Thursday, December 28, 2017

Who's Scamming Who - Taxes


On Nov 8, 2017 Rep Betty McCollum gave a standard floor speech to rail against the on going work to provide Tax Reform and Reduction to the American people. This paralleled speeches and language from Nancy Pelosi (a California multi-millionaire, with net worth of $196 million) seen here.


Here is the transcription and the video:
Mr. Speaker, I rise today in strong opposition to the Republican’s Tax Scam. The middle class receives virtually no benefits from this bill. This bill hits middle class Minnesotan’s especially hard by dismantling the state and local tax deduction. It increases cost for college students and their families. It abandons adoptive parents and it punishes people with high medical bills. So why does this bill hurt hard working families? So President Trump and the Republican’s can pay for give aways to the wealthiest Americans. Big corporations and billionaires will see their taxes slashed wealthy, heirs and heiresses will be allowed to dodge taxes entirely. While the top 1% of Americans receive nearly half the tax cuts. 99% of us will be stuck with a federal debt that will explode by trillions of dollars. Mr. Speaker this Republican bill is not tax reform, it is not a good bill for the middle class, it is a scam plain and simple. I oppose it and we must defeat it.


So let’s analyze, line by line, and parse the fact from the fiction, and decide who is scamming who. It will take a lot to unpack the innuendo and deliberately vague allusions to “what if” conjectures made about unspoken charges.


Mr. Speaker, I rise today in strong opposition to the Republican’s Tax Scam. 
There is no real testable information here. But lets note that its an immediate appeal to emotions using a classic “name calling” technique. Not particularly persuasive for most people. Or at least I hope it would not be.

The middle class receives virtually no benefits from this bill.
Well CBS went to test that very thesis and declared it to be untrue. They had the potential tax bills from 3 households tested and found all would be reduced substantially 


This bill hits middle class Minnesotan’s especially hard by dismantling the state and local tax deduction.
This one is partly true, not because of the tax bill itself, but because of the indisputable fact that Minnesota taxes are so high relative to most other states. It is the 8th highest tax state in the union. And the discrepancy has increased through the entire Dayton administration.

Now here comes the complete story. Since the Federal Tax plan now doubles the standard deduction, the only people who will see any such problem are the highest income households in Minnesota. So the reality of it is, Rep McCollum is decrying “taxes on the richest Minnesotans”, rather than the substantial savings for any lower income household.

It increases cost for college students and their families.
Well the best information on that appear to be a combination of fears that the wealthy will reduce donations and a small tax imposed on the wealthiest of private institutions endowment funds. Again. It looks like Rep McCollum is more anxious about the wealthy than she is about the average Minnesotan, she is simply twisting arguments to support her preference.
Like the House bill, the Senate legislation imposes a new 1.4 percent excise tax on the largest endowments held by private colleges. But thanks to an amendment offered Friday, the tax will apply only to endowments valued at $500,000 per full-time student. Previously, that provision would have applied to endowments valued at $250,000 per student. But although the tax will apply to only the wealthiest private institutions, higher education leaders call it a flawed idea that sets a worrying precedent.

In general the Washington Post describes benefits in almost every point for education.

It abandons adoptive parents and it punishes people with high medical bills.
These were tax deductions that were proposed to be reduced since the standard deduction was being doubled. 
The best discussion of the adoption credit is here
However much it may have alleviated the financial burdens of adopting families, it appears not to have increased the number of adoptions. 

But the use of language “punishes people” is a great hyperbolic emotional exaggeration. Which is exactly what the next sentence proceeds to do by excessive language and posing a statement as an extreme question. An unfounded statement and 

So why does this bill hurt hard working families?

So on to the next line where she attempts to answer this false dilemma or false cause

So President Trump and the Republican’s can pay for give aways to the wealthiest Americans.
The blatant appeal to envy and greed aside, its an empty statement as far as information. Thus we are left to assume next lines are to be used to define this further

Big corporations and billionaires will see their taxes slashed wealthy, heirs and heiresses will be allowed to dodge taxes entirely.
“Big Corporations” must mean an allusion to the corporate tax rate. Taxing corporations is a much argued topic. What does it mean to tax a corporation, since any such “cost” to the corporation must either be passed directly onto the consumer as increased prices to compensate, or has to be absorbed and reduces competitiveness (higher price relative to competitor or foreign product) and future investment. We saw the effect of high corp tax rate here in Minnesota when Medtronic moved corporate headquarters to Ireland’s 12.5% tax rate environment to escape the US 35% 

But what does reducing corporate tax rates really mean for US employees? A number of companies have already answered that question with large bonus’s attributed to the tax bill.
The Corporate Tax-Cut Dividend
Workers get a $1,000 bonus. Democrats call it ‘cruel’ and a ‘scam.’
Alas for Rep. Pelosi, the business reaction so far to the tax bill is starting to look like the ending of “It’s a Wonderful Life.” As we went to press, at least six large corporations had announced plans to do more for their employees, explicitly attributing their action to the tax bill’s business tax reforms.

Tax cut are difficult to make unless you actually cut the tax rates. It is an inescapable fact that cutting taxes will cut taxes for everyone, including the wealthy. Since they pay most of the taxes, they will see a reduction. Its a ridiculous claim to try to use. This chart of California tax rates gives some hint of that dependence and the inevitability. Its a complicated chart, which analysis goes beyond the scope here. But imagine trying to draw the red line lower, without going below zero.
http://soquelbythecreek.blogspot.com/2009/07/oppressive-progressive-income-tax.html



The reference to heirs and heiresses must be another allusion, this time to the “death tax”
The death tax has always been problematic, because it can force sale of smaller companies. With the subsequent loss of jobs. The final plan reduced the impact on the number of households that would have to pay the death tax by increasing (doubling) the threshold for the progressive tax. But don't worry, Nancy Pelosi’s, and Donald Trump's for that matter, heirs and heiresses will still have to pay this tax, in any scenario.

While the top 1% of Americans receive nearly half the tax cuts. 
This is the traditional class envy “go to” line that is a time honored appeal to greed for all. As shown before, its impossible to cut taxes without cutting the tax for “the wealthy” unless you specifically raise their taxes and violate the tax cut promise. As the tax bill progressed in committee and the normal process the “broad picture” statements were developed, the reductions curves were flattened. But since there is such a huge progressive distortion in how much the different income groups pay in taxes, refer to chart above, it will always be the case that those who pay more will get more reduction. So, as far as an age old argument its always guaranteed to be true, and thus immensely useful for demagoguery.


99% of us will be stuck with a federal debt that will explode by trillions of dollars
Ah the lure of exaggeration.  The estimates are for about $1 Trillion dollars over 10 years, not "trillions" . Now personally I am logically (although perhaps not strict enforcement due to pragmatism) opposed to adding to the national debt at all, but let's address the hypocrisy here. Rep McCollum was perfectly fine with the Barack Obama debt addition of about $9 trillion, or just over $1 trillion every single year on average! 

As extra bonus points, Nancy Pelosi's video claims that the Tax Bill will represent an increase for 86 million households. That 4 Pinocchio whopper is discussed here and here. Surprisingly Rep McCollum did not make that claim in this video we dissected here. The source of that statement appears to be this:
What Democrats tried to hide is that their statement is based on one part of the Tax Policy Center's analysis of the GOP bill, which focused on what would happen in 2027, after the individual tax cuts are set to expire.

Mr. Speaker this Republican bill is not tax reform, it is not a good bill for the middle class, it is a scam plain and simple

So Rep Betty McCollum’s floor speech was great theater, but really,
Who’s Scamming Who?


So to see how it will affect your taxes, here is the final test, 


For a detailed study of Minnesota taxation look here:

Saturday, December 23, 2017

Liberals see it raining Tax Increases

In a recent Facebook discussion I had with a liberal, he opined that the recent Tax Bill was a Huge Tax Increase. The following ensued.  Is it really so hard to have a substantive discussion with a liberal? Do they always devolve to ad-hominem attacks when emotional arguments fail? It appears so, here at least. Pardon the misspellings, I left everything as a direct copy.

This was all in the context of a liberal responding to a post that posited: 
Democrats might have made a mistake by attacking the recently enacted tax bill.”

A Liberal
It's actually a tax hike over the next 10 years: 

Me:
Even the far left WashPo calls that meme a lie, giving it 4 Pinocchios

A Liberal:
This images expresses my stance on this. 
It's worth noting your news source is not unbiased: https://mediabiasfactcheck.com/washington-examiner/


A Liberal:

Me: 
So since you cannot follow that it was a review of the leftist Washington Post, here is the Washington Post, which while leftist to the hilt, you will probably accept as "truth", and in this case may be close https://www.washingtonpost.com/news/fact-checker/wp/2017/11/02/senate-democrats-falsely-claim-gop-tax-plan-will-raise-taxes-for-most-working-class-families/?utm_term=.26b17091a6f9

Me:
Here is where you can up your contributions to the Fed if you wish

Me:
And using your tool, it shows the WashPo to be just as biased, albeit to the left as Washington Examiner. So does that invalidate either? I think your view is a little myopic. 

A Liberal:
Income inequality has never been higher than it is now...except during the first great depression. Giving corportions tax breaks is not going to improve this situation. Empowering corrupt venal racists to make sure that out roads are maintained, that children are educated and that jobs continue to pay fairly seems like a lose lose to me. I think when Trump term ends in 2019 we will see how HE managed the existing swamp after a little distance. Our system is broken I don't believe Dems or Reps are going to get it under control until we reverse Citizens United. It's too tempting for our reps to make fair decisions when they stand to get so rich in modern politics.

Me: So many unfounded untruths its hard to know where to start. Corporate tax does not take money from a corporation. It is simply passed on in increased prices and reduced competitiveness. "Corrupt venal racists", really? Why use such abusive and ad hominem attacks in polemic? Its a cheap argument and really unpersuasive. If you study the education issue you can find so much data that shows money does not solve issues. In the state of California there was a study done that demonstrated exactly the lack of correlation. Citizens United, while the left abhors it was equally an issue for Corporate Unions as for Corporate Non-Union organizations.

Me:

Me: 
Or the original study 

Me:
Probably a more important question for many, at least those who attempt to improve their income, is income upward mobility. Which has been stable. Its interesting to note that downward mobility is also common, but few really look at it or care.

A Liberal: 
Cato and NPR are both generating propaganda. Look this admin is the least 'christ like' of any administration. I am ambarrassed by our white house. I wonder why you are not. Trump is convenient idiot who is also a racist, classist, mesogenist, kleptocratic tool for the Republicans. Oh and he is right dimplomat for the job if you want all of our allies to start breaking off relationships with us. America first? More like Trump first. Good luck with your version of the US. I hope it works out for you.

Me:
Wow. Definition: Propaganda is information that is not objective and is used primarily to influence an audience and further an agenda. That is basically true for anyone attempting to put forth any argument in any discussion. Even ostensibly "objective" fact finding organizations can bias by ignoring some of the facts, and enhancing others. I assume you are attempting to say that the Libertarian Cato institute is biased "right" (though I think they might disagree) and NPR is biased left (I know they will disagree, but I would agree they are). I repeat, does that really invalidate an organization, simply for having an ideological stance? In that case you pretty much cannot listen to anyone but yourself. And I hate to tell you, you probably have a bias also.

A Third Commentor: 
The tax cuts will KILL BABIES!!!!