Category: Taxes

Doubling Down on the Stupid

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It’s one of Barack Obama’s Stupid Minions™, HUD Secretary Shaun Donovan said on the Sunday talk shows that a renewal of the new home buyer tax credit might be coming back.

This is unbelievably stupid on a number of levels. First people who are considering buying homes will hold off, waiting for the tax credit, second, it’s really bad policy, that cost taxpayers something like $80K for each additional home sold.

Now there have been tepid denials from HUD, but this sort of crap should not be happening.

Great Googly Moogly.

H/t Atrios.

Barney Frank: Missing the Lede on the GSEs

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The headline, of course is that he is calling for the gradual elimination of Fannie Mae and Freddie Mac:

“I think they should be abolished,” Frank said. “The only question is what do you put in their place. This is a situation where given the importance they had come to play in housing, you can’t tear down the old jail until you build a new one. And that’s a process that we’ve started.”

This is legitimately a big news story, but the rest of his proposal is far more revolutionary. He is a calling for an end to government subsidies to home buyers:

Frank went on: “I have been very critical for a long time that not everybody should be a homeowner. There are people in this society who for economic and frankly social reasons can’t and shouldn’t be homeowners. I do want some government help to build affordable rental housing.”

It’s this 2nd point that is a big deal. While the GSEs (Government Sponsored Entities) were a vanishingly small part of the housing bubble, as house prices exploded, their share of the market fell precipitously, what was a huge part of the market was the enormous subsidies made available to both home buyers, sellers, builders, and agents.

This distorted the market in some very profound ways, and it is very likely that if these measures had not been in place, we would have seen neither the bubble nor the crash.

We sacrificed our economy on the alter of home ownership.

It’s Not, “Not So Bad,” It Sucks

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It appears that lawmakers on both the state and federal level are starting to look at the salaries of senior executives for tax-exempt organizations.

What I love is the quote from M. Cass Wheeler departing CEO of the American Heart Association:

“If you peeled all that [outrageous supplemental pension and other provisions] back, you’d get to a base salary less than $600,000,” he said.

OK, so your base is almost 1½ times that of the President of the United States of America, and you are doing charity work, and we are supposed to be OK with that.

No, we aren’t.

Neither should we be OK with hedge fund managers making over a billion dollars a year, but for non-profits, we are subsidizing the donations that pay their salary.

Enough.

I would note that the most egregious examples are in “not for profit” hospitals, which would imply to me that these institutions are “not for profit” as a fig leaf.

Signs of the Apocalypse, Republican Tax Cuts Edition

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Who is the latest economics notable criticizing the Republican desire for never ending tax cuts?

Why it’s 1980s wunderkind David Stockman, who was Ronald Reagan’s director of the Office of Management and Budget.

Not only does he excoriate supply side, “Tax Cuts Pay for Themselves,” mentality, he lays the financial crisis at the feet of these policies.

We are living in Bizarro world when David Stockman is the voice of reason.

I’m Buying Futures in Fig Newtons and Ice Cream Sammiches

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It appears that California’s Proposition 19, which would legalize and tax marijuana in the state has support fairly consistently polling ahead of opposition.

It should be noted that on human mediated polling, the initiative is down by between 1% and 4%, while in automated polling it is ahead by 10% and 16%, which Nate Silver thinks this is largely because people do not want to tell another person that they are voting for pot, though automated polls might miss minorities who tend to be more opposed to legalization.

I think that it will pass, because it is being sold on unrealistic magical thinking: If you vote for pot, and it is taxed, then California’s fiscal crisis is washed away by a font of “potro-dollars”.

This argument has a grain of truth, reduced costs of enforcement and the resulting criminality, along with the tax revenue, are not insignificant, but it’s not enough to fix the state that was ruined by the California voters and their initiative petition process.

What BTD Says

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There seems to be a push by the blue dogs and DINOS to try to make some portion of the disastrous Bush tax cut permanent.

Of course, most the Republicans won’t vote for it unless it keeps tax cuts for millionaires, and so it needs liberal Democratic votes to pass.

Well, the the blogger formerly known as Armando has this right, the best course of action absent some major concessions from the Blue Dog types is to do nothing, and let taxes go up, particularly the inheritance tax, which will pay for the loss of revenues this year in about 18 months if it returns to its old levels:

But it is not for progressive Dems. In short, to hell with Baucus and Reid on this issue, Progressives can get what they want by simply making sure nothing happens. They have the bargaining power now. Time to use it.

All that needs to happen for the taxes to be repealed is to do nothing.

Doubtless, the Obama administration will twist arms over this, since he promised people making less than $¼ million a year that he would not raise taxes, but he also promised to support a public option, to get us out of Iraq, repeal Don’t Ask Don’t Tell, and have a serious look at torture and other war crimes by Bush and His Evil Minions™.

I don’t see any reason for liberals in Congress to go out of their way to support Obama on bad policy promises if he won’t fight on good policy promises.

Even a Stopped Clock…………

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And Alan Greenspan are actually correct every so often:

Former Federal Reserve chief Alan Greenspan believes Congress should let the tax cuts enacted by President George W. Bush expire for all Americans in order to address the widening deficit, according to a TV interview airing Friday.

“They should follow the law and let them lapse,” Greenspan told Bloomberg TV’s Judy Woodruff.

The 2001 and 2003 tax cuts are due to expire at the end of the year. President Obama had promised to make them permanent for families making less than $250,000.

As to Obama’s promise to people making less than 250K, it would necessarily involve deal cutting which would require some sort of very expensive sop to the rich, so just put this in the category of another Obama promise not kept, and let the rich pay more.

The amount saved by folks making less than 250K amounts to just a few bucks a week.

Of course, that is not what is going to happen. Instead, Obama will propose an extension on the lower income tax cuts, and then he will propose tax cuts for the wealthy, basically giving away the store at the start of negotiations, and then the Republicans, and Ben Nelson, and various Blue Dogs, will go and lard it up with more give aways for the rich, most likely give aways on interest, capital gains, and dividend income, and Obama will declare victory, and sign it.

My suggestion would be to make the proposal, and raise the marginal tax rate for folks over 250K, to something on the order of 85% for income over $10 million a year.

Start there, and you may actually get a good tax bill.

Seriously, soaking the rich is good policy and good politics.

Why You Should not Give to the DSCC

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Because, will throw money at people like Blanche Lincoln, who, now that the primary challenge is done, is once again throwing her lot in with the rich bankers who are in the process of destroying our country.

This time, she and John Kyle, he of the “never need to pay for tax cuts for rich folk,” fame, have introduced an inheritance tax bill that is a big wet kiss for the richest families in the United States:

Their proposal would require Democratic leaders to amend the small-business jobs bill with a provision that sets the estate tax at 35 percent with a $5 million exemption. These amounts will be phased in over a 10-year period and also be indexed for inflation. In addition, inherited assets would be taxed at their worth upon transfer, not when the deceased purchased them.

Of course, because of the way the Bush and His Evil Minions™ wrote his tax cuts, there is no inheritance tax at all this year, but next year, it goes back to 55% and a $1 million exemption, and, quite honestly, the “liberal” proposal is a $3.5 million exemption and a 45% rate.

Of course, when given a choice between giving something to rich heirs, and giving everything to those same heirs, Blanche Lincoln goes with giving money to the useless heir class.

The first broad based tax adopted by the founding fathers was an inheritance tax. They did it because they realized that dynastic wealth was corrosive to the republic.

But Blanche Lincoln needs those campaign dollars, so f%$# the budget and American people.

It goes without saying that the Democratic Senate Campaign Committee is backing her to the hilt, which is why you shouldn’t give to the DSCC when they come calling.

Unambiguously Good News

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For the first time since the 3rd quarter of 2008, State tax receipts rose in the 1st quarter of 2010.

The obvious bit of good news here is that increasing tax revenues means that there is more hiring (income tax) and buying (sales tax), but there is another significant effect.

49 states, all of them but Vermont, are required by their constitution to run balanced budgets, and what this has meant is that the state governments have had to act like 49 little Hoovers, cutting budgets and staffing in the midst of the worst downturn since the great depression.

The turnaround in tax revenue means that the spending cuts can stop, which removes a drag to those state’s economies created by budgetary retrenchment as well.

You Cannot Negotiate With the Insane

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A hack writer once said that, “A gaffe is when a politician tells the truth.”*

Well, John Kyle just had a bit of a gaffe.

He just said that tax cuts never need to be paid for, just spending:

You cannot run a hospital with people who believe in bleeding and leeches.†

There is simply no basis for rational cooperation with moonbats.

[on edit]

I should note that insanity is the best spin on what Kyle said. A more likely interpretation is that the real goal here is to create deficits at such a level that cuts government, particularly to social services,‡ are inevitable.

It’s called, “starve the beast.”

H/t Ezra Klein.

*Michael Kinsley, who is evidence that mindless contrarianism is never a substitute for real insight.
†Yes, I am aware of the fact that there are actually medical treatments that involve bleeding and leeches,most notably iron poisoning and reattaching limbs, it’s a metaphor.
‡But of course, we must never ever reign in our bloated wasteful Pentagon.

Timothy Geithner Can Bite My Shiny Metal Ass

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So, with all the talk of screwing the ordinary guy on the social safety net through Barack Obama’s Pete Peterson sponsored catfood commission, Timothy “Eddie Haskell” Geithner still has the time to promise people who never worked a day for their money that they will pay less in taxes than the guy at McDonalds:

Obama administration will keep tax rates at levels that benefit job-creating businesses and limit taxes on capital gains and dividends, U.S. Treasury Secretary Timothy Geithner said on Wednesday.

Interviewed on CNBC’s “The Kudlow Report”, Geithner said the intent is to extend and keep in place tax cuts that should benefit 95 percent of businesses.

“We’re going to make sure that we keep at 20 percent the existing rates on dividends and capital gains,” Geithner said. “We think that’s good policy.”

Call me a commie, but I think that people who work for their money should pay less, not more in taxes than the trust fund babies who haven’t lifted a finger for their lifestyle.

Lies Conservatives Give Us

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Like the one that higher marginal tax rates stunts the economy and hurt the ordinary people.

Paul Krugman looks at the data, and notices that median family income stalled out once we started cutting the top tax rate:

You can see why: the facts are embarrassing. Here’s a rough-cut version. The blue line, left scale, shows median family income in 2008 dollars; the red line, right scale, shows the top marginal tax rate, a rough indicator of the overall stance of policy. Basically, US postwar economic history falls into two parts: an era of high taxes on the rich and extensive regulation, during which living standards experienced extraordinary growth; and an era of low taxes on the rich and deregulation, during which living standards for most Americans rose fitfully at best.

I would also add that the flattening of income growth also happened as more and more of these families became two earner families.

So the addition of the 2nd earner also masked a very real drop in wages of ordinary people.

We want the marginal rate back above 75, and we want the lower taxes on unearned income, capital gains and dividends, to be reversed.

Money does not trickle down, it bubbles up, and money that goes to paying billions to hedge fund managers and other criminals is money that is taken from ordinary families who play by the rules and work for a living.

Good Politics, Good Policy

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The Democrats in the New Jersey statehouse have passed a bill to raise income taxes on people earning more than $1 million a year, and predictably, the wingnut governor is promising a veto:

Lawmakers in New Jersey’s Democrat- controlled Assembly voted to raise income taxes on residents earning at least $1 million a year, as Republican Governor Chris Christie said he’d veto the bill.

The chamber passed the measure 46-32 in a vote that broke down along party lines. Of 33 Republicans, 32 voted no. The Senate approved the bill 23-17 along party lines, setting up a showdown with Christie, 47, as the deadline approaches to have a balanced budget in place when the fiscal year ends on June 30.

“We’ve got a lot of people who can’t afford to pay their taxes” and need the rebates that the measure may restore, Assembly Speaker Sheila Oliver said before the vote. “Six- hundred thousand older adults would be better off.”

So now you have the Democrats lining up against Goldman Sachs traders, who get paid obscene amounts to screw their clients and other counter-parties with the guarantee of taxpayer money should they fail.

The optics are perfect, and the policy of making the wealthy pay for the damage that they cause, which has the side effect of providing a less recessionary impact on the state economy, is just plain good policy.

This is a win-win, and Dems should jam up Republicans like this more often.

It Looks Like the Hedge Fund Tax Loophole May Be Gone Soon

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As some of you are aware, the bulk of hedge fund managers’ income is taxed at the capital gains rate of 15%, rather than the 35% on amounts in the 6+ figure range that mere mortals pay.

Basically, they get a slice of the increase in price of their assets, even though they never put a dime of their own money in. It’s called “Carried Interest.”

Well, it appears that both Max Baucus (DINO-MT), who slowed down healthcare refiorm waiting for non-existent republicans to come on board, and Barack Obama’s Director of the Office of Management and Budget, Peter Orzag, have decided that it would be a good think to put a stake through the heart of this loophole in the interest of deficit reduction.

The money quote is this:

Hedge fund managers make hundreds of millions of dollars (and often billions) annually. Does anyone really think they will suddenly slam on the brakes if they have to pay the same tax rate as the janitors who clean their offices?

This makes this both good policy and good politics………For the win.

A British Patriot

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J.K. Rowling, author of the Harry Potter series:

No, I’m afraid not. The 2010 election campaign, more than any other, has underscored the continuing gulf between Tory values and my own. It is not only that the renewed marginalisation of the single, the divorced and the widowed brings back very bad memories. There has also been the revelation, after ten years of prevarication on the subject, that Lord Ashcroft, deputy chairman of the Conservatives, is non-domiciled for tax purposes.

Now, I never, ever, expected to find myself in a position where I could understand, from personal experience, the choices and temptations open to a man as rich as Lord Ashcroft. The fact remains that the first time I ever met my recently retired accountant, he put it to me point-blank: would I organise my money around my life, or my life around my money? If the latter, it was time to relocate to Ireland, Monaco, or possibly Belize.

I chose to remain a domiciled taxpayer for a couple of reasons. The main one was that I wanted my children to grow up where I grew up, to have proper roots in a culture as old and magnificent as Britain’s; to be citizens, with everything that implies, of a real country, not free-floating ex-pats, living in the limbo of some tax haven and associating only with the children of similarly greedy tax exiles.

A second reason, however, was that I am indebted to the British welfare state; the very one that Mr Cameron would like to replace with charity handouts. When my life hit rock bottom, that safety net, threadbare though it had become under John Major’s Government, was there to break the fall. I cannot help feeling, therefore, that it would have been contemptible to scarper for the West Indies at the first sniff of a seven-figure royalty cheque. This, if you like, is my notion of patriotism. On the available evidence, I suspect that it is Lord Ashcroft’s idea of being a mug.

You will inevitably find people, both in the UK and the US who will make noise about moving their primary residence, or their company’s “headquarters” to some other country because of taxes or regulations that they do not like.

These people are Quislings, and they should be viewed as the lowest of the low, and their opinions should be of no concern of any person who cares about this country.