Category Archives: Taxes

Fake campaign promise by Trump to lower taxes has reduced his Presidency to swimming in the swamp

“If you’re single and earn less than $25,000 per year, or married and jointly, and jointly earn less than $50,000 – so very important – if you’re single and make less than $25,000 or married and jointly earn less than $50,000, you’ll not pay any income tax. Nothing.” – Donald Trump

September 29, 2015

@2:00 – Less than $25,000 or jointly less than $50,000, pay no taxes


February 3, 2017

In January President Trump took office and almost immediately lowered the benefits of his “middle class” tax plan. Suddenly, the $25,000 and $50,000 standard deductions promised on the campaign were slashed 40% to just $30,000 and $15,000. Continue reading →

GOP plan to end “Death Tax” means the billionaires will be overjoyed, while the rest of us pay the bills

Tuesday, 4/4/17: examining entire fake “Russian Dossier” on Donald Trump!

Estate tax percentages have varied in recent history, ranging from 55% in 2000 under George Bush #1 to 35% under Barack Obama and now 40% under Donald Trump. The GOP wants it to be zero.

300px-Estate_Tax_Returns_as_a_Percentage_of_Adult_Deaths,_1982_-_2010Currently, couples with less than about $11,000,000 pay no estate tax. On amounts above that, the government takes 40% for taxes. The history of the estate tax revolves around the desire for fair taxation of the richest Americans to pay for public programs.

Eliminating the estate tax will aid any couple who die with more than $11 million (current deduction), and the GOP argues that this would affect many small businesses, which would have to sell land or equipment to pay the tax.

I have an idea that should please the GOP and still maintain some sanity in our progressive tax system. This is in addition to the 123 Plan, which easily adds $54 billion in revenues to the federal budget this year.

Only apply the estate tax to those whose estates are $1 Billion or more, but raise the rate to Bush #1 rate of 55%.

That would generate $1,514,425,000,000, or $1.5 Trillion that the rest of us won’t have to pay in income and other taxes. This revenue is calculated by taking the total current Forbes wealth of all American billionaires and assuming they will die someday and have to pay the estate tax.

If there is no estate tax, they will avoid $1.5 trillion in taxes.

Who are these billionaires. Check the list Continue reading →

Trump financials detail his vast business holdings; reducing value of studying individual tax returns

While the study of tax returns may have meaning for individuals, it has far little information than the assets and liabilities of a business. I learned this in the process of buying and selling newspaper companies in the 80s and 90s.

donald-trumps-penthouse-apartment-trump-tower-new-york-profileDonald Trump’s holdings are vast, and they are so diversified that any analysis of how each of hundreds of corporations makes a profit, would take yards of paper and millions of entries.

But Trump’s required election bid financial disclosure form shows how his empire works and could provide many hours of conjecture. Continue reading →

Primary debates hide questions on Social Security! If we knew their actual plans, nearly all would lose

socsec1

Republican candidates for President have avoided using the Primary debates to explain their plans for Social Security. Exceptions include Chris Christie, who saw his ratings collapse after publicly urging that the retirement age be hiked, and Donald Trump, who said he would not cut benefits.

Ben Carson has not settled yet on a stance, except to remind us that life expectancy has increased. As a doctor, he must realize that today, fewer babies die at birth and feeble seniors are kept alive, but not active, for decades.

On the Democrat side Hillary Clinton and Bernie Sanders want hikes in benefits for lowest earners and some kind of increase in the payroll wage tax cap.

First, the GOP.

  • John Kasich, Ted Cruz, George Bush and Marco Rubio all want to raise the retirement Continue reading →

Heritage hates Obamacare – plans “Impoverishcare”

Healthcare.gov has my email address, because I once searched for plan information on the site, and now the artificial intelligence – or just perhaps an algorithm – has decided to pester me to sign up or pay a penalty. Having fooled the system (because I can’t get Obamacare since I passed my 65th birthday), I checked some prices to see the cost of  plans for my neighbors, assuming a family of two parents and two teenage children.

Cruz-at-Heritage-Foundation

Rafael Edward “Ted” Cruz

It’s not a pretty picture. Without premium subsidies, all of the so-called Obamacare Bronze plans cost about $900 a month, or $10,800 a year. All of them have a deductible of about $12,000, which adds up to a total cost of $22,800 – before you receive one penny of health insurance. It’s all on you – just put pennies in the jar each January and set aside 2,280,000 as your personal Copper plan. Actually, someone should call the coppers for allowing such a ripoff junk health plan.

The missing ingredient in this analysis is that the government (middle class taxpayers) provides a subsidy to our average $50k-a-year household of four, amounting to $800 or so per month. That money goes directly to the insurance company. You pay the difference in premiums and you also pay all that $12,000 deductible. It seems insanely expensive – between contributions from taxpayers and subscribers – and some might say a windfall for insurance companies, a deal that was negotiated by Chicago’s current mayor under assault, who is also a former investment banker.

The Democrats may have bowed to the healthcare industry, prostrated their principles, humiliated party members, destroyed the President’s legacy and may even made Valerie Jarrett unhappy, but things might get even far worse.

Enter the GOP and its brainiacs at the Heritage Foundation. They have a plan that makes Obamacare look like heaven with 72 virgins (persons, of course) and unlimited six packs of Continue reading →

Trump card is the minimum wage. My bet: he just lost any chance of winning the Republican Presidential nomination

serfIn the Middle Ages an average duke or earl’s property was about 38,000 acres, and the “little people” grew the food and paid taxes to these aristocrats of yore, and the humble were called serfs and lived like dogs to support the castles for the very few.

The present crony capitalism is different. Our aristocrats elect public officials, set prices by corporations, and there are no serfs, just the “working class.”

Today’s lords and masters also make the dukes of old look like the pikers that defended them. Donald Trump, for example, boasts about $9 billion in wealth. That wouldn’t just buy him 39,000 acres, but at $10,000 an acre, he could acquire 900,000 acres or 1,400 square miles – enough to fit all New York City’s boroughs inside – four times – and still have 200 square miles remaining for golf courses and towers. At that size, Trump’s land could hold 40 million inhabitants at NYC density.

Asked if he is in favor of raising the minimum wage this week:

trumpDONALD TRUMP: I can’t be, Neil (Cavuto). And the reason I can’t be is [that] we are a country that is being beaten on every front economically, militarily. There is nothing that we do now to win. We don’t win anymore. Our taxes are too high. I’ve come up with a tax plan that many, many people like very much. It’s going to be a tremendous plan. I think it will make our country and our economy very dynamic. But, taxes too high, wages too high, we’re not going to be able to compete against the world. I hate to say it, but we have to leave it the way it is. People have to go out, they have to work really hard and have to get into that upper stratosphere. We can not do this if we are going to compete with the rest of the world. We just can’t do it. – most recent Republican debate

Donald Trump has a mixed bag of economic solutions, many bereft of the international Continue reading →

Jeb Bush wants to steal $48,060 from each of us with brutal Social Security cuts. His rich backers are overjoyed at scheme!

SIMI VALLEY, CA - MARCH 08: Former Florida Governor Jeb Bush speaks at the Reagan Library after autographing his new book

He doesn’t need no “stinking Social Security”!

The median Social Security benefit in the United States is $1,335 a month, before they take out monthly $100+ in Medicare premiums. Jeb Bush, the somewhat fat and very goofy brother of former President George Bush, wants to steal that benefit, not for one month, but for 36 months, or a total of $48,060. What will you get in return – probably just a chance to say you contributed to lower taxes for rich families like the Bushes.

Jeb thinks this plan will win him the Presidency, which is why it was announced today with a peculiar thought process  that surrounds most petulant aristocrats. Jeb knows the very rich just don’t need Social Security. Most make more in a day than you will earn in benefits in a year.

The math of these cuts is revealing. About 99% of the folks who currently live to 67 Continue reading →

If we extend Social Security benefits to the richest, we can stop fiscal hawks’ insane crusade to raise the retirement age to 70

Casa Casuarina

Opulence of the late Gianni Versace’s Casa Casuarina $125 million estate in Miami (now a boutique hotel) suggests that some homeowners have the means to help us better fund Social Security by increasing FICA cap.

Under the current Social Security rules, anything we do that creates a higher percentage of low paid workers than currently, results in a larger deficit for the entire government pension system and hastens the day when less money is paid into FICA taxes than is paid out in benefits. The reason: Social Security has been “adjusted” many times by politicians to become an extremely regressive program. As a result, the more you pay in FICA taxes, the lower the percentage of benefits you receive from those contributions.

Your salary and wage FICA tax is 6.2% up to $118,000 in 2015 earnings. Under the law your employer has to match this amount. Earnings above $118,000 are exempt from the retirement portion of FICA. Interest and dividend income is also exempt. If you are very rich and don’t need to work at a job, your income should be free of FICA taxes, unlike the servants in your home or the waiter at your country club.

Businesses don’t like to pay for pensions, and most of these programs for retirement are disappearing, and instead employees are offered 401Ks, savings that you fund with your own money. The only contributions from the employer (unless you have a union contract) are from the goodness of their heart. Fewer and fewer companies now offer such contributions (goodness) to 401ks, simply because they can get away with saving money by not partially funding your retirement.

Even without many company pension plans, some politicians still argue that enough is enough and we cannot pour more money into “entitlements” – Social Security, Medicare and Medicaid. (Actually, Medicare and Social Security are paid benefits, and Medicaid is a program to help the very, very poor.)

With a 401k at 67 and your mortgage paid, why would you need Social Security? Saving your money in a 401k and self-funding your silver years, sounds like a great concept, except…

The average retired couple receives about $21,000 in Social Security benefits. From that money they pay a Medicare premium of about $2,400, supplemental Medicare insurance of about $3,000, average prescription costs of $2,000, plus a few hundred dollars each time they are admitted to the hospital and they are responsible for all of their expenses for dental, hearing aids etc. With such basic medical bills, there’s not a great amount remaining for real estate taxes, transportation and food.

How much do you need in savings to replace that “inadequate” average Social Security benefit. At 2.1% net interest after inflation, $1,000,000 is required to pay out $21,000 a year. An average American household income of $50,000 (before taxes), requires you to save $25,000 a year for 40 years, exclusive of interest earned and inflation adjustment.

The deficit hawks in the White House and Congress, who want to reduce Social Security cost of living (COLA) adjustments, hike retirement age to 69 or 70, and means test the program to eliminate higher earners from benefits, are wrong-headed in a moral sense and ignorant in a critical economic analysis.

Rather than taking from the middle class, it would be wise to extend a program called overly generous by its detractors, to everyone. And, save money at the same time.

The dirty secret is that increasing the FICA income cap from $118,000 to a billion dollars or more, will bring in much more money than the benefits will cost. From Social Security website:

  1. “For an individual who first becomes eligible for old-age insurance benefits or disability insurance benefits in 2015, or who dies in 2015 before becoming eligible for benefits, his/her PIA will be the sum of: 90 percent of the first $826 of his/her average indexed monthly earnings, plus
  2. 32 percent of his/her average indexed monthly earnings over $826 and through $4,980, plus
  3. 15 percent of his/her average indexed monthly earnings over $4,980″

If the cap is raised, payments from the wealthy will result in benefits from the higher amounts over $118,000 at 15% of the base wages, versus 40% average. Increased payments plus lower percentage payouts are a bonus to the system.

According to the IRS 85% benefits rule, virtuallyall of this new money will be subject to normal personal income tax rates. For the new contributors, all in the high bracket, the income tax on each additional $1,000 in these 15% benefits would be be subject to income tax of some 40%. That means the 15% benefit will be reduced 40% to just 9% of prior earnings. The bottom tier of beneficiaries would receive 90% and the top tier, 9%.

Top income employees would receive 1/10th of the benefit of the lowest bracket taxpayers. This positive ratio would contribute mightily to the financial strength of the system. While some have suggested a cap on benefits, extending them to all contributors squashes suggestions of an unfair tax to benefit only middle and lower classes of seniors, and still brings in far more money than would ever paid out in benefits..

If a higher FICA cap sounds reasonable, why not make the change?

Although the government would gain from a more fiscally sound Social Security program, and individuals would be assured of current or higher benefits, plus a positive margin to increase reserves, business owners would object. But there is a solution. Companies could just pay fewer persons huge salaries that need matching 6.2% FICA, and by lowering executive pay, also increase the profit share to stockholders, not just company managers.

Earned Income Tax Credit (EITC) is a boon for corporations, blatant welfare for companies that underpay their workers

Congressional Map TY12

It’s budget season time again. The Washington Post and NYT have already published their obligatory stories on why we need to “reform” Social Security, Medicare and Medicaid, because if not, we won’t have hardly any money left to spend on military and discretionary programs. Fox and NBC stations this week said we must “deal” with the budget deficit caused by “entitlement spending.” Paul Ryan has agreed, and so has the Chamber of Commerce. Unfortunately, the White House sees this attack on the middle class as yet another chance to negotiate with Koch and company.

In the midst of self-inflicted austerity talk, Republicans heartily approve of spending billions of dollars to raise the Earned Income Tax Credit (EITC), which currently gives up to $6,143 (tax free) each year to couples and families, who have have lousy paying jobs.

Also in agreement are most Democrat lawmakers, who believe that EITC subsidizing business by supplementing wages is a kind thing to do for the needy.  Looking down from the top, the “little people’s” dependance on the government for their livelihood is not demeaning and demoralizing, just curing social injustice of some sort.

When the wealthy masters of both parties in Congress agree on a policy, it is often wise for the rest of us to duck. The GOP loves EITC, because it rewards employers who pay poverty wages.  Under normal circumstances such wages would lead to bare subsistence livelihoods for workers, increasing turnover and encouraging unions and other “troublemakers” to end working for starvation pay. However, with the middle class taxpayers sending billions of EITC dollars to these underpaid workers, all is well for the employer, who knows the poor will survive to work another day, and the boss can continue to compensate workers below the level of subsistence.

When will Democrats in the WH recognize that most benefits (food stamps, public housing, etc.) for the working poor are just subsidies to corporations, and that the solutions for reducing inequality must instead include higher minimum wages and more public benefits for all Americans – free college, free childcare, free healthcare and free nursing homes? Or do they already know this and have bowed to pressure from lobbies and campaign contributors.

If you wonder which employers are gaining the most from EITC, the graphics here tell the story. Most of the EITC recipients are from states dominated by austerity advocates, right to work laws, and generally low wages.

EITC Percentage of Filers by State

Means-testing us to deny public benefits, stigmatizes the poor and endangers support from the middle and upper classes

Should government focus on public services or needy services?

The argument is whether we should provide benefits or programs to both rich and poor – even though higher income folks can afford to pay for these with ease.

If we have a service or program, such as public schools, universal public healthcare, or even public childcare for all – why not open it equally to all members of the public. That will keep government from creating  a separate class of people, who are stigmatized by qualifying for a public service – just because they are poor.

How humiliating! Should these recipients be made to wear a green star? Walk on the other side of the street? Keep their gaze averted from ours? Many proud families do not apply for such “aid”, refusing to be classified as bottom dwellers of society.

With a fair, progressive tax system, the wealthy would pay a higher percentage of income taxes, and corporations, fair taxes. The wealthy also should be included in every public program, because they are supporters these public efforts.

In practice, the very rich will probably not need many of these public programs, and instead, will avail themselves of very expensive replacements of their own making. But that is on them. We already mostly agree  that there should not be a means test for public parks, highways and the stigma of drinking fountains for the poor (free), and the rest of us, 25 cents.

Taking the upper and middle classes out of public programs, insures that a so-called lower class (less income, but not less human) feels unequal equal to other Americans, and becomes isolated from the very middle class to which it aspires.

Any means-testing destroys the ideals of a public good, and replaces it with some calculated charity from political “benefactors.”

The regressive benefits now delivered from Social Security are a good example of so-called means-testing, where upper middle class earners are starkly penalized with lower percentages of overall benefits and the lowest earners receive three or four times the benefit percentage. (see chart below)

PolicyBasics_SocSec-TopTen-f2

Such a charity approach is losing support for this pension program, because it has been converted to a part welfare system. The solution here is a fair basic Social Security benefit for all, supplemented by a pension based purely on wages earned and FICA taxes paid.

In another tragedy for seniors means-testing Medicaid – instead of offering universal Medicare to poor and rich – forces families to “spend down” nearly all the elder’s assets, just to enter a nursing home, and forces them to the very bottom of the income ladder.

In the same vein, one of the great mistakes of Obamacare is its extra help to the poor and its sliding scale of subsidies. The goal should be “free” all the way up to the top, and at the same time, fair progressive taxes to insure public programs available to all who want them. The only other alternative is to privatize public services, which puts a fee on users and crushes the poor.

Surely, if we deem a service universal there should no fee to exclude the needy, just as there should be no means test to exclude the wealthy. Higher progressive income and excise taxes will lift some of the burden off the average American and insure democratic access without stigma of “getting something” extra from the government.

 

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