Has U.S. Democracy Been Trumped?

[Zelandakh]

I am going to add my variant on this, since I think this issue of privilege needs to be though about correctly.

Privilege is something that very much depends on context. By Western standards my background was not privileged - my parents split when I was 1 and my mother worked as a part-time cleaning lady with no additional income (or contact) coming from my father. We were poor enough that I was one of a tiny number (3 I think) at school receiving free meals.

 

And yet on a world scale I am clearly highly privileged. I qualify for the top 1% by income worldwide, for example. So I feel privileged just to have been born in the UK and have the opportunities that that offered. That is already privilege enough - why anyone thinks that the top 20% or so in a developed country should have additional privileges that mean they massively increase the wealth gap to the bottom 20% or so is something of a mystery.

 

I understand it in a developing country - they perhaps cannot afford to provide everyone with a high-level education and have to concentrate resources - but in the USA? Seriously, you guys cannot afford to give your poorest children a basic education? And Republicans even defend this as good government? Sorry but that is practically criminal.

[kenberg]

Privilege is something that very much depends on context. By Western standards my background was not privileged - my parents split when I was 1 and my mother worked as a part-time cleaning lady with no additional income (or contact) coming from my father. We were poor enough that I was one of a tiny number (3 I think) at school receiving free meals.

 

And yet on a world scale I am clearly highly privileged. I qualify for the top 1% by income worldwide, for example. So I feel privileged just to have been born in the UK and have the opportunities that that offered. That is already privilege enough - why anyone thinks that the top 20% or so in a developed country should have additional privileges that mean they massively increase the wealth gap to the bottom 20% or so is something of a mystery.

 

I understand it in a developing country - they perhaps cannot afford to provide everyone with a high-level education and have to concentrate resources - but in the USA? Seriously, you guys cannot afford to give your poorest children a basic education? And Republicans even defend this as good government? Sorry but that is practically criminal.

 

Right, I hope it was clear that I agree. Some people can be difficult to help, I made some dumb choices, but there was enough of a structure so that unless I was truly disaster prone I could make something out of my life. As did my parents, who had a far rougher time of it.

 

Some public schools today are much better than anything that existed, public or private, in St. Paul when I was young. But also some are much worse. And this is the divide that we desperately need to address. Every young person (ok, there are always pathological exceptions but basically "every" is right) wants to grow into a self-supporting responsible member of society. That option was there for me, it was there for my father, it was there for you. It is absolutely nuts that we do not see this as a fundamental responsibility of our society. Even if we forget altruism and look only to our own benefit, we need to do this. I accept that this might be easier said than done, but we need to do much more. Never mind that some people can fork over a thousand bucks per ticket for Hamilton while others can barely afford the price of a movie. That's a small issue. But their kids need to have a future. That's a big issue.

[Winstonm]

Never mind that some people can fork over a thousand bucks per ticket for Hamilton while others can barely afford the price of a movie.

 

I don't mean this as criticism whatsoever but only as an additional comment that unless one has worked in social services it is understandable to be unaware of how many people there are for whom the price of a movie is not even on their radar as an option. It is difficult for us to understand in a country so wealthy the plight of the working poor and their inability to engage with that society.

[Winstonm]

Repeat of information from another poster removed.

[Zelandakh]

Here is what genuine PC looks like:

See cherdano's link a few posts back...

[Winstonm]

See cherdano's link a few posts back...

 

I overlooked that post. Thanks.

[barmar]

I don't mean this as criticism whatsoever but only as an additional comment that unless one has worked in social services it is understandable to be unaware of how many people there are for whom the price of a movie is not even on their radar as an option. It is difficult for us to understand in a country so wealthy the plight of the working poor and their inability to engage with that society.

This reminds me of Senator Chuck Grassley's misguided justification for repealing the estate tax: "I think not having the estate tax recognizes the people that are investing, as opposed to those that are just spending every darn penny they have, whether it’s on booze or women or movies." He seems to think that people are living hand-to-mouth because they waste their money. He tried to backtrack on this and say it was taken out of context, and he just meant that the estate tax is unfair in penalizing someone who had worked all their life to amass that fortune. I don't buy it -- he didn't need to put down the poor people to make this point. And I'll bet many rich people spend lots of their money on booze, women, and movies -- they just have so much that they're still rich after doing it.

 

I really admire Warren Buffett. He's one of the richest men in the world, but from everything I've seen and read about him he's extremely down-to-earth. He's a self-made man, who started working as a teenager and made his own fortune. He still lives in the same house he bought 60 years ago. His only real extravagance is a private jet. He might avoid the estate tax, but not by any clever loopholes: he plans on giving much of his wealth to charity. He ackknowledges that he pays a lower tax rate than his secretary, but believes that the tax laws should be fixed to prevent this type of situation.

[Winstonm]

Back to the Russia investigation: The Hill reports:

 

Special counsel Robert Mueller’s office on Sunday defended its work after a lawyer for President Trump’s transition team accused investigators of improperly obtaining thousands of emails from transition officials.

 

“When we have obtained emails in the course of our ongoing criminal investigation, we have secured either the account owner’s consent or appropriate criminal process,” Peter Carr, a spokesman for the special counsel’s office, said in a statement to The Hill.

 

The irony that this administration may come tumbling down due to 50,000 missing e-mails is almost too delicious to describe.

[jjbrr]

LOL the spokesman for the special counsel investigation actually offered a statement? That's unprecedented.

[hrothgar]

http://www.ibtimes.com/political-capital/donald-trump-gop-leaders-could-be-enriched-last-minute-tax-break-inserted-final

 

Republican congressional leaders and real estate moguls could be personally enriched by a real-estate-related provision GOP lawmakers slipped into the final tax bill released Friday evening, according to experts interviewed by International Business Times. The legislative language was not part of previous versions of the bill and was added despite ongoing conflict-of-interest questions about the intertwining real estate interests and governmental responsibilities of President Donald Trump — the bill’s chief proponent.

 

The Trump organization and the Kushners (the family of Ivanka's husband, Jared) have overseen vast real estate empires, and top GOP lawmakers writing the tax bill collectively have tens of millions of dollars of ownership stakes in real-estate-related LLCs. The new tax provision would specifically allow owners of large real estate holdings through LLCs to deduct a percentage of their “pass through” income from their taxes, according to experts. Although Trump, who became famous for his real estate holdings, has transitioned into branding in recent years, federal records show Trump has ownership stakes in myriad LLCs.

 

The new provision was not in the bill passed by the House or the Senate. Instead, it was inserted into the final bill during reconciliation negotiations between Republicans from both chambers. The provision, said experts, would offer a special tax cut to LLCs with few employees and large amounts of depreciable property assets, namely buildings: rent generating apartment and office buildings.

 

“This helps people who have held property for awhile, like Donald Trump,” David Kamin, an New York University law professor who served as a special assistant to the president for economic policy in the Obama administration, told IBT. “If you’ve got an LLC that’s a trade or business with a bunch of real estate holdings and few employees, think you’re now golden. You get the deduction.”

 

Similarly, Urban-Brookings Tax Policy Center senior fellow Steve Rosenthal told IBT the provision would specifically benefit real estate investors.

 

“It would benefit real estate businesses especially, which typically operate as pass-through businesses, most often LLCs,” said Rosenthal, a former tax attorney at Ropes & Gray. “An LLC's building, and other depreciable property, would be ‘qualified property’ for purposes of the new test, as long as the LLC had not fully depreciated the property. That would be unlikely, as commercial real property is currently depreciated over 39 years.”

 

IBT previously reported that 13 GOP lawmakers directly sculpting the bill —including U.S. House Speaker Paul Ryan — have between $36 million and $163 million worth of ownership stakes in real estate-related LLCs. Those entities generated between $2.6 million and $16 million in “pass through” income and could benefit from the new provision.

 

Sen. Bob Corker, who was considered a potential “no” vote on the bill, abruptly switched his position upon the release of the final legislation. Federal records reviewed by IBT show that Corker has millions of dollars of ownership stakes in real-estate related LLCs that could also benefit.

 

“Pass throughs” are business entities that don’t pay corporate income taxes, like partnerships, LLCs and S-Corporations. Instead, they “pass through” income to partners, who then pay personal income taxes on the money they receive. The Senate version of the tax bill would have added a 23 percent deduction for income from pass-throughs to the tax code. The new reconciled tax bill shrinks that deduction to 20 percent but, in a last minute change, added a new way around restrictions that would have kept pass-throughs with large income but few employees from benefiting.

 

The new bill still has the same income provision but adds a loophole: depreciable property. So instead of being being able to get a large tax cut only if you pay a lot of wages, now you can get the tax cut if you own a lot of property.

 

“If they were saying before Trump wouldn’t get this because his pass-through firms don’t have employees, that’s clearly no longer the case,” Kamin said.

 

Congress is expected to vote on the final tax bill next week.

[Winstonm]

http://www.ibtimes.com/political-capital/donald-trump-gop-leaders-could-be-enriched-last-minute-tax-break-inserted-final

 

The American-style oligarchy marches onward.

[andrei]

Collusion?

 

Obama and Hezbollah

[Zelandakh]

Collusion?

 

Obama and Hezbollah

With Hillary at State and an African Muslim in the WH? seems obvious. :blink: :lol:

 

Seriously though, on an initial scan it sounds like a typical turf war between law enforcement agencies. The fact that DT has not revitalised it suggests that the operation might be in a dark (deep infiltration) phase to reach the top. The DEA might well have been seen as too "leaky" for the undercover operative(s) to remain safe. One thing you can be 100% sure about - if Obama was guilty of anything, DT would be shouting it from the roof-tops. He is surely desperate for a good Whataboutism just now.

[Zelandakh]

How's your 401(k) doing?

[Winstonm]

Jesse Watters of Fox News on Saturday:

 

We may have proof the investigation was weaponized to destroy [Trump’s] presidency for partisan political purposes and disenfranchise millions of American voters. If that’s true, we have a coup on our hands in America.

 

I have to quote The Big Bang's Leslie Winkle: Dumbass!

 

I can only presume that Jesse meant coup d'etat but was unfamiliar with the term - after all, it's not English ;) - so instead praised Mueller with a "coup", defined by merriam-webster as: :

a brilliant, sudden, and usually highly successful stroke or act

.

 

It is either that or Jesse was trying to say that he had won on The Price is Right and now we had a coupe on our hands, but didn't know how to pronounce it. Or perhaps he meant coop, as in chicken coop, because they are certainly up to their eyeballs in lame chickens%^t in the Fox News studios, and they probably have it all over their hands.

[jjbrr]

If you replace "Middle East" with "Baltimore," that whole article is just the plot of The Wire.

 

edit: re: hezbollah

[rmnka447]

????

 

Multinational corporations are doing just fine in this global economy. They are not disadvantaged and have manipulated several governments to systematically reduce their corporate tax liability across the globe. Further, as we give the multinational corporations these unnecessary tax breaks, the likelihood that the tax savings will trickle down to the unemployed and underemployed masses is remote.

 

We are marching toward a lowly-paid service economy and our politicans are doing very little to help Main Street.

 

The recipients of this glorified form of corporate socialism will continue to invest their tax savings in stock buyback programs and in mergers and acquisitions which will further imperil the job security of the gainfully employed masses.

 

Multinational companies have no incentive to increase their payrolls or headcount when they can generate respectable earnings per share (EPS) metrics though company stock buyback programs which reduce the total number of shares outstanding and artificially inflate EPS figures. These multinationals will also continue to generate "value" for shareholders by vertically integrating with other industries and reducing redundancies in business processes through layoffs and reengineering.

 

None of this bodes well for Main Street.

 

Multinational corporations will invest rationally their profits where they can make the most money. With the US corporate tax rate higher than other developed countries, it makes sense that these corporations will invest elsewhere and essentially be a money and wealth drain on the US economy.

 

Let's take a hypothetical that would illustrate what I'm getting at. A multinational can produce its product overseas in a country with a 20% corporate tax rate with other costs being about equal to these in the US. If transportation costs to the US are say 5% of revenue. There's still a 10% advantage to making the product overseas and shipping it to the US because of the higher tax rate. And, in fact, if the corporation is producing some of the product in the US, there's an incentive to move that production overseas and reduce US employment also. Such a move increases the multinational profit and you can be sure those corporations will take advantage of it especially if they are primarily foreign-owned.

 

Now let's reduce the US corporate tax rate to 21%. Now, the cost of producing the product overseas and transporting it to the US is still 25%, but the cost of producing the product in the is 21%. That gives a 4% incentive to producing the product in their US facilities versus producing it overseas. At the very least, it makes it difficult to move production and jobs overseas. There's even an incentive to invest more in Us facilities if demand for the product increases.

 

Now let's consider if the US facilities producing the product are a competitor of the multinational corporation. The multinational still has a 10% advantage versus the US competitor at the 35% US corporate tax rate. The result is that the multinational can undercut the price the US corporation charges for the product and drain revenue from the US company. You can argue that that's a good deal for the US consumer because they have to pay less for the product. But that good deal is ultimately draining capital and profits from the US company which pushes the company toward bankruptcy and loss of US jobs. It's ultimately hurting the US economy.

 

Again, if the US corporate tax rate is reduced to 21%, the result is that the multinational corporation can't continue to undercut the US Corporation because of the tax code. So the US company should, hopefully, still be able to compete on a fairly even playing field with the multinational.

 

So, if you believe in a global economy, then you have to accept that in order not to penalize American business, you can only charge about the average tax rate for developed countries. Otherwise, you're sticking to American businesses and workers.

[Winstonm]

Multinational corporations will invest rationally their profits where they can make the most money. With the US corporate tax rate higher than other developed countries, it makes sense that these corporations will invest elsewhere and essentially be a money and wealth drain on the US economy.

 

Let's take a hypothetical that would illustrate what I'm getting at. A multinational can produce its product overseas in a country with a 20% corporate tax rate with other costs being about equal to these in the US. If transportation costs to the US are say 5% of revenue. There's still a 10% advantage to making the product overseas and shipping it to the US because of the higher tax rate. And, in fact, if the corporation is producing some of the product in the US, there's an incentive to move that production overseas and reduce US employment also. Such a move increases the multinational profit and you can be sure those corporations will take advantage of it especially if they are primarily foreign-owned.

 

Now let's reduce the US corporate tax rate to 21%. Now, the cost of producing the product overseas and transporting it to the US is still 25%, but the cost of producing the product in the is 21%. That gives a 4% incentive to producing the product in their US facilities versus producing it overseas. At the very least, it makes it difficult to move production and jobs overseas. There's even an incentive to invest more in Us facilities if demand for the product increases.

 

Now let's consider if the US facilities producing the product are a competitor of the multinational corporation. The multinational still has a 10% advantage versus the US competitor at the 35% US corporate tax rate. The result is that the multinational can undercut the price the US corporation charges for the product and drain revenue from the US company. You can argue that that's a good deal for the US consumer because they have to pay less for the product. But that good deal is ultimately draining capital and profits from the US company which pushes the company toward bankruptcy and loss of US jobs. It's ultimately hurting the US economy.

 

Again, if the US corporate tax rate is reduced to 21%, the result is that the multinational corporation can't continue to undercut the US Corporation because of the tax code. So the US company should, hopefully, still be able to compete on a fairly even playing field with the multinational.

 

So, if you believe in a global economy, then you have to accept that in order not to penalize American business, you can only charge about the average tax rate for developed countries. Otherwise, you're sticking to American businesses and workers.

 

 

Let's stay in the real world. Corporations right now without tax breaks are sitting on massive amounts of cash and have no reason to expand operations without increased demand. Giving them more cash will not change anything.

[barmar]

What you're missing is that even though the nominal tax rate in the US is high, the effective rate is far lower because of all the incentives and loopholes in the US tax code.

 

Yes, there have been some newsworthy cases of companies going offshore because of tax benefits (e.g. Apple), but it's not nearly as common as you suggest. It's obviously far easier for a multinational company that has significant offshore sales. But you don't see car companies moving their factories to Ireland to get the tax breaks (they do have some factories in Mexico because the labor costs are lower).

[barmar]

Put simply, practically all the benefits the GOP is claiming will come from this tax reform are based on fallacies. And they rushed this so much that signigicant unintended consequences are almost certain. Most of the legislators don't even know most of the details, they're just voting along party lines.

 

Like that benefit for owners of real estate LLCs that was snuck in at the last minute -- the Senators who will benefit from it claim they didn't even know about the provision, they learned about it from news reports like we did.

[jjbrr]

Am I back in middle school macro econ?

[barmar]

Am I back in middle school macro econ?

I only wish Trump had such advanced understanding of economics.

[y66]

Did somebody suggest there will be unintended consequences of the tax bill?

 

From The G.O.P. Tax Bill Is Unworkable by John Cassidy:

 

What isn’t yet fully appreciated is how porous and potentially unstable the rest of the tax code will be after the bill is passed. With a corporate rate of just twenty per cent, and a big new break for proprietors of unincorporated businesses and certain types of partnerships, the new code will contain enormous incentives for tax-driven restructurings, creative accounting, and outright fraud. Every tax adviser and scammer in the country will be looking for ways to reclassify regular salary income as favored types of business income.

 

For tax accountants, the first step will be to see how many of their well-to-do clients could feasibly convert themselves into corporations. “Taxpayers will be able to shield their labor income from tax by simply setting up a corporation and having their income accrue in the form of corporate profits. . . . Income that would have been taxed at the high individual rates is instead taxed at the low corporate rate,” an updated report from a group of tax experts at New York University, the University of Chicago, and other places noted on Monday. Investment income is also taxed at the lower rate. “There is really no downside to this game,” the report said.

 

For some high earners, another alternative will be to go freelance and set up their own businesses, reporting their profits as “pass through” income on their personal tax returns. If they do this, many of them will be able write off twenty per cent of their taxable income, thus reducing the new top rate from thirty-seven per cent to 29.6 per cent, and the new second-top rate from thirty-five per cent to twenty-eight per cent.

 

This “game is clear,” the report said. “Don’t be John Doe, employee. Be John Doe, independent contractor (or partner in an LLC, receiving a profit share rather than wages).”

 

But not all unincorporated businesses will be treated equally under the new code. Law partners will be excluded from the twenty-per-cent write-off, as will doctors who co-own medical practices. The owners of other firms that provide a “specified service” whose principal asset is their “reputation or skill” won’t be eligible, either. At least, they won’t be until they start engaging in some restructuring shenanigans.

 

Take a mid-sized medical practice that owns its premises. Victor Fleischer, a tax professor at the University of San Diego, has suggested that it would make sense for such a practice to set up real-estate-investment trust, which would then charge the doctors and nurses a very high rent. The medical practice’s profits would suffer, but the real-estate company would make out well, and, because of Hatch’s last-minute changes, it would also be able to claim the twenty-per-cent pass-through deduction. In a similar vein, it might well make sense for law firms to set up different companies to handle their accounting, computer systems, and other routine services. Here again, the trick would be to overcharge the main business and generate profits in entities that are eligible for the pass-through deduction.

 

In many instances, this sort of reorganization would be perfectly legal. In other cases, in which the rules are ambiguous, the I.R.S. would doubtless try to crack down. But the I.R.S. is reeling after years of budget restrictions—it has lost about a fifth of its workforce since 2010—and the scale of the problems introduced by this new tax bill could very quickly overwhelm the tax agency. The shortfall in tax revenues could be enormous.

 

Perhaps that is what Republicans want to happen. Undoubtedly, there are some in the Party who would like to see the tax base decimated, the I.R.S. crippled, and the federal government forced to slash spending on domestic programs, particularly entitlement programs. But, for anybody who believes in a properly functioning government, a rational, clearly defined tax system is essential. The Republican reform doesn’t meet that standard. In the words of the report, the “haphazard lines” that the legislation creates are “fundamentally unfair and inefficient,” and, taken as a whole, it represents “a substantial blow to the basic integrity of the income tax.” It won’t survive in its current form.

[Zelandakh]

Multinational corporations will invest rationally their profits where they can make the most money. With the US corporate tax rate higher than other developed countries, it makes sense that these corporations will invest elsewhere and essentially be a money and wealth drain on the US economy.

Some basic information for you on nominal and effective corporate tax rates. The short version - the effective US corporate tax rate is 18.6% and lies between that of Germany and the UK. The developed country with the lowest effective corporate tax rate is Italy; I am not sure that is the model the US Government wants to be following though...

[y66]

From Single Vote Decides Race That Creates Even Split in Virginia House by Trip Gabriel at NYT:

 

The Democratic wave that rose on Election Day in Virginia last month delivered a final crash on the sand Tuesday when a Democratic challenger defeated a Republican incumbent by a single vote, leaving the Virginia House of Delegates evenly split between the two parties.

 

The victory by Shelly Simonds, a school board member in Newport News, was a civics lesson in every-vote-counts as she won 11,608 to 11,607 in a recount conducted by local election officials.

 

Ms. Simonds’s win means a 50-50 split in the State House, where Republicans had clung to a one-seat majority after losing 15 seats last month in a night of Democratic victories up and down the ballot, which were widely seen as a rebuke to President Trump. Republicans have controlled the House for 17 years.

 

“I want to thank the voters who came out on Nov. 7,” Ms. Simonds said in a statement released by the Democratic caucus in the House. “What a difference this is from 2015 when I ran before. Everyone came out and we rocked this town.”