Trickle-Down Misinformation

One of my nephews—a good and smart kid (actually past 30 and becoming a father next month but they're all forever kids to me), but with some manosphere items in his media diet—told his mom that the Trump administration is going to free everybody who earns under $150,000 a year from paying any federal taxes, or at least federal income tax, and she texted me to find out what I knew about this, which at that point was pretty much nothing (my first thought was I'd heard something that might have sounded like this but actually meant something different). But it hasn't been reported by The New York Times or The Washington Post or NPR, perhaps because they don't want anybody to know what a generous populist our president is.

In fact there really is something, though I wasn't able to trace such a plan to Trump himself. Trump has definitely talked about eliminating income tax for everybody, and the 16th Amendment, altogether, and going back to the McKinley era when the federal government was entirely financed by import tax revenues or tariffs. I believe that's a very long-term aspiration: right now, individual income taxes raise just short of a trillion dollars a year ($959 billion), 51% of government revenue, along with something like another trillion in corporate taxes, while tariffs bring in $35 billion, or 1.9% of the total. If Trump went as far with the tariffs as he's suggested he'd like to do, Peterson Institute calculates he could get that up to $225 billion, or a little less than a quarter of the way to replacing personal income tax (causing a massive recession along the way as the prices on imported consumer goods rose to make up for it, and an international financial crisis as US consumers stopped buying imported goods such as steel, aluminum, motor vehicles, appliances, food, lumber, and so on, and turned to housing themselves in Hoovervilles and eating at breadlines, so that they'd never raise that much revenue anyway; probably bankrupting the Social Security trust fund and Medicare too, as all the newly unemployed workers stopped paying the payroll tax!). 

It turns out, however, that the more modest proposal for incomes under $150,000 comes from our clownish billionaire secretary of commerce, Howard Lutnick, as he told CBS in an interview on Wednesday:

I know what his goal is — no tax for anybody making under $150,000 a year. That's what I'm working for...

That's 93% of the population, though only about 25% of the individual income tax revenue, but sounds like he's eliminating the payroll tax (another $1.5 trillion a year) as well. And he remains committed to renewing the 2017 tax cuts especially benefiting the wealthiest, and a further reduction in corporate income tax (so we can lure businesses home from Ireland). But then maybe those DOGEboys will find a way to cut $2 trillion a year from the budget one of these days, and then there are those $5 million "gold cards" buying you instant permanent residence, if you could sell those to something like 40,000 billionaires per year you'd practically be home free. No, there aren't that many billionaires, or centimillionaires (something over 28,000 in the world, a pretty large number already Americans) either. 

But then again, who needs Social Security? Not Howard Lutnick's 94-year-old mother-in-law, though she does appreciate it when the check shows up:

"Let's say Social Security didn't send out their checks this month. My mother-in-law, who's 94, she wouldn't call and complain," Lutnick — a billionaire former Wall Street CEO — told the billionaire "All In" podcast host Chamath Palihapitiya. "She just wouldn't. She'd think something got messed up, and she'll get it next month. A fraudster always makes the loudest noise, screaming, yelling and complaining."

It's only a bunch of malcontents who think they're entitled to it (they are, that's why it's called an "entitlement"), and they're probably fraudsters (they aren't).

And the reason The Times and WaPo and NPR haven't reported the story of the near-universal income tax exemption is that it's not ever going to happen, but isn't quite funny enough (unlike the plans to conquer Greenland, or the cheerful indifference to money of Mrs. Lutnick's mom). Or even Fox News or New York Post, as far as I can tell

But it does get picked up by Newsweek and Forbes and Reuters, and the Hindustan Times and the Farm CPA Report, and taken pretty seriously by the libertarians of Reason and Mint and the Committee for a Responsible Federal Budget, and from there down to a goodly number of bottom-feeding YouTubers like Mr. Snyder up at the top of the page, and that's how it gets out to the Internet, and somebody says, “Wow, if I ever make $150K this is gonna save me $24,000!”

Two, Three, Many Reconciliations

Janet Yellen, photo by Brendan Smialowski/AFP via Insider but I think it belongs to Getty.

Speaking of taxes, there is heartwarming tax news coming from everywhere all of a sudden, starting I guess from the Senate Parliamentarian, Elizabeth McDonough, who has ruled not just that the Senate is permitted to consider a second reconciliation bill this year (because the first one replaced the fiscal 2021 budget bill that the Trumpies and McConnell failed to work out last year) but actually three bills, meaning three more bills that can be passed with just 51 votes (48 Democrats, Sanders and King, and Vice President Harris and zero Republicans). 

I'm seeing very little coverage of why this is, from the usual suspects, where reporters either don't know or don't think it's interesting, at The Times, CBS, or even Vox, so I thought I should devote a few words to that, via Center for Budget and Policy Priorities:

Small Ball

Seven Springs Estate near Mt. Kisco; after local authorities refused to let him build a golf course and 15 private houses on the estate, Trump used not-developing it as a conservation easement charity deduction, probably inflating its value, while writing off the property taxes as a business expense. Photo by Craig Ruttle/AP, with a report on how New York attorney general Letitia James is looking at the setup from a criminal standpoint.

Total Fake News

by Donald J. Trump

I didn’t call on you. I’m talking
to him. You should be more respectful
of this gentleman. You’re very rude to him.

But I will tell you that I look forward to
releasing that. I look forward to
releasing many things. I’m going to
release many things, and people will
be really shocked. But the New York Times
has been doing — it’s fake story after
fake story. I’ve never seen anything like it.

And people understand it, and people —
that’s why the — the media has such a
low approval rating now because of
what they’ve done. It’s really a shame.

Well, then, that's not fake news, is it? In a unique feat of reporting, The New York Times has uncovered evidence backing up one of Trump's most idiotic-sounding claims: that audit that his taxes are always under, year in and year out, really exists—

Will this be the most delicious headline of the Trump era?

Something like all of them, actually. Seems when they were scrambling around looking for ways to plug in the holes in the tax plan left by giving Collins her $10,000 mortgage deduction and Johnson his 23% deduction for pass-through income (instead of the 17-something in the draft) and the like, they grabbed at a passing hunk of driftwood that turned out to be the cancelled alternative minimum corporate tax and clung to it for dear life.

So in the bill as passed by the Senate over the weekend, the corporate tax, as you'll recall, is fixed at 20%, and there's an alternative minimum corporate tax which as it turns out is also fixed at 20%, meaning Mr. Corporation can decide either (a) to take no deductions and pay that basic 20% rate or (b) take all the deductions he can, but not so as to pay less than the alternative minimum 20% rate.

In short, all your corporate tax deductions will now be imaginary.

Does the House tax bill subject all Donald Trump's income to a 25% marginal tax rate?

Via. May I play through?

How much of a tax cut is Donald J. Trump hoping to give himself in this week's House bill?

I think the correct answer is it's not clear yet, but there's certainly a good chance that it's meant to get him down to a top marginal rate of 25%, and a likelihood that that's what it's intended for, him and people like him.

The crucial question is that of the taxation of what is called pass-through income, or income a person receives purely by virtue of owning a business.

According to the conservative economic orthodoxy, making money this way is more virtuous—more beneficial to society—than mere working, because when you invest your money, or one of your ancestors does it for you, you are taking the heroic risk on which capital itself depends, whereas if you're just putting goods and services together you're just selling your labor. Investors are makers, workers are takers, as Willard Mitt Romney put it, or was it Paul Ryan, and this is why investment income should be taxed at a lower rate than labor income, as we do with capital gains (when you cash in the profits on a previous investment).

I saw Mommy kissing the continuing resolution

Drawing by Thomas Nast, 1881, via Wikipedia.

Blogfriend Steve M, on holiday, surfaced on the Twitter to react to a piece of sublime idiocy from the tax crusader Grover Norquist:

Norquist: Liberals see government the way kids see Santa https://t.co/gwls1JUs56 pic.twitter.com/86fskyXM7k

— The Hill (@thehill) December 25, 2016

So your point is what, Grover? There is no government? Government is really your parents? https://t.co/eVc99er8AW

— Steve M. (@nomoremister) December 25, 2016

It struck me that there's actually something to that; not, I mean, that government is a bishop from Anatolia who's been dead for 16 centuries so we're foolish to believe it exists. Or that we should leave a plate of cookies and a glass of milk for the OSHA inspector because he's our dad. What Grover said, as opposed to what The Hill reported, is a little more sophisticated.

Bargain hunting

That X-Tax didn't last very long, did it?

Here's a Shorter David Brooks:

Republicans certainly have got themselves into a mess this year with the Grand Bargain and Fiscal Cliff and all. My suggestion is they should do it all over again in 2013, with a new and improved cliff.

No, seriously! He thinks they should make a reasonable deal with Democrats now, giving a little on marginal tax rates and taking a little on Social Security and Medicare (actually, raising Medicare Part B premiums from the current 25% of costs to 35% is not exactly a little), and one big ask:

the big demand would be this: That on March 15, 2013, both parties would introduce leader-endorsed tax and entitlement reform bills in Congress that would bring the debt down to 60 percent of G.D.P. by 2024 and 40 percent by 2037, as scored by the Congressional Budget Office. Those bills would work their way through the normal legislative process, as the Constitution intended. If a Grand Bargain is not reached by Dec. 15, 2013, then there would be automatic defense and entitlement cuts and automatic tax increases.

Indeed, why not make it an annual event? We could have Precipice Parties at popular lovers' leap locations around the country, with tailgate picnics, fireworks launched from canyon floors or riverbanks, and bungee jumping for the young folks. The whole democracy thing could take on a kind of messianic (as opposed to merely aspirational) character: we should understand that our budgetless situation is not something to whine about, but a consequence of human sinfulness, to be rectified by a Redeemer, one day.

Anyhow it will be great for Republicans, I'm sure.

Sin tax and semantics

Willard Mitt Romney, having sent out his henchman on July 2 to say that the Obamacare mandate nonpayment fine-tax is not a tax even though the Supreme Court had just decreed that it was, by a majority of minus-eight votes,* came out himself on July 4 to agree with the Court. This latest flip-twist, by the way, is more than just a fun example of the difficulty he has agreeing with himself. Although it certainly is that.

I don't think he's ever made it quite so clear that while he lies with perfect cheerfulness, it makes him cross when he has to contradict himself. If he said the Obama administration has raised taxes on the middle class by 300% and you showed him evidence that this was not true, he'd just smile and repeat himself, quite comfortably; but if you showed him video of himself saying that the Obama administration had not raised taxes on the middle class, he'd be visibly angry.

I don't know why it is—it could be part of his definition of manliness, that if you have a lie to tell you should just tell it, squarely and boldly, not going all vacillating and equivocal. But since he does, in fact, contradict himself often, he's almost always just this side of a real temper tantrum. [jump]

*Just kidding. Everybody knows that it was a 9-0, 1-3-1-4, 5-4, 5-4, 3-2-4 decision, as NCrissie B carefully explains, and the liberal minority signed that piece of it; but we're free to believe that they didn't really agree with it.