Ideas, Opinions, Genealogy, and Book Reviews
It seems we have quite a few reverse Robin Hoods in the US Senate.
Remember Robin Hood. Rob from the rich and give to the poor. But that was back in the old days.
Modern Republicans are trying to rob from the poor and give to the rich. The Congresssional Budget Office (CBO) report is out on their tax bill and it confirms this.
Continue reading “Reverse Robin Hoods of the Senate”
I just ran across this article. It is a few days old but seems to capture the essence of the GOP congress: Move fast and don’t let facts get in the way.
The full title is The Republican tax bill is moving through Congress at light speed and the subtitle is
The GOP’s playbook: Move fast and don’t let facts get in the way. It was published in Vox a few days ago and is specifically about tax plans but does capture the general GOP approach in this Congress.
We have previously seen a similar approach fail on healthcare. My hope is that it fails again. i would like to see tax reform but I believe this is an important issue and deserves a full debate on the merits of various measures. Move slowly enough to consider the facts and possible consequences of your actions.
Both houses of Congress have their own tax plan. Each rushed through quickly with little of the input you would expect in major legislation.
The House version has already been passed. There will be a vote on the Senate version in the very near future. In my opinion, neither is good.
But here is one opinion on the Senate version. Of course, it could change before the vote but my guess is it will not be for the better.
Read it all, but here is just a small portion –
Surely, we will have other debates in the future with thoughtful arguments on every side. But not this time. The numbers are in and it’s clear: this tax bill helps the rich and hurts everybody else. Just ask the very people who wrote it.
Having just written about potholes, I was wondering why politicians seem to ignore them.
Fixing potholes would seem to be an issue with considerable popular support. I live in Pennsylvania and potholes are a big problem. They make driving dangerous. You could easy lose control of your car while swerving to avoid a pothole or lose control after hitting a big one. Or someone else could and you could end up in the accident.
Nobody likes a pothole. Continue reading “Politics of potholes”
According to AAA (quoted in a report by WUSA ) damage to cars will cost motorists 6.4 billion dollars this year.
Road departments will be busy filling in potholes now that the winter weather is behind us. But would it not be better if we could prevent potholes from forming on our roads.
Can the roads be made to prevent potholes from forming or at least make it less likely? I suspect the answer is YES.
Continue reading “Prevent Potholes”
A few days ago, I was adding to this blog and mentioned that Mitt Romney had 2 good ideas and how one of them might help solve the fiscal cliff problem. But I didn’t mention that other idea.
And nobody asked. I was wondering if nobody was paying close attention. Maybe they were just in awe of my explanation of the first idea and didn’t think about that second idea that I just left out there. Or maybe they just didn’t care. But I do. So I’ll tell you about that second idea.
It was just a matter of seconds between the first idea (which I though was absolutely brilliant and may solve that pesky fiscal cliff problem) and that second idea. In itself, the first idea won’t cause the economy to boom but it may help us from sliding into a second recession.
The second idea won’t cause the economy to boom either. It won’t even stop a second recession. At least I think not. But I have been wrong before. I don’t think it happens that often but I know people who disagree.
The second idea probably is not even in the ball park of modest middle class tax relief when it comes to saving money on your taxes. But it is huge in reducing the middle class a pain-in-the-ass aspect of doing your taxes.
What is the idea?
Here it is:
… every middle-income taxpayer no longer will pay any tax on interest, dividends or capital gains. No tax on your savings. That makes life a lot easier.
If you’re getting interest from a bank, if you’re getting a statement from a mutual fund or any other kind of investment you have, you don’t have to worry about filing taxes on that, because there’ll be no taxes for anybody making $200,000.00 per year and less, on your interest, dividends and capital gains.
Of course you want to be sure I am just not making this up. So if you are not the trusting type, you can look it up at ABC News: Debate transcript.
So how does this reduce the pain-in-the-ass aspect of doing your taxes for us middle class types. I do my own taxes so let me give an example. I’ll just make up some stuff here so some over-zealous IRS agent doesn’t want to check my taxes.
Say for a wedding gift someone gave someone else (not me certainly) 1 share of XYZ corporation which the gifter thought was going up (after all everyone needs XYZs) and would make the giftee and spouse rich by their 10th anniversary. To make it more likely this one share would lead to a fortune, it was enrolled in a Dividend ReInvestent Plan (or DRIP) which would reinvest dividends and so forth in additional shares.
By that 10th anniversary the happy couple now own 2.583 share of XYZ with an approximate market value of twenty bucks. Then XYZ get new management and someone figures out that the company is spending way too much money administering these small DRIP accounts.
So the couple gets a letter from XYZ saying that the plan will be terminated unless the stock holder has at least 50 shares in the plan. So their options are to take the $20 or invest hundreds of dollars more. Not surprisingly, they take the money.
Then come tax time, they get a statement from the company. And then they realize that they need to fill out a tax form.
But the IRS doesn’t ask for much – just when they bought the shares and what they paid.
The problem is they misplaced all those quarterly statements they have been getting for 10 years as their dividends reinvest. So now they need to creatively come up with some figures that make sense. They could look up the value of the stock each quarter or maybe just make up numbers that seem to make sense. But how do they figure out how many shares or what fraction of a share they bought each time?
So it is just a matter of figuring which quarters the company paid dividend and how those reinvestments compounded to give them a total of 2.587 shares. Now they wish they paid a bit more attention to their math teachers.
Then after spending a few hours on that, they figure that they made a profit of $ 1.87. But they are not finished yet. They have to figure out how to apportion this between long and short term capital gains. This doesn’t take too long, just adds a bit of insult to injury.
But if Congress had only taken Mitt’s suggestion and modified the tax code, tax-time would be so much easier. After all if you have such a large tax code, there is really not much of a reason not to tack on a few pages that may relieve some of the pain.
In defending his tax plan which many analysts thought impossible Mitt Romney did come up with 2 good ideas, one of which may be a partial solution to the fiscal cliff we are facing.
President Obama is pretty insistent on raising the tax rates on households making over a quarter million dollars per year. Republicans are insistent that this rate won’t be raised. This standoff is over the temporary Bush tax cuts which should have expired but were temporarily extended 2 years ago and are now set to expire again at the end of this year.
The Democratic view is that these tax cuts should be kept in place for those households making over a quarter million dollars per year and allowed to expire for those earning more. The Republican view is that the tax cuts should be extended for everyone, regardless of income. Let us just call this the tax rate standoff.
Certainly there are many other tax issues – the estate tax, payroll taxes, dividend taxes, capital gains taxes, carried interest to name a few – but I think Mitt Romney may have suggested the solution to the tax rate standoff.
So here is Mitt’s good idea :
And so, in terms of bringing down deductions, one way of doing that would be say everybody gets — I’ll pick a number — $25,000 of deductions and credits, and you can decide which ones to use. Your home mortgage interest deduction, charity, child tax credit, and so forth, you can use those as part of filling that bucket, if you will, of deductions.
So if rates are kept the same on everyone (as the Republicans want), Congress can still limit deductions to a number which will not adversely effect those households making less than a quarter million dollars per year but would still raise taxes on those households making over a quarter million dollars per year (as the Democrats want).
Of course, it won’t be a sharp divide at a quarter million dollars per year but it meets the spirit of what both sides want to do. I’m not sure if the number picked is the right one and if there should be additional rules but this caps could be the start of a discussion.
As our Congress tries to negotiate the fiscal cliff one of the major difficulties is that many members have pledged not to raise taxes. This ridiculous pledge is to Grover Norquist, president of Americans for Tax Reform.
But members of Congress have taken a more solemn pledge in their oath of office.
A few have now decided to abandon their “no taxes” pledge if it interferes with governing.
I am not sure if this is encouraging news or it is discouraging that there are only a few of these brave souls. I would think it fairly obvious that the oath of office trumps a “no taxes” pledge to a private party.
Grover Norquist, president of Americans for Tax Reform, thinks the Republicans in the House have a mandate.
But the Republicans lost big. In the words of The Economist :
The Democrats won 50.6% of the votes for president, to 47.8% for the Republicans; 53.6% of the votes for the Senate, to 42.9% for the Republicans; and…49% of the votes for the House, to 48.2% for the Republicans (some ballots are still being counted). That’s not a vote for divided government. It’s a clean sweep.
The Democrats gained seats in the Senate and in the House and won the Presidency. The Republicans did keep their majority in the House via gerrymandering but it is a smaller majority.
What part of “Republicans have no mandate” does Mr. Norquist have trouble understanding?
Listen carefully to Mitt Romney. Although he does seem exceedingly vague at times and often mathematically challenged. Some of what he says may give you an idea about his plans. But you must listen carefully and think about it.
Governor Romney is no doubt a very smart man. He has made a fortune in business so I doubt his grasp of math is as weak as his statements might suggest. He has been very successful in business, in running the Salt Lake Olympics and as Governor. So I don’t think his thinking is vague. But as a successful politician, he must be vague to mask his ideas that some or maybe even most voters would not agree with.
What got me thinking about this was an article in the Christian Science Monitor. The article explained how his statement about the rich paying the same percentage of income tax as now really has nothing to do with the rich and not-so-rich getting similar benfits from the tax plan or the tax system maintaining its progressive nature.
Then there are other tax issues such as inheritance and payroll taxes. Listen carefully of what he says and read this article
I have many disagreements with Mitt Romney’s tax and budget plans and here is one that may surprise a few people who think his promises are all about saving money. On his website, he lists several savings. Among them-
Repeal Obamacare, which would save $95 billion in 2016
The House recently passed a bill that did just that. Or at least it would do so if it also passed the Senate and was not vetoed. Seems a bit unlikely now but there next year there is sure to be a different Congress and maybe a new President. But my point was that the House did pass this bill, HR 6079, which would repeal Obamacare and the Congressional Budget Office (CBO) looked at the fiscal consequences.
In a “Letter to the Honorable John Boehner providing an estimate for H.R. 6079, the Repeal of Obamacare Act”, the CBO did a 10 year estimate of spending and revenue which would result if that legislation became law.
Sure enough there were big saving there but the government was forgoing even more revenue. The bottom line is a net loss to the government of 109 billion dollars. Since this is just an estimate a reasonable guess is that the average cost is about 10 or 11 billion dollars per year. This could just be added to the deficit or we could just add this to Mitt Romney’s tax plan.
I’m sure this figure does vary from year to year as different parts of Obamacare are implemented but since the average appears to actually be net loss to the government Governor Romney should explain why he thinks this action will save 95 billion dollars in 2016. And he might want to mention what he thinks will happen in all those other years.
In the second debate we learned a bit more about the Romney tax plan on which he has been extremely vague. It is still very vague but a few more details were added during the debate. The plan involves a multi-trillion dollar tax cut and closing of unspecified loopholes and elimination of unspecified deductions.
The Romney plan also includes mostly unspecified spending cuts on the non-military and non-security parts of the budget and large increases in military spending. I guess that is related but strictly speaking not part of the tax plan.
In the first debate, Romney added a bit more and we learned that he will not cut education but will cut PBS and he will not add to the deficit.
And then in the second debate, he also promised that the rich will pay the same portion of the income tax that they pay now. And he also said –
I want to make sure we keep our Pell grant program growing. We’re also going to have our loan program, so that people are able to afford school.
One does wonder how he is going to do all these things.
He was asked which would be his priority if he could not do all at the same time. Governor Romney seems to not even consider that possibility. After all, he is a businessman and he would never make a mistake with money.
Below is that portion of the exchange. The entire transcript is on the ABC news website.
OBAMA:…We haven’t heard from the governor any specifics beyond Big Bird and eliminating funding for Planned Parenthood in terms of how he pays for that.
Now, Governor Romney was a very successful investor. If somebody came to you, Governor, with a plan that said, here, I want to spend $7 or $8 trillion, and then we’re going to pay for it, but we can’t tell you until maybe after the election how we’re going to do it, you wouldn’t take such a sketchy deal and neither should you, the American people, because the math doesn’t add up.
And — and what’s at stake here is one of two things, either Candy — this blows up the deficit because keep in mind, this is just to pay for the additional spending that he’s talking about, $7 trillion – $8 trillion before we even get to the deficit we already have. Or, alternatively, it’s got to be paid for, not only by closing deductions for wealthy individuals, that — that will pay for about 4 percent reduction in tax rates.
You’re going to be paying for it. You’re going to lose some deductions, and you can’t buy the sales pitch. Nobody who’s looked at it that’s serious, actually believes it adds up.
CROWLEY: Mr. President, let me get — let me get the governor in on this. And Governor, let’s — before we get into a…
ROMNEY: I — I…
CROWLEY: …vast array of who says — what study says what, if it shouldn’t add up. If somehow when you get in there, there isn’t enough tax revenue coming in. If somehow the numbers don’t add up, would you be willing to look again at a 20 percent…
ROMNEY: Well of course they add up. I — I was — I was someone who ran businesses for 25 years, and balanced the budget. I ran the Olympics and balanced the budget. I ran the — the state of Massachusetts as a governor, to the extent any governor does, and balanced the budget all four years. When we’re talking about math that doesn’t add up, how about $4 trillion of deficits over the last four years, $5 trillion? That’s math that doesn’t add up. We have — we have a president talking about someone’s plan in a way that’s completely foreign to what my real plan is.
In that last paragraph, Mitt very quickly refused to consider the possibility that he could be wrong and then changed the subject.
Since there has been talk of his Etch a Sketch campaign which he clearly demonstrated in the first debate and his sketchy deal was demonstated by Presdent Obama in the second debate (see quote above), should we call Gov. Romney the Etch a Sketch man with the sketchy plan ?
I recently received a statement for a stock I own in a DRIP account. Not a big account, I think, but I suppose that is relative. Anyway, an enclosure with the statement urged me to contact my Members of Congress to ask them to extend the current low tax rate on qualified dividends .
If the tax break is not extended, dividends will be taxed at the same rate as ordinary income. Ordinary income is the type of income you make at your job. Well, I won’t be calling Congress to extend this tax break. In fact, I may do the opposite and call or email to oppose the extension.
It seems to me that if any income is to be treated differently, there should be a good reason.
The only good argument I have heard in favor of this break is that the money was taxed once at the corporate level and then again at the individual level. But then this tax break is given at the individual level whether or not the corporation paid tax. And there are quite a few companies that make a good profit but pay little or no tax.
Of course, it would be a logistical nightmare to try to match dividend taxation to the taxes companies pay. But if this issue is of concern we should either find a way to do it or adjust the corporate rate in some way. Ideally it seems that either the corporate rate should be zero or the rate on dividends should be zero if the corporation paid tax on all profits.
But I don’t understand why this is a problem. By the same logic when I pay taxes and then hire a contractor to paint my house, shouldn’t his tax rate be reduced as I have already paid tax on the money.
Mitt Romney has been a bit short on details when it comes to his plans. For example, he will cut taxes by 20% (that does sound specific) but he wants to keep revenue about the same and will do so by cutting deductions and loopholes (which are not specified). He has said on a few occasions that this cutting of the deductions will not cause the middle class to pay a larger portion of taxes than they pay now. At the October 3 debate he added that he will not increase the deficit or cut education.
He will lay-out a few broad principles such as the above and congress will find the answer. As I have said before trust him and trust congress. It is certainly a plan but not one in which I have much faith.
He has also said he will cut federal expenditures. He has not given many details. But a the debate, he did tell us that he would “stop the subsidy to PBS”. This despite loving Big Bird.
There is about a trillion dollar deficit. The PBS subsidy is 450 million dollars. For most of us (even Mr. Romney) this is a lot of money. But it is only a very small portion of the deficit .0005 or one twentieth of a percent).
Does Mr. Romney have any specifics on the other 99.95% of the deficit he needs to cut? One specific he has managed to come up with solves about one two-thousandth of the deficit but may result in killing Big Bird.
Yesterday, I noted that Mitt Romney is writing off the 47% who don’t pay federal income taxes as Obama supporters. I pointed out that if this is correct, it pretty much insures an Obama victory and Romney loss. But there is more to the quote than that.
Governor Romney said:
There are 47 percent of the people who will vote for the president no matter what. All right, there are 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it. That that’s an entitlement. And the government should give it to them. And they will vote for this president no matter what. These are people who pay no income tax.
Quite a few of these people are responsible, despite what Mitt Romney thinks. The figure would include many on Social Security and Medicare who probably saved and paid taxes for much of their lives. There are the working poor. Leonard Pitts, Jr. profiles several of these in his “True stories of the 47 percent”. Interesting one of the comments is from the wife of a soldier who paid no income taxes because he was deployed to Iraq. There are people on disability.
There are many reasons people do not pay income taxes. What most have in common is that they make too little money. And many of them do pay other taxes. Some may be irresponsible. But it is probably not many and certainly not all.
There are even rich people who somehow avoid paying income tax (but that is another discussion for another day).
The President is president of all Americans, not 53% of them.