Tax Cuts

There is a lot of misunderstanding regarding Trump’s 2018 tax cuts. Polls say that only 17% of Americans believe that they got a tax cut whereas our IRS says that the actual number is 66%. My own daughter was doubtful that she got a cut because her refund wasn’t as large as before ... forgetting the fact that her tax withholdings throughout the year were smaller. When we went through the numbers together she was surprised at the size of her tax savings.

The media and demagogic Dems have played up the fact that it was corporations and the rich that got the majority of these benefits. Yes, corporations generally did benefit ... which is why the afterburners are on in our economy and the stock market is way up ... benefiting many retirement accounts. But, it is not true that, in general, the wealthy made out like bandits.

Let me explain. The new tax law had two zingers for many plutocrats — mortgage interest payment deductions were capped on loans of $750,000 AND real estate, state and local taxes were limited to a total of $10,000 if itemized. This latter construction meant that high-income people in high-tax states like New York, New Jersey, California, Connecticut, etc. really were punished in the itemized deductions column ... which generally meant that they ended up in that 34% of individuals who payed higher taxes.

Yes, the super-wealthy who could hire tax attorneys may have stopped some of this bleeding but, in general, it was the blue-state six-figure-income earners with big mortgages who payed more, and in many cases, much more income taxes last year.

QED.

TKO

Pat Buchanan said late last night that Mitt Romney won the first Presidential debate in a walk, “If it were a 16 round boxing match, Romney won 13 rounds.” I agree and I would even expand on his metaphor … it was at least a Technical Knock Out (TKO) for Mitt. In particular Romney said three things that caught my attention … and often went against his own self-interests:

1) Reluctant as he was to provide details about his proposals to broaden the income tax base, Romney did suggest one possibility … cap total itemized deductions at something like $25,000 or $50,000. This is a brilliant solution that primarily would impact the very wealthy and does not target any specific itemized deductions (which would create a political firestorm). For instance, Romney’s million$ of charitable deductions would no longer help reduce his income tax burden as in times past. To me this shows the level of true statesmanship from Romney … showing his rabid commitment toward reducing our nation’s deficits (and mimics my previous tax proposals ... see: Taxing Ideas).

2) When discussing what was wrong with the Dodd/Frank bill, Romney said that it did not get rid of “too big to fail.” This he said was a gigantic “kiss” to the five biggest Wall-Street banks (see: Huffington Post). What?!? Romney is conspiring against the gang that couldn’t shoot straight and that did a lot to cause the financial meltdown in 2008. He, of course, was right and I think it showed great courage to dis what is some of his financial support.

3) Even though Romney said he loved Big Bird and Jim Lehrer, he said he would nevertheless stop federal funding of PBS in order to help reduce government spending. I concur. Our government now gives this network close to a half billion dollars a year and this is supplemented by private donations; annual week-long auctions of donated goods; foundation and corporate largess; and now even actual ads of increasing length. Basically PBS is now a fully commercial network and Romney (and I) think that it is now time for our government to back away. Perhaps this would mean that some of the producers and personalities on this network would take a hit to their high six-figure take-homes (see: Big Bird Dollars), but I believe that they will easily survive.

I now look forward to the remainder of these debates with greater optimism.