Tag Archives: taxes

Current Events

Trump’s Tax Issue is BS!

It never ever ends with the NYT, they turn any Trump announcement into a headline, but never tell the whole story. Anyone who reads that despicable piece of garbage without doing some research is simply stupid, something none of us can ever fix.

Trump Didn’t Avoid Taxes, He Prepaid Them.

By Dick Morris

Monday, 28 September 2020 02:37 PM

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Contrary to the false impression in The New York Times story, Donald Trump did not avoid taxes.

He pre-paid them.

In 2016 and 2017, he requested and got an extension to file his returns.

As required, he made an estimated tax payment of $1 million in 2016 and $4.2 million in 2017. Then, it turned out that he did not owe that much in taxes, but, rather than demand the money back, he let the IRS keep it and apply it to any future tax he owed.

So — when he only paid $750 in taxes for the first two years of his presidency it was because he had already overpaid during the two previous years and just reduced his payment by that amount.

Over the longer term, Trump overpaid his taxes by $72 million.

Because some of that overpayment was more than two years earlier, he was not allowed to offset it against current taxes. But Obama changed the law to allow taxpayers to go further back and he offset his tax liability in future years by citing his overpayment.

So Donald Trump did not avoid paying taxes, he prepaid them.

So what’s wrong with that?

Many taxpayers overpay or have more withheld from their paychecks than they end up owing in taxes. They look forward to a deserved refund each year.

Some even use the process as a way of saving money.

All that Trump did differently, was to leave the money at the IRS and take the refund over several years. A government strapped for cash should reward such conduct, not vilify it.

And, since no good deed goes unpunished in politics, the president also being skewered for taking a charitable tax deduction of $119 million for agreeing not to build homes on a 200 acre plot in Westchester, New York and a similar one in Los Angeles.

In each case, Trump bought the property planning to build a golf course and homes on them. Both times, the local zoning board refused to allow the development.

So Trump donated the right to develop develop this land to charity and took a deduction of $119 million, called a charitable easement.

So now the beautiful land in each location will be preserved forever wild as a place of refuge for people, birds, and animals.

Beyond these points, several facts emerge:

  1. Trump never used any illegal means to reduce his tax liability. He always followed the law.
  1. He never used his power as president to get the IRS to pull its punches even though he appoints the director who serves at his pleasure.
  1. He took advantage of every way to cut his tax burden. Do you know any taxpayer who doesn’t?

Can’t wait for tonight. Someone PLEASE check Sleepy Joe’s ears for a fob.

Originally posted 2020-09-29 13:08:08.

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Let’s hear it for the 99%!

I just can’t get over how the MSM ignores facts, but what slays me is how they continue to pound the on the economy stating how bad it is and especially for anyone who is one of the 1% gang. Just today, the FED lowered interest rates 1/4 point because the the economy is doing so well, and while their are little signs of inflation they wanted to head it off should it start. Geez.

From the WSJ Editorial board.

Political discourse nowadays is enough to depress anyone, and the media don’t help by ignoring good economic news. But buck up, Americans: Worker wages are growing much faster than previously reported.

The Bureau of Economic Analysis (BEA) on Tuesday published its annual revisions to personal income data, and the surprise was the huge jump in disposable income and employee compensation.

The revisions show that employee compensation rose 4.5% in 2017 and 5% in 2018—some $4.4 billion and $87.1 billion more than previously reported. The trend has continued into 2019, with compensation increasing $378 billion or 3.4% in the first six months alone. Wages and salaries were revised upward to 5.3% from 3.6% in May year over year. And in June wages and salaries grew at an annual rate of 5.5%, which is a rocking 4.1% after adjusting for inflation.

This is far more than the 3.1% year over year increase in average hourly earnings that the Labor Department’s jobs report showed for June. One reason for the disparity may be that employers are hiring millions of younger, lower-income workers, which may be depressing average hourly earnings as older, more highly paid workers retire.

The BEA also revised overall personal income up by 1.7% for 2017 and 2018 and transfer receipts down 0.7%. In sum, Americans are earning more and relying less on government. Personal savings estimates were also increased by $217 billion for the last two years and are now $1.3 trillion, which means Americans are socking away more of their earnings.

The personal savings rate was revised upward to 8.1% from 6.1% in May, which is much higher than the roughly 5% before the last two recessions. This should make the current economic expansion more durable since consumption isn’t being pumped up largely by increased household debt. Instead consumer spending has increased as wage growth has accelerated amid a tight labor market.

Recall how liberals blamed “secular stagnation” as the reason worker incomes weren’t growing faster during the latter years of Barack Obama’s Presidency. Yet employee compensation has increased by $150 billion more in the first six months of 2019 than all of 2016. Compensation increased 42% more during the first two years of the Trump Presidency than in 2015 and 2016. This refutes the claim by liberals that the economy has merely continued on the same trajectory since 2017 as it was before.

The economy barely skirted recession in the final Obama years, and economic policy changed in 2017. Deregulation has unleashed repressed animal spirits, especially in energy. Tax reform has also spurred business investment in new facilities and equipment, which over time should translate into higher worker productivity and wages.

Those reforms are continuing to pay economic dividends despite the damage from Mr. Trump’s trade policies. While Democrats and even some conservatives complain that workers haven’t benefited from tax reform, the evidence suggests otherwise.

Corporate after-tax profits increased by about $220 billion between 2016 and 2018 while employee compensation swelled nearly $1 trillion. Corporate profits declined 2.9% in the first quarter of 2019 even as wages grew at an annual rate of 10.1%. This sure sounds like an economy that is benefiting the 99%.

Copyright ©2019 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Appeared in the July 31, 2019, print edition

Originally posted 2019-07-31 17:06:46.

Current Events

Beware of Halloween Spooks

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Hello followers. I hope this missive finds you and yours in the best of health and staying safe. My bride and I returned from our getaway to St. Lucia very early this morning. Truly a relaxing place for the late twenty to late thirty crowd. For the early eighty crowd, not so relaxing; glad I purposely did not bring my Hearing Aids. Not quite my genre of music; in fact, it was unbearable. However, the place is so large and dissected in such a way we found a quiet pool away from all that. Anyway, we both had a great time, lots of fun in the sun.

I arrived home to find an excellent treatise by Greg on the current state of the economy in this once vibrant and glowing country of sane people. And as usual, I totally concur with all he states. It is coming folks. For those living off their 401K’s beware!! I and most who think like me have been selling for the past several weeks, and I shall continue during the ups and downs of Wall Street. I shall also do some selective buying, but inflationary companies, which are many, will not be on my sought-after lists.

The highlights in red within Greg’s treatise are mine.

October Instincts

By: G. Maresca

The Executive Director of JPMorgan Chase admitted that the stock market’s “biggest nightmare periods have tended to be October. You go back to obviously the crash in 1929, but the 1987 crash, and in 1989… was in October. You tend to have these October moments.”

Financially most are feeling pretty good as brokerage accounts never looked healthier and home prices are over-the-top. Over the past year, the S&P 500 has closed at new, all-time highs over 50 times and in so doing has created the illusion that the market only rises.

This results in taking more chances when investing.

The K-shaped economy and booming stock market underscore that Main Street and Wall Street are at a major disconnect. Many dismiss the growing rate of inflation, the unprecedented intervention by the Federal Reserve’s nonstop money-printing and increased debt believing that the dollar today is worth the same as it was last year.

It’s not.

The duality of low interest rates and those stimulus payouts have devalued the dollar. Thanks to inflation and time, savings in fixed investments like CDs, bank accounts and money markets lose purchasing power. With yields registering next to nothing, where are investors expected to put their money?

As a result, savers seek more risk in order to obtain better returns leading to a stock market that is cooking and overvalued. Increasing stock prices coupled with a mushrooming federal debt is a brick road paved over with inflation.  As the Fed continues easy-money policies, the market will continue higher as the infusion of cheap dollars rules the day.

Most bankers, brokers, and politicians understand that these bouts with inflation are what economists call: “The Money Illusion.” It is when one’s wealth is measured in how many dollars they possess, rather than its purchasing power.

Among investors, the Money Illusion breeds risk taking and heightened speculation. It’s like watching a skilled magician work his stagecraft. It looks and appears amazing and impossible, but it is not at all what it seems.

Low interest rates did, in fact, rescue the market. The Fed slashed short-term interest rates to near zero at the onset of the COVID-19 debacle and bought large purchases of Treasury and mortgage bonds making dollars discounted. In so doing, The Fed propped up not only the bond markets, but stocks, too.

Many are in denial about what is truly happening throughout our financial system. To paraphrase writer Upton Sinclair, it’s difficult to get someone to look when their getting paid depends on not looking.

Adding to the illusion is that 40% of all U.S. currency in circulation has been printed since March 2020. Few comprehend the effects of so many trillions in our financial system. The Case-Shiller Index which measures home prices has risen 18.6% for the year, up from a record 16.8% the month before. The index is the proverbial rat in the financial mine that brings with it a healthy dose of inflation.

Financial storm clouds are forming as the economy experiences labor shortages, supply chain disruptions, rising prices, and increasing inflation. With too many dollars chasing too few assets, the good times won’t last forever.

One out of every four companies are on life support because of low interest rates. With rates near zero, and with inflation rising, The Fed cannot afford to keep them low forever.

Bankruptcies are on the horizon.

The federal debt continues to grow as trillions crowd the government’s balance sheet with the debt literally growing by the second. Inflation does to a degree keep the debt somewhat manageable. However, as inflation rises, Social Security, and other assorted fixed incomes like pensions will see their buying power shrink even further.

Eventually, a significant tax increase will hit all Americans hard and below the belt – regardless of income.

Rising stock prices are great, but when easy money begins to create social, political, and economic turmoil, something is seriously amiss. A White House which believes that global warming, systemic racism and COVID are our greatest threats, does not possess the foresight and wisdom to comprehend what is economically occurring.

The laws of economics cannot be repealed, no matter what one’s wishful thinking may be.

As October looms, consider this a heads-up.

Postscript: Beware of the ghouls of October, they are coming, meanwhile many Americans keep chasing those soon to be negligent goods and, to paraphrase Mack the Knife , “Spending like a Sailor.”

Originally posted 2021-09-20 14:39:12.

Current Events

Christmas in July

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A couple making $149,999 a year with one child between six and seventeen gets $250/month?  And the rationale is it will reduce child poverty — really? Folks doing simple arithmetic of 39 million households getting the lowest of $250/month come to $9,750,000,000. Count the zeros, that’s 9.75 billion dollars a month, paid for by. . . . . .? And it lasts through till the end of the year.

Question,  is a child of a couple who make just short of $150,000  living in poverty?  Really? Oh well, surely the government would know; I mean their our leaders, right?

By: G. Maresca

Congressional Democrats approved an expanded version of the Child Tax Credit that was part of the American Rescue Plan and did so without bipartisan support.

On July 15th, the IRS began depositing $300 a month for every child under six and $250 for each child up to 17. This latest round of monthly cash infusion from Washington is for parents making under $75,000 per year, and for those parents filing jointly who earn less than $150,000 per year. Nearly, 39 million households, covering 88% of American children will receive the monthly outlays, according to USA Today.

Democrats maintain the payments will reduce child poverty, as if the absence of money were the problem. Democrats have thrown trillions at poverty starting with Lyndon Johnson’s “Great Society,” which is nothing short of Jim Crow 2.0.  and on its fourth generation of undermining the family. Cash helps but rarely addresses the underlying issues that money cannot solve.

This roguish cycle of government dependence is renewed by each subsequent generation of welfare recipients who teach their children, probably from a multitude of fathers, that they are entitled to the fruits of somebody else’s labor. Every welfare program must be tied to positive behaviors with a time limit on benefits. It should not be a lifetime annuity.

Replacing the father with government has done tremendous harm to women and children. Nearly 90% of incarcerated males grew up in fatherless homes. Contrary to the Left’s ridicule of American patriarchy, the problem is not that we have too much of it but not enough.

This so-called stimulus spending is an investment in buying future votes all in the name of compassion. Taking from those who work in order to provide for those who don’t to buy their votes is ideological theft. Democrats have made vote buying an art, while making voting more haphazard by not requiring ID – all to their benefit.

Such shenanigans are an integral part of keeping Democrats permanently in power. Provided Democrats can maintain their slight edge in the House of Representatives and retain Vice President Harris’s tiebreaker vote in the Senate in 2022, these apparatchiks will not only remain in power but solidify it.

If you believe monthly free cash will end poverty, your perception of human nature is wanting. A prime symptom of leftist derangement syndrome is believing poverty is solely based upon the lack of cash. Poverty is rooted in a plethora of issues that largesse ignores but certainly reinforces. Democrats have always been more fixated on symptoms than causes.

This cash infusion will not move the poverty level one percent because tax credits are not factored into the poverty rate. The same holds true for food stamps, Medicaid, Section 8, and earned income tax credits that total into the hundreds of billions annually – none of it counts.

The Leftist tradition of not holding anyone accountable for their contribution to their circumstance’s reigns. When bad behavior involves guns, the gun is at fault, not the humans who use them. When those who created their circumstances fail, it is society’s fault. This results in a one size fits all bureaucratic government program that only contributes to the nation’s decline.

Ian Smith, the New Jersey gym owner who refused to close his gym during the pandemic, summed it up this way: “Everything the government is doing right now is designed to make you fat, weak, stupid, depressed, lazy, and reliant on crumbs they wipe off their plates. Health replaced by pharmaceuticals. Education replaced by programming. Hard work replaced by handouts. These people hate you.”

Once acquainted with systematic direct deposits from everyone’s favorite Washington Uncle, less and less people will oppose them. One of the malevolent attributes of socialism is how it takes advantage of people by claiming to help them.

Democrats have always needed a dependent class to maintain their relevancy and hold on power. These longstanding attributes are now devolving into a dependent country.

The Child Tax Credit deposits are to expire at the end of the year, but Biden is hoping to extend them until 2025, the next presidential election. How is that for political expediency?

Sporting aviator sunglasses, Biden is Santa Claus, and every day is Christmas in America.

What’s not to like?

 

Originally posted 2021-07-24 11:34:37.

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Punishment

LOL, this is so funny. Some may have trouble understanding what Mr. Lindsey is saying in this article. Heck I had to read it again slowly to get the full drift. The bottom line is simple, raise the tax and get less revenue. LOL Makes sense to me, What an idiot this president is. That is unless he is doing it as Mr. Lindsey thinks, to punish the rich and the hell with revenue. OMG.

 

And if anyone is qualified to talk on this subject it is certainly Dr. Lawrence Lindsey, former Governor of the Federal Reserve System for six years.

The Biden administration last week proposed to increase the capital-gains tax rate—currently 20% for most assets held for at least a year—to 39.6% for people making more than $1 million. Since capital gains are also subject to the 3.8% Medicare tax, the new capital-gains rate would be 43.4%.

What makes this unusual is that 43.4% is well above the rate that would generate the most revenue for the government. Congress’s Joint Committee on Taxation, which does the official scoring and is no den of supply siders, puts the revenue-maximizing rate at 28%. My work several decades ago puts it about 10 points lower than that. That means President Biden is willing to accept lower revenue as the price of higher tax rates. The implications for his administration’s economic thinking are mind-boggling.

Even the revenue-maximizing rate is higher than would be optimal. As tax rates rise, the activity being taxed declines. The loss to the private side of society increases at a geometric rate (proportional to the square of the tax rate) as rates rise. The government collects more revenue, but its gains slow as the taxed activity declines. The revenue-maximizing rate is the point at which the government starts losing from higher taxes. Tax rates above the revenue-maximizing rate are punitive: The government is giving up revenue simply to punish the rich.

Punishing the rich is distinct from redistribution. Higher taxes on the rich to finance spending, or to transfer money to lower-income people, may be good for society’s welfare. Economists express this idea in a “social-welfare function,” which weights additional income received by different people, usually based on income. The same sum is considered less valuable if it goes to a high-income person than a lower-income one. The weights are subjective and different analysts will choose different weights.

Still, economists can agree that the ideal is to make someone better off without making someone else worse off. The simplest case is a voluntary exchange of goods for money, in which the buyer values the purchase at least as much as the price, while the seller values the money at least as much as the item being sold. Economists call such an exchange Pareto-optimal after Vilfredo Pareto, the Italian economist who formally framed the concept.

There is no choice in paying taxes, and usually the government is better off and the taxpayer is worse off. But above the revenue-maximizing rate, even the government is worse off. This is called Pareto-pessimal.

Generally, the government can raise tax rates and transfer the money to lower-income people, thereby improving social welfare. The government can do this even after incurring the economic burdens caused by higher rates and the costs of transferring money (known as the “leaky bucket”). The trade-off depends on how much tax rates distort the economy, how big the leaky-bucket effect is, and how one evaluates the difference in value of money going to people in different income groups.

As indicated by other proposals, the current administration rates money going to lower-income people extremely highly relative to higher-income people—higher than has traditionally been the case in U.S. economic policy. It also seems to put little weight on excess economic burdens and leaky-bucket costs. The wisdom of those choices will be tested at the ballot box.

But to an economist, a Pareto-pessimal choice is unwise by definition. There is no set of “weights” one can devise to justify this proposal, because there are no highly prized winners to offset the losses to the low-weighted losers.

The concept of social-welfare maximization has been a cornerstone of economic thinking across the political spectrum for the past century. It dates back at least to Adam Smith in the 18th century, and arguably to the 17th, when Jean-Baptiste Colbert, King Louis XIV’s finance minister, declared “the perfection of taxation consists in so plucking the goose as to procure the greatest amount of feathers with the least possible amount of squawking.”

That’s why it is shocking that this policy got past the economists in the administration, many of whom have had long and distinguished careers. The Biden administration is blowing up one of the key concepts that has united the economics profession: maximizing social welfare. It now believes in taxation purely as a form of punishment and is even willing to sacrifice revenue to carry it out.

Mr. Lindsey is president and CEO of the Lindsey Group. He served as a Federal Reserve governor (1991-97) and assistant to the president for economic policy (2001-02).

Originally posted 2021-04-26 15:14:18.