From the President – 6-28 – Weekly Update

Jul 2, 2019 | From The President

[vc_row][vc_column][vc_column_text]Call it the dueling letters. 

On the eve of the first set of debates by the Democrat candidates for president, a group calling themselves the “Patriotic Millionaires” penned an open letter calling on the candidates to “tax them more.” While neither the group nor their call for higher taxes on the rich are new, they seem to find ways to help the press insert calls for higher taxes on a consistent basis. 

In an open letter the group outlines their support for proposals that would address the nation’s staggering wealth inequality through taxation, such as an existing plan put forth by Senator Elizabeth Warren (D-MA).

What was different this time was a couple of critics took the issue straight on and turned the moral tables around on them. The first was an Op-Ed in the Wall Street Journal (An Open Letter to Patriotic Billionaires) that ask’s “what’s stopping them?” If billionaires see themselves as a threat to “the stability and integrity of our republic,” they could cease being billionaires any day.

If retiring student debt is vital, they could put out a call to graduates and start paying off loans. If the climate is a priority, they could fund a green Manhattan Project.  Maybe they’re intent on routing their largess through the government, since it already does such a bang-up job of setting priorities and spending prudently. Again, though, why wait for legislation?

They could start contributing more today.

This was followed by an Op-Ed by Ken Fisher. He’s got a better idea than a wealth tax. His solution? The government isn’t the most efficient organization and certainly doesn’t know how to solve problems and create jobs like the successful entrepreneurs and business elite. 

“If the billionaires calling for a wealth tax can’t figure out how to put people in high-paying jobs, Uncle Sam sure isn’t going to know how to do it.”

 

So far these rebuttals have gone unanswered — and likely won’t. We know the real reason for this group is to socialize the concept that even the rich see the inequities and the only solution is higher taxes. It’s also a great moral fig-leaf for all of these “patriots” to feel good about doing something. 

What’s clear from the opposing Op-Eds however, shows that the emperor has no clothes!

 

COURTS

 

The US Supreme Court issued a decision on a major trust case on June 21. Here are the facts of North Carolina Department of Revenue v. The Kimberley Rice Kaestner 1992 Family Trust, via Kelly Phillips Erb of Forbes: Joseph Rice, a New York resident, set up a trust about a quarter-century ago, to also be run by a New York resident. His daughter, Kaestner, moved to North Carolina five years later, and one of three sub trusts was then formed in her name.

The trust then paid North Carolina some $1.3 million over several years, under a state law that allowed for the taxing of any trust income benefiting a resident. 

But a unanimous court ruled that residence alone was too flimsy of a reason to allow for trust income to be taxed, as Pro Tax’s Aaron Lorenzo reported. Some members of the legal community said the decision could pave the way for simpler estate planning, as Aaron also noted. But critics said the Court’s ruling might have just given wealthy people the road map to yet another tax dodge.

“If you’re a rich person in a high-tax state, the path forward is quite clear,” wrote Daniel Hemel, a law professor at the University of Chicago. “Transfer income-generating assets to an irrevocable trust in a state that does not tax trust income on the basis of trustee residence or place of administration.”

 

CAPITOL HILL HAPPENINGS

PATG had a very active June advocating for Legislative Estate Tax Repeal in the House and Senate, as well as meeting with most of the House Ways and Means members to seek a lead sponsor for our Rate Reduction bill. 

The Senate bill garnered the support of Senator Josh Hawley (R-MO), bringing total Senate support to 34 of the 100 members. In the House, we have identified several members that we are working with who may introduce our rate reduction bill. 

Our repeal efforts however have gained 15 additional co-sponsors, bringing the total up to 108! A list of the new supporters follows below. Feel free to send them a thanks!

Rep. Wright, Ron [R-TX-6] 06/03/2019

Rep. Ferguson, A. Drew, IV [R-GA-3] 06/03/2019

Rep. Fulcher, Russ [R-ID-1] 06/10/2019

Rep. Simpson, Michael K. [R-ID-2] 06/10/2019

Rep. Rose, John W. [R-TN-6] 06/10/2019

Rep. Curtis, John R. [R-UT-3] 06/13/2019

Rep. Riggleman, Denver [R-VA-5] 06/13/2019

Rep. Steube, W. Gregory [R-FL-17] 06/13/2019

Rep. Norman, Ralph [R-SC-5] 06/13/2019

Rep. Miller, Carol D. [R-WV-3] 06/13/2019

Rep. Guest, Michael [R-MS-3] 06/24/2019

Rep. Armstrong, Kelly [R-ND-At Large] 06/24/2019

Rep. Latta, Robert E. [R-OH-5] 06/24/2019

Rep. Taylor, Van [R-TX-3] 06/24/2019

Rep. Gianforte, Greg [R-MT-At Large] 06/24/2019

Today’s Ways and Means subcommittee hearings on the SALT cap will undoubtedly feature testimony about how that $10,000 limit harms both state and local governments’ ability to offer quality services and puts the squeeze on average workers.

What’s unlikely to come through today is any consensus on the Democratic side about how to at least offer some relief from the SALT cap. A bipartisan group of lawmakers has released a bill to totally kill the limit, and there are also proposals to both lift the cap and give higher exemptions for married couples.

But as with many tax policy matters among Democrats these days, one big question hanging over the debate is whether to offset the cost of potential SALT changes — and, if so, how? “There’s a number of pay-fors, all the likely suspects are out there, and we’re looking at all of them.

We want to make sure that what we do is fair and we don’t want to hurt the same people we’re trying to help,” said Rep. Mike Thompson (D-Calif.), whose home state is among those most affected by the cap and is the chairman of the Ways and Means Select Revenue Measures Subcommittee, which is hosting separate hearings today to hear from local leaders and lawmakers about the limits.

Rep. Tom Suozzi (D-N.Y.), another member of that subcommittee, has floated the idea of raising the corporate rate from 21 percent to 25 percent, and the top individual rate back to 39.6 percent from 37 percent, to replace the revenue raised by the SALT limits over a decade, as Newsday reported.

(That still might not be quite enough to replace all of the cap’s more than $600 billion in revenue, though it’s also not an idea likely to be embraced by Republicans — plus, other Democrats have their own ideas about how to spend a couple points of corporate tax rate revenue.)

The other big issue here: It’s hinted at in that statement from Thompson — eliminating the SALT cap would disproportionately help rich people, even as Democrats cast their efforts as aimed at the middle class.

The Joint Committee on Taxation reported ahead of today’s hearings that households earning seven figures a year would reap the majority of the benefits — some $40 billion in 2019 alone — if the cap was eliminated, as Pro Tax’s Brian Faler noted.

Tlaib rolls out bill to create tax credit for low- and middle-class people. Rep. Rashida Tlaib (D-Mich.) on Wednesday rolled out legislation to create a new tax credit to help low-and middle-income people, Tlaib’s bill makes her the latest Democratic lawmaker to offer a tax-credit proposal in an effort to counter the GOP tax law and address the rising cost of living. 

The refundable credit amount under the bill would be up to $3,000 for individuals making less than $50,000 and $6,000 for married couples making less than $100,000, with the amount phasing out as incomes increase. Unlike similar proposals from Democrats, Tlaib’s proposed credit would be available to people even if they are not working. 

The left-leaning Institute on Taxation and Economic Policy estimated that Tlaib’s credit would provide most of its benefits to those in the bottom 60 percent of income, and would cost $380 billion in 2020.

 

CAMPAIGN TRAIL

 

Democrats lead with their left, most liberal stance since ’70s. This is a party eager to go on the ideological offensive not just against Donald Trump (whose name did not dominate the evening even as he was invoked plenty) but against an economic and political power structure that candidates argued is deeply corrupt. Liberals must be empowered to bring bad actors to heel through robust intervention of government.

Over the course of two hours, people who are inarguably some of the party’s most consequential and ascendant figures endorsed the mandatory abolition of private health insurance, sharply higher taxes on the wealthy, the decriminalization of illegal border crossings.

They spoke with contempt about the alleged profiteering, manipulation, and cruelty of corporations. They argued that ordinary Americans are right to feel screwed, and multiple candidates boasted that they are tough enough to turn the screws on the victimizers, for a change.

 

 

“DEMOCRATS SPLIT ON HOW FAR LEFT TO NUDGE NATION … THEME OF FIRST DEBATE … Progressive Solutions vs. Caution on Economy and Immigration” 

Pollster Frank Luntz summed it up this way on “The Ingraham Angle” on Thursday: “This is not your parents’ Democratic Party.”

Bernie Sanders:  “Trump is the worst kind of socialist,” Bernie Sanders writes in an op-ed for today’s Wall Street Journal: “The time is long overdue for the U.S. to end corporate socialism for Mr. Trump and the rest of the billionaire class.

Instead, those resources should be put to work to ensure shared prosperity by enhancing Social Security and Medicare and investing in roads and bridges, public schools, clean water and clean air. Mr. Trump believes in corporate socialism to protect the wealth and power of the rich. I believe the U.S. must end corporate socialism and instead fulfill President Franklin D. Roosevelt’s vision of enshrining basic economic rights for all Americans.

These include the rights to health care, a living wage, a decent job, a quality education, a secure retirement, affordable housing and a clean environment. We can make this 21st Century Economic Bill of Rights a reality with initiatives like Medicare for All, a $15 minimum wage, a Green New Deal, student-debt cancellation and legislation to expand Social Security.”

Sanders to propose eliminating all $1.6T student debt in US.

Bernie Sanders, the 2020 hopeful, announced a policy proposal that would eliminate all $1.6 trillion of American student debt. 

The Democratic presidential candidate’s new proposal calls for the federal government to wipe clean the student debt held by 45 million Americans, including all private and graduate school debt. The proposal package also includes making public universities, community colleges and trade schools tuition-free. Sanders reportedly plans to pay for the lofty proposal with a tax on Wall Street, which his campaign says will generate more than $2 trillion over 10 years.

Beto O’Rourke: Former Rep. Beto O’Rourke of Texas endorsed a 28 percent corporate rate and taxing capital gains and income at the same levels, while ducking a question about a potential 70 percent top income tax rate. 

Elizabeth Warren: Sen. Elizabeth Warren (D-Mass.) has proposed $640 billion in student debt forgiveness, and former housing secretary Julián Castro introducing a more modest debt forgiveness plan. All these proposals have raised strong objections, including from moderate Democrats, for giving taxpayer subsidies to educated Americans who, on average, have higher earnings than those with only a high school degree.

Associated Press: Experts question whether the math adds up on Sen. Elizabeth Warren‘s wealth tax.

“‘We need to make structural change in our government, in our economy and in our country,’ Ms. Warren said, setting the tone for the handful of populists in the debate.”

 

POLITICO’s 2020: The Issues is the most comprehensive guide anywhere to the issues shaping the Democratic presidential primary, driven by dozens of expert journalists in the nation’s most robust newsroom covering policy and politics.

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