Tag Archives: taxes

He’ll Lie About ANYTHING

According to a number of news reports, in addition to bragging about his administration’s “excellent” performance during the pandemic (and who are you going to believe, Mr. Perfect or your lying eyes?), Trump plans to accuse hospitals and health officials of lying about the number of Covid-19 deaths. His campaign will insist that the numbers are exaggerated.

His base will probably believe him. (Google “motivated reasoning.”)

Over the past, horrific three plus years, those of us who do believe our own lying eyes have come to realize that there is absolutely nothing Trump won’t lie about, no matter how inconsequential or even counter-productive. He is so intellectually and emotionally defective, it is entirely possible he believes whatever comes out of his mouth. (In a recent op-ed, George Conway of the Lincoln Project suggested that Trump’s frantic lies are an effort to hide his inadequacies from himself; be that as it may, he clearly lacks the capacity to realize how stupid those lies–and his ungrammatical, misspelled angry tweets– make him look to sane people.)

I have recently come across two examples that illustrate the truly majestic sweep of Trump’s dishonesty, and how it manifests in absolutely anything and everything he mentions. The first was from Juanita Jean. 

Well, come to find out, even though Trump constantly says he was great at high school baseball and could have gone pro … no.  Not even close.

She then reproduced a tweet in which Trump bragged that, in high school, his baseball coach had called him one of the best players he’d ever coached.

Yeah, sure. As Juanita Jean notes, the reality was that he was pretty much the kid they picked last for the team.

Slate has managed to unearth nine box scores from Trump’s time at New York Military Academy, which showed a four-for-29 batting record in his sophomore, junior, and senior seasons, with three runs batted in and a single run scored. Trump’s batting average in the nine games Slate found box scores for stood at a disappointing .138.

Rational people would say “who cares?” Why would you bother to lie about something that–in the scheme of things–is so trivial? And so easily debunked?

Far more significant is the emerging evidence that Trump is nowhere near as wealthy as he has always claimed to be. His desperate efforts to keep his tax returns secret have led many observers to that conclusion, but up until now, it has all been speculative. With the Supreme Court preparing to rule on whether Trump’s accounting firm must comply with subpoenas for those tax records, Pro Publica has issued a very interesting report about that accounting firm.

The story is titled “Meet the Shadowy Accountants Who Do Trump’s Taxes and Help Him Seem Richer than He is,” a headline that gives a pretty good clue to what the investigation turned up. There was a lot to turn up, too–the investigative team found that in “various episodes” over a period of 30 years, partners of the firm — including its CEO — have been in legal trouble as a result of fraud, misconduct or malpractice.

(And that’s not even counting the New York partner who stabbed his wife to death back in 2016….)

According to Pro Publica, the firm helped Trump pay the least amount of taxes possible, which is what accountants generally do, but it also helped him appear “to be rich beyond imagining”–something that required creating “precisely the opposite impression of what’s in his tax filings.”

This lie is more understandable than the one about baseball. Creepy Steve Bannon is on record opining that, if Trump’s base were to discover that he’s not really a billionaire, the disillusion would trigger mass defections. (In America, there are evidently large numbers of people who believe those lines in “If I Were a Rich Man” from Fiddler on the Roof: “And it wouldn’t matter if I answered right or wrong; when you’re rich, they think you really know.”)

The legal issue before the Court should be a slam-dunk; as the lower courts properly concluded, no one is above the law, and ordering an accounting firm to hand over documents in its possession doesn’t require a President’s time or attention.But who knows?

I hope I’m wrong, but given Mitch McConnell’s appalling success in politicizing the Supreme Court, I don’t hold out much hope that we’ll see Trump’s taxes before November.

But even without the disclosures that lurk in his tax forms, the polls tell us that most Americans trust medical experts and state health officials far more than a President who only tells the truth accidentally.

Let’s just hope we don’t get invaded by aliens from outer space. If Trump warned us, we’d never believe him.

 

Affording My Brave New World

An even longer one. Sorry.

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Even if you found yesterday’s post persuasive, a UBI seems politically impossible and cost prohibitive.

Politically, shifting from a paternalistic and judgmental “welfare” system to one awarding benefits based upon membership in the polity would not only require a significant culture change, but would be vigorously opposed by the large number of companies and individuals whose interests are served by America’s current patchwork of programs, subsidies and policies.

Then there’s the issue of cost.

Although Americans’ deeply-ingrained belief that people are poor because they made bad choices or didn’t work hard enough continues to be a barrier to a more generous and equitable social safety net, the most significant impediment to passage of a Universal Basic Income is the argument that has consistently been made to thwart universal healthcare– that America, rich as the country is, simply cannot afford such a Brave New World. This argument flies in the face of evidence from counties with far more robust safety nets: In 2012, the U.S. spent an estimated 19.4% of GDP on social expenditures, according to the Organization for Economic Co-operation and Development. Denmark spent 30.5%, Sweden 28.2% and Germany 26.3%. All of these countries have a lower central government debt to GDP ratio than the United States.

While specific economic recommendations aren’t possible in the absence of concrete, “fleshed out” policy proposals, it’s possible to identify ways in which universal programs might be financed, and how they might affect economic growth. The short answer is that both the UBI and some version of Medicare-for-All could be funded by a combination of higher taxes, savings through cost containment, economies of scale, reduction of welfare bureaucracy, the elimination or reform of existing subsidies, and meaningful reductions in America’s bloated defense budget.

Debates over taxes rarely if ever consider the extent to which individual taxpayers actually save money when government relieves them of the expense of a service. Even now, requiring citizens to make out-of-pocket payments for such things as scavenger services (in lieu of municipal garbage collection), or private police and fire protection or schooling, would vastly exceed the amounts individual households pay in taxes for those services. Low-income citizens, of course, would be unable to afford them.

The American public is positively allergic to taxes, even when a majority financially benefits from them. If low-and-middle income American families did not have to pay out-of-pocket for health insurance, and could count on a stipend of $1000/month, most would personally be much better off, even if they experienced increases in their tax rates. They would likely see other savings as well: for example, if the U.S. had national health care, auto and homeowners’ insurance rates could be expected to decline, because insurance companies wouldn’t have to include the costs of medical care in the event of an accident or injury in their actuarial calculations. Research also predicts the country would see a decline in crime, child and spousal abuse and similar behaviors that have been found to increase under the stresses associated with poverty. (The extent of such reductions and the cost savings attributable to them is speculative, but a substantial level of abatement seems likely.)

Most tax increases, obviously, would be levied against those capable of paying them. Americans used to believe in progressive taxation, and not simply to raise revenue. Taxes on the very wealthy were originally conceived as correctives, like tobacco taxes, that should be judged by their social impact as well as their ability to generate revenue. High tax rates on the rich were intended to reduce the vast accumulations of money that serve to give a handful of people a level of power deemed incompatible with democracy.

A recent report from the Guardian calculated the results of (relatively modest) increases in taxes on the very rich.

Right now they pay about 30% of their income in taxes. Increasing their overall average tax rate by about 10 percentage points would generate roughly $3tn in revenue over the next 10 years, while still leaving the 1% with an average post-tax annual income of more than $1.4m. (That new tax rate, by the way, would be about the same as the overall rate the richest 1% paid back in the 1940s and 1950s.)

As indicated, in addition to reducing inequality, progressive taxation does raise money, and there is widespread agreement that the very rich aren’t paying their share. At the 2019 Davos World Economic Forum, Dutch historian Rutger Bregman caused a mini-sensation by telling the uber-wealthy assembled there than the “real issue” in the battle for equality is tax avoidance and the failure of rich people to pay what they should. Momentum is clearly building for more progressive tax rates than the United States currently imposes.

There is also growing anger directed at the generosity of various tax credits and deductions, aka “loopholes,” that allow immensely profitable corporations to reduce their tax liabilities (or escape them completely). The use of offshore tax havens and other creative methods of eluding payment devised by sophisticated tax lawyers employed by the uber-wealthy is an ongoing scandal.

Real-world experiments like Governor Sam Brownback’s tax cuts in Kansas confirm that, contrary to the ideological arguments against imposing higher taxes on wealthy “makers,” high marginal rates don’t depress economic growth and cutting taxes doesn’t trigger an increase in either job creation or economic growth. In 1947, the top tax rate was 86.45% on income over $200,000; in 2015, it was 39.60% on income over $466,950. During that time span, researchers have found very little correlation between economic growth and higher or lower marginal rates. In 2012, the Congressional Research Service published a research study that rebutted the presumed inverse correlation between tax rates and economic growth.

Climate change is affecting America’s weather, increasing the urgency of efforts to reduce carbon emissions and increase the development and use of clean energy sources. Yet the United States spends twenty billion dollars a year subsidizing fossil fuels, including 2.5 billion per year specifically earmarked for searching out new fossil fuel resources, at a time in human history when the development of those resources is contraindicated. According to Oil Change International, permanent tax breaks to the US fossil fuel industry are seven times larger than those for renewable energy. At current prices, the production of nearly half of all U.S. oil would not be economically viable but for federal and state subsidies.

During the 2015-2016 election cycle oil, gas, and coal companies spent $354 million in campaign contributions and lobbying, and received $29.4 billion in federal subsidies in total over those same years – an 8,200% return on investment. The OCI report concluded that: “Removing these highly inefficient [fossil fuel] subsidies – which waste billions of dollars propping up an industry incompatible with safe climate limits – should be the first priority of fiscally responsible climate, energy, and tax reform policies.” Not incidentally, eliminating these subsidies would free up funds for other uses, including the social safety net.

Then there are farm subsidies– another 20 Billion dollars annually. Arguments for and against terminating these subsidies are more complicated than for fossil fuel subsidies, but the case for means-testing them is strong.  In 2017, the USDA released a report showing that approximately half the money went to farmers with household incomes over $150,000. As Tamar Haspel wrote in the Washington Post, “That means billions of dollars, every year, go to households with income nearly three times higher than the median U.S. household income, which was $55,775 that year.”

Farm subsidies were created during the Depression in order to keep family farms afloat and ensure a stable national food supply. Since 2008, however, the top 10 farm subsidy recipients have each received an average of $18.2 million – that’s $1.8 million annually, $150,000 per month, or $35,000 a week. These farmers received more than 30 times the average yearly income of U.S. families. Millionaires are benefitting from a program originally established to protect family farms during times of economic distress.

Most citizens understand why government should not be providing billions of dollars to support companies that make climate change worse, or adding to the bottom lines of already-profitable corporate farms. Efforts to cut the military budget encounter genuine anxieties about endangering national security, as well as more parochial concerns from lawmakers representing districts with economies heavily dependent upon military bases or contractors. Those concerns may explain why U.S. military spending in 2017 was over 30% higher in real terms than it was in 2000.

The United States will spend $716 billion in 2019, and annually spends more than twice what Russia, China, Iran and North Korea spend collectively.

Critics of the military budget make three basic arguments: the budget is much bigger than threats to U.S. security require; very little of the money appropriated supports efforts to fight terrorist groups that pose the real threat in today’s world; and the countries that might threaten America  militarily are historically few and weak. (Russia, for example, has an energy-dependent economy roughly the size of Italy’s. According to America’s intelligence community, its efforts to destabilize the U.S. are made through social media, assaults by “bots,” and hacks into vulnerable data repositories, not military action.)

The massive amounts that America spends on its military are used to support bases and troops that are ill-suited to the conduct of modern-day defense. (Even the Pentagon has estimated that base capacity exceeds need by 20%) The existence of this enormous military capacity also creates an incentive to substitute military intervention for the exercise of diplomacy and soft power (as the Japanese proverb warns, when the tool you have is a hammer, every problem looks like a nail.)

An argument can also be made that we are supporting a military establishment that is prepared to fight the last war, not the next one.

As one military expert has written, “counterterrorism is poorly served by manpower-intensive occupational wars, which rarely produce stability, let alone democracy.” He argues the U.S. could safely cut the military budget by 25%; even if he is wrong about the size of the savings that could be realized, knowledgable observers suggest that modernizing military operations, restraining America’s all-too-frequent interventions into the affairs of other countries, and focusing on actual threats would translate into very significant savings.

The elimination of fossil fuel subsidies, and the reduction of farm subsidies and military expenditures would allow lawmakers to achieve substantial savings while pursuing important policy goals. The government ought not be abetting climate change or further enriching wealthy Americans, and it is past time to reconfigure national defense to meet the challenges of the 21st Century.

Andy Stern lists a number of ways a UBI might be funded, including “cashing out” all or most of the existing 126 welfare programs that currently cost taxpayers $1 trillion a year. The UBI would make many if not most of these programs unnecessary.

Stein also lists a number of targeted tax proposals, including a Value Added Tax (VAT), that have been suggested by economists supportive of a UBI. As he points out, these and other proposals constitute a “menu” of possibilities. (Another example: If the UBI allows workers to cover basic essentials, taxpayers would be relieved of the need to supplement the wages of McDonalds and Walmart workers,  saving government some ten billion dollars annually.) If and when America has a Congress that is serious about reforming both our democratic decision-making structures and our social infrastructure, that menu provides a number of options from which to choose.

America’s problem is a lack of political will to confront the special interest groups that currently feed at the government trough, not a lack of realistic funding mechanisms.

So THIS Is Why Trump Is Hiding His Tax Returns…

Among the many mysteries I’ve been unable to fathom is a deceptively simple one:  why don’t Trump voters find his hysterical efforts to hide his taxes suspicious? Don’t they ever wonder what it is he is so determined to hide?

So far, of course, he’s been successful. His lawyers have been able to appeal lower court orders requiring him to turn over his tax returns, his bank says it doesn’t have copies (and if you believe that, I have some swampland in Florida to sell you…), and between the insane tweets and the bizarre behaviors and now the impeachment shenanigans, the issue of the tax returns has receded into the vast pile of venality labeled “and other stuff.”

But thanks to Pro Publica, we now have at least a partial answer. It’s not surprising, but it sure does explain why he wanted to keep the information hidden.

Documents obtained by ProPublica show stark differences in how Donald Trump’s businesses reported some expenses, profits and occupancy figures for two Manhattan buildings, giving a lender different figures than they provided to New York City tax authorities. The discrepancies made the buildings appear more profitable to the lender — and less profitable to the officials who set the buildings’ property tax.

For instance, Trump told the lender that he took in twice as much rent from one building as he reported to tax authorities during the same year, 2017. He also gave conflicting occupancy figures for one of his signature skyscrapers, located at 40 Wall Street.

Lenders like to see a rising occupancy level as a sign of what they call “leasing momentum.” Sure enough, the company told a lender that 40 Wall Street had been 58.9% leased on Dec. 31, 2012, and then rose to 95% a few years later. The company told tax officials the building was 81% rented as of Jan. 5, 2013.

When tax experts were shown the discrepancies, they dismissed the possibility that they were careless errors; they agreed the inconsistencies were properly characterized as tax fraud.

New York City’s property tax forms state that the person signing them “affirms the truth of the statements made” and that “false filings are subject to all applicable civil and criminal penalties.”…

ProPublica obtained the property tax documents using New York’s Freedom of Information Law. The documents were public because Trump appealed his property tax bill for the buildings every year for nine years in a row, the extent of the available records. We compared the tax records with loan records that became public when Trump’s lender, Ladder Capital, sold the debt on his properties as part of mortgage-backed securities.

ProPublica reviewed records for four properties: 40 Wall Street, the Trump International Hotel and Tower, 1290 Avenue of the Americas and Trump Tower. Discrepancies involving two of them — 40 Wall Street and the Trump International Hotel and Tower — stood out.

One expert who was asked to look at the returns said the numbers suggested the company had kept two sets of books–one for lenders, another for tax authorities.

Taxes have long been a third rail for Trump. Long before he famously declined to make his personal returns public, a New York Times investigation concluded, Trump participated in tax schemes that involved “outright fraud,” and that he had formulated “a strategy to undervalue his parents’ real estate holdings by hundreds of millions of dollars on tax returns.” Trump’s former partners in Panama claimed in a lawsuit, which is ongoing, that Trump’s hotel management company failed to pay taxes on millions in fees it received. Spokespeople for Trump and his company have denied any tax improprieties in the past.

In February, Cohen told Congress that Trump had adjusted figures up or down, as necessary, to obtain loans and avoid taxes. “It was my experience that Mr. Trump inflated his total assets when it served his purposes,” Cohen testified, “and deflated his assets to reduce his real estate taxes.”

Most Trump voters, of course, lack the resources to play these games. They have to pay what they owe. One would think they might resent it when rich people lie to evade taxes–but then, it’s widely known that Trump routinely stiffs vendors and contractors, and his base doesn’t seem to care. (As long as he hates the same people they do…)

What was that Trump line? “When you’re a star, they let you do it.” A star! I guess the delusional self-image that supposedly entitles him to grab women’s genitals tells him he’s also entitled to cheat on his taxes.

Evidently, the people who think gold toilets are classy think tax fraud is smart…..

 

Rich Guys For Higher Taxes, Businesses For Single-Payer

Are more zillionaires joining “renegade” rich guys like Nick Hanauer and Warren Buffett and recognizing the dangers posed by the current gap between the rich and the rest?

A recent article from the Guardian was titled “Patriotic millionaires want to pay more taxes.” Those millionaires didn’t mince words.

If you believe the prevailing philosophy of US conservative ideology, the handful of individuals in the 1% are entitled to every bit of their wealth and power because they deployed their capital wisely.

As businessmen in the 1%, living in a conservative state, we confront this philosophy every day, and frankly, we’re sick of it.

The Republican party’s embrace of the “I’ve-done-it-all-on-my-own” mentality is extraordinarily delusional, harmful, and counterproductive. Collective goods – like a sound infrastructure system, a strong K-12 and higher education systems, and rule of law – are critical ingredients to building both individual and societal economic prosperity.

The article’s authors have joined the Patriotic Millionaires, a group of wealthy Americans “from all walks of life across deep red, deep blue and purple states” who realize that the system that enabled their success, that created opportunity, is fundamentally broken. And they aren’t shy about placing the blame: they write that the system has been ” hijacked by the ultra-wealthy.”

But a substantive and sincere commitment to an evolved form of capitalism requires a few things. It requires us to confront the reality of the climate crisis as the existential threat of our time; and to acknowledge that we are a country founded on the toxic prejudice of white supremacy, which continues to unjustly shape the future of millions of Americans before they’re even born. We must separate money from politics, so that the influence of special interests doesn’t overpower the voices of voters; and shift our financial goals from short-term profits to long-term sustainability.

And it requires economically advantaged folks like us to not only pay our fair share, but also unequivocally commit to and support the policies that will achieve that reality – and to get all of our similarly situated friends and associates to do the same.

It isn’t just the ultra-rich who are (belatedly) recognizing the need for change. Another new group is Businesses for Single Payer.

Activist Wendell Potter has become president of Business for Medicare for All, the only national business organization working for single payer health insurance. This group of the economically pragmatic lends expertise and credibility to the cause of reform at a time when many, including some of those running for the Democratic presidential nomination, question the viability of single payer.

Potter spent twenty years in the health insurance industry, and left to become an outspoken critic of what he calls a broken, dysfunctional and unfair healthcare system. He points to surveys showing that people on Medicare are far more satisfied than people with private insurance, and says one reason is that  private insurance has changed significantly over the years. Premiums have gone up while insurance companies have devised clever strategies to avoid paying for care.

In the linked article, Potter enumerates the reasons single-payer systems are superior to our patchwork approach. Most of us could recite those reasons in our sleep, but until now, the business sector has been noticeably absent from both the conversation and the criticism. Why the change?

About three years ago, I was approached by a business leader in the Lehigh Valley of Pennsylvania, Richard Master, who decided to make a documentary on the US healthcare system….

But he began to pay a lot of attention to healthcare costs. He’s got an MBA from Wharton and a law degree from Columbia so this guy’s really smart, has built a very successful business, but he was questioning the sanity of a system in which he has no control over his healthcare costs from year to year….

 I knew what individuals and families were facing, but I hadn’t paid a lot of attention to what is happening to employers who are trying to stay in the game in our uniquely American, employer-based healthcare system. It’s abundantly clear that the system has run its course and is just not working for increasingly large numbers of employers.

Potter quotes Warren Buffett’s observation that “healthcare is the tapeworm that is destroying American competitiveness,” and goes on to say that more and more businesses are recognizing the need to change.

We’ve got several hundred employers who are part of our organization. Our goal is to have at least one business from every congressional district by this time next year. We’re growing pretty rapidly and we already have a voice in Washington.

Money talks, for good or ill. If people with money support higher tax rates and a more robust social safety net, Congress might actually listen.

 

About Those Rankings…

A reader recently sent me a link to a ranking of U.S. states on the basis of how “business-friendly” they are. The more welcoming to business, the more likely to create jobs and experience economic growth–or so the organization doing the ranking asserted.

The organization doing this particular ranking was ALEC, the American Legislative Exchange Council. ALEC is dominated by corporate and libertarian interests, so it isn’t surprising that its definition of “business friendly” is heavily weighted toward low tax rates and corporate subsidies.

If you agree with ALEC’s priorities, I suppose having one’s state receive high marks is cause for celebration. If you don’t–and I don’t–their conclusions are pretty worthless, except, perhaps, as a cautionary tale.

City and state rankings are issued by a variety of organizations and publications; they’re the sorts of “report cards” that Mayors and Governors often brag about–conveniently overlooking the fact that virtually all of them paint a picture of how well their jurisdictions meet the sponsors’ priorities rather than providing accurate assessments of the comparative merits of the “rankees.”

I would call my critique of city and state rankings their “dirty little secret,” except it isn’t very secret: all of the various rankings–the ones I like and the ones I don’t– are inescapably a function of the values of the entity doing the ranking. (Take a look at those “best places to retire” lists. Their top choices tend to be places I’d hate, because the elements that make a community livable to me are clearly not among the criteria they’ve employed.)

ALEC  finds Indiana moderately “business friendly” because our taxes are low, and it prioritizes low taxes over elements of state environments that many businesses find more important: an educated workforce, and such quality of life measures as good schools, convenient public transportation, affordable housing and well-maintained infrastructure. The presence of those elements, of course, depends upon the adequacy of the public dollars available to support them–and we raise those public dollars through taxation.

You see the problem.

It isn’t a mystery why states like Indiana lack the first-rate public schools needed to produce that coveted educated workforce, not to mention the well-maintained public amenities that factor into a high quality of life. Like ALEC, we’ve prioritized low taxes over the maintenance of our social and physical environment.

There is a fairly substantial body of business research that finds the availability of an educated workforce and those “quality of life” measures that attract and keep talented workers much more important to businesses seeking to relocate than the level of taxation. Not that taxes aren’t an important part of the mix, but they are rarely dispositive.

If you want confirmation of that research, you need only take a look at the qualities that Amazon has listed as important as it searches for a city in which to locate its second headquarters. Or talk to the people in your city or state who are charged with economic development.

A genuinely business-friendly environment is one in which people want to live and work. Unfortunately, that isn’t something that can be produced on the cheap.