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.
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.
The following appeared in my inbox while I was in the air. I'll read them later:
I'll probably read them after my body wakes me up at 6am local time tomorrow. The westbound time change is so much easier than eastbound, but it's still hard to sleep in.
I've been in frenetic housecleaning mode today, since it's the first work-from-home Wednesday I've had in...let me see...10 weeks. And apparently I last had my housekeeping service here 16 weeks ago. (It wasn't that bad; I do clean up occasionally.)
The activity and actually having to do my job has led me to miss a couple of news stories, which I will now queue up to read:
- Former President Obama spoke at the Economic Club of Chicago last night, and said, at one point, "American democracy is fragile, and unless care is taken it could follow the path of Nazi Germany in the 1930s."
- Citylab outlines how the tax bill now working its way through reconciliation between the House and Senate will be really, really bad for cities. As if we didn't know. As if that wasn't a feature, rather than a bug.
- And it doesn't take a Nobel-winning economist to understand the chutzpah behind the Republican Party's bait-and-switch on taxes and deficits. "Now, to be fair, there are some people in America who get lots of money they didn’t lift a finger to earn — namely, inheritors of large estates." How true.
- In more neutral news, the Atlantic has the the year in photos (part 1), with more on the way later this week. I especially like the Turkish seagull (#22).
- Finally The Daily WTF has an example of life imitating satire, and it's sad and funny all at the same time.
I'm now going to throw out all the empty boxes in my office closet, though it pains me to do so. After all, someday I might need to return this pair of wired headphones from 1998...
I'd rather have an incompetent, sane person as president (see, e.g., most of the past Republican presidents) than an incompetent, insane one. But ya gotta dance with the one that brung ya:
And why would the Republican Party allow all of this to continue? Gosh, who can say.
The Post's Dana Milbank thinks that President Trump's polling numbers—already the lowest for any president since polling began 70 years ago—are about to get worse:
I asked The Post’s polling chief, Scott Clement, to run a regression analysis testing how views of the economy shape overall support for Trump when other variables such as party are held constant. The result was powerful: People who approve of his handling of the economy are 40 or 50 percentage points more likely to approve of him overall. While views of the economy closely correlate with partisanship, this means, all things being equal, that Trump’s overall approval rating should drop four or five points for each 10-point drop in views of his economic performance. Because Trump supporters are largely unconcerned with his personal antics, economic woes — not the Russia scandal or zany tweets — are what would doom Trump in public opinion.
The problem for Trump is many of his populist promises are starting to look fraudulent.
So what happens if — and when — Trump’s core backers discover that they’ve been had: They’re losing health-care coverage and other benefits, while manufacturing jobs aren’t coming back and a Trump-ignited trade war is hurting U.S. exports?
Meanwhile, New Republic's Bryce Covert suggests how Democrats could change the conversation:
If Democrats want to win elections, they should imbue Trump’s empty rhetoric with a real promise: a good job for every American who wants one. It’s time to make a federal jobs guarantee the central tenet of the party’s platform. This is the type of simple, straightforward plan that Democrats need in order to connect with Americans who struggle to survive in the twenty-first-century economy. And while a big, New Deal–style government program might seem like a nonstarter in this day and age—just look at the continuing battle over the Affordable Care Act—a jobs guarantee isn’t actually so far-fetched.
Americans overwhelmingly want to work: Most people say they get a sense of identity from their job and would keep working even if they won the lottery. Joblessness is even associated with poorer mental and physical health for entire families—not working appears to make us sick. And there’s already strong support for a jobs guarantee: In a 2014 poll, 47 percent said they favor such a program. A jobs guarantee holds the promise not just of jobs for all, but of a stronger and more productive economy for everyone. The biggest obstacle, in fact, might be the Democratic Party’s own timidity.
A Federal jobs program and universal health care? What's next, rising productivity and declining inequality? Haul up the drawbridges!
Still, it's going to be a long 1,282 days.
The Chicago Tribune today published the first in a three-part series showing how Illinois property tax assessments contribute to rising inequality while failing to fund schools:
The valuations are a crucial factor when it comes to determining property tax bills, a burden that for many determines whether they can afford to stay in their homes. Done well, these estimates should be fair, transparent and stand up to scrutiny.
But that’s not how it works in Cook County, where Assessor Joseph Berrios has resisted reforms and ignored industry standards while his office churned out inaccurate values. The result is a staggering pattern of inequality.
The assessor’s office says it does not check its own work for fairness and accuracy, as is standard practice for assessors around the world.
So the Tribune stepped in, compiling and analyzing more than 100 million property tax records from the years 2003 through 2015, along with thousands of pages of documents, then vetting the findings with top experts in the field. The process took more than a year.
The conclusion: Residential assessments have been so far off the mark for so many years that the credibility of the entire property tax system is in doubt.
I've advocated for my entire adult life in favor of progressive income taxes and against regressive property and value-added taxes. I hope the Tribune gets some traction on this.
Some of my libertarian-minded friends have circulated an article written by Cato Institute senior fellow Daniel J. Mitchell, an anti- flat-tax advocate, claiming that Cam Newton will pay a 200% tax to California on his Superbowl earnings. Mitchell quotes "a Certified Public Accountant" writing in a Forbes article at length, ending with this legerdemain:
If the Panthers ... lose [the Superbowl, Newton] will only net another $51,000. The Panthers will have about 206 total duty days during 2016, including the playoffs, preseason, regular season and organized team activities (OTAs)....
Seven of those duty days will be in California for the Super Bowl... To determine what Newton will pay California on his Super Bowl winnings alone ... looking at the seven days Newton will spend in California this week for Super Bowl 50, he will pay the state ... $101,360 on $51,000 should they lose.
Except that's total bullshit. Did anyone else spot the problem with this?
See, Newton didn't earn $51,000 for losing the Superbowl; he earned over $1.1 million for losing the Superbowl. And a $100,000 tax on $1.1 million seems pretty reasonable to me, despite how unreasonable it seems to the Cato Institute (which thinks any tax on income is unreasonable and wants to repeal the 16th Amendment).
If Newton works 206 days in 2016, and 7 of them are in California, then 3.4% of his annual gross income is apportioned to California. But Newton will probably earn $31 million in 2016, not $51,000; and 3.4% of $31 million is, it turns out, $1,053,398.
(Come to think of it, the $51,000 bonus seems kind of small, doesn't it? I mean, since we're talking about fantasy money and not the compensation that most people earn.)
Mitchell's problem isn't that states like California have higher income taxes than other states. His problem is that doesn't want any income taxes, period. Fine; make that argument. But don't foist patently misleading headlines on completely misleading articles and claim you're presenting a real argument.
I've just spent a few minutes going through all my company's technology expenses to figure out which ones are subject to the completely daft rental tax that Chicago has extended to cover computing services. The City theorizes that rental tax is payable whenever you pay to use a piece of equipment that belongs to someone else for a period of time. This makes a lot of sense when you go to Hertz, but less when you use Microsoft Azure.
My understanding of the tax and the City's might not be completely orthogonal, but here are some examples of things that I've flagged for my company.
Salesforce.com: This clearly falls within the tax ruling. You pay for an online service that runs on someone else's computers. This is exactly what the city was after when they extended the rental tax.
Microsoft Azure: The tax only seems to cover Azure Compute fees, and specifically exempts Storage charges. So how are database hours taxed, then? With Azure, you pay for Database compute and storage together. Clearly Azure Storage is exempt, though. So now we've got a recordkeeping burden that Microsoft can't help us with yet. Great.
LinkedIn Professional: This may be subject to the tax, if you interpret the tax very broadly. But a LinkedIn subscription isn't so much for the use of its computers (which is free), but for enhanced features of the product that seem more like consulting services than compute time. I think we'll see some litigation over services like this one.
JetBrains ReSharper software license: This does not seem subject to the tax, because we're only paying for a license to run the software on our own computers.
Basically, the City is trying to raise revenue any way it can, but they don't have the technical wherewithal to understand why the tax as constituted makes no sense. Some people in my company feel this makes Chicago unattractive to business, but that's true only if you don't count the difficulty getting talented people to move away from all the city has to offer. It's a frustrating new tax, though, and one the City probably wouldn't have to impose if the rest of the state would pay for its share of the services that Chicago provides to it.