He was crazy, a real nut job. I faced great pressure because of Russia. That’s taken off.”)
Recall that the president agreed with Chinese President Xi Jinping that the press should not be allowed to ask questions during his visit to China earlier this month. The first time in memory that the President of the United States acquiesced to a dictator to keep the American press silenced.
Recall that during that same trip the president laughed when autocratic Philippine President Rodrigo Duterte responded to press questions by telling them no questions were allowed as they are “spies.” The same President Duterte that is on record saying “just because you’re a journalist you are not exempted from assassination if you’re a son of a bitch.”
These are but a few recent examples.
We might discuss whether the current administration is merely incompetent or malicious. Hard for me to say except as it pertains to freedom of the press. Regardless, the result is the same — a threat to our freedoms. I think the constant attacks against the press are part of a larger plan. They are not accidental or merely reflective of his natural tendency to lash out at criticism.
By nature I am not an alarmist. This pattern alarms me. He is doing great harm to our nation and to our friends and allies around the world. It is becoming “normal.” That worries me the most.
I think a tweet from General Michael Hayden (ret.), former director of the CIA says it best for me. In response to the president’s tweet about CNN (above) he wrote:
“If this is who we are or who we are becoming, I have wasted 40 years of my life. Until now it was not possible for me to conceive of an American President capable of such an outrageous assault on truth, a free press or the first amendment.”
I trust that you all had an enjoyable Thanksgiving weekend. In many ways we have so much to be thankful for so it is always nice to take time out and to reflect on our good fortune — whatever form that may take.
In our nationally induced tryptophan haze, one may have noticed, or more hopefully ignored, a bevy of tweets and other distractions that obscure the many important legislative challenges coming up in the next four weeks. Or more accurately, in the few days that the House and Senate are actually in session before Christmas. Nearly all of the following impact Americans in some form or another and are important to the smooth functioning of our nation. These are important issues that deserve serious consideration and discussion. I will let you decide whether or not that will happen.
To name a few:
- Tax cuts. The president promised a “great big beautiful Christmas present” with completion of the Republican tax cut. Both the House — which passed its version before Thanksgiving — and the Senate — which hopes to pass its version this week — have significantly different bills designed to permanently cut corporate taxes and to cut some lower and middle class taxes for a while. The Republican leadership is touting both bills as a boon to the middle class. Sorry, but I don’t see it. Besides adding at least 1.5 trillion dollars to the national debt over the next ten years, it makes some puzzling changes. For example, nearly all deductions (mortgage, student loan, state and local taxes, medical expenses, moving expenses and about 40 some more) are removed from the individual taxpayers’ ability to use them but keeps them in place for corporations. The argument is that the individual standard deduction will greatly increase (roughly doubled) and therefore there will be no need to itemize. At the same time, corporate taxes drop roughly 40 percent (from 35% to 20%) but they still keep all itemized deductions, including those listed above that go away for the rest of us. The real kicker is that corporate tax rates and rules are permanent and the rules for the rest of us are temporary. The non-partisan Tax Policy Center (TPC) estimates that for many of us, our taxes will actually go up over the next ten years as compared to current law. This happens primarily because of the “sunset” provisions impacting everyday Americans. Many Republicans are arguing that some time “in the future” Congress will make them permanent and so in the end, we all benefit. Except. Except. There is no guarantee that they will become permanent. If they don’t, we are victims of a big lie. And if they do, then it all has been a sham and a trick. In order to meet the rules of the Senate, they cannot exceed the 1.5 trillion dollar addition to the national debt. (To do so, they need 60 votes in the Senate, which means getting Democrats onboard, who, so far, have been shut out of any input to the bill.) Thus, the permanent cuts for corporations are paid for by the average tax payer. But not to worry, according to the Director of the Office of Management and Budget (OMB) Dick Mulvaney, it is all a trick. A “gimmick.” As he said on Meet the Press, in order to meet the Senate rules, “certain proposals can only have certain economic impact. One of the ways to game the system is to make things expire.” Or as he went on to say, “a lot of this is a gimmick… to get through these rules in the Senate.” This from the president’s point man on the cuts and in charge of explaining them to the public. There is a whole lot more to this issue, but it deserves a separate piece as the issues are complex with wide impacts on each of our futures. Keep an eye on this.
(Please note that there is no need to place a time limit on getting this legislation right. It is an arbitrary political goal to “deliver” a tax cut by Christmas. Remember that as it crowds out the following issues, many of which do have — or have already reached — a drop dead date to accomplish.)
- Government Shutdown. Funding to operate the federal government expires on 8 December. Here we go again. Both Republicans and Democrats are using the imminent expiration of the spending authorization to promote their political agendas. As in the past, it is unlikely that the Republicans can pass a spending bill without at least some Democrats voting for it as well (there is always a hard-core Republican group opposed to the amount of spending and the impact on the deficit — although they mysteriously voted for the increased deficit from the tax cuts). There is a “summit” planned tomorrow involving the leaders of both parties from both houses and the president to try to come to accommodation on this and other issues. Probably there will be a short-term extension to keep the government operating — a continuing resolution or CR. CRs wreak havoc on all government agencies from defense to agriculture as they limit immediate spending and give no clear guidance for the future, thus severely inhibiting planning for the future. Predictions are not optimistic as to a quick resolution because the Republican leadership remains laser focused on getting the tax cuts finished first.
- Defense Spending. As part of the overall objective of setting spending levels for 2018 many want to see defense spending increased from about $549 billion to about $600 billion. In order to do that, Congress must rescind a bipartisan 2011 budget deal that set spending caps on all areas of government. Democrats are insisting that any increases in defense spending must be matched by increases in non-defense spending or they will not vote to lift the 2011 caps. Under Senate rules, 60 votes are required to change the bipartisan agreement providing the limits so Democrats have a say in how this is resolved. Very little progress in resolving the issue is apparent and this impacts the funding for the government as a whole (see above).
- Health Care. Politicians on both sides of the aisle want to see the market stabilized for health care. Not surprisingly, there are differences on how to do it. The Alexander-Murray health care bill is a bipartisan effort to bring some continuity and stabilization to health care under the Affordable Care Act (ACA). The administration opposes this bill and the Senate version of the tax cut plan eliminates the penalty for not having insurance — thus creating the possibility of increased premiums for those with insurance and eventually driving a predicted 13 million from the roles. (See my previous posts about the “three-legged stool” needed to keep the system stable.) Democrats say the Alexander-Murray bill is off the table if the repeal of a key provision of the ACA is enacted. Republicans are still making noise about “repeal and replace in 2018.” Compromise seems unlikely and the public suffers.
- The Children’s Health Insurance Program. The generally popular CHIP provides health coverage for about 9 million poor children and others. The current legislation expired on 30 September and it is unknown when this usually bipartisan issue will be addressed. To date, the states have picked up the slack to keep the program going in the short-term but many say that funds will run out at the end of the year. This is also caught up in the “need” to address tax cuts before other legislation.
- Immigration. The president announced the expiration of the Deferred Action for Childhood Arrivals (DACA) (the Dreamers) program last September and gave Congress until March to come up with a system for dealing with the children brought here illegally by their parents. Many Democrats say that they will not vote for any spending bills unless this issue is addressed by the end of the year. Some Republicans say that they will not address immigration unless “The Wall” is part of the bill. There are also Republicans that agree that the Dreamers issue needs to be addressed and that may actually favor their remaining in the country. But, again, they argue this cannot be part of any spending bill and can only be addressed after the tax cuts pass.
- Intelligence Gathering. On 31 December of this year Section 702 of the Foreign Intelligence Surveillance Act will expire. This section of the law, approved by Congress in 2008 as a part of the response to the terrorist attacks on 11 September 2001, is intended as a tool to track and thus foil foreign terrorists. It is meant for use in conjunction with foreign citizens outside of the United States and has specific provisions to protect American citizens. Unfortunately, critics of the provision claim that vast amounts of information is collected on U.S. citizens as they communicate with foreigners — any foreign national, not just those suspected of being terrorists. Known as “incidental surveillance” it raises many questions of privacy and government intrusion into the lives of innocent, ordinary U.S. citizens. The NSA considers this provision to be among their most important collection capabilities and fear that if they lose the ability to continue the surveillance that it will severely inhibit their counter-terrorism capability. There is general bipartisan support to extend the statute, but with some restrictions to further try to protect Americans’ privacy. Currently, there are no plans to address the expiring statute by the end of the year.
- Disaster Relief. The Administration asked Congress for $44 billion in disaster relief for help in mitigating the impact of the hurricanes and wildfires that affected many areas of the country this year. To pay for it, they have asked for reductions in other expenditures, such as benefit programs. By all accounts, 44 billion — a lot — is inadequate to meet the need. Puerto Rico alone estimates that it will cost $99 billion to get the island back on its feet. Congress has promised to provide the aid, but does not plan to address the issue with concrete action (money duly appropriated) until the tax cut plan is finished.
- Iran Sanctions. By declaring in October that Iran was not in compliance with the international deal to limit Iran’s ability to develop nuclear weapons, the president activated a 60 day period which expires in December for Congress to act to impose new sanctions or not. The general sense is that there is mostly bipartisan agreement not to extend new sanctions on Iran and thus to keep the deal in place. However, at the end of the 60 day period the ball is back in the president’s court and it may be that inaction on the part of Congress will lead to action by the president and thus put the deal in jeopardy.
And there’s more! But you get the idea. Not much of anything will get done until the tax cuts are passed, which is not a sure thing in the Senate. Even if it does get through the Senate this week, or soon after, they still need to reconcile the two versions of the bill — no easy task as they are significantly different in several important areas. All deadlines discussed for the tax cuts are purely political and self-imposed, unlike many other items in need of Congressional attention.
It is sure to be a busy political December. Enjoy! And don’t let the tweeting distract you from the real action going on.
A single failed 2001 shoe bombing attempt on an airliner bound for Detroit.
— We all now take our shoes off before boarding any airliner.
A single failed 2009 underwear bombing attempt on an airliner bound for Detroit.
— We all now have to go through full body scanners before boarding any airliner.
A plot to turn a lap top into a bomb was foiled.
— Laptops were banned on many airline flights.
A legal immigrant kills 8 and injures 12 in New York City.
— Close the borders to immigrants. “Extreme vetting.”
A single terrorist shooter kills 59 and wounds 241 people in Las Vegas.
A single terrorist shooter kills 26 and wounds 20 in Sutherland Springs Texas.
— “It’s not a gun situation.”
378 mass shooting incidents (defined as four or more people shot) in 2017 alone.
“Guns don’t kill people, people kill people.”
In February 2017 the president signed a decree scrapping the regulation aimed at keeping guns out of the hands of severely mentally ill individuals.
Gun homicide rates in the U.S. are 25 times higher than any other high income nation.
Guns kill approximately 1300 children in the U.S. each year.
The Congress refused to pass legislation preventing individuals on the terrorist no fly list from buying guns.
It is not anti-gun to be for gun safety. As the greatest nation on earth we should be able to figure out how to keep our Second Amendment right without giving up our right not to be randomly shot by a disgruntled idiot. It is a national disgrace. It most definitely is not “the cost of freedom.”
I don’t want to hear anymore “thoughtsandprayers.”
The Republican Congress is moving ahead with passage of a bill to enact tax “reform.” Actually, if one takes a close look, it really is not tax reform, but rather a tax cut. Some of us may be for it, some of us may be critical of it, some of us may think that there is no need for a tax cut at this point. Whichever approach you favor, there are elements to the proposal that all of us need to understand as we will all hear different spins on the bill as more and more of it becomes clear.
The one thing we do not need or want — whether or not one favors the current tax cut proposal — is what I increasingly hear from Republican members of Congress. That refrain is something along the lines of what’s important isn’t so much the details of the legislation but that this Congress must pass something. Anything. They could not deliver on Repeal and Replace and have so far not enacted any significant legislative at all. Something has to pass or voters will think that they are ineffective and unable to govern. As a result, the argument goes, they will be decisively punished at the polls in 2018 and therefore something is better than nothing.
Wrong. I could not think of a worse reason to pass a bill, especially one that will impact every single American tax payer and business. The last major attempt at tax reform took place under President Reagan in the early 1980’s. Thus we hear that this is a once in a generation legislative achievement. True or not, it is clearly significant and will have a lasting impact on our economy.
So, whether or not one supports the current bill, there are some things of which we all need to be aware as we decide if this is a good idea or not. As usual, a few caveats apply.
The final version of the bill is unknown. Even as I write, negotiations are taking place that will cause certain provisions to change or get modified as the wheeling and dealing takes place. This deal making can substantively change the bill and not necessarily for the better. Even as the version in the House is getting all of the attention, the Senate is working on its own bill, the provisions of which are being kept under wraps. We can assume that it will probably be similar to the House version, but there is no guarantee. The competing bills then go to conference where negotiators hash out the differences. The question will be whether or not the “deals” see the light of day before voting takes place. Finally, recall that the Republican leadership in the House and the Senate have decided to lock out the Democrats and pass the bills on a straight party-line vote. Regardless of whether or not this is a good idea, certain Senate rules kick in as a result which means the House and Senate may not be able to do all that they want. If they break certain rules — outlined in the just passed budget bill which got little attention because of other events — then the Senate will require 60 votes to pass the legislation, which is unlikely if the Democrats are locked out of any input to the bill.
I know, a lot of inside baseball type maneuvering, but it matters because the rest of us have to live with the results.
There are two major economic reasons for fooling around with taxes (either raising or lowering them). One is to stimulate the economy to get it growing again. The other is to bring about a balanced budget to stop or bring down the growth of our national debt. The two are not necessarily mutually exclusive, but they tend to act in competition in a modern economy.
Some argue that the economy cannot be stimulated further because current unemployment rates are very low. According to the Labor Department, unemployment in October was 4.1% and there were 6.2 million open jobs on the market. Demand for workers is exceeding those available. During the presidential campaign, the Republican candidate claimed that the government’s statistics were “false” and that the unemployment rate was really much higher. He now argues that the numbers are correct. Regardless, an argument can be made that although the unemployment rate is the lowest in decades, there are many people that have stopped looking for jobs even though there are 6.2 million available. Why the disparity? Probably because the skill levels needed for the empty jobs is greater than, or a poor match with, the skills of those that stopped looking for jobs. Couple this information with the fact that worker productivity is the highest ever — thanks to automation and other technology advances — and one can rightly ask how this tax cut is going to further stimulate growth in the economy.
The usual reply is that corporations will create more jobs by using dollars that would have gone to taxes to instead expand production. This assumes that there is more demand for their products, an assumption that may or may not be true but is an unknown and should not be assumed.
The use of “dynamic scoring” helps the case for the tax cuts. This is the theory that more money not spent on taxes will enter the economy as people have more cash to spend and this in turn causes the economy to grow and will actually bring in more tax dollars in the long run than are lost with the cuts. Historically, this has rarely if ever happened.
The proposed tax cuts now before Congress will not balance the budget and will in fact increase the national debt by at least 1.5 trillion dollars over ten years. (By the way, this is one of those intricate rules that the Senate must follow under the just passed budget. They cannot go over that number or 60 votes will be required for passage.) One might ask what happened to the Republican “deficit hawks” that argued for the past decade that the debt was growing too fast and even argued for a balanced budget amendment to the Constitution. Beware of the need to pass something. One can also argue that it is not good governance or good policy to finance a tax cut through increasing the deficit. It narrows the options going forward when it may be necessary to finance a major catastrophe or war through deficit spending.
In fact, the current proposal cuts government revenue by roughly 4 trillion dollars. For those that argue for smaller government and less spending, that may be attractive. Remember that many in Congress are also arguing for increased defense spending, major infrastructure spending, no cuts to Medicare or Social Security in an aging population, and other measures that will increase spending. The money has to come from somewhere.
To get the 4 trillion in cuts down to 1.5 trillion in actual lost revenue, the bill makes up the difference by eliminating many current deductions. This is where it starts to get interesting to you and me.
There are always winners and losers in these types of bills. Depending on where you sit, you may or may not like what you see. To me, we need to understand who wins and loses and decide for ourselves whether or not our elected representatives should vote for or against the bill. There are philosophical reasons to support or oppose it and there are also practical reasons to do so or not. Sometimes those line up, sometimes they do not.
As an aside, it is impossible to know if the president makes out well or not through the provisions of this bill because we do not have his tax returns. Every analyst that I have seen opines that if his stated worth and holdings are true, the man and his family makes out “bigly” if the bill passes. Call it a tycoon real estate developers dream.
Those that authored the tax cuts tout it as a huge win for the middle class and not so much for the wealthy. Please investigate it for your self and do not take as gospel the talking points of anyone in the House or Senate, Republican or Democrat.
Here are some of the more eye-opening provisions. These are only a sample. Read the 429 page proposal for yourselves and see if it meets your needs.
According to the talking points, the attempt at tax reform is to simplify the tax code. If you dig through the details, it really does not do that. There will be no “post card” sized tax form unless you already use the “1040 EZ” form and use photo shop to make it fit on a post card.
According to the talking points the cuts will put about $1,182 into the “typical family of four.” First, I’m not sure what a “typical” family might be (more on that in a minute), but more broadly, of the $1.5 trillion cut about $1 trillion goes primarily to corporations, about $300 billion to tax payers, and about $200 billion to the most wealthy Americans via the elimination of the estate tax.
Back to the typical family. Some will receive a tax cut, although how much is in dispute by some economists, but they generally agree that some will get a cut and that some middle class folks will actually have their taxes go up. The main argument from the bill’s authors is that increasing the standard deduction ($12,000 for individuals and $24,000 for married couples) will eliminate the need to itemize deductions as most people will be better off not doing so. Perhaps. Individual circumstances vary so widely that it is hard to generalize. But middle class tax payers should know that among other deductions that are to be eliminated include:
- Federal deductions for state and local taxes (known as SALT) are eliminated. Property taxes will be deductible up to $10,000. The argument against “double taxation” — used in eliminating the estate tax — doesn’t seem to matter here. For states with state and local taxes (including sales taxes) one will pay twice on the same income. Arguments that high state taxes that are deductible means those with no or low state taxes subsidize them do not hold up. There are many ways to analyze the return on investment, but in general, states with low or no state taxes get back more from the federal government than they send to Washington in taxes and just the opposite for the supposed free loaders. For example, New York (high state tax) gets back about 75 cents for every dollar it pays in federal taxes and Florida (no state income tax) gets back about $4.50 for every tax dollar.
- The Alternative Minimum Tax (AMT) is repealed. This is the methodology that hits many middle class tax payers (although it was originally designed to keep wealthy people from paying no taxes through shelters and other tax dodges) requiring that when certain marks are reached, the owed tax is calculated in two different ways and the higher rate prevails. Estimates are that the president will save tens of millions of dollars every year with the elimination of the AMT.
- Elimination of the deduction for medical expenses. Currently, one can deduct all expenses over 10% of adjusted gross income. No deductions will be allowed under the new proposal. This obviously impacts people with major medical bills, often the elderly, as it includes long-term care and other services needed for the aged or infirm.
- Deductions for student loan interest is eliminated.
- Estate Tax limits rise from the current $5.9 million to $11 million and then is eliminated in 2024. This is a hot button issue. Most of us will never be impacted by it, but Republicans claim it is “double taxation” (see above) and harms small businesses. Its elimination adds about $200 billion to the deficit over ten years. Estimates are that about 80 businesses were impacted by it last year. The president’s family is expected to increase their inheritance by approximately $500 million through its elimination. Keep an eye on this. One proposal to pay for this change would provide for estates passed to heirs to be valued at their original prices (such as stock you bought 20 years ago and want to pass on) rather than the current rule where the origination value is that that it held at the time of passing. This would impact far more people than currently affected by the estate tax.
- A lower rate for “pass through” business income also sometimes called the “Trump loophole.” This applies to businesses such as partnerships, “S” corporations, sole proprietorships, and the like. It allows the owners to “pass through” profits from their businesses to be taxed as their personal income. Thus pass through income is taxed at no more than 25 percent — far below the 39.6 percent top individual income tax rate that now applies to pass-through income, or the 35 percent top rate that would apply to individual income under the Republican plan. Many very wealthy people such as the president use these types of arrangements for their businesses. It is expected that many will restructure their business arrangements to take advantage of this new loophole.
- There are proposals over the weekend to include repeal of the Affordable Care Act, or portions there of in the tax bill. Mixed signals from law makers make it unclear whether or not they will try to sneak that into the bill after failing to pass it into law over the last seven years.
- And a whole lot more, but you get the idea.
Clearly a “typical family” with a mortgage (deductions are limited under the bill) who are suddenly hit with catastrophic medical bills while paying off the student loans they took out to meet the needs of the new work place will fare totally differently than those families used in the talking points. Very little is “typical” of any family.
Primarily we all need to keep an eye on the negotiations that will keep specifics of the bill in flux until the day it is voted up or down. Whether for or against these provisions, we should insist on a fair and transparent process where our representatives know what they are voting on and what the implications for the new laws will be. All of us will be impacted in some way.
Tax reform is a good thing. There are many complicated elements to the current law and other elements that are unfair to some or too generous to others. It’s complicated. It’s messy. Not everyone will be happy. What we don’t need is a closed door, rushed job, unclear bill that gets passed only because they had to do something.