Republican Tax Plan Aims To Put Americans On Low-SALT Diet
Senate Republicans Want A Vote On Their Tax Plan By The End Of The Week
That’s the one that contains a partial Obamacare repeal, and some Republican Senators also appear reluctant because they say it rewards big corporations a lot, but doesn’t help small businesses enough. It also offers no compromise on a repeal of state and local tax deductions. State And Local Tax Deductions = SALT.
Of course, most SALT deductions benefit people who live in places with high state income and property taxes, which are mostly blue states, which mostly didn’t vote for Trump. Still, all those states have pockets of Republicans, and if a bill comes out of the Senate that doesn’t at least bend a little, it might have trouble getting through when it comes to a final vote. Or at least a prolonged negotiation, and Republicans say they aim to pass something by the end of the year even if they have to stay through their year-end break (which is scheduled to start December 15 for the House, December 16 for the Senate).
So far though, it’s been surprisingly smooth sailing. As we’ve contended repeatedly (from back when people were saying “if health care was hard just wait til they get to taxes”) it’s still easier to give away free money, regardless of how irresponsible it is, than take someone’s health care away.
The New Yorker’s Ryan Lizza has a great scene-setter for the week, describing–stinks or not–just how important passage of this bill is to both Trump and the Republican Party.
We also do not understand why Democrats in the House and Senate are not out there loudly portraying this as an “Attack on Homeowners“. Had the shoe been on the other foot, and Democrats proposed doing away with those same tax breaks in order to raise revenue, Republicans would’ve been screaming “they’re trying to kill the American Dream”! And good chance it would’ve worked. If they don’t get that message out soon, it’ll be too late. So let’s repeat: it’s an “Attack on Homeowners”. That’s also not a lie. It is…
Things Trump/Republicans Say About Tax Cuts That Seem To Make Sense, But Totally Don’t
Part 3: “Allowing People In High Tax States To Deduct Their State And Local Taxes Is Unfair To Those Who Live In Low Tax States”
As part of our continuing series, it made sense to us to address this particular issue today. Because even though the argument that there’s an inequity here seems to make sense on the face of it, this is one of those things where the exact opposite is true: state and local tax deductions actually even things out and make things more equitable.
Let us explain: taxpayers in states with high local and property taxes (in the case of the SALT issue in the current bill we’re mainly talking about California, New Jersey and New York), already pay a disproportionate amount of federal taxes, even with the deduction allowed.
The chart below, courtesy of an article in The Atlantic, and using data from WalletHub, is a little hard to read: but any state that does not cross $1.00 on the chart, means its taxpayers are not getting back what they are paying in to the federal government. And surprise! Residents in California, New Jersey and New York all pay in more than they get back from the federal government (in the form of contracts, grants, and other things). In general, only about 70 or 80-cents for every dollar they put in. And this is with allowing them to deduct state and local taxes. Without that deduction, this inequity will become far more inequitable, not less. (According to this chart, for instance, South Carolina gets a whopping $7.87 back from the government for every $1 each taxpayer in that state puts in, California gets only 78-cents back for every $1 its residents put in).
The Atlantic article also argues that some states are able to keep local taxes “artificially low” precisely because they receive so much federal money.
Or as Business Insider put it: “Red States — the ones governed by folks who think government is too big and spending needs to be cut — are a net drain on the economy, taking in more federal spending than they pay out in federal taxes. They talk a good game, but stick Blue States with the bill”.
And it’ll be an even bigger bill with SALT off the menu.
There’s A Similar (Silly) Argument At Work In Trump Administration’s Intent To Kill Net Neutrality
Trump’s FCC Chair Ajit Pai says it’s easy as pie: “the federal government will stop micromanaging the internet.” Sounds great, except the effect of what he wants to do is add a whole new layer of micromanagement for consumers, not take it away. Or from another angle, what he calls “government micromanagement” is currently preventing micromanagement of consumers by the corporations that provide internet service.
Trump’s Own Alma Mater Says Tax Cuts He Wants Ain’t Kosher
The only reason we’re bring this up is this study is from UPenn/Wharton: the school Trump went to for college and often cites as evidence he’s smart.
The study finds that while the Senate’s proposed bill will meet a requirement that it increases the deficit by less than $1.5-trillion in the next 10 years (which of course is what the Senate will be pointing to), it will continue to increase the federal deficit in years beyond that. Technically, that would not qualify the bill to pass with just a simple majority of 51 votes; it would actually need 60 votes to pass. It points to one main culprit that will continue to deprive the government of more and more funds from 2028 and beyond: “New corporate tax rates and repeal of corporate Alternative Minimum Tax.”
Of course, this study holds no real weight. But the Congressional Budget Office is not yet out with its official report on the potential impact of the bill, and may not be before the Senate votes.
And hey, it’s from Wharton: “the BEST“!
Briefs
• Over the weekend, 305 people were killed in a terrorist attack on a Sinai Peninsula mosque in Egypt. No group has yet taken responsibility for the highly organized attack, but Egyptian law enforcement and several witnesses say it was ISIS related. Most of the worshipers were Sufi Muslims. A friend of us shared this informative article about why ISIS targets Sufis.
• The longest-serving Member of Congress, Michigan’s John Conyers, is stepping away from his role as the highest ranking Democrat on the House Judiciary Committee, but not stepping down from his seat in the House. The 88-year old Conyers admitted last week to settling a sexual harrassment claim, but says he did it to avoid extensive litigation, and denies the charges. Al Franken returns to the Senate today, saying he feels “ashamed” by his behavior toward women, but also won’t resign.
• Trump’s quadruples down on his non-endorsement endorsement of Roy Moore in a series of frenetic Tweets in which he attempts to “Pelosi” Moore’s opponent, Democrat Doug Jones. It’s a page straight out of the Republican playbook, devised years ago by pollster Frank Luntz, and unfortunately, it works (even some upstart Democrats have started to use it against entrenched incumbents): don’t run your Republican against the Democratic candidate, run him/her against Nancy Pelosi, who represents all that coastal elitism. Never mind that the candidate Trump means to benefit is accused of making sexual advances to a 14-year old girl when he was in his 30s and working for the DA’s office.
• Trump also took the time over his long holiday weekend to muse on Twitter that during his long Asia trip he was forced to watch CNN, and “they represent our Nation to the WORLD very poorly”. To which CNN Tweeted a great comeback: “It’s not CNN’s job to represent the U.S. to the world. That’s yours”. Here’s the thing too: Fox News used to be on overseas as well. It was almost as ubiquitous as CNN International. That’s until Rupert Murdoch et. al. pulled it because of low ratings. The Fox News feed in the U.K. for instance, was attracting a mere 2,000 viewers a day.
Then again, there were persistent rumors earlier this month that Fox may be trying to buy CNN, especially now that Trump’s Justice Department is trying to block AT&T from buying CNN’s parent company, Time Warner. Is this Tweet Trump’s attempt to spur that deal along? Then again, there have also been persistent rumors that Disney may be trying to buy Fox!
• Even though it seems mind-bogglingly opaque , here’s why what’s going on at the Consumer Financial Protection Bureau is important: the agency, which was formed after the 2008 financial crisis to protect consumers against predatory lenders and improper practices in the banking industry, was constructed to be somewhat out of reach of the President. Not just Trump. Any President. But that’s not something Trump likes, since he wants to get rid of it (“a total disaster“), and most of the banking laws that came along with it. So when the CFPB’s director quit last week, Trump moved quickly to replace him temporarily with his own Budget Director, Mick Mulvaney, yet another example of him appointing someone who outspokenly hates something to run that something. However, the outgoing director appointed someone else to that same job, and late last night she sued to block Trump from blocking her. So yes, it is a bit convoluted, and part of the reason Leandra English’s ex-boss may have left is it’s hard to get anything done these days anyway.
But it’s not so much what’s going on here exactly as how Trump is handling it. We’ll leave you today with an astute Tweet from Trump-fired New York U.S. Attorney turned podcast host Preet Bharara:
