The Daily Parker

This is a wonky post about tax law and at the same time a pissed-off post about political advocacy under cover of "neutral" commentary that takes advantage of people's ignorance of a nuanced area of law.

Bruce Willey, an Iowa-based tax lawyer, claims in a pearl-clutching post on Kiplinger that recent IRS guidance on Paycheck Protection Program (PPP) loan forgiveness "could bankrupt small businesses:"

On April 30, late in the evening — when few people were likely paying attention — the IRS released guidance that essentially nullified much of the benefit of the Paycheck Protection Program (PPP) created under the CARES Act. It stated that those who receive PPP may not receive tax deductions for using those funds to pay expenses. That includes expenses like payroll and rent, the very point of the PPP.

Let’s say a small-business owner requests and receives $600,000 to cover payroll for the 10 weeks where he or she is covered by the PPP. If they can’t deduct that amount as expenses, that means their federal tax burden clocks in at a rate of 37%.

That equates to a $222,000 increase in their taxable income. Meaning the effective tax-free benefit of the loan is $378,000, not the $600,000 intended by the law.

No, no, no, it does not. And it's easy to see why.

Let's say that the small business takes $600k in PPP loans and pays out $600k in payrolls (including employer payroll taxes) in 2020. Let's also say the business takes in $600k in sales revenue, and that their total 2020 deductible expenses would be $1.2m regardless of the PPP.

So: Under the CARES act, they have $600k in taxable income and $1.2m in deductible expenses. But, since 50% of their 2020 books income was the $600k grant, they can only deduct 50% of that $1.2m—i.e., $600k. Result: $0 adjusted gross income and $0 taxes.

Now let's look at what happens if Bailey's wish comes true, and why the IRS said no. If the business can deduct the full $1.2m, they will have a net operating loss (NOL) of $600k, that they can use to offset future income. And that can generate future NOLs until they finally have enough AGI to offset the full NOL. A $600k NOL for a $1.2m-a-year business would probably wipe out their income tax burden for many years.

In other words, the result of the IRS guidance isn't that the IRS would cost the business money; it's that it would prevent the business from avoiding legitimate taxes in future years. And Willey knows this; he's just hoping you don't.

(Also, the IRS releases guidance every Friday night, which he also knows. But people who don't deal with income tax regularly probably don't, which he's counting on.)

My day kept getting longer as it went on in a way that people living through the pandemic will understand. So I didn't have time to read any of these yesterday:

• The Chicago Tribune produced six charts that explain the pandemic's economic effects.
• Rolling Stone identifies the four men most responsible for our current calamity.
• The Washington Posts lists six takeaways from Dr Anthony Fauci's testimony before the Senate today.
• Consumer Reports helps you avoid Zoombombing.
• The New Yorker describes the secret lives of fungi.

Finally, Jon Oliver has put out a line of Last Week Tonight stamps to help support the US Postal Service. So naturally I bought some.

So, this just happened:

Are these the better angels of our nature? Nah, but they're still cool:

Harvard Medical School epidemiologist Julia Marcus argues that "quarantine fatigue is real," and it may be healthier to start relaxing self-isolation (for many people) than to continue it:

Public-health experts have known for decades that an abstinence-only message doesn’t work for sex. It doesn’t work for substance use, either. Likewise, asking Americans to abstain from nearly all in-person social contact will not hold the coronavirus at bay—at least not forever.

I’m not talking about the people who are staging militaristic protests against the supposed coronavirus hoax. I’m talking about those who are experiencing the profound burden of extreme physical and social distancing. In addition to the economic hardship it causes, isolation can severely damage psychological well-being, especially for people who were already depressed or anxious before the crisis started.

[T]he choice between staying home indefinitely and returning to business as usual now is a false one. Risk is not binary. And an all-or-nothing approach to disease prevention can have unintended consequences. Individuals may fixate on unlikely sources of contagion—the package in the mail, the runner or cyclist on the street—while undervaluing precautions, such as cloth masks, that are imperfect but helpful.

[A]s years of research on HIV prevention have shown, shaming doesn’t eliminate risky behavior—it just drives it underground. Even today, many gay men hesitate to disclose their sexual history to health-care providers because of the stigma that they anticipate. Shaming people for their behavior can backfire.

Scientists still have a lot to learn about this new virus, but early epidemiological studies suggest that not all activities or settings confer an equal risk for coronavirus transmission. Enclosed and crowded settings, especially with prolonged and close contact, have the highest risk of transmission, while casual interaction in outdoor settings seems to be much lower risk. A sustainable anti-coronavirus strategy would still advise against house parties. But it could also involve redesigning outdoor and indoor spaces to reduce crowding, increase ventilation, and promote physical distancing, thereby allowing people to live their lives while mitigating—but not eliminating—risk.

Of course, the Trump Administration's abject failure to provide adequate testing and safety guidance will only prolong our anxiety and isolation. But right-wing governments never make the trains run on time, no matter what their propaganda says.

I read the news today, oh boy:

• Close to 2,000 former Justice Department and FBI officials called on Attorney General William Barr to resign, which he won't do because he's this close to total world domination.
• Former Acting Assistant Attorney General for National Security Mary McCord agrees.
• Chicago will open six new Covid-19 testing sites around the city in an effort to get to 10,000 tests per day.
• Pilot-journalist James Fallows says "air travel is going to be very bad, for a very long time."
• Cranky Flyer agrees, pointing to United's short-sighted efforts to preserve cash.
• Will white-collar companies ever re-open offices? Maybe, but with differences.

Finally, the USS Nevada, a battleship that survived World War I and Pearl Harbor until the Navy scuttled her in 1948, has been found.

So believes NYU media professor Jay Rosen about how President Trump will try to win this fall:

The plan is to have no plan, to let daily deaths between one and three thousand become a normal thing, and then to create massive confusion about who is responsible— by telling the governors they’re in charge without doing what only the federal government can do, by fighting with the press when it shows up to be briefed, by fixing blame for the virus on China or some other foreign element, and by “flooding the zone with shit,” Steve Bannon’s phrase for overwhelming the system with disinformation, distraction, and denial, which boosts what economists call “search costs” for reliable intelligence.

Stated another way, the plan is to default on public problem solving, and then prevent the public from understanding the consequences of that default. ... The manufacture of confusion is just the ruins of Trump’s personality meeting the powers of the presidency. There is no genius there, only a damaged human being playing havoc with our lives.

In other fun stories:

• Adam Serwer argues that "the coronavirus was an emergency until Trump found out who was dying."
• Jake Bittle explains "why conservatives dismiss the dangers of the coronavirus."
• Chicago has its own plan to reopen, and it has some differences with the Illinois plan.
• Once things do open up, The Atlantic describes how you can stay safe.
• While you wait for that, check out this excellent set of graphics about how Covid-19 mitigation is progressing in states and countries.
• The city of Palm Beach, Fla., has had just about enough of its most famous resident—starting with the fact that he isn't even allowed to reside there under a 1996 agreement.
• Chicago's police union has just elected a right-wing Trump fan, which we knew would happen because his opponent was also a right-wing Trump fan.
• In June 1965, six English boys were shipwrecked on a deserted island near Tonga and didn't kill each other before (or after) their rescue on 11 September 1966.
• Unrelated to anything corona, C# 8 will have doubly-linked lists. Finally.

Oh, and 151 years ago today, the Union Pacific and Central Pacific railroads completed the Transcontinental Railroad.

Illinois has had a stay-at-home order in effect for over seven weeks now, though last week the state and county opened up forest trails and other outdoor activities that allow for proper distancing and discourage people clumping together in groups. So today I drove up to the northern suburbs to the site of the largest Civilian Conservation Corps project undertaken during the agency's run from 1933 to 1940.

It was good to get outside. Not my fastest-ever pace, but still respectable, and somehow I got over 10,000 steps just on the walk.

And when I got back, this was waiting in my inbox:

Writing for the Washington Post, Michele Norris has had enough of white dudes toting firearms at "peaceful" protests:

We’ve gotten far too accustomed to the image of white protesters carrying paramilitary-level firearms in public spaces. The presence of guns — often really large guns — at protests has become alarmingly normalized. It is time to take stock of what that means.

Accepting and even expecting to see firearms at protest rallies means that we somehow embrace the threat of chaos and violence. While those who carry say they have no intention of using their weapons, the firepower alone creates a wordless threat, and something far more calamitous if even just one person discharges a round.

Is this brazen display of force about the right to own firearms or the right to make armed threats for political purposes? Just asking, because the latter is not a “right” that can be equally asserted. The protests are purportedly about reopening America. A parallel goal is realignment — using the Second Amendment to conduct regular and routine shows of force to intimidate elected officials into enacting a political agenda.

Polls show that most Americans prefer a go-slow approach to reopening most businesses. The armed protesters in places such as Michigan, Wisconsin, Arizona and North Carolina represent a tiny minority. Some surveys put the most insistent open-now crowd at less than 10 percent. But the weapons make their influence seem larger — and they know that. We see protests punctuated by guns almost every day. It has become routine. We have normalized something that should be shocking.

This sort of thing has happened before, in other times and places, and it hasn't ended well.

The US unemployment rate exploded to 14.7% in April as 20.5 million people officially left the workforce, with millions more people leaving full-time work and others not even trying to find new jobs. April's job losses were more than 10 times the 1.9 million reported in September 1945 as the US demobilized from World War II.

Once you've absorbed that, there's more:

• Illinois has passed 3,000 Covid-19 deaths, meaning more people have died of the disease in Illinois than died nationwide in the 9/11 attacks.
• The Justice Department dropped charges against former Trump aide Michael Flynn, despite him pleading guilty twice in Federal court to the same charges, signaling that William Barr has almost completely dismantled the independent agency from within.
• Eight billionaires have added $1bn more to their wealth each since the pandemic began, with the rest splitting over $270bn in additional wealth, even as millions of Americans wonder where their next meals will come from.
• The Atlantic has a "guide to staying safe as states reopen." Hint: not a lot will change without a vaccine.
• When we do finally open, Citylab predicts transit agencies won't recover for years.
• Writer Sophie Sills laments being alone during the pandemic. One sympathizes.
• Chicago will get near-record cold tonight, with a hard frost predicted for the suburbs. The polar vortex has slipped into southern Ontario as temperatures climb in Alaska and the Yukon, which will cause March-like cold weather here for the next week or so.

Finally, today is the 75th anniversary of V-E Day, when the Nazi army finally surrendered to the Allies, ending the war in Europe. Germans celebrated the event today as a day of liberation from the Nazis.

A pool of warm air running all the way up the Rocky Mountains to Alaska has forced a blob of cold air down into the eastern United States. This has started driving temperatures down all throughout the northeast, with a forecast drop to 10°C below normal here in Chicago and possible snow as far south as Philadelphia.

In May.

Ah, well. We all feel like it's March 68th, anyway.

And yes, this cold snap is a consequence of climate change.