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Amodei’s Explanation?

February 15, 2018: Representative Mark Amodei (R-NV2) cast his “yes” vote for HR 620, the Americans with Disabilities Education and Reform Act.

Here’s Section 3 of that bill:

(Sec. 3) The bill prohibits civil actions based on the failure to remove an architectural barrier to access into an existing public accommodation unless: (1) the aggrieved person has provided to the owners or operators a written notice specific enough to identify the barrier, and (2) the owners or operators fail to provide the person with a written description outlining improvements that will be made to improve the barrier or they fail to remove the barrier or make substantial progress after providing such a description. The aggrieved person’s notice must specify: (1) the address of the property, (2) the specific ADA sections alleged to have been violated, (3) whether a request for assistance in removing an architectural barrier was made, and (4) whether the barrier was permanent or temporary.

And this summation from Newsweek describes the bill’s possible consequences:

“The bill would effectively gut the ADA, detractors argue. Without a fear of being sued, businesses might be inclined to ignore ADA compliance rules. Critics of the bill also believe people with disabilities should not bear the responsibility of making sure businesses are compliant with the law.

“Instead of expecting businesses to own the responsibility of complying with civil rights laws, it shifts the burden to the individual who is being denied access,” the American Civil Liberties Union (ACLU) wrote in a letter to congressional representatives on Thursday.

The ACLU called the bill unacceptable. “This scheme removes the business’s incentive to proactively ensure that it is accessible to people with disabilities,” it said. “Instead, businesses will simply wait until someone’s right to access is violated and notification is received before making the change they were already obligated to make.” (emphasis added)

The bill’s sponsor, Rep. Ted Poe (R-TX), argued businesses were subjected to “drive by” lawsuits concerning implementation of ADA requirements, and therefore “reform” was necessary.   However, shifting the burden of proof from the entity charged with denying appropriate access to the person making the complaint is a rather blunt instrument for assisting the disabled, and a boon to those who make accessibility difficult if not impossible.  And Representative Mark Amodei voted “yes.”  He’s fine with turning the ADA on its head.

He might want to explain this vote to the 108,054 (2015 AFB) people in Nevada who are significantly visually impaired?  There are other people to whom Representative Amodei might wish to explain his vote —  The Institute on Disability (University of New Hampshire) estimates that between 1.0% and 2.1% of Nevadans under 5 years of age were disabled, 5.7%-6.1% of those aged 5 to 17; 10.7% – 12.5% aged 18 to 64; and 33% to 35.1% over age 65. (pdf)  But Amodei’s protecting businesses from a gazillion frivolous lawsuits, right?…. Maybe not so much.

About those ‘frivolous” lawsuits, let’s hear from an advocate for the disabled:

“To be fair, I vehemently oppose frivolous ADA lawsuits for monetary gain. I cherish this law and hate hearing that some misuse it. However, frivolous lawsuits are not as prevalent as some believe. An analysis of ADA lawsuits in 2016 identified just 12 individuals and one organization that have filed more than 100 lawsuits each. And these lawsuits are not an ADA issue; they are a state and court problem. Indeed, ethics rules bar attorneys from bringing frivolous lawsuits. Rather than go after people with disabilities, attention should be focused on stopping these few bad attorneys.”

We can reasonably conclude that House Republicans have decided to “protect” businesses at the risk of targeting the disabled instead of unscrupulous attorneys.  Some explication is required.  At least it would be polite for Representative Amodei to offer one.

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Filed under Amodei, Nevada Congressional Representatives, Nevada politics, Politics

What Big Victory?

There’s a steady drum beat of pundits and politicians telling me the passage of the TaxScam is a great, wonderful, awesome, fabulous, stupendous, magnificent piece  of legislative action.   Okay, I am certainly not the brightest bulb in the great chandelier, but I’m no dim candle either, and I can tell the difference between tax reform and a tax heist giveaway, handout, bequest, benefaction, and contribution to the top income earners when I see it.  Further, I am truly tired of pounding out the fact-of-life:  Trickle Down Economics is a HOAX.

What the Congress is voting on today isn’t a tax reform bill, it is purely and simply the enaction of economic mythology and political ideology.  There is much economic theorizing asserting the efficacy of tax cuts toward encouraging economic growth, but the numbers (those pesky facts) haven’t substantiated the claim, and the recent example of Kansas offers a real time look at some very dismal prospects.

Making the tax system more rational isn’t best served by a code that includes the Corker Kickback, exceptions for private airplanes,  golf courses, and doesn’t incorporate provisions for exempting state and local taxes.   And, we’ve covered the Carried Interest issue before.   The advice from the EPI back in January 2014 still holds:

“These investment advisors and hedge fund managers can take advantage of this tax structure because they are often compensated through a scheme that, in part, pays them according to the returns on the fund. The industry standard for hedge fund managers is “two and twenty,” which is shorthand for an “overhead” fee of 2% of capital under management plus carried interest (often called a “carry”) of 20% of the returns on the fund. Thus a $100 million fund earning 20% would pay its fund manager $2 million for overhead and $4 million in carry. The carry portion of their compensation is treated under the tax code as capital gains for the fund manager and is taxable at the much lower capital gains tax rate of 15%.” [EPI] (emphasis added)

However, rest assured Nevada’s Republican members of the 15th Congress will vote in favor of retaining the carried interest loophole, and other egregious portions of the Trump Family Property and Legacy Protection Act.  Paris Hilton’s wealth will be preserved.  And for this we may now expect an onslaught on “spending” as in Republican attempts to dismantle Social Security, Medicare, and Medicaid.

As the Republicans hiss out “entitlements” as if the word was a synonym for undeserved welfare, most Americans are quite aware they’ve been paying into Social Security — yes,  to restate the obvious, people are entitled to receive their Social Security benefits — they’ve been paying for them all along.

The point will come when the GOP will cry out, “Oh, we have to cut government spending, because Social Security is going broke! Medicare is out of control.  Medicaid will bankrupt the nation — look at the national debt!”   Really — the way to fix these issues is to re-visit and revise the mess made in the 15th Congress, repeal the TaxScam, and do some revisions targeted at helping middle income Americans.

Some suggestions:

Enact tax cuts 80+% of the benefits go to working middle and lower income Americans who will actually go out and spend the benefits on washing machines, cars, groceries, rent or home mortgages, and who support our economy.

Close the carried interest loophole.  It was never a good idea and it certainly isn’t now.

Enact tax reforms that address the modern economy — not the horse and buggy days.  Support solar, wind, and alternative energy sources and research.  One of the fastest growing jobs in the US today is “wind turbine technician.”  Continuing to subsidize fossil fuels is tantamount to protecting the buggy whip factory owners.   Just to hammer the point a bit further:  “Increases in Job Opportunities:”  Solar Photovoltaic installers  — 105% increase; Wind Turbine Technicians — 98%; Home health aides — 47%; Personal Care aides — 37%; Physician Assistants — 37%; Nurse Practitioners — 36%; and interestingly enough Bicycle Repair Specialists — 29%.

Forget the territorial tax regime — all that does is incentivize corporations to move their operations overseas.

This would be a start.  There’s nothing simple about a tax code — there never was and there never will be.  Piling up stacks of paper to illustrate the density of the code isn’t instructive, all it demonstrates is that we have an extremely complex economy.  We use taxation as a lever to encourage or discourage certain decisions.   In this instance we are encouraging the behavior of hedge fund managers (notoriously short term thinkers) and multi-national corporations.  This didn’t work so well in 2007-2008 and it surpasses all reason why anyone would think a repetition would have any different result.

But we can count on Senator Dean Heller and Representative Mark Amodei to march right in line with the GOP leadership…straight into the next bubble, the next crisis, and the next recession — only this time the resources of the federal government will be depleted in the face of adversity.  In slightly less modest terms, it’s a recipe for more debt which will eventually lead to the necessity of incurring even more debt.

And they’re still coming after Social Security and Medicare.  Be prepared.

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Filed under Economy, Politics, Taxation

Amodei’s Wonderland: Wherein Economic Vision Becomes Hallucination

One of the more confusing statements from Representative Mark Amodei (R-NV2) concerns how the Republican Tax Scam will affect the economy:

(Part A) “With respect to the effect on businesses, Main Street job creators will see their tax rates reduced through the lowering of the maximum tax rate on business income to no more than 25%. (Part B) Additionally, federal tax rates on corporate taxable income will see a decrease from the highest rate of 35% to a flat corporate tax rate of 20%. (Part C) Each of these changes will help businesses and corporations expand, hire new employees, increase wages, and also give them the resources they need to stay competitive in the global marketplace.”  [Amodei] (“parts” added for discussion)

Let’s begin with Part A, those “main street job creators” are the high income earners discussed yesterday as be beneficiaries of the Pass Through Loophole.   It really doesn’t matter if the firm’s address is Main Street, 5th Avenue, or Wall Street, the result is essentially the same.  After telling Nevadans not to worry about losing their most popular deductions because not all that many people use them and the new standard deductions will take care of them,  Amodei doesn’t apply the same test to the business and corporate deductions.  That Pass Through Loophole, by any and all other names, has resulted in massive revenue losses in Kansas, the state which imprudently serves as a laboratory for the GOP’s ideological economics.  Let’s not confuse Mom and Pop’s Midtown Market with the capital management firm of Grabbem, Gouggem, & Howe.   Both may “create jobs” but there’s no comparison in terms of how much of a tax break each will receive for having essentially the same number of employees.

Moving along to Part B:  Yes.  At present there’s a plethora of corporate accountants employed to create a situation in which a top rate of 39.1% becomes an effective rate far below that maximum rate.  One study of Fortune 500 companies reached the following conclusions:

  • As a group, the 258 corporations paid an effective federal income tax rate of 21.2 percent over the eight-year period, slightly over half the statutory 35 percent tax rate.

  • Eighteen of the corporations, including General Electric, International Paper, Priceline.com and PG&E, paid no federal income tax at all over the eight-year period. A fifth of the corporations (48) paid an effective tax rate of less than 10 percent over that period.
  • Of those corporations in our sample with significant offshore profits, more than half paid higher corporate tax rates to foreign governments where they operate than they paid in the United States on their U.S. profits.

Now, if they’re starting at 39.1% and getting their taxes down by half or even more at present — imagine what they can do when they start from 20-25% and work their way down?  For example, the “intangible drilling costs” loophole seems not to have closed up at all in the House version, and this while it’s acknowledged that seismic testing has significantly reduced the prospect of drilling dry holes.  The old Depletion Allowance survives as it always does, even if other deductions for mere mortals do not.

Or, consider the creative ways corporations use depreciation.  The House Ways and Means Committee version allows corporations to write off the depreciation for new equipment immediately.  Nice, if one is looking for a way to get from 20% down to a 10% tax rate or less.  [WaPo]  Not to put too fine a point to it, but while mere mortals are expected to absorb the elimination of student loan interest deductions, home mortgage interest deductions, and major medical expense deductions — the corporations go almost untouched.

Part C is unalloyed wishful thinking.  Walter Isaacson observes in his new book about Da Vinci that “vision without implementation is hallucination,” and this GOP canard is an almost perfect example.   Where the Tax Cut Fairy Waves Her Magic Wand wonders ensue — commerce increases, new employees will be hired, employees will have higher wages, and we will be “more competitive.”

Let’s step back from the hallucinations and observe what happens in the real world of employment:

“Service businesses, in which payroll is the major cost of providing the service, can take on higher payroll percentages since the payroll is, in fact, producing the revenue. There is likely to be no other significant cost of services to be provided. In such situations, payroll can reach the 50% mark without destroying profitability. Manufacturers, however, must maintain a payroll figure closer to 30% or less as the business must endure the cost of manufacturing the widget plus the payroll. Same with restaurants, given the high cost of food the payroll must stay under thirty percent.”

In order to lend any credence to the overblown rhetoric of GOP apologists for reducing corporate taxes and enacting pass-through loopholes, we have to merge all hiring from all sectors into one grand lump.  No matter the tax rate, what really matters is that the widget factory can keep its payroll allocations to 30% or less of its costs.  Nor can we argue that the sector with the highest payroll allocation, “service,” is all created equal.  This tertiary sector includes everything from health care to banking to education, to media and communications.   At the risk of continuous redundancy, the tax rate doesn’t determine payroll allocation — no one will be hired to do anything unless there is a demand for the goods or services beyond the capability of current staffing levels to deliver an acceptable level of consumer or client satisfaction.

Employees will have higher wages if the corporation gets a tax cut?  Probably not.  We can wade into the deeply arcane economic theoretical weeds and talk about the relationship between labor costs and tax liabilities, but let’s keep our feet on the ground instead.

Nevada has a fairly unique economy given one of our major sectors is “hospitality,” (or how to house, feed, and amuse people whom we want to leave behind large sums of money) establishments.  Therefore, there’s nothing surprising about finding out that we’ll need about 191,141 people working in food service in 2018; a growth rate of 2.8% with about 5,048 new positions expected. [DETR download]  The mean wage for food service workers is $12.74 per hour.  Most dealers are earning about $8.57 plus tips.  What will drive up food service and dealers’ wages?  Which is more likely to drive increases in food services wages: (a) more customers or (b) a bigger tax cut for corporate headquarters?

If you answered “b” then you are willing to wait for the calculations to be completed concerning how much the corporation should allocate for payroll expenditures, and then try to bank the results from this theory:

“Why would anyone think slashing corporate tax rates would increase workers’ wages in the first place? The theory endorsed by the CEA relies on three steps to get from corporate tax cuts to higher wages. First, the corporate tax cut increases companies’ after-tax returns on investment. As a result, firms will make more investments in plant and equipment than they would in a higher-tax-rate environment. Second, greater investment by firms leads to higher productivity by the workers who put those investments to work. Third and finally, workers will receive increased wages in line with those productivity gains.” [vox]

And, if you believe this I have a lovely bridge over the Humboldt River to sell you.  Why? Because corporations can do lots of other things with those savings — higher executive compensation, mergers and acquisitions, stock buy backs, and dividend payments.

Short Form:  Representative Amodei’s analysis requires redefining “job creators,” as those titans of the financial system who don’t necessarily become those doing the hiring; and requires disconnecting wages and salaries from the accepted wisdom about payroll allocation; and, means a person has to roll the dice and hope that the corporation trickles the money down to the counter-man.  In Isaacson’s parlance:  It’s vision without implementation.

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Filed under Economy, Nevada, Nevada economy, Nevada politics, Politics

Think of the Children! GOP tax plan is hazardous for children

I’m so old I remember when Republicans would bellow “Think of the Children” every time tax proposals were discussed and each time there was a proposal to spend a dime on anything.  Now they have a tax proposal which doesn’t help Nevada’s children — no matter how many times they invoke the Growth Fairy and insinuate the new plan will be better for “working families.”  Not so fast.  Here’s what their tax plan does:

Removes the Personal Exemption: The current tax code allows families a tax exemption of $4,050 per person. For some families, the loss of the personal exemption is recovered through the tax bill’s increase of the standard deduction to $12,000 for single filers and $24,000 for joint (married) filers. However, single parents with more than one child and married couples with three or more children would see their taxable income increase. [CFC]

Okay, so that category of families who will be “helped” doesn’t include single parents with more than one child, or married couples with three or more children…and this is “family friendly?” Thus a single parent can only have one child and benefit from the GOP tax plan, and a married couple can’t have three or more … who’s left?  But wait, there’s another blow to follow:

Insufficiently Increases the Child Tax Credit: The tax bill increases the current Child Tax Credit from $1,000 to $1,600, with an additional $300 credit per parent. The addition of the Family Credit is a marginal improvement over current law, but not for families with children who are working-class or living in povertyargues Senator Marco Rubio. Because the increases are not refundable, they won’t apply to families living under the poverty threshold, and the $300 parent credits would expire after five years. The proposal to index the refundable portion to inflation is also insufficient, as it uses a less generous estimate and ceases upon reaching $1600. (emphasis added)  [CFC]

That $600 increase looks good until the curtain is pulled back and the proposal doesn’t really apply to children in working class families…which would be most of them.  Notice the magic expiration date, that’s a recurring feature in the GOP plan wherein breaks for individuals and families expire but the breaks for corporations don’t.   However, we’re not through here:

Repeals the Adoption Tax Credit: The adoption tax credit, which is capped at $13,570 per adopted child is a vital support for families and helps alleviate the costs of adoption fees. The Adoption Tax Credit is an important tool for children in the child welfare system to achieve permanency, as it helps defray the expensive process of adoption, especially for children with high needs. In 2014 alone, 74,000 families claimed the credit. [CFC]

Thus much for the old line about supporting adoptions and being “pro-life.” We’ve posted before about average adoption costs, and here the GOP goes again: The Mouth says one thing while the hands do another.

The bottom line is that as far as Nevada families are concerned (1) the personal exemption is inadequate; (2) the child tax credit is insufficient; and (3) the elimination of adoption tax credits is unconscionable.   This really isn’t a great formula for the benefit of Nevada families and their children.

Voters in Nevada District 2 can let Representative Mark Amodei know how they feel about this at: 775-686-5760; 775-777-7705; or 202-225-6155.

Senator Heller can be contacted at: 702-388-6605; 775-686-5770; and 202-224-6244.

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Filed under Amodei, Nevada politics, Politics, Taxation

Taxscam 101 Part One — Satisfy the 1% and Soak the Rest of Us

I think it’s safe to assume that Representative Mark Amodei (R-NV2) will be supporting the House Republican version of the Tax Cut Cut Cut… the last three words indicating what will happen for corporations, not what average Nevada income earners can expect from the proposal.  USA Today has a preliminary summation of some deductions INDIVIDUALS and FAMILIES won’t be able to use, that increase in the standard deduction is supposed to make up for this?   USA Today’s points are listed below, in red font.

Adoption: A tax credit worth up to $13,750 per child would end.  It’s a little hard to explain this one, given the GOP “pro-life” stance. It’s even harder to understand when the average cost for an adoption (2012-2013) was $39,996 using an adoption agency and $34,093 for an “independent” adoption. [AmAdopt]  Eliminating the tax credit to alleviate the impact of these expenses seems a strange way of encouraging couples to adopt children in need of permanent homes.

Alimony: To eliminate what Ways and Means Committee documents referred to as a “divorce subsidy,” alimony would no longer be deductible by the payor for decrees issued after 2017. Payments would be excluded from the recipient’s income.  I’m not at all certain that rebranding alimony as a “divorce subsidy” encourages support for single parents? This would also seem to make it all the more difficult for a parent to make child support payments?

Classroom costs: Teachers could no longer write off the cost of supplies they buy.  The reality is that not so long ago school districts kept supplies from pencils to facial tissues on hand; today these items (along with hand sanitizer) end up on lists of items parents are expected to purchase when the school year begins.  What isn’t subsidized by parents whose children are enrolled in cash strapped districts is usually purchased by teachers, to the tune of an average of $500 per teacher per year, with some teachers spending much more. [CNN money]  It’s been reasonably obvious Republicans aren’t great friends of public school teachers — but this suggestion is a direct slap at teacher’s own bank accounts.

College boosters: Sports fans would no longer be able to deduct 80% of the cost of donations to colleges if they are made only to become eligible to buy seats for games or get preferences such as prime parking spots.  The University of Minnesota isn’t sure what will happen to its program in light of this proposal, and universities in Nevada probably aren’t either.   UNLV and UNR both use booster donations to support their athletic scholarship funds. Perhaps lost in this controversial proposal is the notion that scholarship funds are, in most cases, not limited to a particular program but also support our “Olympic Sports.”  Donors to UNR and UNLV athletic funds might want to ask Representative Amodei why he might be in favor of this Republican plan.

Disaster losses: Currently, losses from theft or events such as flood, fire or tornado that exceed 10% of adjusted gross income are deductible. The bill would repeal that deduction, with one exception — disasters given special treatment by a prior act of Congress. A law enacted Sept. 29 increased the deduction for losses caused by Hurricanes Harvey, Irma and Maria, and it was sponsored by Rep. Kevin Brady, R-Texas. Brady, the chairman of the Ways and Means Committee, is also sponsoring the tax overhaul.  How interesting — the plan doesn’t affect those battered by “Harvey” in Texas — but Florida, Puerto Rico, and others it’s YOYO time as far as the Republicans are concerned.  Since when do we, as a nation, not give people a break when they’ve lost everything, or nearly everything in a natural disaster?

Employee achievement awards: Complicated rules that allowed some cash awards from employers to be tax-free to the worker would become taxable.  Another interesting point — corporations can expect a big tax cuts, but employees earning cash awards from those corporations would be required to pay taxes on these kinds of achievement awards.

Employer-provided housing: Rules allowing for some workers to get housing and meals tax-free from their employers would face a new cap of $50,000, and benefits would be phased out for those earning more than $120,000.  So, if the employer has you (and perhaps your family) parked in “West Moose Bay” where groceries have to be flown in, and “housing” is only provided by the corporation — the subsidy is taxable?  And we haven’t even mentioned that Section 1310 eliminates moving expenses. (pdf)

Home sale gains: Right now, the gain on the sale of a home is not taxable if it is under $500,000 for joint filers as long as the home was the owner’s primary residence for two of the previous five years. New rules would require a home to be the primary home for five of the past eight years to qualify, and the income exclusion would be phased out for taxpayers with incomes over $500,000.  I suppose we can kiss the Bush Administration’s emphasis on home ownership goodbye? Little wonder there’s opposition to this proposal from the housing industry — and from those who construct homes as well. There’s more from USA Today on the topic of housing at this link.

Major medical costs: The decision to eliminate the deduction for medical expenses exceeding 7.5% of adjusted gross income was one of the bill’s “tough calls,” Brady said Friday. “The call is this: Do we want a tax code that has special provisions that you may need once in your life, or do we want a tax code that lowers rates every year of your life?” he said.  This may take the prize for lame explanations — ever.  Consider for a moment the victims of the Las Vegas shooting, some of whom will be facing major medical expenses exceeding 7.5% of their AGI — not just now but for years to come.  The idea that we should eliminate affordable comprehensive health insurance is bad enough, but this notion is downright heinous.  And, this from those who want to cut Medicare and Medicaid?

And this isn’t all — there are more atrocities in the USA Today article, and more specifics in the Ways and Means Committee summary of the bill.  (pdf)

Not to put too fine a point to it, but this bill, which will most likely be supported by Representative Amodei, could have been drafted by accountants and tax lawyers for major corporations and the top 1% of American income owners — to be paid for by those who are working in everyday jobs, who have to move to find employment, who are adoptive parents, who are victims of natural disasters, who are facing major medical expenses…

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Filed under Amodei, income tax, Nevada politics, Politics, tax revenue, Taxation

New Bull, Same Old Product: The Latest Incarnation of GOP Tax Cuts

For some reason, probably known but to the major donors of the Republican Party, “we” need a tax cut.  The rationale for this exercise echos the ubiquitous adolescent argument for automobile ownership — I need the car to go to work, I need to work to pay for the car.   In this instance, it’s argued that we need the tax cut to promote growth, and the growth to pay for the tax cut.  It’s the same old southbound product of a northbound male bovine we’ve heard so many times before.

Even the GOP assertions connect to this circuitous argument.  A tax cut, we are told, will promote economic growth — and Everyone will win.  Unfortunately, there’s no unanimous jury decision on this question.  First, there are some common methodological problems with altogether too many academic studies purporting to answer the question definitively.  Secondly, there are further issues intrinsic to discussion about how the tax cuts are to be offset.  Not all tax cut/reform proposals are created equal.

“The results suggest that not all tax changes will have the same impact on growth. Reforms that improve incentives, reduce existing subsidies, avoid windfall gains, and avoid deficit financing will have more auspicious effects on the long-term size of the economy, but may also create trade-offs between equity and efficiency.” [Gale, Brookings]

Therefore, if we step back and adopt the centrist conclusions of the Gale-Samwick Study quoted above, there appear to be some boxes to be checked off if the goal is to encourage long term economic growth, and one of those boxes calls for the avoidance of deficit financed tax cuts.

We are cautioned by Republican advocates that there are only two ways to reduce a federal deficit, either raise taxes or reduce spending.  The last iteration of a Republican tax cut, was not only deficit financed but the deficit was enhanced by the spending associated with the wars in Afghanistan and Iraq.  Since raising revenue by increasing taxation is anathema to Republican orthodoxy then there must be a reduction in spending.  Enter the proposals from the current Republicans to reduce Medicare spending by $472.9 billion over the next decade, and a further reduction of $1 to $1.5 trillion in cuts to the Medicaid program.

The current FY 2018 budget makes some assumptions which may be quickly frustrated. For example, the budget assumes no further military conflicts — the military expenditures assume readiness costs, not military operations; and, cuts to domestic expenditures  to a level not seen since the Hoover Administration.

If this sounds like the same old prescriptions from GOP decades past, there’s a reason for it which becomes obvious when the framework is examined.  What we have herein is NOT a new proposal for tax reform, but a recycling of ideas included in every recent Republican tax plan.

Cut the corporate tax rate from 35% to 20%.  As noted previously in this site,  there are several options available to corporations, none of which have anything to do with increasing employment or raising wages — share buybacks, dividend payments, mergers and acquisitions, corporate bonuses, management compensation, etc.  The GOP argument rests on the fluid assumption that corporations will reward the nation with more plant expansion, research and development, and rising wages — without a scintilla of proof this will actually happen.

The 25% (15%) pass through rate.  This purports to be a bonus for small businesses.  In the real world most small businesses are already paying this rate or rates even lower.  Consider the following evaluation of the Pass Through business:

“Finally, the top statutory rates and average effective rates mask substantial differences in what individual business owners pay in taxes. Most businesses are small, earn relatively modest income, and thus face relatively low bracket rates. As a result, more than 85 percent of pass-through businesses in 2014 faced a top rate of 25 percent or less; only 3 percent faced a marginal rate greater than 30 percent (Figure 6).[10] However, a much larger share of pass-through income does face high marginal income tax rates. Almost half of pass-through income in 2014 came from businesses with a top rate of at least 35 percent.  In other words, a small number of large pass-throughs are responsible for the vast majority of the sector’s tax burden.”  (emphasis added)

Consumer Warning: Beware of muddled conflation of pass through taxation with income from pass through businesses.  85% of small businesses are already paying low pass through rates, and the income is coming from a small number of very wealthy pass through businesses.  It doesn’t take too much imagination to figure out these are lobby shops, law firms, and other wealthy operations which bear little resemblance to small law offices and other independent businesses.

The Death Tax is Coming, The Death Tax is Coming.  I have no reason to believe that there won’t be one more “small business owner,” or one more family farmer, hauled into camera range at a GOP function who will have some tale of woe about inheritance taxation — or as I prefer to call it: The Paris Hilton Legacy Protection Act.   99.8% of all Americans don’t have to pay the estate tax, and such taxes as are paid are 40% of the excess above $5.45 million.   One other point might be made at this point, it’s not the heirs who pay the estate taxation if any is due — it’s the estate, via the executors.  But the major number here is 99.8%, the 99.8% of Americans who will see absolutely no benefit from this “tax cut” at all.

Eliminating the Alternative Minimum Tax, “which is intended to ensure that higher-income people who take large amounts of deductions and other tax breaks pay at least a minimum level of tax.”   Now, gee, if I could just see a certain President’s tax returns I could tell if he were liable for the AMT?  If I could be reassured that high profile NYC real estate developers, who take a spectacular range of deductions, might have to pay the Alternative Minimum Tax so they aren’t dodging their contributions almost entirely?  However, it’s been since May 20, 2014 since a certain presidential candidate said that if he decided to run for high office he’d release his tax returns — some 1,313 days ago…

In short, there’s nothing new here. It’s the same old south bound produce of a north bound bull.  Repackaged, with a new face in the Oval Office, and I remain convinced that two of our Congressional representatives, Senator Dean Heller and Representative Mark Amodei, will happily twist themselves into rhetorical knots trying to explain how cutting Medicare and Medicaid will benefit middle income Nevadans by pleasing the millionaires and billionaires among us.

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Filed under Amodei, Federal budget, Heller, income tax, Nevada politics, Politics, tax revenue, Taxation

Rep. Amodei’s Wonderful Record: January De-Regulation Edition

Representative Mark Amodei’s (R-NV2) record in the 115th Congress is as dubious as the institution itself.  For a group touting their “accomplishments” the actual record doesn’t quite hit that level.  Post Office namings, and other minutiae are not included in this list.

Roll Call 8, January 4, 2017:  Midnight Rules Relief Act — “This bill amends the Congressional Review Act to allow Congress to consider a joint resolution to disapprove multiple regulations that federal agencies have submitted for congressional review within the last 60 legislative days of a session of Congress during the final year of a President’s term. Congress may disapprove a group of such regulations together (i.e., “en bloc”) instead of the current procedure of considering only one regulation at a time.” Representative Amodei voted in favor of this bill (238-184).   But, wait, there’s more:

“According to the CRA, resolutions of disapproval not only nullify the regulation in question; they also prohibit a federal agency from issuing any other regulation that is “substantially the same” in the future, unless specifically authorized to do so by a future act of Congress. As a result, these mass-disapproval resolutions would permanently block agencies from addressing threats to public health and safety.”  (emphasis added)

Those who believe that things like corporate accountability, safe working conditions, clean air, and clean drinking water are important wouldn’t find this very appealing.  However, that didn’t stop Rep. Mark Amodei from supporting this bill, which was essentially a solution in search of a problem.

Roll Call 23, January 5, 2017:  “Regulations from the Executive in Need of Scrutiny Act of 2017”  Representative Amodei voted in favor of this bill.  “(Sec. 3) The bill revises provisions relating to congressional review of agency rulemaking to require federal agencies promulgating rules to: (1) identify and repeal or amend existing rules to completely offset any annual costs of new rules to the U.S. economy.” [Cong]  This is vague to the point of ridiculousness.  There are several ways to do a cost analysis, and we can bet that the GOP has in mind only the most stringent, even if there is an obvious benefit to public health, safety, or general well being.  Frankly, there are some rules we have put in place which are expensive in terms of commercial and industrial calculations, but necessary in terms of public health and safety — we do not allow, for example, the unlimited release of arsenic into supplies of drinking water.   It’s hard to imagine this as a “major piece of legislation” without considering the potential hazards it creates for local governments and citizens who have to live with the pollution, work rules, and other regulations which place them at risk.

Roll Call 45, January 11, 2017: “(Sec. 103) This bill revises federal rulemaking procedures under the Administrative Procedure Act (APA) to require a federal agency to make all preliminary and final factual determinations based on evidence and to consider: (1) the legal authority under which a rule may be proposed; (2) the specific nature and significance of the problem the agency may address with a rule; (3) whether existing rules have created or contributed to the problem the agency may address with a rule and whether such rules may be amended or rescinded; (4) any reasonable alternatives for a new rule; and (5) the potential costs and benefits associated with potential alternative rules, including impacts on low-income populations.”  Here we go again!  Yet another way to tie the hands of executive branch departments and agencies, and a GOP tenet for some time now.  Remember, the rules don’t have to be in one category (for example, environmental regulation) they can also cover such things as SEC rules and regulations, banking, and other financial regulations.   Representative Amodei, voted in favor of this bill and perhaps needs to explain if he meant this to handcuff the financial regulators who are responsible for seeing that Wall Street doesn’t replicate its performance in the run up to the Housing Crash of 2007-2008.

Roll Call 51, January 12, 2017:  SEC Regulatory Accountability Act, and yet another House attempt to slap a “cost-benefit” analysis on SEC regulations on financial market transactions.  Representative Amodei voted in favor of this bill.    There were objections to this bill at the time, and this is one of the more cogent:

“The most prominent new requirement would mandate that the SEC identify every “available alternative” to a proposed regulation or agency action and quantitatively measure the costs and benefits of each such alternative prior to taking action.  Since there are always numerous possible alternatives to any course of action, this requirement alone could force the agency to complete dozens of additional analyses before passing a rule or guidance. Placing this mandate in statute will also provide near-infinite opportunities for Wall Street lawsuits aimed at halting or reversing SEC actions, and would be a gift to litigators who work on such anti-government lawsuits. No matter how much effort the SEC devotes to justifying its actions, the question of whether the agency has identified all possible alternatives to a chosen action, and has properly measured the costs and benefits of each such alternative, will always remain open to debate.”

Speaking of a “Lawyers Full Employment Bill,” this is it.  Imagine voting in favor of allowing an infinite and interminable number of lawsuits demanding that the SEC consider ALL available options before promulgating a rule.  That didn’t stop Representative Amodei from voting in favor of it.

If you’re seeing a pattern, you’re right.  “De-regulation” has been a Republican talking point for the last 40 years.  However, while the term sounds positive when it’s generalized the devil, as they say, is in the details.  The January flood of deregulation bills in the 115th Congress wasn’t designed to tamp regulations on ordinary citizens, but on the corporations (especially in terms of environmental issues) and Wall Street players who want more “flexibility” in their transactions.

What the Republicans have yet to provide are instances of jobs lost because of environmental regulations.  Since this evidence is scarce, the next ploy is to argue that the costs outweigh the benefits.  By emphasizing the short term monetary costs the GOP minimizes the importance of long term economic or environmental costs, and the impact deregulation has on residents in our states and communities.

We can point to jobs lost after financial deregulation — Nevada was one of the poster children for financial sector deregulation impact.  Eight months later, Representative Amodei has yet to offer more than the usual highly generalized platitudes about the significance of the deregulation fervor during the first month of the 115th Congress.

We’ll be taking a look at some other “important” votes taken by our 115th Congress.  In the mean time, it’s depressing but productive to watch what this current Mis-administration is doing in regard to North Korea, Iran, women’s issues, common sense gun control legislation, and the various and sundry scams and grifts associated with the Cabinet.

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Filed under Amodei, Economy, financial regulation, Nevada politics, Politics