The Daily Parker

Everyone knew that Donald Trump lost millions on bad business deals and bad management in the 1980s and 1990s. But we never knew how badly he dealt and managed until now. The New York Times obtained official IRS data on Trump's tax returns from the years 1985 to 1994, showing he lost a staggering $1.17 billion during that period—equivalent to more than $2 billion today:

Mr. Trump appears to have lost more money than nearly any other individual American taxpayer, The Times found when it compared his results with detailed information the I.R.S. compiles on an annual sampling of high-income earners. His core business losses in 1990 and 1991 — more than $250 million each year — were more than double those of the nearest taxpayers in the I.R.S. information for those years.

Over all, Mr. Trump lost so much money that he was able to avoid paying income taxes for eight of the 10 years. It is not known whether the I.R.S. later required changes after audits.

The new information also suggests that Mr. Trump’s 1990 collapse might have struck several years earlier if not for his brief side career posing as a corporate raider. From 1986 through 1988, while his core businesses languished under increasingly unsupportable debt, Mr. Trump made millions of dollars in the stock market by suggesting that he was about to take over companies. But the figures show that he lost most, if not all, of those gains after investors stopped taking his takeover talk seriously.

Jennifer Rubin finds five takeaways from the report, and Trump's non-denial of it. Her final point is spot-on:

Finally, do not expect the revelations to dim the Trump cult’s reverence for its leader. If he isn’t really as rich as he said, they will commend him for pulling a fast one (even on voters). If the story is false, it’s one more bit of evidence for their media paranoia. Sadly, the Fox News and talk-radio crowd long ago jettisoned any concerns that they’ve invested their hopes in a con man, someone who has lied and finagled his way through life and into the White House. To admit that would be to recognize they were dupes, victims of another Trump scam. That, they will never do.

The Trump cultists have gone this far and they will go farther. As Matt Ford says, we have not even begun to approach "peak Trump." It's going to be a very long 18 months until the next election.

The Chicago Tribune points out that Sears' $5 bn in losses could actually help the guy who killed it, Eddie Lampert:

As of the retailer's bankruptcy on Oct. 15, Sears estimated it had net operating losses it could use to offset $5 billion of future taxable income, and separate tax credits of around $900 million. These are the most valuable assets Sears has, and under U.S. tax law, they could disappear in bankruptcy if another company or investor takes the company over.

When a company has accumulated net operating losses, it can use them to offset future taxable income, which in turn cuts into its tax bills. The rule is meant to give struggling companies more breathing room. That means big benefits on the balance sheet. For example, Sears saved $1.7 billion in deferred taxes in 2017, according to its most recent quarterly filing.

While a sale in bankruptcy would often mean a change in control, meaning that such tax benefits are lost, Lampert's stock and debt stakes would help him avoid that. Lampert and his hedge fund ESL Investments Inc., together own about 49 percent of Sears shares, and are among Sears's biggest creditors, having extended it $2.66 billion in debt through various loans.

Creditors who have held debt for 18 months before the filing and whose debt rose in the ordinary course of Sears's business are "qualified creditors" who can thus avoid losing the tax assets even if there's a shift in control towards them.

He profits from destroying the company. Ain't America grand?

Before diving back into one of the most abominable wrecks of a software application I've seen in years, I've lined up some stuff to read when I need to take a break:

• DARPA claims to have developed a microchip, that goes in your brain, that can control a swarm of drones. You read that right.
• The Republican Congress are set to float a budget bill that would add $2 trn to our national debt (only $2,000 bn to my UK readers) over the next 10 years, a move that Thomas Friedman calls "heating up our economy by burning all the furniture in the house."
• Chicago might get a cute little park by Union Station if the latest in a series of development proposals goes through.
• James Fallows asks, is Bob Woodward like Walter Cronkite?
• Bruce Schneier warns about a security hole in Wemo smart plugs, which I use. Which is patched. So I will right now go order my plugs to patch themselves.
• Finally, if you need to use the System.Drawing namespace with .NET Core 2.0, Scott Hanselman has your back.

OK. Firing up Visual Studio, reaching for the Valium...

While trying to debug an ancient application that has been the undoing of just about everyone on my team, I've put these articles aside for later:

• Using the example of an automated process that sends out emails that your inbox subsequently deletes without any intervention on your part, Raymond Chen discusses Le Chatelier's Principle.
• Demonstrating that a stopped clock is correct twice a day, it turns out the Trump tax cuts have given a (temporary) boost to craft distilling.
• Whisky Advocate name-checks (literally) one of my favorite local distilleries.
• Greg Sargent provides yet another column about President Trump's "bottomless bad faith and nonstop lying."
• New Republic's David Dayen reminds us that Obama also had cabinet-level institutional resistance in the person of Tim Geithner.
• Also in New Republic, "The Tyranny of Personality Testing." Apparently MBTI is evil. Uh huh.
• Microsoft is using some cool AI to diagnose and fix intermittent SQL Server problems.

Back to the mouldering pile of fetid dingo kidneys that is this application...

The Supreme Court handed down its ruling in South Dakota v. Wayfair, Inc. this morning:

Brick-and-mortar businesses have long complained that they are disadvantaged by having to charge sales taxes while many of their online competitors do not. States have said that they are missing out on tens of billions of dollars in annual revenue under a 1992 Supreme Court ruling that helped spur the rise of internet shopping.

On Thursday, the court overruled that ruling, Quill Corporation v. North Dakota, which had said that the Constitution bars states from requiring businesses to collect sales taxes unless they have a substantial connection to the state.

South Dakota responded to Justice Kennedy’s invitation by enacting a law that required all merchants to collect a 4.5 percent sales tax if they had more than $100,000 in annual sales or more than 200 individual transactions in the state. State officials sued three large online retailers — Wayfair, Overstock.com and Newegg — for violating the law.

Here's a really interesting bit: "KENNEDY, J., delivered the opinion of the Court, in which THOMAS, GINSBURG, ALITO, and GORSUCH, JJ., joined. THOMAS, J., and GORSUCH, J., filed concurring opinions. ROBERTS, C. J., filed a dissenting opinion, in which BREYER, SOTOMAYOR, and KAGAN, JJ., joined."

Ginsburg siding with Thomas and Alito against Roberts, Sotomayor, and Kagan? That's just weird.

Tim Jones, writing in Crain's for the Better Government Association, says the experiences of Minnesota and Kansas put the lie to claims that people are leaving Illinois because of taxes:

The scapegoat nominees include not just high taxes but House Speaker Michael Madigan, Gov. Bruce Rauner, government regulations, financial chaos and uncertainty from a two-year budget stalemate, not to mention old standbys greed and corruption.

That's where Minnesota looms as a spoiler of the tax-cutting political narrative embraced by many Midwestern states. Minnesota is a high-tax state, rated the sixth-highest in the nation in state and local individual income tax collections per capita and eighth in the combined state and local tax burden, according to the most recent rankings of the Washington-based Tax Foundation.

Minnesota has a graduated income tax, with rates ranging from 5.35 percent for those of modest incomes to 9.85 percent for individuals with annual incomes above $156,000.

The Tax Foundation ranked Minnesota's overall business tax climate among the nation's worst. Even so, the state was among Midwestern leaders in population growth, with a 5.1 percent gain since 2010 and a 13.3 percent jump since 2000. The state also has the highest median household income and the lowest poverty rate.

Focusing on taxation produces a distorted picture, said Larry Jacobs, a political science professor at the University of Minnesota.

“Clearly in Minnesota there are other things going on. Taxes are one component but also jobs, wages, quality of life, the education system,” Jacobs said.

The flip side of the taxation narrative, put into action by Kansas six years ago, is that cutting taxes will give a jolt to economic development and drive population growth. But it did neither, and Republicans who control the legislature had to backtrack on the tax cuts last year when revenue loss became untenable.

See, taxes pay for things that people want and need, like transport, schools, and police. Cutting taxes, as Kansas demonstrated, means you can't pay for those things anymore. Then people don't want to live there. QED. I'm not wild about higher taxes in general, but I understand we all need to pay them to get better living conditions. I hope that J.B. Pritzker makes that point as he runs for governor this fall.

Over the weekend I made a couple of minor updates to Weather Now, and today I'm going to spend some time taking it off its Azure Web Role and moving it to an Azure Website. That will (a) save me money and (b) make deployments a lot easier.

Meanwhile, a number of articles bubbled up overnight that I'll try to read at lunchtime:

• Cranky Flier is annoyed how United has implemented basic-economy seat assignments.
• Josh Marshall outlines what the FBI knew about Trump campaign advisors in the summer of 2016. (Seems so long ago, dunnit?)
• Both Jennifer Rubin and Greg Sargent think the Nunes memo will cause serious problems for the Republican Party pretty soon.
• I haven't yet seen all the ads from yesterday's football game, but that didn't stop me from reading AdAge's coverage.
• New research suggests that fertilizers contribute to Southern California's smog.
• And maybe I should file for Subchapter S treatment of my corporation?

Back to Azure deployment strategies.

Speaker of the House Paul Ryan tweeted early yesterday the great news about the tax breaks ordinary people are experiencing:

Never mind all the Democrats who call the GOP’s tax bill a deficit-busting giveaway to the rich; House Speaker Paul D. Ryan has been enthusiastically promoting it as a middle-class tax windfall.

He’s been coaching other Republican lawmakers to sell the $1.5 trillion tax cut to voters, and telling people on Twitter to check their paychecks for wage hikes. The bill — which was deeply unpopular when it passed along party lines in December — is now breaking even in a new opinion poll.

So Saturday morning, by way of good news, Ryan’s Twitter account shared a story about a secretary taking home a cool $6 a month in tax savings.

Wow. An extra $1.50 a week will make a huge difference to that taxpayer. That might even let her eat cake.

Due to a combination of city, county, regional, state, and federal policies, just about every tax and fee I pay is going up next year. My initial math suggests my Federal taxes will remain almost exactly the same, thanks to the increased individual exemption that covers my itemized deductions only because I'm renting out the flats I own. But my state taxes went up in July by 67%, my property taxes (on those flats) are going up, and even my gas bill is going up.

The Tribune explains how I'm not alone:

[T]he average property tax increase for the owner of a $250,000 home will be an estimated $97. Owners of a home worth $500,000 can expect a $369 tax hike. That’s because the larger homeowners’ exemption shifts the burden of paying property taxes to higher-priced homes and commercial properties.

• Other tax and fee hikes start sooner. The CTA fare increase of 25 cents per bus and “L” ride goes into effect Jan. 7, raising the price of those rides to $2.25 and $2.50, respectively. For people commuting to and from work 50 weeks a year, that’s $125 more out of their pockets. The cost of a 30-day pass will go up by $5, to $105. Those increases will help fill a hole left by state public transportation funding cuts, CTA officials have said.
• In February, Metra is boosting fares for one-way tickets by 25 cents. The cost of 10-ride tickets is going up by $4.25, to $7.75. Monthly passes will increase by $9 to $12.50, depending on the length of the trip. The price of $8 weekend passes will rise to $10.
• Taking an Uber or Lyft in Chicago will cost more too. The start of the year brings a 15-cent increase to the 52 cents already charged for ride-sharing trips. The Emanuel administration expects to collect $16 million for CTA projects.
• Also taking effect with the new year are higher fees charged to every cell and landline phone billed to a city address. Those fees are going up by $1.10 a month, to $5. The cost to a family with three phone lines is an extra $39.60 a year. The money will be used for emergency services costs and technology upgrades, freeing up about $30 million in general city funds for the city to spend as it sees fit.

Also going up: the city entertainment tax, city vehicle licenses, park and forest-preserve district taxes...the list goes on. It costs a lot to run a city the size of Chicago, and the Federal government under the Republican party is hosing us good. Subsidizing Mississippi and Alabama annoys me, especially when the people I'm subsidizing revere other people who tried to leave the United States so they could preserve human slavery.

A lot of people feel the way I do. My vote won't do much, because I live in a bright-blue state with Democratic representation in both the House and Senate; but in Ohio, Michigan, and Pennsylvania—states that went to Trump by the narrowest of margins—other people are going to be pissed off. The next election is in 313 days. Let's see how it goes.

Both the WaPo's James Hohmann and TPM's John Judis believe the Republican Party won't suffer as much as people hope after passing their massive giveaway to big corporations. Judis:

I am not a fan of the new tax bill that the Republican Congress passed. It will widen the gap between the wealthy and everyone else and increase the likelihood over a decade or so of another crash. And it contains all kinds of unpleasant ancillary provisions, such as the one killing the Affordable Care Act’s mandate. But I don’t buy the argument – voiced by Democratic pundits, political consultants, and even a few economists – that the bill will doom the Republicans to defeat in 2018 and even 2020. Like many things I read or hear these days from liberals, it’s wish fulfillment disguised as analysis. 

Democrats argue that the bill will be unpopular because it increases inequality by giving huge tax breaks to the rich and corporations. But most American voters don’t object to inequality and to the rich per se. (I wrote a long essay for TPM arguing this two years ago, and it was borne out in the 2016 election.) They object to inequality when a policy is so skewed that everything goes to the rich – when there is nothing in it for them. And they object to inequality when, as in 1932 or 2008, they see it conveying favor on a group that is responsible for wrecking the economy. But neither condition is likely to hold in this case.

Hohmann, yesterday:

THE BIG IDEA: The best thing going for Republicans right now is low expectations.

[H]ere’s the truth: 8 in 10 Americans will pay lower taxes next year, according to the nonpartisan Tax Policy Center’s analysis of the final bill. Only 5 percent of people will pay more next year. Mostly, those are folks who earn six figures and own expensive houses in places with high local taxes, such as New York and California.

Bottom line: Nancy Pelosi says, “This is Armageddon.” But the sky will not fall. At least not next year.

To be sure, over the long-term, this bill may set in motion a fiscal disaster a la Kansas by exploding the national debt and forcing painful cuts to popular programs, including entitlements. The rich and corporations do get the vast majority of the benefits. The new code will cause confusion and uncertainty. It will also worsen income inequality. And there’s a chance that it gives the economy a sugar high that forces the Federal Reserve to raise rates faster than planned and hastens a recession.

Overnight, though, Hohmann got a lot of pushback from Democrats:

In the two-and-a-half years I’ve been writing the 202, I’ve never received so much pushback. Top operatives at all the relevant Democratic committees and outside groups, as well as the most prominent progressive pollsters in town and campaign managers in the states, argued passionately that the tax bill is not going to become a winner for the GOP. They shared a battery of private polling and reports on focus groups to make their case.

“Calling this thing a win because Republicans finally got something done is like saying the captain of the Titanic won when he successfully found that reclusive iceberg,” said Jesse Ferguson, the former director of the Democratic Congressional Campaign Committee’s independent expenditure arm. 

1. Most folks who pay lower taxes will not save enough to care.

I noted yesterday that 8 in 10 Americans will pay lower taxes next year, according to the nonpartisan Tax Policy Center’s analysis of the final legislation. Only 5 percent of people will pay more next year, and mostly those are folks who earn six figures and own expensive houses in places with high local taxes.

Democratic pollster Geoff Garin of Hart Research replied that 80 percent of taxpayers will see an increase of less than 2 percent in their after-tax income, and it is not until you get to the 95th percentile that the after-tax income benefits are much greater. “There is no history of voters being grateful for tax cuts that small,” he said.

One thing is certain: Nobody knows nothing. But I'm pretty optimistic about November 6th.