Opinion | The Tax Cut for the Rich That Democrats Love – By Richard V. Reeves and Christopher Pulliam – The New York Times

By Richard V. Reeves and 

Mr. Reeves is a senior fellow at the Brookings Institution, where Mr. Pulliam is a research analyst.

Credit…Alex Edelman/Getty Images

“Joe Biden tells us he is intent on winning in November “for the workers who keep this country going, not just the privileged few at the top.”

The election is a referendum not only on the moral failings of President Trump, Democrats argue, but on the economic fissures of the new economy. It is a fight, Mr. Biden says, on behalf of “the young people who have known only an America of rising inequity and shrinking opportunity.”

Why on earth, then, are Democrats fighting — and fighting hard — for a $137 billion tax cut for the richest Americans? Mr. BidenNancy Pelosi and Charles Schumer don’t agree on everything, but on this specific issue they speak with one voice: the $10,000 cap on deductions for state and local tax (better known as the SALT deduction) must go.

The House of Representatives has already passed legislation removing the cap, allowing the amount of the deduction to rise. If the Senate turns blue in November, Democrats have promised to return to the issue. “I want to tell you this,” Senator Schumer said in July, “If I become majority leader, one of the first things I will do is we will eliminate” the SALT cap “forever.” It “will be dead, gone and buried.”

Opinion | The Inheritance Tax Is Far Too Low – By Lily Batchelder – The New York Times

By 

Ms. Batchelder is a professor at New York University School of Law.

Credit…Michael Houtz

“A massive transfer of wealth is underway and will accelerate in the coming years. Baby boomers and the generation that preceded them currently own $84 trillion, or 81 percent of all U.S. household wealth — wealth that will before long be inherited by their children and other beneficiaries.

This extraordinary transfer of resources will further cement the economic inequality that plagues the United States because this wealth is tightly concentrated in the hands of a few. And it will be passed on as taxes on such transfers are at historic lows.

Among high-income countries, the United States has one of the lowest levels of intergenerational economic mobility, meaning a child’s economic future is heavily influenced by his or her parents’ income. We have the second-highest level of income inequality after taxes and government transfers, and the highest level of wealth inequality. These disparities are sharply skewed by race. Median black household wealth is only 9 percent that of white households, a racial wealth gap that is even larger than in 1968New research suggests the pandemic will further increase wealth inequality, as the affluent save more and the poor earn less.

Effectively addressing these systemic inequalities will require many things. But increasing the taxation of inheritances is one vital component.”

Opinion | Trump’s Deficits Are an Existential Threat to Conservatism – By Philip Klein – The New York Times

By 

Mr. Klein is the author of “Fear Your Future: How the Deck Is Stacked Against Millennials And Why Socialism Would Make It Worse.”

Credit…George Rose/Getty Image

“Last week, the Treasury Department announced that the federal deficit was just shy of $1 trillion in the 2019 fiscal year that ended on Sept. 30. The Congressional Budget Office expects deficits to exceed that mark every year going forward.

During Barack Obama’s presidency, such news triggered sanctimonious outrage among Republicans. Mr. Obama’s run of deficits exceeding $1 trillion helped fuel the Tea Party. Mitt Romney attacked Mr. Obama for fiscal irresponsibility during the 2012 presidential campaign. Mr. Romney’s running mate, Paul Ryan, built his national career around dire warnings about the mounting federal debt.

Even Donald Trump regularly got in on the act. In one of many such warnings about deficits, citizen Trump used the March 2013 debt crisis in Cyprus as an occasion to tweet: “Watching the madness in Cyprus? If our government keeps spending trillion dollar deficits, that could happen here.” In 2016, as a candidate, Mr. Trump said he could eliminate the national debt in about eight years.

Yet as president, Mr. Trump has piled on about $3 trillion to the debt, bringing the total to $22.9 trillion. What’s amazing is that he has managed to increase deficits at a time of historically low unemployment and relative peace, when one would expect the national balance sheet to improve.”

 

David Lindsay Jr.
Hamden, CT | Comments at NYT.
Nice essay Philip Klein. I too care about the growing deficit. Are you supporting that ugly idea, starve the beast? Grow the deficit as a way to pressure the cutting of the safety net. Social Security and Medicare allow older Americans to grow old and die with some dignity. It was created when a large percentage, maybe half?, of older Americans lived in poverty. So don’t forget to emphasize undoing unneeded and unfair tax cuts and loopholes for the rich.
Let’s test my argument. From Nasi.org: “Before Social Security, in 1934, roughly one half of seniors were estimated to be poor. Most had to rely on family or friends, or go to the poor house. As ever more seniors paid into Social Security and then received retirement benefits, the poverty rate among seniors steadily declined from circa 50 percent in the Great Depression to 35 percent in 1959, 25 percent in 1970, 15 percent in 1975, and around 10 percent in 2000, where it has hovered ever since. Today, were it not for Social Security, the senior poverty rate would be 43.5 percent, and just over half (PDF) of elderly African Americans (51 percent) and Latinos (52 percent) would be poor.”
David Lindsay Jr. is the author of “The Tay Son Rebellion” and blogs at InconvenientNews.net.

Opinion | The Rich Really Do Pay Lower Taxes Than You – David Leonhardt – The New York Times

“Almost a decade ago, Warren Buffett made a claim that would become famous. He said that he paid a lower tax rate than his secretary, thanks to the many loopholes and deductions that benefit the wealthy.

His claim sparked a debate about the fairness of the tax system. In the end, the expert consensus was that, whatever Buffett’s specific situation, most wealthy Americans did not actually pay a lower tax rate than the middle class. “Is it the norm?” the fact-checking outfit Politifact asked. “No.”

Time for an update: It’s the norm now.

For the first time on record, the 400 wealthiest Americans last year paid a lower total tax rate — spanning federal, state and local taxes — than any other income group, according to newly released data.”

Opinion | $111 Billion in Tax Cuts for the Top 1 Percent – by David Leonhardt – NYT

“More inequality? Yes, please. Federal tax policy in the 21st century has been like a tug of war. Thanks to President Trump, the rich are winning it once again.

The top-earning 1 percent of households — those earning more than $607,000 a year — will pay a combined $111 billion less this year in federal taxes than they would have if the laws had remained unchanged since 2000. That’s an enormous windfall. It’s more, in total dollars, than the tax cut received over the same period by the entire bottom 60 percent of earners, according to an analysis being published today.”

The Built-In Instability of the G.O.P.’s Tax Bill – By REBECCA KYSAR and LINDA SUGIN – NYT

“Republicans are on the verge of achieving their decades-long goal: an overhaul of the tax code. But the system they have built will not last.The plan’s instability is partly a result of the process Republican Party leaders chose to make it happen. Reconciliation, which allows escape from the Senate filibuster, means that Republicans did not have to reach across the aisle. Not a single Democrat supported the legislation.

This choice has consequences. For one, the exclusion of Democrats means that there is no buy-in from the minority party that will one day, perhaps soon, be in the majority again. This dynamic is worsened by the fact that the tax legislation pits blue states against red through the limitation of the state and local tax deductions. In the end, Republicans have chosen policies that are more extreme than they would have if they had worked with Democrats.”

DL:  Well done. Here are the top comments which I endorse:

mancuroc is a trusted commenter rochester 12 hours ago

“Republicans are on the verge of achieving their decades-long goal: an overhaul of the tax code.”

Yes it is a decades-long goal. No it isn’t an overhaul – it’s a heist that moves massive amounts of wealth to the top.

Reply 376 Recommended

ChristineMcM is a trusted commenter Massachusetts 10 hours ago

“These policies not only face the risk of being undone by a future Democratic majority, but also could indeed prove to be so lopsided as to alienate the more centrist of Republicans. Worse, Republicans now aim to take advantage of the instability they’ve created by cutting so-called entitlements like Medicare down the line, burdening the poor and the middle class.”

Actually, they kick the middle and lower classes three ways: first by raising taxes on those who might have itemized deductions in high tax states; second, making them pay the penalty for fixing deficits the GOP created in the first place; and third, making sure their “cuts” such as they are are temporary.

Once the understaffed, underfunded IRS sets these 1000 pages into rules and regulations, I believe they’ll find a ton of stuff that sets off unintended consequences.

By then of course, Democrats may take back the house and face the dirty job of fixing the GOP’s messes (which they always do).

But now, at least, Republicans can’t call Democrats the “tax and spend” party. No, the real truth is more like the “clean up party, ” fixing the messes created by the “Cut and spend” Republicans, who are gambling that the Dems will be blamed once the economy tanks.

It might be hard to prove given how this unilateral bill was rammed through without Democrat participation or votes.

And if Congress thinks all will be fogotten, I can assure them, we won’t let the public forget.

Reply 346 Recommended

Bruce Rozenblit is a trusted commenter Kansas City, MO 11 hours ago

The line being touted by the Republicans is that the temporary nature of the individual tax cuts exists only because of the rules of reconciliation. They are laying the groundwork for blaming the tax cut expiration on the Democrats if they don’t make them permanent next year.

How stupid do they think we are? If these cuts are made permanent, then the deficit will be much larger than the forecasted 1.5 trillion. Why don’t they increase the corporate rates in 2025 and then make the individual rates permanent? By then, if their supply side magic works, corporations will be so wealthy, they can afford to pay more in taxes. The public will have financed their growth with debt and deserves to be paid back.

But no. The deficit most likely explode under this bill. It will be much higher than forecast. That is because of the many new loopholes they opened up that are yet to be fully exploited. Give the accountants six months to launch their plans.

They also keep saying that the increased profits will be reinvested which will grow businesses. Here we go again. It is demand that grows business, not supply. Investments are always made in response to demand. All the GOP did was to dramatically boost profits with the stroke of a pen. You don’t make more widgets if you can’t sell them. If you make more money on the widgets you sell, you stick the money in your pocket.

This is going to blow up. The Democrats should prepare to assess blame on where it belongs, the GOP.

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Reply 306 Recommended

Opinion by David Brooks | The Workers Paradise

From the comments section, the top comment, and my rebuttal.

JBC

Indianapolis 16 hours ago

The tax revenue lost by the 7% difference between 21 and 28 is sizeable, and Obama never would have placed the impact of any corporate tax cut on the backs of the middle class and those with even lower incomes. Do not act like this is no big deal Mr. Brooks. It is.

David Lindsay Jr.

Hamden, CT

Bravo David Brooks. Keep writing, and don’t let the detractors get you down. I’m disappointed that 698 commenters endorsed JBC. The problem with the JBC critique is that Brooks is just right that the world is going towards a 20% or lower corporate tax. But progressive, steep income taxes, and vat taxes, make up the difference, so that other developed countries have plenty to spend on social services for the middle and lower classes. We also spend more on military than these other counties, and fight in poorly thought out wars, which are wasteful. The problem with the GOP tax bill is not the 20% corporate rate, but almost all of the rest of it. They were supposed to get rid of all the loopholes, so that corporations would have to pay 20%. David is the author of “The Tay Son Rebellion, Historical Fiction of Eighteenth-Century Vietnam”, and blogs at TheTaysonRebellion.com.

Passing Through to Corruption – by Paul Krugman – NYT

“Unless something drastic happens, this will be the week Republicans ram through a tax cut that adds more than a trillion dollars to federal debt while undermining health care for millions. They will do so by violating all previous norms for major legislation, having held not a single hearing and rushed to a vote before the new senator from Alabama could be seated.The question is, why are they doing this? For this bill isn’t just a policy crime; it also seems to be a political mistake. It will, however, be good, one way or another, for the bank accounts of quite a few Republican members of Congress. Is that why it will pass?

About the politics: Normally, politicians willing to add a trillion dollars to the debt can hand out enough goodies to make their plans popular, at least for a while. The George W. Bush tax cuts heavily favored the rich over the middle class, but they contained enough clear middle-class tax cuts to have broad public approval, at least at first.This bill, however, faces heavy disapproval. Ordinary voters may not be able to parse all the details, but they have figured out that this bill is a giveaway to corporations and the wealthy that will end up hurting most families. This negative view isn’t likely to change.”

Tax Bill Lets Trump and Republicans Feather Their Own Nests – The New York Times

“To understand the cynicism and mendacity underlying the Republican tax bill, look no further than a provision that would benefit President Trump and other property tycoons that is in the final legislation Congress is expected to vote on this week.

The provision would allow people who make money from real estate to take a 20 percent deduction on income they earn through limited liability companies, partnerships and other so-called pass-through entities that do not pay the corporate tax. The beneficiaries would also include members of Congress like Senator Bob Corker, who last week decided he would vote for the bill even though Republican leaders did nothing to address his concerns about an exploding federal deficit.

The biggest winners would be people like Mr. Trump, his family and similarly advantaged developers who make tens or hundreds of millions of dollars every year on swanky office towers and luxurious apartment buildings. An earlier version of the bill passed by the Senate provided a 23 percent deduction but put limits on its use that would prevent wealthy developers from profiting from it. The House version would simply have reduced the rate at which pass-through income is taxed.”

DL: Much uglier than simply pigs at a trough.

A Tax Plan to Turbocharge Inequality- in 3 Charts – by David Leonhardt – NYT

“The Republican tax bill is an audacious attempt to accelerate the economic trends of the last half-century.If you’re a fan of these trends — rapidly rising inequality and stagnant middle-class incomes — you should love the bill. If you’re not a fan, you can at least take comfort in knowing that you’re in the majority of Americans, as polls consistently show.

Over the last few decades, the rich have not only enjoyed the largest pre-tax raises, by far. They have also received big tax cuts. The middle class and poor, meanwhile, have suffered from slow-growing incomes — and from overall tax rates that are higher today than in the mid-1960s.The first part of that story is widely known. The rich have gotten richer, for a whole variety of reasons.”

DL: Great piece. It looks like this tax plan will help progressive environmentalist and their friends on the left, to take over congress in the next, or next couple of elections.

And exellent comments, such as:

Ron Cohen

is a trusted commenter Waltham, MA 17 hours ago

Contempt for the poor and middle class starts with Republican donors, the very rich. Why do the rich care so much? After all the tax cuts are modest relative to their immense wealth. Is it really about money? Or is it something deeper, more visceral, a need to dominate and impoverish everyone else?

The great English historian, R.H. Tawney, in his magisterial work, “Religion and the Rise of Capitalism” (1926), tells us that by the mid 1600’s, most English Puritans saw in poverty “not a misfortune to be pitied and relieved, but a moral failing to be condemned, and in riches, not an object of suspicion … but the blessing which rewards the triumph of energy and will.”

This ideal of individual morality, derived from Calvin, has been with us ever since. But it has surfaced with renewed zeal in our time, with men like the Koch bothers, Robert Mercer, Art Pope and Sheldon Adelson determined to spend whatever it takes to replace democracy as we know it—a leveling force—with a fascistic, plutocratic model of government.

For these billionaires, however, religion is not the motivator. Rather, it’s how they see themselves, their self image, that drives their lust for power, their need to dominate. They are the “makers,” deserving, while the rest of us are “takers,” undeserving and cadging off their efforts. Identity politics isn’t just for Democrats anymore.

For a penetrating interpretation, see George Monbiot’s short but defining piece in The Guardian: http://tinyurl.com/p5dg6b5

Ed Schwab

Alexandria, VA 13 hours ago

One way to deal with the problems of Social Security and the high payroll taxes is by recycling taxes that many Social Security recipients pay on their benefits. AS you may know, many social security beneficiaries pay no taxes on their benefits. However, there are many like me who pay quite a bit. My wife and I pay about $7,000 a year.

SS benefits are taxed only when recipients receive more in retirement income from other sources than they receive in SS benefits. Taxes are paid under a complex formula from 0% to 80% depending on how SS income compares to other retirement income. My pension income is about 20 times my SS benefit. That means I and my wife pay income taxes on 80% (the max percentage) on our SS benefits.

I don’t mind paying that amount, but I object to where it goes. It goes into the general fund just like other taxes. It seems to me that the better way would be to recycle it into social security. There are millions of us who pay taxes on our social security. The problems of the fund would be relieved a lot if our taxes went back to social security rather than into the general fund. When my wife and I pay back almost 20% of what we get to the government, it seems like that money should go to replenish the SS fund.

NYT Pick

MC

Upstate New York 5 hours ago

This tax bill for the rich is so appalling. Not only have payroll taxes not been addressed, but also every person will lose the personal exemption of $4,100 for themselves and for every member in their household.

It doesn’t matter that the standard deduction has doubled to $24,000 because if you are a family of three, you lose $12,300 in person exemptions. Therefore, doubling the standard deduction is a wash. But, if you’re a family of four or more, chances are very good you will pay more in taxes.

Why hasn’t the media explained to the public this MAJOR lose of the personal exemption of $4,100 per person? This vital fact has been ignored. Most middle class people will gain nothing. In fact, most of us will pay more. And every additional dollar we pay will go in the pockets of the 1%.

This tax bill is so shameful and such a sham.