Raise our taxes!

The Thinker by Rodin

Merry Christmas everyone! And it’s a merry one here as we had actual snow for Christmas, about five inches locally. So yes, we have a white Christmas, which was a rarity but now that I live in New England maybe not so much. It still seems kind of magical.

Can it be a downer to get money for Christmas? We don’t collect on this money for a while, but as part of my 2018 planning I have been trying to figure out our budget. Trump promised Americans a big fat tax cut for Christmas. Now that this tax bill has become law, I decided I needed to crunch the numbers. The bill is still being digested but based on one online calculator I figure that our federal taxes will be $3352 less than what it would be had Congress not passed the law.

And yet it is a downer. It is true that I could take that $3352 and write a check to the U.S. Treasury and they would be happy to take the extra money. If I did this I would be in the top .01% … of taxpayers who actually send money to the U.S. Treasury in excess of what they owe. (Hmm, maybe not, considering how many undocumented send in payroll taxes from which they will never derive any benefits.) Unfortunately, it wouldn’t patch the nation’s roof.

What am I talking about? I’m talking about spending tax money to fix what’s desperately in need of repair. We could start with our crumbling infrastructure, something even Republicans in the age of so-called “fake news” cannot deny. Where I live they recently closed yet another bridge over the Mill River because it was too dangerous to actually use. Another one across the Connecticut River went down to one lane for more than a year while it was slowly repaired. With the tax bill now law Trump wants to make a “deal” with Democrats to spend on infrastructure. We know two things about this: it will be paid for with borrowed money if it happens at all and it will go to enrich Trump’s friends, if not Trump himself. So as desperate as the need is, maybe Democrats should take a pass for now.

Our lack of political will has resulted in crazy solutions. In Northern Virginia where we used to live the solution to the traffic problems is not quite to actually solve it, but to add HOT (high occupancy toll) lanes to the capital beltway and other places. Those with the money can escape a lot of the crushing traffic. Since the pricing is usually dynamic, it depends on supply and demand. Recently I-66 between the beltway and D.C. was opened for HOT traffic. It got so crazy that recently a one-way toll reached $44 dollars. That works out to more than $4 a mile.

Even in the rich D.C. suburbs, that’s a lot of dough. In most cases these HOT lanes don’t feed the government’s coffers. Instead, they go to private companies given very long-term leases to construct these extra lanes. So they may make traffic flow for those who few that can afford it. But they don’t really solve the problem of crumbling highways and bridges elsewhere.

Needless to say, the Trump Administration’s infrastructure “solution” involves a lot of what they are doing in Northern Virginia. In short, driving is becoming a privilege for the wealthy. As for the rest of us, we don’t get to eat cake: we get to sit in more traffic and get stuck in more potholes.

I really don’t think the United States qualifies as a first world country anymore. Perhaps I can say it’s true about certain things we elect to fund adequately, which is basically only the military. We’re the best at waging high tech wars and blowing stuff up. It’s pretty much all the other stuff that we won’t pay the freight on. I recently finished teaching another dispiriting class at a local community college. My students were incurious, clearly didn’t study and usually didn’t seek me out when they were having problems. Granted that these are students who probably got by with C’s in high school, but it’s clear we have huge problems with our educational system. The general problem though is we won’t make the investment required for education. We pay teachers scandalously low wages while overworking them. And now teachers can’t even claim a deduction for school supplies. Yep, that’s part of the $3352 extra we expect from the tax bill: basically we’ve taking money out of the pockets of teachers!

I wish the federal government operated a lot more like New England towns. Here towns practice real democracy. Across the river in Hadley, Massachusetts there were a number of town meetings to debate issues like construction of a new senior center and a new fire engine purchase. Basically the issues are publicly debated and if you show up you can vote. These tax overrides are not trivial. It means citizens pay extra property taxes. Both issues though won.

Not in our current Congress. The tax bill’s process was just shameful. There were at best cursory hearings. Leadership behind closed doors wrote most of the bill. There was no attempt to even consider ideas from Democrats. It was narrowly tailored to technically qualify under Senate budget reconciliation rules, which required only 51 votes. Hand written amendments were inserted into the bill from lobbyists sitting outside the Senate chambers. It was the complete opposite of a New England town meeting. The process could not have been any more opaque, less democratic, or less republican either for that matter.

Republicans are hoping that taxpayers will be bought off by temporary tax cuts in the bill. Our share looks to be $3352. In reality, it buys us nothing. However, it makes the debt worse, makes our infrastructure worse and gives money to those who need it least. And we are on that list. For goodness sakes, we’re retirees with a very comfortable income! $3352 a year means nothing to my standard of living. We can’t give it to our employees as bonuses; we don’t any of them. It’s not enough money to coax us to buy a private jet or even a fancy car. The truth is there is really nothing more for us to buy that we want or crave. We have a paid off house, two cars, free electricity from solar panels and good pension plus plenty of savings and investments. We take a couple of really nice vacations every year too.

If we can afford to contribute more, certainly those that make more money that we do can too, and they likely wouldn’t notice it either. And it’s not like there aren’t lots of things that would make productive use of our tax money.

But it only works if it is done nationally. The .01% of us who might give extra to the U.S. Treasury can’t fix this problem. It must be done nationally and it really can only be done if richer people give proportionately more, and the even richer people give even more. And the truth is they won’t notice the extra taxes either. And that’s because (a) they’re rich (duh!) and (b) the rich don’t trickle down anything of consequence. Trickle down is a lie. Putting money into things like a crumbling infrastructure, education and allowing poor people to just get buy though buys a whole lot and improves everyone’s lots.

Raise our taxes!

Boy, Republicans passed one really nasty tax bill!

The Thinker by Rodin

I mentioned recently about the audaciousness of the new tax bill expected to become law soon. Some years back I also mentioned that Republicans are basically sadists. This newest version of the bill that passed Congress this week proves Republicans have doubled down on both their bill’s audacity and its egregious sadism. I really hope they don’t believe their own rhetoric that this will actually grow the economy and make the middle class prosperous, since all previous attempts have proven trickle down simply doesn’t work. So I prefer to believe they are simply mendacious.

Apparently the House-Senate conferees decided to go through the bill and look for ways to make their tax bill even more in their favor and to screw the working classes even more. Now there are new tax break for real estate investors. It’s hard to believe Trump and his cronies didn’t phone this one in, not that Trump was not going to profit handsomely even before the addition of these provisions.

This bill has all the hallmarks of legalized bribery. Basically it’s a scheme to foist $1.5T in new debt on the American taxpayer and redirect the vast majority of this debt directly into their pockets. It’s like going to the Federal Reserve, taking $1.5T out of their vaults and doling out $1.4T of it to rich people and corporations over the next ten years.

Ah, but not for us little people. They have dangled some candy in front of us, but those who taste it are going to discover its initial sweet state will soon turn bitter. Consider:

  • You may pay a few hundred dollars less in taxes per year over the next ten years. But by getting rid of the individual mandate, the rising cost of health insurance premiums are going to quickly negate any of this extra money. After all, it’s not how much you are taxed; it’s how much you keep. Those who figure they can’t afford health insurance will opt out now that the penalty for not having insurance has gone away. These are illusory savings. Medical debt is likely to wipe out any savings they accrue by dropping health insurance. As for the rest of us with health insurance our costs will go up and up until we too decide we can’t afford it either, leading to ever-higher levels of working class impoverishment. This makes a lot of sense though if you are sadistic, and Republicans are sadists.
  • As a Disney heiress points out because of “pass through” provisions in the bill her income (none of it earned) will be taxed at a rate lower than most you saps who must work for a living. This is not entirely new. Those living off of capital gains and dividends have been tax-advantaged over those most of us who earn wages for a long time while doing nothing to earn it other than occasionally discussing their portfolios with their financial adviser. This just widens the hole. Remember how Trump was going to drain the swamp? He’s making it deeper. However, this makes a lot of sense though if you are sadistic, and Republicans are sadists.
  • Remember that Alternative Minimum Tax that made sure that many of these loopholes for the rich were mitigated by requiring them to pay at least some reasonable tax? It’s gone. Oh, and fewer wealthy people will have to bother their executors with the duty of paying estate taxes. The estate tax limit has been doubled meaning more money will go to their kids who earned none of it. Leona Helmsley once famously said only the little people pay taxes. Republicans are proving her right. This makes a lot of sense though if you are sadistic, and Republicans are sadists.
  • Why do Republicans hate charities? The charitable deduction is effectively gone for most of us, because they have doubled the standard deduction. This dries up any incentive other than pure kindness and a philanthropic nature for anyone but the richest to give any money to charity. If I had to guess we’ll see a lot more money going to Koch-funded charities and a lot less to the American Red Cross. It’s a likely red alert for charities across the country, who can almost certainly count on fewer donations in 2018 and basically forever. But this makes a lot of sense if you are sadistic, and Republicans are sadists.
  • Republicans don’t like blue states. How dare they vote for people they don’t like! Now to add insult to injury by capping deductions for property taxes they are effectively screwing the bluest of the blue states. States where property values are high (predominantly blue states) charge the most in property taxes. Since most states base state income taxes on the adjusted gross income on your federal return, this effectively cuts revenue for these states, which means fewer state services like money to public schools, police and food stamps. Blue states already send more federal revenue to red states than they receive. This actually makes it worse, and makes it permanent. This makes a lot of sense thought if you are sadistic, and Republicans are sadists.
  • Who doesn’t like teachers? Republicans don’t, perhaps because they suspect them of teaching subversive liberal ideology. Anyhow, our teachers who are already vastly overworked and vastly underpaid while serving an incredibly vital role in our nation’s future prosperity and going to be screwed some more. The expenses they paid out of their own pocked for school supplies for their own students that their own school districts were too chintzy to pay are no longer deductible. Apparently, Republicans loathe teachers and look forward to future generations of even stupider Americans. This makes a lot of sense thought if you are sadistic, and Republicans are sadists.
  • Apparently Republicans also hate people with business expenses. It used to be that you could deduct these expenses in excess of 2% of your AGI. That deduction is gone with the wind too. So if your employer does not reimburse your business expenses, essentially Republicans in Congress have reduced your salary. This makes a lot of sense thought if you are sadistic, and Republicans are sadists.

There are also indirect ways the bill will further screw over the rest of us. Republicans are already making noises about how the $1.5T deficit that’s part of their tax reform means we need more austerity because … omigosh, the deficit’s so high! They obviously won’t repeal their tax cuts or defense spending so they are talking about “entitlement reform” instead. First out the gate will be automatic cuts to Medicare that will start in 2019. These would start on January 1, 2018 but Trump will wait until January 1 to sign the bill so these cuts start in 2019, conveniently after the midterms. Update: reports are that Trump signed the bill today so presumably that means Medicare cuts would begin in 2018, not 2019.

Thankfully, Americans aren’t nearly as stupid as Republicans think that we are. This is borne out by polls that show the law is deeply unpopular, in spite of the fact that most people will initially pay fewer federal taxes. It’s the most unpopular bill polled in the last forty year.

They will get their comeuppance next November 6.