REPUBLICAN AGENDA - The Regressive Tax Plan (including final bill)

"How does the GOP tax plan affect you?  You asked, we answer" PBS NewsHour 12/13/2017

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SUMMARY:  Republicans are poised to work out their differences on the tax overhaul bill, a major piece of legislation that could affect work, health care, education, charity and other facets of American life.  How does it affect you?  We received an avalanche of questions from viewers, and Lisa Desjardins joins Judy Woodruff to answer some of them.

"Republicans rush to finalize tax overhaul as roadblocks loom" PBS NewsHour 12/14/2017

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SUMMARY:  Republicans are racing to keep their promise of sending a final tax overhaul bill to the White House by Christmas.  On Wednesday GOP lawmakers announced they reached a compromise in principle to bridge the House and Senate bills.  But with only two votes to spare, Senate Republicans are facing health issues and holdouts.  William Brangham reports on how the bill is shaping up.

"Who will reap the wealth of the GOP corporate tax cut?" PBS NewsHour 12/14/2017

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SUMMARY:  The corporate tax rate is set to drop 14 percent under the new tax bill.  Will big businesses invest more in American plants and factories?  What will it mean for American workers?  Economics correspondent Paul Solman breaks down the numbers.

"What's in the GOP's final tax plan" by Jeanne Sahadi, CNN Money 12/17/2017

Well, that was fast.

Just six weeks after lawmakers and the public got their first glimpse of the first draft of a tax overhaul bill, Republicans on Friday released their final version.  They aim to pass it next week and send it to President Trump for his signature.

The final bill still leans heavily toward tax cuts for corporations and business owners.  But it also expands or restores some tax benefits for individuals relative to the earlier bills passed by the House and Senate.

The individual provisions would expire by the end of 2025, but most of the corporate provisions would be permanent.

All told, the final bill includes trillions in tax cuts, most of which but not all are offset by revenue-raising measures.  The bill on net would increase deficits by an estimated $1.46 trillion over a decade, according to the nonpartisan Joint Committee on Taxation.  That number would be much higher if, as Republicans assume, a future Congress does not allow the individual tax cuts to expire after 2025.

One important note:  The bill would not affect 2017 taxes, for which Americans will start filing their returns in a month or so.

With that, here's a quick rundown of 16 key provisions in the final bill.

FOR INDIVIDUAL FILERS

1.  Lowers (many) individual rates:  The bill preserves seven tax brackets, but changes the rates that apply to: 10%, 12%, 22%, 24%, 32%, 35% and 37%.

Today's rates are 10%, 15%, 25%, 28%, 33%, 35% and 39.6%.

Here's how much income would apply to the new rates:
-- 10% (income up to $9,525 for individuals; up to $19,050 for married couples filing jointly)
-- 12% (over $9,525 to $38,700; over $19,050 to $77,400 for couples)
-- 22% (over $38,700 to $82,500; over $77,400 to $165,000 for couples)
-- 24% (over $82,500 to $157,500; over $165,000 to $315,000 for couples)
-- 32% (over $157,500 to $200,000; over $315,000 to $400,000 for couples)
-- 35% (over $200,000 to $500,000; over $400,000 to $600,000 for couples)
-- 37% (over $500,000; over $600,000 for couples)

2.  Nearly doubles the standard deduction:  For single filers, the bill increases it to $12,000 from $6,350 currently; for married couples filing jointly it increases to $24,000 from $12,700.

The net effect:  The percentage of filers who choose to itemize would drop sharply, since the only reason to do so is if your deductions exceed your standard deduction.

3.  Eliminates personal exemptions:  Today you're allowed to claim a $4,050 personal exemption for yourself, your spouse and each of your dependents.  Doing so lowers your taxable income and thus your tax burden.  The GOP tax plan eliminates that option.

For families with three or more kids, that could mute if not negate any tax relief they might get as a result of other provisions in the bill.

4.  Caps state and local tax deduction:  The final bill will preserve the state and local tax deduction for anyone who itemizes, but it will cap the amount that may be deducted at $10,000.  Today the deduction is unlimited for your state and local property taxes plus income or sales taxes.

The SALT break has been on the book for more than a century.  The original House and Senate GOP bills sought to repeal it entirely to help pay for the tax cuts, but that met with stiff resistance from lawmakers in high-tax states.

Residents in the vast majority of counties across the country claim an average SALT deduction below $10,000, according to the Tax Foundation.  So for low- and middle-income families who currently itemize because of their SALT deduction, they're likely to take the much higher standard deduction under the bill if it becomes law, unless their total itemized deductions, including SALT, top $12,000 if single or $24,000 if married filing jointly.

Preserving the break -- albeit with a cap -- is likely to provide more help to higher income households in high-tax states.

5.  Expands child tax credit:  The credit would be doubled to $2,000 for children under 17.  It also would be made available to high earners because the bill would raise the income threshold under which filers may claim the full credit to $200,000 for single parents, up from $75,000 today; and to $400,000 for married couples, up from $110,000 today.

Like the first $1,000 of the child tax credit, $400 of the additional $1,000 also will be refundable, meaning a low- or middle-income family will be able get the money refunded to them if their federal income tax liability nets out at zero.

Even with the additional $400 in refundability, however, 10 million children from working low-income families would receive only an additional $75 in benefit under the bill, according to the Center on Budget and Policy Priorities estimates.

6.  Creates temporary credit for non-child dependents:  The bill would allow parents to take a $500 credit for each non-child dependent whom they're supporting, such as a child 17 or older, an ailing elderly parent or an adult child with a disability.

7.  Lowers cap on mortgage interest deduction:  If you take out a new mortgage on a first or second home you would only be allowed to deduct the interest on debt up to $750,000, down from $1 million today.  Homeowners who already have a mortgage would be unaffected by the change.

The bill would no longer allow a deduction for the interest on home equity loans.  Currently that's allowed on loans up to $100,000.

8.  Curbs who's hit by AMT:  Earlier bills called for the elimination of the Alternative Minimum Tax.  The final version keeps it, but reduces the number of filers who would be hit by it by raising the income exemption levels to $70,300 for singles, up from $54,300 today; and to $109,400, up from $84,500, for married couples.

9.  Preserves smaller but popular tax breaks:  Earlier versions of the bill had proposed repealing the deductions for medical expenses, student loan interest and classroom supplies bought with a teacher's own money.  They also would have repealed the tax-free status of tuition waivers for graduate students.

The final bill, however, preserves all of these as they are under the current code.  And it actually expands the medical expense deduction for 2018 and 2019.

10.  Exempts almost everybody from the estate tax:  Unlike the House GOP bill, the final bill does not call for a repeal of the estate tax.

But it essentially eliminates it for all but the smallest number of people by doubling the amount of money exempt from the estate tax -- currently set at $5.49 million for individuals, and $10.98 million for married couples.  Even at today's levels, only 0.2% of all estates ever end up being subject to the estate tax.

11.  Slows inflation adjustments in tax code:  The bill would use "chained CPI" to measure inflation, which is a slower measure than is used today.  The net effect is your deductions, credits and exemptions will be worth less -- since the inflation adjusted dollars defining eligibility and maximum value would grow more slowly.  It also would subject more of your income to higher rates in future years than would be the case under the current code.

12.  Eliminates mandate to buy health insurance:  There would no longer be a penalty for not buying insurance.  While long a goal of Republicans to get rid of it, the measure also would help offset the cost of the tax bill.  It is estimated to save money because it would reduce how much the federal government spends on insurance subsidies and Medicaid.

The Congressional Budget Office expects fewer consumers who qualify for subsidies will enroll on the Obamacare exchanges, and fewer people who are eligible for Medicaid will seek coverage and learn they can sign up for the program.

But policy experts also note that the mandate repeal could raise premiums because more healthy people might decide to skip buying insurance.

FOR BUSINESSES AND CORPORATIONS

13.  Lowers tax burden on pass-through businesses:  The tax burden on owners, partners and shareholders of S-corporations, LLCs and partnerships -- who pay their share of the business' taxes through their individual tax returns -- would be lowered by a 20% deduction, somewhat less than the 23% called for in the Senate-passed bill.

The 20% deduction would be prohibited for anyone in a service business -- unless their taxable income is less than $315,000 if married ($157,500 if single).

14.  Includes rule to prevent abuse of pass-through tax break:  If the owner or partner in a pass-through also draws a salary from the business, that money would be subject to ordinary income tax rates.

But to prevent people from characterizing their wage income as business profits to get the benefit of the pass-through deduction, the bill would place limits on how much income would qualify for the deduction.

Tax experts nevertheless have warned that this kind of anti-abuse measure still presents taxpayers with a lot of opportunities to game the system, and favors passive owners of a business over active owners who actually run things.

15.  Slashes corporate rate:  The bill cuts the corporate rate to 21% from 35%, starting next year.  That's somewhat higher than the 20% called for earlier.  The increase was made to free up some revenue to accommodate lawmaker demands on other provisions.  The bill would also repeal the alternative minimum tax on corporations.

16.  Change how U.S. multinationals are taxed:  Today U.S. companies owe Uncle Sam tax on all their profits, regardless of where the income is earned.  They're allowed to defer paying U.S. tax on their foreign profits until they bring the money home.

Many argue that this "worldwide" tax system puts American businesses at a disadvantage.  That's because most foreign competitors come from countries with territorial tax systems, meaning they don't owe tax to their own governments on income they make offshore.

The final GOP bill proposes switching the U.S. to a territorial system.  It also includes a number of anti-abuse provisions to prevent corporations with foreign profits from gaming the system.

In the meantime it would require companies to pay a one-time, low tax rate on their existing overseas profits -- 15.5% on cash assets and 8% on non-cash assets (e.g., equipment abroad in which profits were invested), slightly higher than the rates in the Senate- and House-passed bills.

GOP TAX PLAN - The Rape of the American Taxpayer

REMINDER:  You are seeing the fulfillment of the GOP's dream to gut your benefits to give bigger tax breaks to business interests.  Their next dream (nightmare) is killing your entitlement programs, aka Social Security and Medicare.  It's worshiping 'trickle-down economics' which has never worked when they tried in the past, including the Ronald Reagan era.

"The term trickle-down originated as a joke by humorist Will Rogers, and today is often used to criticize economic policies which favor the wealthy or privileged, while being framed as good for the average citizen." - Wikipedia

As I've said before, Republicans behave as if 98% of Americans are NOT worth spending money on.

"CBO report predicts GOP tax plan would hammer poorest Americans" PBS NewsHour 11/27/2017

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SUMMARY:  Congress returns from Thanksgiving to face an extreme to-do list for next month, including funding the government and voting on a tax plan.  That comes on the heels of a public apology by Sen. Al Franken after allegations of groping women, and the decision by Rep. John Conyers to temporarily step down from the Judiciary Committee.  Lisa Desjardins joins William Brangham to take a closer look at the tax plan.

William Brangham (NewsHour):  So, CBO analysis is out.  I would like to go through with what this means for different segments of the American population.

Let’s start with, what does this do for the poorest Americans?

Lisa Desjardins (NewsHour):  That’s the big headline out of the CBO report that we got over the weekend.

In the past, William, we have seen analysis for how you do with the tax cuts portion of this, and in the Senate bill in particular, it phases out, for example, kind of in the out years.  And so a lot of Americans would see a tax increase at the very end of this bill.

But what the CBO did is different.  It didn’t just look at the tax cuts.  It looked at the net effect, because, William, this bill is so large that it would likely trigger automatic spending cuts in various programs.

So, the CBO said, OK, let’s look at the combined effect of those two things, how your taxes would change under this bill, plus any benefits you get, any government programs that you get, any loss you would see from spending cuts.

And they found that those two things combined would have a dramatically larger effect on lower classes, people earning under $40,000, many times the effects we have seen in other analyses so far.

William Brangham:  And impact meaning they would be paying more.

Lisa Desjardins:  That’s right.  They would be paying a little bit more in taxes, but they would lose a lot more in benefits, as programs like Medicaid, maybe Medicare would be hit by cuts.

William Brangham:  Does the GOP agree with this analysis that this is really going to hammer the poor in America?

Lisa Desjardins:  What they have said in the past — it’s notable, first of all, that none of the Republican committees overseeing this bill responded to my questions about this today directly.

They usually do.  They’re busy.  But, still, we don’t know their word on this.  But in the past, William, what they have said is that the numbers actually don’t give you the full picture, because they say what they’re trying to do here is to cut taxes especially for the middle class.

And they say what is happening with the lower classes is, they have the biggest amount of benefits in the system, so what looks like a big cut to them is something coming off of already what the Republicans think are benefits that are outsized and a bloated government.

Now, of course, Democrats argue against that.  They say the lower classes are the ones that need the biggest amount of benefits to begin with.

William Brangham:  You mentioned this middle-class tax cut.  That’s always been the President’s main objective in this.

What does the analysis show about that?

Lisa Desjardins:  All right, let’s talk about where we are with middle classes.

The first statistic I want to look at is an important one.  This is actually from a different analysis, from the Joint Committee on Taxation.

They found that, looking at the Senate bill, if you look at anyone making over $40,000, all of the income groups over that, on average, would see their taxes cut for the next eight years.  Now, that’s a big deal.  That’s what the Republicans want to do.

William Brangham:  Sure.

Lisa Desjardins:  They want to cut everyone’s taxes.

But, William, the average really doesn’t apply here.  You can’t look at the tax cuts that way, because many millions of Americans fall into very broad groups whose deductions would be taken away.

Let’s start with one big one, the medical expenses deduction.  If you have a very large amount of medical expenses, anything more than 10 percent of your income, you can deduct that on your taxes.  So, say someone is facing a cancer diagnosis, and they don’t have strong insurance.  They’re paying $100,000 out of pocket.  They can deduct that from their taxes now.

The Senate and House bills would wipe that away.

William Brangham:  That’s a huge tax increase.

Lisa Desjardins:  It would be a massive punch to the gut for people who are already dealing with a major health crisis.

Then another group — we talked about before state and local taxes.  Now, this is also a very huge group.  Almost a quarter or maybe more than a quarter of Americans take state and local taxes off of their federal taxes.  Of course, this affects mostly high-tax states.  New Jersey gets brought up a lot, New York, but it’s also states like Maryland, California, Virginia.

A quarter of million American taxpayers would lose that deduction, most or all of it.  And so, when you say, on average, the middle class would see a tax cut, well, really, everyone is unique, and you see a lot of unique situations where the taxes might go up.

William Brangham:  The criticism of all this, of course, by the Democrats and some economists is that this is in a massive giveaway to the wealthiest Americans and corporations.  How true is that?

Lisa Desjardins:  Right.

So, I looked at all of the new data we got, including CBO's yesterday, and I compared it, looked at how much benefit you get or loss you get, combining all the spending cuts, the taxes, everything.

And, in fact, it’s true that the lowest-paid Americans would see the greatest harm.  And if you go all the way to the top of the scale, by many times, those at the highest income level, say, $500,000 and above, would see not only the biggest benefit in dollar terms, William, but also in terms of percentage of their own income.

And that’s per person.  So, it’s not a broad category.  I really dove in on that analysis.

"If you pay student loans, the GOP tax overhaul could affect you.  Here’s how" PBS NewsHour 11/28/2017

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SUMMARY:  Both the Senate and House tax overhaul bills could make higher education more expensive for some students, though in different ways.  The biggest proposed changes in the House bill would end the deduction for interest paid on student loans, a deduction used by some 12 million people in 2015.  John Yang learns more from Danielle Douglas-Gabriel of The Washington Post.

"Under this proposed tax cut, big small businesses benefit most" PBS NewsHour 11/30/2017

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SUMMARY:  The corporate tax rate is not the only important tax cut affecting businesses that's being considered in the Republican tax bills.  The pass-through tax rate affects millions of small businesses, and has been a point of debate and dealing.  Hari Sreenivasan talks to Jim Tankersley of The New York Times about that and who really gets the biggest cuts.

"Senate Republicans make 11th-hour changes in push to pass tax cut bill" PBS NewsHour 12/1/2017

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SUMMARY:  Winning over holdouts like Sen. Jeff Flake, Majority Leader Mitch McConnell told reporters that Republicans had the votes to pass their tax bill, which could affect the U.S. for at least a decade.  But as the clock ticked down, the final bill hadn't appeared, and Democrats railed against the idea of passing something without the final language in hand.  Lisa Desjardins talks to Judy Woodruff.

"What were the last-minute changes to the Senate tax bill?" PBS NewsHour 12/2/2017

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SUMMARY:  The Senate passed a $1.5 trillion tax package early Saturday, pushing closer to one of the largest overhauls of the U.S. tax code in decades.  But the vote came just hours after the final text of the nearly 500-page bill was released, provoking several, last-minute negotiations on the Senate floor.  Lisa Desjardins joins Hari Sreenivasan for more on what made it into the bill and what’s next.

GAMING THE SYSTEM - Trump Played Sucker

"Carrier is 'Gaming the System' and Trump Just Played into Its Hands" by Steve Horn, In These Times 12/2/2016

As one of their first orders of business, President-elect Donald Trump and Mike Pence, his vice president, helped strike a deal between the Indiana Economic Development Corporation (IEDC) and the Carrier Corporation to keep more than 1,000 jobs at Carrier's Indianapolis manufacturing plant.

The company had originally planned to send all but 300 research and headquarters jobs at the facility to Monterrey, Mexico, where workers reportedly earn $3 an hour.  Carrier later decided to keep an additional 800 or so jobs in Indiana in exchange for a reported $7 million in tax breaks over 10 years.

Carrier was a frequent target of Trump during his presidential campaign, in which he promised to protect jobs and penalize companies for leaving the United States.  After tweeting about a deal in the works with Carrier on Thanksgiving, Trump and Pence spent the next several days hashing out its parameters before the president-elect announced on Twitter on November 29 that they had reached an agreement.  Trump took a victory lap at Carrier's plant in Indianapolis this week.

Mixed reactions

Though controversial, it's important to note that workers at Carrier have lauded the Trump-Pence deal.  That's the case even though the actual terms and conditions of the deal, as it applies to workers who get to keep their jobs, have yet to appear in fine print and the union representing the plant was not involved in the negotiations.

Looked at as a whole, the Trump-Pence announcement has received mix reviews.  Some have celebrated Trump's “art of the deal,” others have questioned whether this is a model that can be replicated as a way to keep jobs in the United States, while Bernie Sanders decried it as a bad deal for taxpayers and a potentially disastrous precedent moving forward. 

Even Trump admitted his own sense of surprise at a press conference celebrating the agreement.

During the presidential campaign, in which he made an example of the Carrier plant as the dark side of the North American Free Trade Agreement (NAFTA), Trump told the public that he would use his business prowess to force Carrier and companies like it to keep jobs in the United States.  If not, Trump said, there would be economic hell to pay.

But in his speech in Indianapolis, he said his campaign promise to bring Carrier jobs back was a “euphemism,” not an actual promise to cut a deal at that particular plant.  With Pence uniquely situated to help foster a deal through the IEDC, though, the stars aligned and the deal was cut.  (Pence chairs the IEDC board.)

Workers at a nearby plant in Huntington, Indiana, however, may not be as lucky.

That facility, which is also owned by Carrier's parent company, will soon lay off 700 workers.  Many of them made the two-hour drive south to Indianapolis to protest.  They held signs that read, “What about our jobs?”

“All of our jobs are leaving.  Why isn't he saving some of our jobs if not all of them?” asked Bill Davis, president of the International Brotherhood of Electrical Workers Local 983.  “I'd love to keep the whole facility, but even if we can keep some of our jobs – because I think some of the people would be glad to retire and some of the younger ones stay – so I think our membership could be satisfied even if it was just 50 percent that got to stay.”

Offshoring jobs and taxes

Missing in the many media stories that have tackled the Carrier deal is the fact that Carrier's parent company—United Technologies—isn't just in the business of offshoring U.S. jobs.  It also likely skirts paying its share of federal and state income taxes by maintaining offshore tax havens.  Carrier, itself, is incorporated in the domestic tax haven of Delaware.

Though a company with taxable income at the level of United Technologies has a corporate tax rate of 35 percent at the federal level, United Technologies only paid an 11 percent tax rate between 2008-2012, according to numbers crunched by Citizens for Tax Justice.  It has done so while also securing billions of dollars of U.S. government contracts and receiving hundreds of millions of dollars in state and federal tax subsidies.

Matthew Gardner, a senior fellow at the Institute on Taxation and Economic Policy, who has critiqued the Trump-Pence Carrier deal in a series of blog posts, told In These Times he sees this entire saga as an example of Carrier “gaming the system” for its own ends on the backs of taxpayers.

“Companies competing with United Technologies that haven't as brazenly threatened to move jobs offshore will have to pay higher tax rates than United Technologies,” says Gardner.  “And, of course, in the balanced-budget setting of state budgets, every tax break for a specific company ultimately has to be paid for by the rest of us, including smaller businesses and working families.  This deal is a poke in the eye for the many business and individuals who already pay their fair share.”

Like Sanders, Gardner sees Carrier as a worrisome case moving forward in the sense that if it can be repeated or modeled at other workplaces in other cities and states, it will only harm working-class communities.

“The more such deals are carved out, the more unfair—and unsustainable—the tax system becomes,” says Gardner.  “From a broader economic development perspective, and from the perspective of the public interest, there's nothing to cheer about here and certainly nothing to replicate.”

BIG OIL/GAS - Ripping-Off Landowners and U.S. Taxpayers

"Unfair Share:  How Oil and Gas Drillers Avoid Paying Royalties" by Abrahm Lustgarten, ProPublica 8/13/2013

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Don Feusner ran dairy cattle on his 370-acre slice of northern Pennsylvania until he could no longer turn a profit by farming.  Then, at age 60, he sold all but a few Angus and aimed for a comfortable retirement on money from drilling his land for natural gas instead.

It seemed promising.  Two wells drilled on his lease hit as sweet a spot as the Marcellus shale could offer – tens of millions of cubic feet of natural gas gushed forth.  Last December, he received a check for $8,506 for a month’s share of the gas.

Then one day in April, Feusner ripped open his royalty envelope to find that while his wells were still producing the same amount of gas, the gusher of cash had slowed.  His eyes cascaded down the page to his monthly balance at the bottom: $1,690.

Chesapeake Energy, the company that drilled his wells, was withholding almost 90 percent of Feusner’s share of the income to cover unspecified “gathering” expenses and it wasn’t explaining why.

“They said you’re going to be a millionaire in a couple of years, but none of that has happened,” Feusner said.  “I guess we’re expected to just take whatever they want to give us.”

Like every landowner who signs a lease agreement to allow a drilling company to take resources off his land, Feusner is owed a cut of what is produced, called a royalty.

In 1982, in a landmark effort to keep people from being fleeced by the oil industry, the federal government passed a law establishing that royalty payments to landowners would be no less than 12.5 percent of the oil and gas sales from their leases.

From Pennsylvania to North Dakota, a powerful argument for allowing extensive new drilling has been that royalty payments would enrich local landowners, lifting the economies of heartland and rural America.  The boom was also supposed to fill the government’s coffers, since roughly 30 percent of the nation’s drilling takes place on federal land.

Over the last decade, an untold number of leases were signed, and hundreds of thousands of wells have been sunk into new energy deposits across the country.

But manipulation of costs and other data by oil companies is keeping billions of dollars in royalties out of the hands of private and government landholders, an investigation by ProPublica has found.

An analysis of lease agreements, government documents and thousands of pages of court records shows that such underpayments are widespread.  Thousands of landowners like Feusner are receiving far less than they expected based on the sales value of gas or oil produced on their property.  In some cases, they are being paid virtually nothing at all.

In many cases, lawyers and auditors who specialize in production accounting tell ProPublica energy companies are using complex accounting and business arrangements to skim profits off the sale of resources and increase the expenses charged to landowners.

Deducting expenses is itself controversial and debated as unfair among landowners, but it is allowable under many leases, some of which were signed without landowners fully understanding their implications.

But some companies deduct expenses for transporting and processing natural gas, even when leases contain clauses explicitly prohibiting such deductions.  In other cases, according to court files and documents obtained by ProPublica, they withhold money without explanation for other, unauthorized expenses, and without telling landowners that the money is being withheld.

CONGRESS - Apple Takes Bite Out of Taxpayers

"Congressional Hearing on Apple Tax Practices Puts Spotlight on Legal Loopholes" PBS Newshour 5/21/2013

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SUMMARY:  Tech giant Apple has avoided paying billions of dollars in taxes to the U.S. or any country by using a complex web of Irish subsidiaries.  But Apple is not alone, and none of the practices are illegal.  Margaret Warner talks to Charles Duhigg of The New York Times for more on corporate tax loopholes.

ECONOMY - Good Idea on Tax Rates, Millionare's = Middle-Income's

"Obama Tax Plan Would Ask More of Millionaires" by JACKIE CALMES, New York Times 9/17/2011

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President Obama on Monday will call for a new minimum tax rate for individuals making more than $1 million a year to ensure that they pay at least the same percentage of their earnings as middle-income taxpayers, according to administration officials.

With a special joint Congressional committee starting work to reach a bipartisan budget deal by late November, the proposal adds a new and populist feature to Mr. Obama’s effort to raise the political pressure on Republicans to agree to higher revenues from the wealthy in return for Democrats’ support of future cuts from Medicare and Medicaid.

Mr. Obama, in a bit of political salesmanship, will call his proposal the “Buffett Rule,” in a reference to Warren E. Buffett, the billionaire investor who has complained repeatedly that the richest Americans generally pay a smaller share of their income in federal taxes than do middle-income workers, because investment gains are taxed at a lower rate than wages.

Mr. Obama will not specify a rate or other details, and it is unclear how much revenue his plan would raise. But his idea of a millionaires’ minimum tax will be prominent in the broad plan for long-term deficit reduction that he will outline at the White House on Monday.

Mr. Obama’s proposal is certain to draw opposition from Republicans, who have staunchly opposed raising taxes on the affluent because, they say, it would discourage investment. It could also invite scrutiny from some economists who have disputed Mr. Buffett’s assertion that the megarich pay a lower tax rate over all. Mr. Buffett’s critics say many of the rich actually make more from wages than from investments.

So economists who disagree with Buffett say "the rich actually make more from wages than from investments" and this is a logical reason NOT to raise their tax-rate?!

The tax-rate is on INCOME which includes wages, which makes the objection illogical. A tax-rate increase would just mean a bigger portion of the tax they pay would be on their wages and less on investments.

The likely reason Mr. Buffett believes what he asserts is all the tax breaks the megarich can take advantage of, that is not available to the average Joe. These effectively lower their tax-rate.

ECONOMY - Outrageous Tax Breaks for Video Game Industry

With the on going argument over our national Budget Deficit and the need to increase revenues, this is an example of an outrageous practice that our current tax code allows companies (or anyone) that have the bucks for lobbyists, and good tax lawyers, to get away with.

"Rich Tax Breaks Bolster Makers of Video Games" by DAVID KOCIENIEWSKI, New York Times 9/10/2011

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The United States government offers tax incentives to companies pursuing medical breakthroughs, urban redevelopment and alternatives to fossil fuels.

It also provides tax breaks for a company whose hit video game this year was the gory Dead Space 2, which challenges players to advance through an apocalyptic battlefield by killing space zombies.

Those tax incentives — a collection of deductions, write-offs and credits mostly devised for other industries in other eras — now make video game production one of the most highly subsidized businesses in the United States, says Calvin H. Johnson, who has worked at the Treasury Department and is now a tax professor at the University of Texas at Austin.

Because video game makers straddle the lines between software development, the entertainment industry and online retailing, they can combine tax breaks in ways that companies like Netflix and Adobe cannot. Video game developers receive such a rich assortment of incentives that even oil companies have questioned why the government should subsidize such a mature and profitable industry whose main contribution is to create amusing and sometimes antisocial entertainment.

For example, Electronic Arts of Redwood City, Calif., shipped more than two million copies of Dead Space 2 in the game’s first week on the market this year. It shows a total of $1.2 billion in global profits the last five years using an accounting method that management says captures its operating profits.

But largely because of deferred revenue, deductions for executive stock options and a variety of accounting requirements, the company officially reports a net loss for the period. And the company reports that it paid out $98 million in cash for taxes worldwide in those years.

Neither corporations nor the government make tax returns public, and the information most companies disclose in their regulatory filings is insufficient to determine how much they pay in federal taxes and how that compares to the official United States corporate rate of 35 percent.

All told, the federal government gave $123 billion in tax incentives to corporations in 2010, according to the Joint Committee on Taxation, with breaks for groups and people as diverse as Nascar track owners, mohair producers, hedge fund managers, chicken farmers, automakers and oil companies.

Many tax policy analysts say the breaks for the video game industry — whose domestic sales of $15 billion a year now exceed those of the music business — are a vivid example of a tax system that defies common sense. Most times, subsidies begin as a way to nurture a fledgling industry that will not be profitable for years or to encourage a business activity deemed to have a broad benefit to society, like reducing pollution or improving public health.

But it’s a lot easier to create a tax break than to eliminate it. That leaves a generous assortment of tax incentives available to all types of companies, like Electronic Arts, with skilled accounting departments.

ECONOMY - Chrysler Pays Back Taxpayers

"Chrysler Pays Back Billions in Bailout Loans: Is the Comeback Complete?" PBS Newshour Transcript 5/24/2011

Excerpt

JEFFREY BROWN (Newshour): And we turn to an update on one of the big three automakers, as Chrysler pays back billions.

Chrysler CEO Sergio Marchionne made the announcement as he stood before a banner reading "Paid" at a plant just outside Detroit.

SERGIO MARCHIONNE, Chrysler: We have received confirmation this morning at 10:13 a.m. from Citigroup that Chrysler Group repaid, with interest, by wire transfer to the United States Treasury and by bank transfer to the Canadian government, every penny that had been loaned less than two years ago.

(CHEERING AND APPLAUSE)

JEFFREY BROWN: The bill came to $7.6 billion -- $5.9 billion repaid to the U.S. government and $1.7 billion to Canada.

The company financed the repayment with a mixture of bonds, bank loans, and an increased stake from its Italian part-owner, Fiat. Less than two years ago, Chrysler had emerged from Chapter 11 bankruptcy with a government bailout package that also left it under Fiat management.

Ron Bloom was part of President Obama's auto task force.

RON BLOOM, assistant to President Obama for manufacturing policy: This repayment means that U.S. taxpayers have now recouped more than 100 percent of the money that President Obama invested in the company, and over 85 percent of all moneys invested by the U.S. government.

If that doesn't qualify Chrysler for comeback of the year, then I cannot imagine what would.

(CHEERING AND APPLAUSE)

JEFFREY BROWN: Two years ago, a number of Republicans criticized the bailout, charging the Obama administration had overreached.

REP. JOHN BOEHNER, R-Ohio Minority Leader: What we really ought to have is an exit plan to get the federal taxpayers' money back in the treasury and allow the private sector to be itself.

JEFFREY BROWN: And today's announcement immediately became a political football, as the Democratic National Committee released an ad taking note of the earlier criticism and celebrating Chrysler's comeback.

MITT ROMNEY, (R) former Massachusetts governor: ... that, if you write a check, they're going to go out of business.

JEFFREY BROWN: Today's move was the latest step in what may be a broader revival of a Detroit auto industry all but left for dead two years ago.

The smallest of the big three Detroit automakers, Chrysler has been fighting to restore its image, as well as its bottom line, including a big Super Bowl ad featuring Detroit's own Eminem.

EMINEM, musician: This is the Motor City, and this is what we do.

JEFFREY BROWN: And, last quarter, Chrysler posted its first net profit in five years.

American taxpayers win AND Chrysler workers win. Also, private investments look better.

ECONOMY - Future Sticker-Shock for $750k-Homeowners

"Federal Retreat on Bigger Loans Rattles Housing" by DAVID STREITFELD, New York Times 5/10/2011

Excerpt

By summer’s end, buyers and sellers in some of the country’s most upscale housing markets are slated to lose one their biggest benefactors: the deep pockets of the federal government. In this seaside community of pricey homes, the dread of yet another housing shock is already spreading.

“We’re looking at more price drops, more foreclosures,” said Rick Del Pozzo, a loan broker. “This snowball that’s been rolling downhill is going to pick up some speed.”

For the last three years, federal agencies have backed new mortgages as large as $729,750 in desirable neighborhoods in high-cost states like California, New York, New Jersey, Connecticut and Massachusetts. Without the government covering the risk of default, many lenders would have refused to make the loans. With the economy in free fall, Congress broadened its traditionally generous support of housing to a substantial degree.

But now Democrats and Republicans agree that the taxpayer should no longer be responsible for homes valued well above the national average, and are about to turn a top slice of the housing market into a testing ground for whether the private mortgage market can once again go it alone. The result, analysts say, will be higher-cost loans and fewer potential buyers for more expensive homes.

Michael S. Barr, a former assistant Treasury secretary, said the federal government’s retrenchment would be painful for many communities. “There’s always going to be a line, and for the person just over it it’s always going to be an arbitrary line,” said Mr. Barr, who teaches at the University of Michigan Law School. “But there is no entitlement to living in a home that costs $750,000.”

Barr's comment is sad but so true considering what percentage of Americans live in $750k homes.

AMERICA - Two on Economic Inequalities

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"America Isn’t Broke But Republican Fiscal Morals Are Bankrupting Us" by Ray Medeiros, PoliticusUSA 4/7/2011

The burden of taxation has been systematically and heavily shifted onto the individual and away from Corporate America over the last 35 years. This should be of grave concern to the American people. The tea party rose up in 2008 chanting “Taxed Enough Already”, I stand with them on that statement. The American individual has been shouldering more and more of the cost of Government since the conservative Reagan revolution.

Where I differ with the tea party is lowering corporate taxes. According to the Urban and Brookings Institutes, the percentage of federal revenue coming from individuals, including sole proprietors was 41.5%, the percentage paid by corporate America was 8.9% in 2010.

In 2008, the federal government collected $2.5 trillion, an amount equal to 17.7 percent of GDP. Federal revenue has ranged from 14.4 to 20.9 percent of GDP over the past five decades, averaging 18.2 percent.

The individual income tax has been the largest single source of federal revenue since 1950, averaging just over 8 percent of GDP.

Revenue from the corporate income tax fell from between 5 and 6 percent of GDP in the early 1950s to 2.1 percent of GDP in 2008.

The conservatives like to throw around America’s corporate tax rate. They say it is too high and it is the cause of our economic problems. What they haven’t told the American people is corporate tax receipts to the federal government is very low. Corporations contribute very little to our government, YOU ARE SHOULDERING THE COST! The Reagan administration and subsequent administrations have increased the FICA tax (social security tax) and used that surplus to bridge the gap. This is a direct tax on the individual.

Imagine if we brought the amount corporations contributed to our society back to the levels of the 1950s, where they accounted for 30% of tax receipts. Back in those days, we built the interstate highway, built new schools, had a balanced budget and created NASA from scratch!

Today we could renovate our national power grid and create clean energy, build high-speed rail and many other things that need to be fixed in this country since we put off maintenance. The reason why we put it off is because of a cash flow problem.

Instead of doing what needs to be done, the Republicans are cutting away at the safety net that has created the middle class and sustained our elderly population. This can not happen in the wealthy country.

We are not broke, but we are becoming morally bankrupt!

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"Off-the-charts income gains for super-rich" by Zachary Roth, The Lookout 4/8/2011

In recent years, we've been hit with a barrage of statistics, charts, and even full-length books, documenting how inequality is on the rise in America.

But very few of them capture what's happened over the last 30 years or so as well as this image:

(click for better view)

Put together by the Center on Budget and Policy Priorities, a liberal Washington think tank, the chart is pretty self-explanatory. It shows that the 30 years following the Second World War were a time of broadly shared prosperity: Income for the bottom 90 percent of American households roughly kept pace with economic growth.

But over the last 35 years, there's been an abrupt shift: Total growth has slowed marginally, but the real change has been in how the results of that growth are distributed. Now, the bottom 90 percent have seen their income rise only by a tiny fraction of total growth, while income for the richest 1 percent has exploded by upwards of 275 percent.

One can argue about why this is happening. Some say it's the result of a decline in workers' bargaining power as labor unions have weakened, while others blame the rise of offshoring and outsourcing. But despite the best efforts of some commentators, there's really no serious debate about the overall realignment of income in our age: The already super-rich have vastly increased their share of the pie--at the expense of everyone else.

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ECONOMY - GM Starts Taxpayer Payback

"U.S. Taxpayers Recover Billions in Sale of G.M. Stock" by MICHAEL J. de la MERCED and BILL VLASIC, New York Times 11/17/2010

Excerpt

American taxpayers’ ownership of General Motors was halved on Wednesday, and billions of dollars in bailout money was returned to the federal government, as a result of the nation’s largest initial stock offering ever.

The offering, which raised $23.1 billion, is bigger and more ambitious than had once seemed possible. But the recently bankrupt automaker will have to build on its revival for the government to recoup its entire $50 billion investment and validate the Obama administration’s decision to keep G.M. from collapsing.

The new shares start trading on Thursday at $33 each. To break even, the Treasury Department will need to sell its remaining 500 million shares at an average price of $53 each in the months and years to come. And while the administration may retain great influence over the company, it may not be able to keep stoking the enthusiasm investors have shown for G.M. stock in recent days.

Still, now that General Motors has shown that it can be profitable, a complete exit by the government could happen even within the next two years. With the offering, G.M. is shedding its ties to the government faster than expected, cutting the Treasury Department’s ownership stake to 26 percent, from nearly 61 percent.

"GM Turns Corner With IPO, but Can It Maintain Momentum?"
PBS Newshour 11/18/2010

ECONOMY - AIG, Bailed Out for the Sins of Wall Street?

"AIG Looks to Repay Government, But Will Taxpayers Break Even?" PBS Newshour Transcript (includes video) 9/30/2010

Excerpts

RAY SUAREZ (Newshour): The federal government and the bailed-out insurance giant AIG announced a deal today for the company to pay back the bulk of its massive debt to the Treasury.

At the height of the financial crisis, the Treasury and the Federal Reserve agreed to spend more than $180 billion if needed to rescue the company. AIG ultimately received more than $130 billion. It still owes over $100 billion. Under the plan, the U.S. Treasury will gradually sell off its majority stake of the company. AIG will also sell more of its insurance units to repay the Treasury.

In an audio recoding on AIG's Web site, the company's chief executive, Robert Benmosche, predicted, taxpayers would ultimately come out ahead.
----
ROBEN FARZAD, senior writer, "Bloomberg BusinessWeek": The idea is not for the government to sit out there and be a mutual-fund-like holder of these common shares. I mean, they're not portfolio managers out there.

They did this holding their nose and dragging their feet. They're looking to sell the shares in an orderly manner, but then in an expeditious manner. I mean, look, they want to off-load this stuff and get hard cash back. It's a huge black eye, I mean, the September 2008 kind of gun-to-the-head negotiations, with the entire economy at the brink.

And I think it's critical for Treasury to have this type of a symbolic victory, but I disagree with what Robert Benmosche said in the recording there. I think it's incredibly deceptive to think that the taxpayer and the system is going to be made whole with even $100 billion or $150 billion paid back.

Truth be told, I mean, this exposed the entire systemic rot that was happening. And the government, and the Federal Reserve, and the Treasury, and the New York Fed have stepped in and taken unprecedented measures at multiples the $180 billion bailout sticker price.

You still have the Federal Reserve pursuing quantitative easing, which is going out there and actually conjuring money out of thin air to buy toxic assets, the very likes of these assets that were backed and insured by AIG.

So, while it might make sense from a headline perspective -- yes, the taxpayer is going to make potentially a profit on the $130 billion or $140 billion going out three or four years -- it's certainly cold comfort for an economy that's lost trillions.
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RAY SUAREZ: Well, Louise, let's reel back a little bit and remind people how the federal government ended up owning those 92 homes in the first place. What happened?

LOUISE STORY, The New York Times: Well, if you remember, back in September 2008, it was right after Lehman Brothers failed. The economy was on the brink. There was major panic.

And AIG, one of the things they did that really, really is the reason they failed is, they wrote all these insurance contracts to banks. So banks like Goldman Sachs, and Deutsche Bank, and Merrill Lynch, they had gotten AIG to insure them against losses on their mortgage bonds.

And, sure enough, when the mortgage market went south, AIG was paying out all these insurance claims to the banks. They couldn't afford it. And so the government stepped in and bailed out AIG. This was very controversial, because a lot of the money the government put into AIG went right out the back door to the banks who had contracts with AIG. And that's part of the reason this has been one of the most controversial bailouts.

RAY SUAREZ: So, Roben, an indirect bank bailout to even more institutions than we were aware of when it was happening?

ROBEN FARZAD: Yes. They got -- they got bailed out for the sins of Wall Street. I mean, you talk to old-school AIG executives, and they say that they were a patsy, or that they were crucified for everybody else's sins, that it was a transitive backdoor bailout. And, in reality, that's what it was.

And the thing that held the entire system hostage wasn't just that AIG being allowed to fail would subsume the entire system, but AIG was managing pensioner funds, 401(k)s, insurance plans. Municipalities were backing bonds with AIG. I mean, it was just unthinkable, in the haze of those terrifying days of September 2008 and October, to let this thing just fall and see how the dust cleared afterwards.