Lobbyists

Do You Know What Is In The Tax Bill That Congress Is About To Pass?

December 13, 2017December 13, 2017 by Michael

A conference committee has been merging the tax bills that were passed by the House of Representatives and the Senate, and even though we could still see some minor changes, it looks like the major parameters of the final bill have now been agreed upon. The final bill will be known as the Tax Cuts and Jobs Act, and we are being told that it will be one of the largest tax cuts in U.S. history. Unfortunately, the impact on our tax bills will be relatively minor, but at least it is a step in the right direction. The following summary of the major provisions in the final bill comes from AOL…

A less generous corporate rate cut: Republicans may cut the corporate rate to 21% from the current federal rate of 35%, instead of the 20% proposed in both the house and Senate bills. The new rate would start in 2018.
A lower top individual tax rate: The top individual bracket would drop to 37% instead of the 38.5% proposed in the Senate bill. It would still be down from the current 39.6%.
Keep the estate tax, but raise the threshold to qualify: Instead of phasing out the estate tax over time, like the House bill, the compromise bill would instead simply increase the threshold for an estate to qualify — from $5.6 million to around $11 million. That aligns with the Senate bill.
Repeal the corporate alternative minimum tax (AMT): The corporate AMT in the Senate bill was a sore spot for many companies because it would have negated the effects of many popular deductions and credits, like the research and development credit.

The reduction in the corporate tax rate is probably the most important provision in this tax overhaul package. For decades, the United States has had a much higher corporate tax rate than much of the rest of the world, and this has given large corporations an incentive to locate operations elsewhere. By making the corporate tax rate more competitive with everyone else around the globe, it is hoped that this will mean more good jobs for American workers.

This bill also reduces individual tax rates, but not by that much. So you will notice a reduction in your tax bill, but don’t expect anything “game changing” in nature.

In addition, this bill will eliminate the Obamacare individual mandate. This is something that should have been done back in January, and I am very happy that Congress is finally getting it done.

It is anticipated that both the House and the Senate will vote on the final version of this tax bill next week.

Sadly, it is not a slam dunk that this bill will actually get through the Senate.

Senator Bob Corker voted against the original Senate bill, and he may vote against this version too.

Ron Johnson of Wisconsin and Susan Collins of Maine have also expressed reservations about this bill, and it is unclear how they will vote at this point.

And let us not forget that Senator John McCain’s health is rapidly failing. Hopefully he would be present for any vote, but there is no guarantee that will happen.

In the end, Republicans can only lose two votes in the Senate, and so this is going to come down to the wire.

But President Trump is quite optimistic that this bill will succeed, and he says that it will “breathe new life into the American economy”…

“Our tax cuts will break down — and they’ll break it down fast — all forms of government and all forms of government barriers and breathe new life into the American economy,” Trump said.

“They will unleash the American people, they will tear down the constraints on discovery, innovation and creation, and they will restore the hopes and dreams of the American family. Millions of middle class families will win under our plan.”

Of course even if this bill passes, our tax code will still be a complete and utter nightmare.

The tax code will still be over two million words, and the regulations will still be more than seven million words. Our system will still greatly favor those that can hire accountants and tax attorneys to find every conceivable loophole possible, and it will still be a tremendous burden on the middle class.

If I am elected to Congress, I am going to fight to completely abolish the IRS and the income tax. As I travel around Idaho and speak to groups, many are extremely receptive to these proposals, but they wonder how we would fund the government without an income tax.

Well, the truth is that the individual income tax only accounts for about 46 percent of all federal revenue, so we could definitely eliminate the individual income tax but we would also have to dramatically reduce the size of the federal government at the same time.

And we have a historical precedent for what this would look like.

Between 1872 and 1913 there was no federal income tax, and it was the best period of economic growth in U.S. history.

Of course the Democrats are not just going to roll over and allow us to cut the size of the federal government in half, so in the short-term we can focus on some other solutions. A flat tax or a fair tax would both be far superior to the system that we have today, and there are some very good proposals already out there that just need to be implemented.

I once spent an entire year studying our tax code, and I still shudder when I think about those 12 months. Our tax code is a complete and utter abomination, and while I applaud Congress for trying to “simplify” it, the truth is that this bill that is about to be passed won’t make that much of a difference.

We need to fundamentally change the way that we fund government in this nation, and that is why I want to completely abolish the income tax. The system that we have right now is simply not fixable, and we should not pretend that any “tax reform bill” is going to solve our problems.

Michael Snyder is a Republican candidate for Congress in Idaho’s First Congressional District, and you can learn how you can get involved in the campaign on his official website. His new book entitled “Living A Life That Really Matters” is available in paperback and for the Kindle on Amazon.com.

Welcome To The Hunger Games: Trump’s Tax Plan Is Going To Mean A Battle Royal Among D.C. Lobbyists

September 29, 2017 by Michael

Are you ready for mass chaos in Washington? There are lobbyists for just about every cause that you can possibly imagine, and they are always working hard to influence members of Congress on their particular issues. But when you are talking about a major tax reform bill, that is something that virtually every single lobbyist in the entire city will want to be involved in. Our tax code is over two million words long, and the regulations are over seven million words long, and any changes to our immensely complex system could have absolutely enormous implications. There will be winners and there will be losers with any piece of legislation, and lobbyists will zealously fight to defend the turf belonging to their particular clients. Often lobbyists from different sides will literally be pitted directly against one another, and it won’t be pretty. In fact, one analyst that works for Cowen Washington Research Group says that we could soon be watching “the corporate hunger games”…

Almost every industry, special interest, and consumer group has an interest in the tax code, especially if the package ends up being as ambitious as Trump and Republican leaders want it to be. Chris Krueger, an analyst at Cowen Washington Research Group, told Business Insider that the battle over which loopholes to keep and which to throw out could get nasty.

“Welcome tribunes to the corporate hunger games!” Kruger said in an email. “Only one-sixth of lobbyists were involved with health care (give or take — assuming it is one-sixth of economy). Six-sixths of lobbyists are involved in taxes.”

There is so much at stake, and if the Republicans are able to get something passed it probably won’t look much like the plan that Trump originally proposed. But it is so important to do something, because today Americans spend more on taxes than they will on food, clothing, and housing combined. That is morally wrong, and we desperately need tax relief.

Trump’s tax plan would nearly double the standard deduction, and that would be a wonderful thing. It would provide instant tax relief to working class Americans, and that is something that I would greatly applaud.

Trump’s tax plan would also great reduce the tax rate for corporations. Our big corporations certainly don’t need the help, but we do want to get our rate more in line with the rest of the planet. Because our corporate tax rate is one of the highest in the world, it actually encourages companies to set up shop some place else. Being more competitive with the rest of the world would likely mean more jobs for the American people.

Trump’s tax plan would also reduce the number of tax brackets for individuals. Instead of seven, now there would just be three tax brackets of 12 percent, 25 percent and 35 percent. To me, those rates are way too high, but of course I would like to eliminate the individual income tax entirely.

Many are criticizing Trump’s plan for proposing to raise at least a trillion dollars over the next decade by getting rid of the deduction for state and local income taxes. For those that live in very high tax states such as California, that deduction is a really big deal…

High-income Californians, for instance, pay as much as 13.3 per cent of their income to the state in addition to their federal taxes. New Yorkers can pay up to 8.82 per cent.

Just seven U.S. states have no personal income taxes, including Texas, Florida and Nevada.

Hopefully the Republicans can pass some sort of tax reform in the short-term, because the status quo is definitely not acceptable.

When the income tax was first introduced in 1913, the vast majority of taxpayers were being taxed at a rate of just one percent. The following comes from Politifact…

The 1913 law imposed a tax of 1 percent on income up to $20,000, for both individual and joint filers. However, exemptions from the tax — the first $3,000 of income for individuals and the first $4,000 for joint filers — meant “virtually all middle-class Americans” were excused from paying, according to W. Elliot Brownlee’s book, Federal Taxation in America. The law also put in place a graduated surtax on incomes above $20,000; the highest rate paid, 7 percent, applied to Americans making more than $500,000 (about $11.4 million in 2011 dollars).

Today, Americans are being taxed into oblivion. It has been reported that we spend more than 6 billion hours a year on our taxes, and I once wrote an article detailing 97 different ways that various levels of government extract revenue from all of us.

Every year government just gets bigger and bigger on the federal, state and local levels. And the bigger government gets, the more oppressive it tends to become.

Personally, I would love to start starving the beast that the left has created, and a great way to do that would be to completely eliminate the federal income tax.

A lot of people could not even imagine a world without a federal income tax. But the truth is that our country once thrived under such a system. In fact, the greatest period of economic growth in U.S. history was between 1872 and 1913 when there was no income tax at all.

And we could do it again. Today, the individual income tax only accounts for about 46 percent of all federal revenue, and if we reduced the federal government to a size that our founders would have wanted, we would be more than okay.

But even if we can’t greatly reduce the size of the federal government in the short-term, we can at least go to a very basic flat tax or a fair tax, and both of those systems would be far superior to what we have today.

If we can’t get a flat tax or a fair tax right now, we should at least try to dramatically reduce tax rates and simplify the tax code as much as humanly possible.

But if we do get a short-term victory, the battle is definitely not over. In the long-term, we need to be very clear that our goal should be to abolish the income tax, the IRS and the Federal Reserve entirely. Anything short of that is not good enough.

Why Does Maryland Have The Most Millionaires Per Capita? The Answer Might Make You Angry

February 24, 2015February 24, 2015 by Michael

The fat cats in Washington D.C. are living the high life, and they are doing it at your expense. Over the past decade, there has been one area of the country which has experienced a massive economic boom. Thanks to wildly out of control government spending, the Washington D.C. region is absolutely swimming in cash. In fact, at this point the state of Maryland has the most millionaires per capita in the entire nation and it isn’t even close. If you have never lived there, it is hard to describe what the D.C. area is like. Every weekday morning, hordes of lawyers, lobbyists and government bureaucrats descend upon D.C. from the surrounding suburbs. And at the end of the day, the process goes in reverse. Everyone is just trying to get their piece of the pie, and it is a pie that just keeps on growing as government salaries, government contracts and government giveaways just get larger and larger. Of course our founders never intended for this to happen. They wanted a very small and simple federal government. Sadly, today we have the most bloated central government in the history of the planet and it gets worse with each passing year.

If you were to ask most Americans, they would tell you that the wealthiest Americans probably live in cities such as New York or San Francisco. But thanks to the Obama administration (and before that the Bush and Clinton administrations), the state of Maryland is packed with millionaires. In particular, the Maryland suburbs immediately surrounding D.C. are absolutely overflowing with government fat cats that make a living at our expense. Every weekday morning, huge numbers of them leave their mini-mansions in places such as Potomac and Rockville and drive their luxury vehicles to work in the city. As the Washington Post has detailed, at this point approximately 8 percent of all households in the entire state of Maryland contain millionaires, and the rest of the area is not doing too shabby either…

In Maryland, nearly 8 out of every 100 households in 2014 had assets topping $1 million, giving the state more millionaires per capita than any other in the country, according to a new report from Phoenix Marketing International.

The rest of the Beltway isn’t lacking in millionaires either: The District and Virginia ranked in the top 10 among those with the highest number of millionaire households per capita in 2014. In Virginia, which was No. 6 on the list, 6.76 percent of the state’s 3.17 million households are millionaires. And in the District, which rounds out the top 10, 6.25 percent of its more than 292,000 households are millionaires.

And while not too many of them are millionaires, your average federal workers that toil in D.C. are doing quite well too.

Once upon a time, it was considered to be a “sacrifice” to go into “government service”.

Not anymore.

If you can believe it, approximately 17,000 federal employees made more than $200,000 last year.

Overall, compensation for federal employees comes to a grand total of close to half a trillion dollars every 12 months.

In fact, there are tens of thousands of federal employees that make more than the governors of their own states do.

Does that seem right to you?

If you want to live “the American Dream” these days, the Washington area is the place to go. Just check out the following description of the region from the Washington Post…

Washingtonians now enjoy the highest median household income of any metropolitan area in the country, and five of the top 10 jurisdictions in America — Loudoun, Howard and Fairfax counties, and Falls Church and Fairfax City — are here, census data shows.

The signs of that wealth are on display all over, from the string of luxury boutiques such as Gucci and Tory Burch opening at Tysons Galleria to the $15 cocktails served over artisanal ice at the W Hotel in the District to the ever-larger houses rising off River Road in Potomac.

And of course let us not forget the fat cats in Congress.

According to CNN, our Congress critters are now wealthier than every before…

The typical American family is still struggling to recover from the Great Recession, but Congress is getting wealthier every year.

The median net worth of lawmakers was just over $1 million in 2013, or 18 times the wealth of the typical American household, according to new research released Monday by the Center for Responsive Politics.

And while Americans’ median wealth is down 43% since 2007, Congress members’ net worth has jumped 28%.

Not only that, there are nearly 200 members of Congress that are actually multimillionaires…

Nearly 200 are multimillionaires. One hundred are worth more than $5 million; the top-10 deal in nine digits. The annual congressional salary alone—$174,000 a year—qualifies every member as the top 6 percent of earners. None of them are close to experiencing the poverty-reduction programs—affordable housing, food assistance, Medicaid—that they help control. Though some came from poverty, a recent analysis by Nicholas Carnes, in his book White Collar Government: The Hidden Role of Class in Economic Policymaking, found that only 13 out of 783 members of Congress from 1999 to 2008 came from a “blue-collar” upbringing.

Incredible.

But even though almost all of them are quite wealthy, they don’t hesitate to spend massive amounts of taxpayer money on their own personal needs.

For example, according to the Weekly Standard, more than five million dollars was spent on the hair care needs of U.S. Senators alone over one recent 15 year period…

Senate Hair Care Services has cost taxpayers about $5.25 million over 15 years. They foot the bill of more than $40,000 for the shoeshine attendant last fiscal year. Six barbers took in more than $40,000 each, including nearly $80,000 for the head barber.

And in one recent year, an average of $4,005,900 was spent on “personal” and “office” expenses per U.S. Senator.

So the grand total would have been over 400 million dollars for a single year.

That seems excessive, doesn’t it?

And even when they end up leaving Washington, our Congress critters have ensured that they will continue to collect money from U.S. taxpayers for the rest of their lives…

In 2011, 280 former lawmakers who retired under a former government pension system received average annual pensions of $70,620, according to a Congressional Research Service report. They averaged around 20 years of service. At the same time, another 215 retirees (elected in 1984 or later with an average of 15 years of service) received average annual checks of roughly $40,000 a year.

If you can believe it, there are quite a few former lawmakers that are collecting federal pensions for life worth at least $100,000 annually. The list includes Newt Gingrich, Bob Dole, Trent Lott, Dick Gephardt and Dick Cheney.

Of course the biggest windfalls of all are for our ex-presidents. Most Americans would be shocked to learn that the U.S. government is spending approximately 3.6 million dollars a year to support the lavish lifestyles of former presidents such as George W. Bush and Bill Clinton.

So does this make you angry?

Or are you okay with these fat cats living the high life at our expense?

Please feel free to add to the discussion by posting a comment below…

New Law Would Make Taxpayers Potentially Liable For TRILLIONS In Derivatives Losses

December 7, 2014December 7, 2014 by Michael

If the quadrillion dollar derivatives bubble implodes, who should be stuck with the bill? Well, if the “too big to fail” banks have their way it will be you and I. Right now, lobbyists for the big Wall Street banks are pushing really hard to include an extremely insidious provision in a bill that would keep the federal government funded past the upcoming December 11th deadline. This provision would allow these big banks to trade derivatives through subsidiaries that are federally insured by the FDIC. What this would mean is that the big banks would be able to continue their incredibly reckless derivatives trading without having to worry about the downside. If they win on their bets, the big banks would keep all of the profits. If they lose on their bets, the federal government would come in and bail them out using taxpayer money. In other words, it would essentially be a “heads I win, tails you lose” proposition.

Just imagine the following scenario. I go to Las Vegas and I place a million dollar bet on who will win the Super Bowl this year. If I am correct, I keep all of the winnings. If I lose, federal law requires you to bail me out and give me the million dollars that I just lost.

Does that sound fair?

Of course not! In fact, it is utter insanity. But through their influence in Congress, this is exactly what the big Wall Street banks are attempting to pull off. And according to the Huffington Post, there is a very good chance that this provision will be in the final bill that will soon be voted on…

According to multiple Democratic sources, banks are pushing hard to include the controversial provision in funding legislation that would keep the government operating after Dec. 11. Top negotiators in the House are taking the derivatives provision seriously, and may include it in the final bill, the sources said.

Sadly, most Americans don’t understand how derivatives work and so there is very little public outrage.

But the truth is that people should be marching in the streets over this. If this provision becomes law, the American people could potentially be on the hook for absolutely massive losses…

The bank perks are not a traditional budget item. They would allow financial institutions to trade certain financial derivatives from subsidiaries that are insured by the Federal Deposit Insurance Corp. — potentially putting taxpayers on the hook for losses caused by the risky contracts.

This is not the first time these banks have tried to pull off such a coup. As Michael Krieger of Liberty Blitzkrieg has detailed, bank lobbyists tried to do a similar thing last year…

Five years after the Wall Street coup of 2008, it appears the U.S. House of Representatives is as bought and paid for as ever. We heard about the Citigroup crafted legislation currently being pushed through Congress back in May when Mother Jones reported on it. Fortunately, they included the following image in their article:

Unsurprisingly, the main backer of the bill is notorious Wall Street lackey Jim Himes (D-Conn.), a former Goldman Sachs employee who has discovered lobbyist payoffs can be just as lucrative as a career in financial services. The last time Mr. Himes made an appearance on these pages was in March 2013 in my piece: Congress Moves to DEREGULATE Wall Street.

Fortunately, it was stopped in the Senate at that time.

But that is the thing with bank lobbyists. They are like Terminators – they never, ever, ever give up.

And they now have more of a sense of urgency then ever, because we are moving into a period of time when the big banks may begin losing tremendous amounts of money on derivatives contracts.

For example, the rapidly plunging price of oil could potentially mean gigantic losses for the big banks. Many large shale oil producers locked in their profits for 2015 and 2016 through derivatives contracts when the price of oil was above $100 a barrel. As I write this, the price of oil is down to $65 a barrel, and many analysts expect it to go much lower.

So guess who is on the other end of many of those trades?

The big banks.

Their computer models never anticipated that the price of oil would fall by more than 40 dollars in less than six months. A loss of 40, 50 or even 60 dollars per barrel would be catastrophic.

No wonder they want legislation that will protect them.

And commodity derivatives are just part of the story. Over the past couple of decades, Wall Street has been transformed into the largest casino in the history of the world. At this point, the amounts of money that these “too big to fail” banks are potentially on the hook for are absolutely mind blowing.

As you read this, there are five Wall Street banks that each have more than 40 trillion dollars in exposure to derivatives. The following numbers come from the OCC’s most recent quarterly report (see Table 2)…

JPMorgan Chase

Total Assets: $2,520,336,000,000 (about 2.5 trillion dollars)

Total Exposure To Derivatives: $68,326,075,000,000 (more than 68 trillion dollars)

Citibank

Total Assets: $1,909,715,000,000 (slightly more than 1.9 trillion dollars)

Total Exposure To Derivatives: $61,753,462,000,000 (more than 61 trillion dollars)

Goldman Sachs

Total Assets: $860,008,000,000 (less than a trillion dollars)

Total Exposure To Derivatives: $57,695,156,000,000 (more than 57 trillion dollars)

Bank Of America

Total Assets: $2,172,001,000,000 (a bit more than 2.1 trillion dollars)

Total Exposure To Derivatives: $55,472,434,000,000 (more than 55 trillion dollars)

Morgan Stanley

Total Assets: $826,568,000,000 (less than a trillion dollars)

Total Exposure To Derivatives: $44,134,518,000,000 (more than 44 trillion dollars)

Those that follow my website regularly will note that the derivatives exposure for the top four banks has gone up significantly since I last wrote about this just a few months ago.

Do you want to be on the hook for all of that?

Keep in mind that the U.S. national debt is only about 18 trillion dollars at this point.

So why in the world would we want to guarantee losses that could potentially be far greater than our entire national debt?

Only a complete and utter fool would financially guarantee these incredibly reckless bets.

Please contact your representatives in Congress and tell them that you do not want to be on the hook for the derivatives losses of the big Wall Street banks.

When this derivatives bubble finally implodes and these big banks go down (and they inevitably will), we do not want them to take down the rest of us with them.