From the President – 7-12 – Weekly Update

Jul 16, 2019 | From The President

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It took a while, but the dueling letters” by the wealthy to either tax them more or figure out better ways to create wealth opportunities for others has just gotten another response. 
 
 
But ‘let’s not get carried away. The reasons they state for not liking a wealth tax are mainly administrative and practical, since all the European countries that tried it failed. 
 
No they have a better and much simpler idea: “”repeal those provisions of the 2017 tax law that restored favored treatment to large estates; to reduce the favorable treatment of capital gains in general; and to eliminate the huge break for profits on the sale of stock by people who inherit it from rich benefactors.”” Not exactly on our side about taxing success!
 
What I found interesting in their short proclamation was they ‘didn’t reach for even more. The corporate tax rate – which was permanently dropped 14 percentage points by the Tax Cuts and Jobs Act (TCJA) raises a significant amount of money if it could roll back. 
 
For every percentage point they move it up, they can bring roughly $100 billion into the coffers to help pay for the large number of “free” items that we all know ‘aren’t really free!
 
If “saner” minds can hopefully talk progressive policymakers down off the ledge of a wealth tax, we know there are more direct threats to the Estate tax than just an editorial screed. As we reported earlier, the House Ways & Means Committee has already approved a bill to rollback the doubling of the Estate Tax exemption included in the TCJA. 
 
We ‘don’t expect that vehicle to see legislative action anymore as we believe it was just a “marker” for the House Democrats to outline their tax priorities in any tax extenders final package. 
 
However, it ‘doesn’t end there!
 
Just this week a Senator proposed hiking the estate tax to benefit Social Security. Senator Chris Van Hollen (D-MD) introduced a bill, the Strengthen Social Security by Taxing Dynastic Wealth Act, which would return the estate tax exemption to 2009 levels, and also raise the top estate and gift tax rate to 45% from 40%.  
 
“I can think of no better way to use that revenue than to strengthen Social Security,” Mr. Van Hollen said in a statement.
 
“This program has been under attack in recent years, and we must fight to protect it. With this new legislation, we can ensure all hardworking men and women have financial security in their later years — not just the wealthy few.”
 
Sadly, we believe more is to come. We are hearing that the House Democrats want to address the State and Local Tax Deduction (SALT). As you may recall, the TCJA limited the SALT deduction to $10,000, and the limit is not indexed for inflation. Previously, taxpayers could have deducted from taxable income all their state and local property tax as well as either their income or sales taxes. 
 
This provision mostly hurt “blue” states like New York, New Jersey, California, Connecticut and Maryland where the high state and local taxes were ignored as they could just be credited to an individual’s federal tax liability. We ‘don’t yet know exactly what changes are being envisioned by the House (full repeal, raising the $10k limit, etc.) but we do know that they have penciled in “taxes on the wealthy” to pay for what is ostensibly a give back to the wealthy since more than 96 percent of the people impacted by SALT are those in the top 20 percent of the income distribution (those making $150,000 or more in 2018). 
 
We will continue to oppose these measure and work to educate policymakers on the ill-advised attacks on the successful, but we need your help to make that happen!
 
Forbes takes a deeper look at the consequences of a couple recent Supreme Court tax rulings in North Carolina v. Kaestner and Minnesota v. Fielding. 
 
CAPITOL HILL HAPPENINGS
 
Work on obtaining co-sponsors for Estate Tax Repeal continues and our efforts have garnered four additional co-sponsors in the House. Representatives Sam Graves (R-MO), Kevin Hern (OK-1), Dan Newhouse (R-WA), and Vicky Hartzler (R-MO) all signed on bringing the total number in the House up to 112!
 
 
CAMPAIGN TRAIL
 
BIDEN: Former vice president Joe Biden took advantage of a loophole in the tax code that Barack Obama tried to plug. The Wall Street Journal’s Richard Rubin reports: “Mr. Biden and his wife, Dr. Jill Biden, routed their book and speech income through S corporations, according to tax returns the couple released this week.
 
They paid income taxes on those profits, but the strategy let the couple avoid the 3.8% self-employment tax they would have paid had they been compensated directly instead of through the S corporations. The tax savings were as much as $500,000, compared to what the Bidens would have owed if paid directly or if the Obama proposal had become law.”
 
 
SANDERS: ‘NO, MINUS ONE’: Haim Saban, the billionaire Democratic donor, spoke with The Hollywood Reporter ‘s Tatiana Siegel about which presidential candidate he might back. “‘We love all 23 candidates,’ Haim says, then pauses. ‘No, minus one.
 
I profoundly dislike Bernie Sanders , and you can write it. I don’t give a hoot. He’s a communist under the cover of being a socialist. He thinks that every billionaire is a crook. He calls us ‘the billionaire class.’ And he attacks us indiscriminately. ‘It’s the billionaire class, the bad guys.
 
‘ This is how communists think. So, 22 are great. One is a disaster zone.'” 
 
In an op-ed for The Post, Bernie Sanders writes that racial equality can be met by attacking the wealth gap: “Example after example shows that corporate exploitation disproportionately affects black people. Black Americans lost 40 percent of their wealth in the 2009 housing crisis, and were the target of predatory lenders.
 
Black Americans are more likely than white Americans to be paid a minimum wage salary, and black Americans stand to benefit disproportionately from a $15 an hour federal minimum wage. … The racial wealth gap lingers in part because the politicians who could close it are funded by the very corporate donors who continue to benefit from it.
 
Gross inequality persists largely unchallenged despite the United States’ massive wealth because myths about racial inferiority and the ‘undeserving poor’ justify the worst effects of unfettered capitalism. As long as corporations can rely on the indifference to black lives as a cover for their exploitation, they will continue to do so.”
 
 
 
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STATE NEWS
 
New Jersey:  “They can’t tax us anymore, the middle class is getting wiped out,” former “Saturday Night Live”cast member and New Jersey resident Joe Piscopo told FOX Business’ Neil Cavuto on Friday, adding that wealthy individuals are leaving the state “in droves.” The current top income tax rate on individuals in New Jersey is more than 8 percent, as it is in neighboring New York. The SALT cap has hit high-tax states like New York, California and New Jersey particularly hard. As a result, affected residents have begun to move to other states – a trend that experts expect to accelerate.
 
As expected, Gov. Phil Murphy of New Jersey signed a state budget on Sunday, right ahead of the deadline — and he wasn’t happy about it, largely because it didn’t include a millionaires’ tax. 
 
@realDonaldTrump at 10:47 a.m.: “Congratulations to legislators in New Jersey for not passing taxes that would have driven large numbers of high end taxpayers out of the state. Many were planning to leave, & will now be staying. New York & others should start changing their thought process on taxes, fast!”
 
 
New York: New York’s new “mansion tax” is spurring rich people there to hurry up and close deals on homes sales, The New York Times says. “The new tax isn’t causing more new sales, but is motivating earlier closings,” a real estate appraiser tells the paper, by “essentially pulling sales that would have organically closed in July, August and September to beat the tax.” The tax, which took effect July 1, tops out at 3.9 percent on sales of $25 million or more.
 
Norwegians want to start businesses in New York because the taxes there are so low? Yup. “Hundreds of these startups are raring to go, say business executives,” the New York Post reports. “While the Big Apple’s cost of living and taxes are among the nation’s highest, it doesn’t compare by a long stretch with that of Norway, with its total tax burden of roughly 45 percent of GDP,” the paper says. In Norway, “personal income tax rates hover around 40 percent. Corporate profit tax ranges from 28 percent to as high as 78 percent.”
 
 
WEEKEND READS
 
Democrats want to eliminate corporate tax cut but their tax measure avoids it There’s no lack of plans from Democrats paid for by undoing at least part of the huge 2017 corporate tax rate cut. But the only Democrat with a tax bill currently moving through Congress is pointedly not talking about revisiting the lower 21 percent rate. 
 
 
 
Taxing the wealthy The Hindu Business Line… on wealth above $1 billion as against no wealth tax at present; and an estate tax (imposed on the transfer of property upon death – nick named ‘death tax’) at the top rate of 77% (proposed by Bernie Sanders ) as against the current …
 
 
 
MarketWatch reports that itemized charitable contributions dropped by $54 billion in 2018compared to 2017, citing IRS statistics. That seems to bear out fears among charities that contributions would fall as a result of the Tax Cuts and Jobs Act’s doubling of the standard deduction. MW also reports that refunds were up for the wealthy. Those “with adjusted annual gross incomes between $250,000 and $500,000 were refunded $14.6 billion this year, compared to $10.6 billion last year,” MW reported.
 
“Likewise, taxpayers with adjusted gross incomes between $500,000 and $1 million were refunded $6.1 billion, up from the $5.2 billion a year earlier. Meanwhile, taxpayers making between $100,000 and $200,000 were refunded $44.1 billion this year, down [from] $49.7 billion a year earlier. With some exceptions, refunds were slightly lower this year for earners making less than $100,000.”
 
 
 
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