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Trump's Tax Plan Helps Wall Street, Not Main Street
It should be called the Leona Helmsley tax plan, only the little people will pay taxes
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S. Peries: It’s the Real News Network. I’m Sharmini Peries coming to you from Baltimore.

A general consensus is emerging that Trump’s tax plan, which he presented last Wednesday will benefit mostly the country’s upper classes and corporations. In fact the only people that got a tax increase are the poorest taxpayers. A quick scan of even business press headlines will reinforce what I’m saying. For example, Bloomberg writes, “Tax reform could open a huge loophole for wealthy Americans”, and the conservative magazines National Review has a headline that reads, “Congressional Republicans tax plan isn’t great for Trump suburbanites.” However Trump himself promised on Wednesday that he and the rich generally would not benefit from this plan. Here’s what he said.

D. Trump: Our framework includes our explicit commitment, that tax reform will protect low income and middle income households, not the wealthy and well-connected. They can call me all they want, it’s not gonna help. I’m doing the right thing, and it’s not good for me, believe me.

S. Peries: Joining us to analyze what Trump’s tax plan would mean for us is Michael Hudson. Michael is a distinguished research professor of economics at the University of Missouri, Kansas City. He’s the author of several books, and the most recent among them is J Is For Junk Economics. Good to have you back, Michael.

M. Hudson: Good to be here, Sharmini.

S. Peries: Michael. Let’s cut to the chase here. Everyone seems to agree that this tax plan will benefit only the rich. Give us a sense of your main points of why you want to contest this tax plan is beneficial for all.

M. Hudson: Sure. It should be called the Leona Helmsley tax plan. Only the little people will pay taxes. But about the loopholes, the interesting thing is Trump said he wasn’t going to gain a penny, and he may have been telling the truth. That would be true if he’s already paying zero income tax. So his income tax rate is going to go from zero to zero.

That’s about the same for a lot of the biggest corporations in America. Apple, Google, Alphabet, these companies that have been taking all of their profits abroad, trillions of dollars, supposedly, that they’re holding abroad. They haven’t paid any U.S. taxes on this money, because they’ve held them nominally in a teeny little office in Ireland, or the Cayman Islands, claiming that they have to pay hardly any income tax at all.

The misrepresentation here is that Trump says that he can now bring all this money back from these offshore enclaves and tax avoidance zones. The reality is the money’s never been in these zones. It’s been in America all the time. Apple, Google and rich real estate companies simply hold all this “foreign” money in an American bank, but in the name of the foreign affiliate, an office registered in Panama or some other offshore enclave.

So there’ll be zero effect on the balance of payments, but it will lock in their zero rate, enabling them to have avoided taxes for over a decade. I think 2004 was the last such tax holiday. They’ll bring them all back now, without having to pay much tax at all.

S. Peries: Michael, another method that wealthy individuals and companies can use to avoid paying taxes is deducting investment expenses. Tell us how this works.

M. Hudson: If you look at the real estate sector’s loopholes, since World War II the National Income and Product Accounts (NIPA) report that real estate is hardly paying any income tax at all. If you own a building and you’re an absentee owner – not living there, not a homeowner, but absentee owners – they avoid paying any income tax because they don’t earn any reportable income. They pay interest, which is a tax-deductible expense, or they pretend – under the accounting rules that their lobbyists have bought from Washington – that the buildings actually are depreciating in value, even while the price is soaring. It’s going way up, they don’t have to pay an income tax. Then finally, when they die neither their estate nor their heirs have to pay any capital gains. The heirs get it without having to pay any tax.

The richest people have to pay an estate tax, but that’s being knocked out also. I think that everybody, as you pointed out, who’ve looked at the tax plan, says, “All the benefits are at the top. Where’s the benefit for the low-income people?”

Well, the wage earners are going to have to pay more tax. The minimum tax rate is actually raised from 10% to 12%. Also, people who live in Democratic states, New York, New Jersey, Maryland, California and so forth, will not be able to subtract the state and local taxes that they’ve been deducting from their taxable income all these years. So the tax rate for wage earners, for people who actually have to file tax forms and declare an income, is actually going to go up. The economy is going to be made poorer.

S. Peries: Now, Trump and his supporters argue that tax reductions will make the U.S. more competitive, and it will lead to more investment. In an earlier interview that we had with Dean Baker, he points out that historically this has not happened when taxes on corporations and on the wealthy were reduced. So if it does not lead to more investment, what do the corporations do with this additional untaxed income?


M. Hudson: They’re going to do the same thing they’ve done with 92% of corporate earnings in the last decade. They’re going to pay it out as higher dividends, pushing up the stock price, and most of all they’re going to use the money for stock buybacks. They’re going to buy back their stocks to raise the price. They are not going to invest.

The reason you would invest would be to sell more goods to the market and expand the economy. But most corporations, and certainly Wall Street, know that the game is over. The economy has not grown since 2008, except for the financial sector and the real estate sector. That is, except for the richest 5%. For 95% of Americans the economy has shrunk, just like it’s shrinking in Europe.

Corporations know this and say, “There’s only one thing we can do, now that the game is over and the economies are shrinking. We’re going to take the money and run. We’re going to pay all the tax cuts we get and give it to our stockholders.”

S. Peries: What are the consequences of this for us?

M. Hudson: It means the class war is back in business with a vengeance. But I don’t think it’s going to go through. There is no way that a group of Republican senators are really going to commit political suicide by actually voting for this plan, any more than they voted for Trump’s medical health plan revoking Obamacare.

What this is really doing politically though, is driving a stake through the heart of the Democratic party. The Democrats are so sure that the kerfuffle over this tax plan is going to backfire against the Republicans that the knives are out. They’re fighting like they’ve never fought before against the supporters of Bernie Sanders, against Elizabeth Warren. The Wall Street-Hillary, wing of the Democratic party says, “Now we’re going to win the election. We don’t need Bernie supporters. We don’t need the working class. We can form an even more right-wing party than Hillary had and what her program was.”

Obviously the Bernie supporters and the bulk of the Democratic party are not going to go along with the heads of the national committee. It’s going to probably split the Democratic party, because the way in which politicians are opposing the tax plan is on the ground that it’s going to vastly increase the budget deficit if it passes. Just like the Reagan and Bush tax cuts quadrupled the national debt. So the Democrats who are arguing against the Trump plan are budget hawks. They’re saying, “A deficit is bad.”

Now, as you know from the people you have on this program, like my colleague Bill Black and the Modern Monetary Theorists, were all in favor of having the government run a budget deficit if it pumps money into the economy, if it leads to more investment, if it employs more people. But in this case the deficit isn’t going to pump money into the “real” economy. It’s only going to pump money into Wall Street, and the money is going to be used just to push up stock prices, push up bond prices, and push up real estate prices and trophies for the rich. It’s the opposite of the kind of deficit that we’ve been urging all along.

So you’re going to have a lot of junk economic theories on the Democratic side opposing the junk economic theories on the Republican side. They’re claiming that this is trickle-down economics and supply-side economics, but the people who originally introduced supply-side economics under Reagan, people like Craig Roberts, have denounced the Trump plan, saying, that this is a travesty of supply-side economics, because all it does is supply more money to the richest 1%. It supplies more money to Wall Street, not to the economy at large. That’s what really should be brought out. I know that you’re bringing it out, but certainly the mainstream press is not emphasizing this.

S. Peries: All right Michael. I thank you so much for joining us today, and I guess this discussion will only continue over the next couple of weeks, so we hope to come back to you. Thank you.

M. Hudson: Good to be here, Sharmini.

S. Peries: Thank you for joining us here on The Real News Network.

(Republished from TRNN by permission of author or representative)
• Category: Economics, Ideology • Tags: Donald Trump, Neoliberalism, Tax Cuts 
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  1. Don Bacon says:

    So why should corporations pay taxes when that money could be invested in the corporation to provide more employment, and then the employees pay income taxes. The focus should be on jobs. State agencies pay no federal taxes, but they employ people who do. Employment — that’s the goal, and job creators have a key role. Hudson: “The economy has not grown since 2008, except for the financial sector and the real estate sector. ” If we intend to grow the economy we must focus upon job creation, and not get tied up in this class chatter. Promote the success of people who do things and make things, and who need people to do these things. That’s how we can grow the economy.

  2. The best overview of this issue is this 2014 interview with David Cay Johnson. He explains the Deep State, American media propaganda, and how the ultra-rich pay low taxes.

    • Replies: @Astuteobservor II
    , @Sowhat
  3. Thomm says:

    More left-wing economics from an article.

  4. Wally says:

    Guess what, Comrade Hudson:

    50% of workers pay zero federal income tax, but take taxpayers money as if they did.

    An income tax is the most degrading and totalitarian of all possible taxes. Its implementation wrongly suggests that the government owns the lives and labor of the citizens it is supposed to represent. Tellingly, “a heavy progressive or graduated income tax” is Plank #2 of the Communist Manifesto, which was written by Karl Marx and Friedrich Engels and first published in 1848.
    – Ron Paul

  5. Art says:

    No inheritance tax is a giveaway to the wealthy elite – they will rule forever after that happens.

    The sons and daughters of the supper wealthy are undeserving of all that wealth. They are not quality people – they have not proven themselves. They should not have the power that goes with all that wealth.

    America is already on its way to being 1% oligarchy and 99% serf nation. No inheritance tax on the super wealthy will seal the deal.

    Once the wealthy in an area or nation takes hold of power, they stop producing new things and start working to maintain their position in society. They take their money and invest it in some other local (i.e., globalism). The English elite invested their money in America while maintaining their status at home. The lower classes never benefited in the form of new growth from their labor – they stayed stagnant – while the investment cream went to America – keeping the elite in profits and their status intact.

    The same thing happened in the small town South. The city big wigs, bankers, and business owners sent their money to New York. Whites got to hate blacks, and the town elite ran off with the profits and stayed in power.

    Think Peace — Art

  6. Trump’s Tax Plan Helps Wall Street, Not Main Street
    It should be called the Leona Helmsley tax plan, only the little people will pay taxes

    All true.

    So, what’s new?

  7. @Art

    The sons and daughters of the super wealthy are undeserving of all that wealth.

    I know lots of the type and agree. Most are utterly narcissistic, bored, confused, sniveling, spoiled low life incompetents with attitudes that make one’s skin crawl. There’s not much to worry about from them though since almost none have a clue about what to do with all that money, or anything else for that matter.

    Their main skills include petulance, whining, sappy displays of the most crude ignorance, and running to the shrink on a regular basis. (The shrinks must have skulls of iron, souls of compost, noses of stone, and ears of concrete to be able to put up with the stench and listen to their *&@! day in and day out.)

    They’re typically right on top of every fashion though! I mean, like, they’re really cool. I mean really!

    • Replies: @c matt
    , @Monty Ahwazi
    , @Wally
  8. @Art

    The city big wigs, bankers, and business owners sent their money to New York. Whites got to hate blacks, and the town elite ran off with the profits and stayed in power.

    Interesting perspective. I would’ve never thought of that, but there seems to be more than a little merit there.

    I can see where sending their money to New Yoik could have been ultimately used against a good portion of them.

  9. @Art

    True. The only tax I am for is inheritance tax.
    The rich can give their children the best education, best health care. Spoil them rotten during their life if they wish. Give ‘m a house and maybe 100k.
    How much of a head start do you need? Also I think they will become better citizens.

    After that ALL should go to the State.
    New game, new chances.

  10. @Don Bacon

    So why should corporations pay taxes

    Why should big business corporations exist at all?


    Corporations, as we think of them today, are government pampered vacuums of special treatment and should be banned. Free markets are key to prosperity and one cannot have a free market when government intervenes in it. If government did not intervene, then corporations as we know them today, simply could not exist. The most outrageous aspect of these hideous monstrosities of legal injustice is the fact that they release the money grubbers from personal responsibility. They socialize risk while privatizing and concentrating wealth. Socializing risk may be OK as long as the risk is spread among those who agree to it. That’s not the case today since, thanks to government, the risks are spread to those of us who want no part of them. Worse, thanks to pampering of them with our tax dollars, they invite moral hazard, and our own funds are ultimately used against us in one way or another.

    Corporations do not produce a net increase in useful jobs. Their existence closes many other productive businesses and they thus they are responsible for a net loss of jobs. The present capitalistic systems tend towards monopolies and corporations and government are both a result and a tool of that tendency. Not good.

    Almost 200 years ago Herbert Spencer pointed out how the East india Company, despite all of its government sponsored advantages and pampering was still a huge, incompetent waste. Corporations may be good for the wallets of the few, but they should not be part of a civilized society.

    What an astounding illustration of the defeat of dishonesty by the eternal laws of things we have in the history of the East India Company! Selfish, unscrupulous, worldly-wise in policy, and with unlimited force to back it, this oligarchy, year by year, perseveringly carried out its schemes of aggrandisement. It subjugated province upon province; it laid one prince after another under tribute; it made exorbitant demands upon adjacent rulers, and construed refusal into a pretext for aggression; it became sole proprietor of the land, claiming nearly one-half the produce as rent; and it entirely monopolized commerce: thus uniting in itself the character of conqueror, ruler, landowner, and merchant. With all these resources, what could it be but prosperous? From the spoils of victorious war, the rent of millions of acres, the tribute of dependent monarchs, the profits of an exclusive trade, what untold wealth must have poured in upon it! what revenues! what a bursting exchequer! Alas! the Company is some 50,000,000l. in debt.

    -Herbert Spencer, Social Statics [1851], Introduction p47

  11. Joe Hide says:

    Don’t you think a bigger LONG game is being played here than what the interviewed and interviewer see?

    Intelligent informed realists understand the economy is close to collapse and making deals with psychopathic billionaires on the temporary is necessary to create a “Soft Landing” for the economy, which would force GRADUAL positive changes. This tax change is just one move on the chess board. The goal is to give up a pawn now to checkmate the queen later.
    Perhaps I misinterpreted the direction of the article, and Michael Hudson understands this, since he did mention that the Democrats could self destruct playing the new game, which is very astute thinking on his part.

  12. @Willem Hendrik

    After that ALL should go to the State.

    You are a died-in-the-wool Commie, Mr. Hendrix. I didn’t know was a Commie site, but you’re welcome to learn the HBD stuff here – you won’t learn that much about freedom unless you read Dr. Paul’s and Judge Napolitano’s articles.

    That is robbery, plain and simple. You want your (mostly your taxpaying neighbors) to hire government goons to steal someone’s hard-earned money?

    I’ll tell you all another thing about the inheritance tax. It doesn’t hit the big guys (in REALITY), whatever it says on paper at first glance. They’ve got tax lawyers, tax accountants, trust funds, overseas investments, and all kind of stuff to make sure the Feral Government doesn’t get THEIR money. The middle-class small businessman is the low-hanging-fruit. They don’t have the resources to hire all the guys to hide their money, yet some may have a few million in assets, including possibly a business that the son could take over.

    I hate hearing this statist crap on unz, because it’s a good site otherwise.

    • Agree: jacques sheete
    • Replies: @Willem Hendrik
  13. @Don Bacon

    At a minimum they won’t use the money to create employment when they have the option of stock buy back.
    That said: if we banned stock buy back there’s a case to be made for zeroing out the corporate tax which hits middle class retirement savers and instead just jacking up the top rates or AMT on individuals and couples.

  14. @Wally

    Thanks for the Dr. Paul quote, Wally! Here’s some slight-of-hand bullshit from this writer:

    Also, people who live in Democratic [sic “Democrat”] states, New York, New Jersey, Maryland, California and so forth, will not be able to subtract the state and local taxes that they’ve been deducting from their taxable income all these years.

    Are you trying to tell me that these are the only states with an income tax, Mr. Hudson? Most do, and the exceptions I know off the top of my head are Florida, Tennessee, Texas, and Washington. Why do you make this a “Democrat State” issue, when it affects everyone?

    I am not arguing that Trump’s plan is going to be good for the middle class, though. He is not smart or tough enough, apparently, to stand up to the big-money guys. However, the inheritance tax affects the middle-class businessmen the most, so should be eliminated, and I don’t even have space to write about all the evils of the 16th-Amendment and the personal income tax. Ron Paul’s quote will do for now.

  15. Ronald Reagan argued for at least a much simplified tax code (not the answer, by any means, but the idea was to cut out all the expenses in compliance and get rid of loopholes).

    I think Comrade Hudson would be on-board with the STATIST version of the short form:

    – FORM 1040FU – ( pg 1/1)

    1] How much did you earn? ___________________
    2] How much stuff do you have? _________________
    3] No, I mean ALL of it. _______________________
    4] Send it in – we will find the best use of this money and stuff to run your life for you.
    5] Sign off, and get back to work, Citizen!

  16. c matt says:
    @jacques sheete

    . . . or, the shrinks get paid handsomely to put up with it.

    • Replies: @jacques sheete
  17. c matt says:

    I’m sorry, middle class tax what? Are you sure you didn’t mean “middle class tax f*ck”?

  18. I like Michael Hudson, but everytime I watch one of these interviews he does on the Real News about this (Trump’s tax ideal/plan, this is not the first time Hudson has talked about this), I want to say to him:

    So, you are arguing that Trump is a bald-faced liar? When he says it will benefit his base, he is lying to them right to their faces???????????????????

    Michael. Surely you jest.

    If things do not get better for the people that voted for him, but instead just get better and better for the 1 percent, as you, Michael Hudson, claim in this interview? You apparently think that’s going to work for Trump, for America.

    It’s stupid, Michael Hudson. Trump was voted in to make things better not make things worse. And if he makes things worse? There will be Hell to pay. Hell. To. Pay.

    This is why it is really excrutiatingly difficult to listen to Micheal Hudson merrily (he looks happy all the time he talks, merry actually) saying we are all going to be royally screwed by Trump’s tax plan.

    Trump and his advisers (including Cabinet members) are saying that the cuts will stimulate the economy and that’s why they are doing it. They must be proved right by events immediately. No waiting 5 years. If the tax plan does not work by Spring 2018, there will be hell to pay.

    Hudson doesn’t want to give it a chance. He merrily claims that it won’t work and appears to be also saying that Trump knows it won’t work. I don’t know how you can claim this, merrily or otherwise. I don’t know this because Hudson gives no clear reasons why it won’t work. Everything he has said can be easily countered as it has been in press conferences by saying that it will stimulate the economy to produce jobs and better wages, and that’s now, not later.

    The only thing that is blatently terrible about this plan is removing the inheritance tax, which acted as a small barrier to the creation of a landed aristocracy in the US. I say very small barrier because there were so many ways around it and there has been so much resistance to it for so many years.

    Studies have supposedly shown (and there is a folk wisdom about it, too) that the first generation from wealth does try their best to maintain it, but the 2nd generation after squanders it. I don’t suppose this has been totally true with the Kennedys or the Rockfellers or the DuPonts or any of the other families, though there have been notable failures in the 3rd generation and more.

    What I am saying is that maybe the inheritances naturally dissolve as the generations come? In other words, perhaps removing the inheritance tax will allow nature to take its course anyway. Thus, it’s probably best for Trump’s tax plan to remove the inheritance tax. It will give the left and the right one less thing to fight over and it might work out much the same anyway.

    I much prefer Hudson’s other theories, the primary one being that we should tax rentier income only and not tax at all the income coming from labor. Add to that a complete rollback of copyright law to the 28 years written into the Consitution (and doing something similar for patents) and you’ve got innovation again, prosperity again.

    Michael, stick to those ideas. Putting down Trump merrily or otherwise? Let the voters do that when your prophecies come true, if they do.

    • Replies: @Achmed E. Newman
  19. TG says:
    @Don Bacon

    Kudos to M. Hudson, well said.

    Reply to Don Bacon: I agree that we should focus on jobs, but I think there really is a class war, and our class is losing.

    “Promote the success of people who do things and make things…” um. Does this include:

    – A rich banker that drives their company into the ground, and gets bailed out at taxpayer expense?

    – A politically connected defense contractor that gets to charge $500/gallon of gasoline shipped to Afghanistan so we can continue to wage endless pointless winless wars in places that are of zero strategic interest the the United States?

    – A wealthy investor that gets almost zero-interest money from the US government, loans it to a student to pay grossly overpriced tuition at a third-rate institution, and then when the student goes bankrupt, the government pays them out like a guaranteed 6% profit? Why do we even need these investors anyhow? They are using our money, not theirs, and they are not evaluating risk which is of course one of the real cores of a market-based economy.

    You get the idea. I like people who do useful things and make useful things. I like people who take real risks, trying to steer resources away from unproductive uses and into productive ones. But that’s not what we have here. Our current ‘job creators’ are nothing of the sort, they are parasites, pure and simple.

    • Replies: @Achmed E. Newman
  20. MarkinLA says:
    @Don Bacon

    So why should corporations pay taxes when that money could be invested in the corporation to provide more employment, and then the employees pay income taxes.

    Could be but won’t be, that is the issue. In the 80s we had the PC and semiconductors to generate a wave of new jobs. What exactly are all the corporations going to make that that they aren’t already doing. No, whey will use the money for accusations, which actually result in less jobs.

  21. @TG

    Man, I like this comment a lot, especially your last paragraph. I was going to ask you how you expect this (honest and hardworking men getting rewarded) to happen, so I’m glad you didn’t have your own special tax plan ideas.

    Look it’s simple, all the moral hazards, with the guys that just get in good deals with the US government (most legally) that are unproductive gravy trains – pretty much your 3 paragraphs starting in “-“, happen because the US Feral gov’t has been allowed to grow large. It’s completely off the reservation as far as the US Constitution goes. Your 3 examples, TB, and thousands of more bad “moral hazard” induced scams are happening because the US gov’t is INVOLVED in stuff it should not be.

    The real solution lies in cutting this Feral Beast in Washington, FS, down by 95%.That’s the only thing that will fix the problems you wrote about TG. This new tax plan, and this other one, and another guy’s great plan will all be loopholed out of, and there are millions of people on the gov’t gravy trains that won’t let it be allowed to see the light of day to begin with.

  22. @restless94110

    I agree with you, Restless-90210 on your views on inheritance. Also, you are right about copyright and patent law. The patent law should include a loss of rights if the invention, process, whatever is not made/implemented within a 10 year time frame. Big companies buy up patents and apply for patents just to keep competitors from creating something. If they sit on ’em, that should be the end of the patent.

    Now, respectfully on the rest of your comment, I admire your optimism. However, this one statement, “There will be Hell to pay. Hell. To. Pay.” is wrong in my opinion. Look, I agree with you that Trump did intend to help actual Americans. I don’t think he can do it, and I think he’s not nearly as wise as people made him out to be. He may be street smart and business smart, but he doesn’t know any history or anything about the people he is up against. He’d be much better off to start urging the public to come to Washington, FS to help out (yes, I mean rallies, visits by masses of people to congressional/senatorial offices, and more (all on the up-and-up, for sure …))

    Here’s my disagreement finally with your “Hell to Pay” statement, excuse me, HELL! TO! PAY! I don’t think President Trump wanted to be president for the money or fame. I don’t think he’s particularly power-hungry either, so the threat of no support for him in 2020 is an idle threat. He doesn’t care, and I can’t blame him.

  23. Let’s see how much cognitive dissonance we will get to see from commentators.

  24. @jacques sheete

    That’s how the alcohol manufacturers and drug. Producers get rich! The brats spent their inheritance wealth this way and die early

  25. @Achmed E. Newman

    Hold your camels, Achmed.

    I am not denying I may be a communist.

    And yes, it will not work when earth is devided into separate states. Precisely because the reasons you gave. But all tax is a reset between those who run too far ahead of the crowd and those who lag too much. It is a matter of time preference.

    • Replies: @Achmed E. Newman
  26. Alden says:

    I thought it was 50 percent of the total population that doesn’t pay income taxes?? Maybe i’m wrong.

  27. SteveM says:

    50% of workers pay zero federal income tax, but take taxpayers money as if they did.

    Classic false assertion by yet another “Let ’em eat cake” Social Darwinist. Low wage workers pay the 7.5% payroll taxes. And if they are self-employed and/or 1099, they pay the full 15%. To say nothing of the state and local taxes they have to pay.

    Moreover, there is a good chance that they get crap benefits if they get any at all so are stuck paying for nearly worthless health care insurance with huge deductibles.

    Trump is indeed an idiot and a sell-out, but it’s the repulsiveness of the “I got mine.” crowd that got him elected.

    • Replies: @Wally
  28. @Willem Hendrik

    Hold your camels, Achmed.

    Not to worry – they are bedded down for the night (in the tent with crazy Uncle Mo). OK, where were we:

    I am not denying I may be a communist.

    From what you wrote earlier, you sure can’t. I am no Senator Joe McCarthy, as much as we need him now, so not to worry about that either. I am glad you are honest about it.

    But all tax is a reset between those who run too far ahead of the crowd and those who lag too much.

    That may be the Communist idea of taxes, but the libertarian idea of taxes are collections of money taken for a set of things that only governments can do a good job at. It turns out, that’s a miniscule set.

    And yes, it will not work when earth is divided into separate states.

    OK, yeah they’ve tried it enough. I wouldn’t want to see the earth NOT divided into separate states, unless we have easy access to, and a way to live, on some other planets – first so I’d be able to get the hell out before the rush, and secondly so there’d be some competition between Communism and freedom. Monopolies never work out very well.

    Cheerio to you, too, Mr. Hendrix.

    • Replies: @Wally
  29. Wally says:

    Embarrassing strawmen & stunning ignorance.

    I said federal income taxes.

    I said nothing about state & local taxes.

    What health insurance are you talking about? I doubt you even know.
    Those that federal taxpayers pay for?

    There’s a very, very “good chance” that you don’t know what you’re pretending to talk about.

    I suspect you’re probably one of the unproductive takers.

    • Replies: @Alden
  30. Wally says:

    You have no right to tell someone what they can or cannot do with their money.

    However, I do sense the classic communist jealousy & envy from you.

    • Replies: @Art
  31. Wally says:
    @jacques sheete

    My, my, ‘red’ envy.

    So what? Don’t associate with them if you don’t like them, simple.

    • Replies: @jacques sheete
  32. Wally says:
    @Achmed E. Newman

    Indeed, Hendrick would rather the government get peoples money because government spends it so wisely and does such wonderful things with it.

    Communism, the most failed system ever devised.

    Doing the same thing over and over again and expecting different results.

  33. @Willem Hendrik

    After that ALL should go to the State.

    Yes, because they always use it so well. Always for the public benefit ya know. (Sarcasm intended.)

    On second thought, maybe I shouldn’t be so sarcastic since the big bucks were probably obtained with the aid of government in the first place, so maybe it should be returned to the government. However, there’s a problem with that and it goes like this: At a minimum, taxes are theft. They can also be correctly viewed as fines imposed on productive folks

    The funds, therefore, do not belong to the government, but to the productive people they were stolen from. How about returning the ill gotten gains to the people and then abolish taxes, corporations and government altogether?

    • Replies: @Willem Hendrik
  34. @c matt

    . . . or, the shrinks get paid handsomely to put up with it.

    They do get paid well. Believe it or not, there have been three of them in my family, and I wouldn’t have their occupations for anything.

    They are all well moneyed, fine folk, but their kids are messes. Totally screwed up with their entitlement mentalities. Excellent genetic potential gone utterly to waste.

  35. @Wally

    Don’t associate with them if you don’t like them, simple.

    I don’t.

    It has nothing to do with envy but a lot to do with disgust. I already said the parents are fine folk, but the kids…they’re another story. See comments #18 and 24. They have a clue as to what I’m referring to.

    Please keep commenting. Your personal attacks are a good source of laughs just like Humpty Trump and the rest of the hyenas in DC.

  36. @Carlton Meyer

    it isn’t low tax, it is no tax. when you die, you will pay 50%. when the walton died, he paid zero. I am 100% sure when his wife and kids die in the future they will also pay zero tax.

  37. Anon • Disclaimer says:

    The problems with inheritance taxes include

    1. The very rich only pay if they are careless or don’t care. By “very rich” I mean those who are rich enough to matter in terms of influence and political clout, not just someone whose home and holiday house are worth $8 million and lives off the income from $25 million of investments. The latter would not avoid inheritance tax ….and…
    2. Death can strike capriciously and it is most unlikely that the family of a 45-55 year old worth say $25 million is going to be adequately protected by life assurance (assuming the deceased could get it at all: the worst injustice I know was inflicted on the family of a veteran of WW2 whose war caused disabilities that he bravely worked to overcome prevented him getting life assurance!). And capricious markets can mean that assets are greatly overvalued for inheritance taxes.

    3. Who can trust moderately salaried public servants and politicians (with great perks and pensions) to devise the rules and levels of any tax so heavy in its impact as an inheritance tax above about 10 per cent?

    I write as one who’s family suffered near total wipeout of an honest businessman’s estate by a conjunction of high death duty rates, their non adjustment for inflation, and a temporary spike in the market for shares in companies which he could not ethically sell at the time – before a precipitate crash before a grant of probate could be obtained.

    I now live and propose to die in a country without inheritance taxes or the need to try and avoid them.

    • Replies: @Astuteobservor II
  38. @jacques sheete

    I realise the united states of America is a fairly young country and some Americans think it still to be a frontier country. But, everything has been ‘ discovered’, claimed or belonging to someone or some entity by now. There is no more vacant land to claim. America will, and has evolved into a socialist state where government will gain ground or takes the burden by salami tactics, brute force or simply by scraping up the residu of bankrupt individuals or compagnies. Cleaning up the mess those individuals or compagnies leave behind.

    Even if peoples have enough of their kings, and put their heads under the guillotine. The first thing they do thereafter is elect a new leader who Ofcourse also need money to do the things most people are only too glad not to have to do themselves.

  39. map says:

    How are Trump’s policies not a classic application of supply side economics? What matters is that we get tax reductions that pull us down along the Laffer Curve and that the tax cuts increase the marginal utility and marginal value of work.

    The single barometer for how tax cuts are functioning is the stock market. The market is going higher because of the anticipatory effects of Trump’s tax cut proposals.

    The notion that tax cuts are for the rich is the demand-side nonsense between the monetarists and the fiscalists.

    Trump is even a supporter of the gold standard.

    All classic Jude Wanniski.

  40. @map

    Would you care to spell out what Laffer curve effect the cutting of corporation tax will have especially if it is made revenue neutral by increasing indirect taxes.

    • Replies: @map
    , @map
  41. @Anon

    the death tax is just another way to make sure the middle class cannot climb that ladder. another taking away the ladder bullshit by the rich.

    I would probably be moving my entire asset out of usa before I die.

  42. Art says:

    However, I do sense the classic communist jealousy & envy from you.

    In our modern economy, products go begging to be purchased – we produce more than we can rationally consume – yet many people live a substandard life because of a lack of money. There is NO good reason for this – other than our current monetary system is inadequate.

    I am sure you would like to fix this inadequate system – right!

    Think Peace — Art

    p.s. Pure capitalism ownership does not work – pure government ownership does not work – we need a system where private consumers and employees end up as the major owners of production.

    • Replies: @Achmed E. Newman
  43. Anon • Disclaimer says:

    “Guess what, Comrade Hudson: 50% of workers pay zero federal income tax, but take taxpayers money as if they did.”

    Why do Repugs always focus on the federal income tax as if it were the only tax people pay? The income tax is a tax the rich pay because they are rich and can afford it. The poor and middle class DO pay taxes – lots of taxes: FICA taxes, sales taxes, gas taxes, payroll roll taxes, property taxes, etc. They don’t pay income tax because that would mean basically everything they earn goes to the government. They are hardly lazy or parasites like trucons like to imply.

    The relevant issue isn’t how much the ultra rich pay of a particular tax (the income tax) but how much of their overall income they pay in tax. The poor and middle class may pay up to 50% of their incomes in taxes. A rich guy like Romney? He paid just over 20%. Those poor whittle rich people. Whatever.

    Repugs are nothing but low IQ sheep who repeat whatever they hear without any semblance of critical thinking. Yeah, buddy. Go ahead and cut Google, Corporate America, George Soros, Marc Zuckerberg, and Harvey Weinstein’s taxes some more…because those people worked soooo hard for you last election.

    • Agree: Jonathan Mason
  44. map says:
    @Wizard of Oz

    “Would you care to spell out what Laffer curve effect the cutting of corporation tax will have especially if it is made revenue neutral by increasing indirect taxes.?

    The key point to keep in mind is that the changes in the tax rate and the tax code are not revenue neutral within the same corporate entity. It’s not like squeezing the end of a balloon. Furthermore, not all companies or individuals have complex tax returns with massive deductions that remove income from the taxable economy. For most businesses and individuals, they pay substantial taxes across the board. Any relief from that will be welcome.

    Overall, we are taxed at levels above 50% across federal, state and local. Whoever is paying lower rates does so through inefficient tax planning that becomes redundant at lower tax rates.

    Lower taxes are the way to go and, according to the Laffer Curve, will have the effect of maximizing tax revenue.

    Look at the stock market…which is a barometer of how the overall market is anticipating the cut in taxes. The market is being forced upwards by these expectations in the growth of future revenues. We are also seeing record tax collections.

    Even Jim Grant of Grant’s Interest Rate Observer looked favorably on both tax cuts and the Trump’s support for the gold standard.

  45. map says:
    @Wizard of Oz

    Keep in mind that the economy needs faster growth, greater individual productivity and an increased marginal value of working. That’s what tax cuts are for.

    Tax cuts always need to be part of any Republican platform.

    And, yes, revenue neutrality is stupid.

    • Replies: @Wizard of Oz
  46. @map

    While acknowledging that revenue neutrality would only be an aspiration imperfectly realised I note that, unless the Laffer curve effect delivers big time and immediately there are going to be some years of increasig governent debt as an immediate conseqience. Is that acceptable?

    As nominal unemployment in the US is low I wonder why you seem to think that the skills of those who will be drawn back into the workforce by any adfitional corporate investment incentivised by a cut in the corporate tax rate will contribute anything much worthwhile. And what are these investments that corporate America will be making if the nominal rate is say 25 per cent rather than 35 per cent? Does it go beyond deciding to manufacture in America rather than in some other country where the tax rate is already much lower?

    • Replies: @map
  47. Sowhat says:
    @Carlton Meyer

    This is the way it goes in an Oligarchy when a company is a “citizen” who doesn’t pay taxes and who OWNS AND OPERATES the government.

  48. Sowhat says:

    It amazes me that the same middle class that supports the MIIC and their psychotic goal of Absolute Total Dominance and World-wide Hegemony is going to sit on their hinders parts as the Neoconservatives and Globalists band together to keep the masses enslaved. The land of Idiocracy

  49. map says:
    @Wizard of Oz

    The key point to keep in mind is that there are two tax rates where the government gets zero revenue: a tax rate of 0% and a tax rate of 100%.

    0% is obvious. At 100%, people choose leisure, work sloppily and move their economic activities underground. The government is effectively starved of tax revenue.

    Moving from the points of 0 and 100, you soon discover that there are always two tax rates that yield the same revenue. A tax rate of, say, 90% may yield the same revenue as 10%…but the 10% tax is presiding over a much larger economy.

    The whole point is to move along the Laffer curve to an optimum point, once you realize that a 10% tax may be too low or a 90% tax may be too high.

    Reducing marginal tax rates from 35% to 25% represents about a 33% increase in profits and income. That is, it is a maximum increase of 33% in profits and income the smaller the economic unit gets. Sure, an entity like Apple may experience a smaller benefit because much of their profits are in untaxable structures. But the smaller the business gets and the lower the worker, the greater the windfall effect is. And even Apple will question the priority of tax avoidance if the lower rates allow it to keep more of its money and use it for other things other than paying lawyers.

    The effect is huge for small businesses and workers. Business like these can use their 33% increase in profits to cannibalize the market share of larger rivals. This is why big business hates these tax cuts. They want the tax system in place to keep other firms down, since they already have the legal means to avoid paying these taxes. With supply-side tax cuts, big business advantages are weakened.

    In fact, the “revenue-neutral” scam is precisely calibrated so as to negate the beneficial effects of supply-side tax cuts. Big business wants to keep small business down and most republicans are stupid austerity junkies that think government is “too big” or spends “too much” so they fall for this demand-side fiscalist nonsense all of the time.

    Proper tax cuts will lead to increases in tax revenue and more investment in America. Why? Because smaller firms can’t go overseas. They will be forced to invest here.

    • Replies: @Wizard of Oz
  50. @map

    Thanks. I aim to read and digest better when I have time but your opening pars prompted two recollections. 1. A recent visit by Laffer to a local think tank where I thought he came over as a fairground salesman. This impression was not dispelled by his video of a jolly lunch he had with Rumsfeld and Cheney…. 2. J.K.Galbraith. Though I am no fan I Googled “Galbraith on Laffer” and I commend that as a good starting point against over simplification.

    • Replies: @map
  51. @Art

    … other than our current monetary system is inadequate.

    You inadvertently got one thing right, there, Art. Yes, the monetary system, fiat money backed by nothing, with a trillion or so created by the FED each year, is inadequate (to say the least). What you seem to be arguing about it the economic system, freedom vs State Control.

    Pure capitalism ownership does not work – pure government ownership does not work – we need a system where private consumers and employees end up as the major owners of production.

    Now that’s one of the most confused single sentences I’ve read on economics since I stopped reading stuff written by people in the Feral Gov’t, I mean … of course.

    Wait, now pure Capitalism, not seen in a century or so, first of all, worked pretty damn well (but, we – the US – had REAL money, meaning gold and silver, not bullshit scraps of green paper). Private consumers have no reason to end up as owners of any damn thing if all they do is consume. As far as employees, they can own the production when they buy the assets that produce. That means they are now the owners, so you might not call them employees anymore.

    What’s not working right now is crony capitalism, gov’t / big business collaboration against small business, the self-employed, and anyone else who likes to work in economic freedom. It’s pretty close to fascism, minus Nazi or Mussolini posters.

    If you are this confused about the terminology, Art, how can you even know if you are a Communist or not?

    • Replies: @Art
  52. map says:
    @Wizard of Oz

    I really don’t see how this is a critique.

    Galbraith was a major Keynesian…and Keynesianism is essentially fraud. All demand-side theories, be they monetarism or fiscalism, do not work. Remember the stagflation of the 1970’s? That was not supposed to happen, yet it did. The monetarists got us off the gold standard which destroyed the value of money and the Keynsians crippled the economy with demand-side theories designed to destroy the relationship between creditor and debtor.

    Keep something else in mind. The real brain behind Arthur Laffer is Robert Mundell. He is actually the true master of supply-side economics. He was Laffer’s teacher and a Nobel-prize winner in economics. Mundell was also the father of the Euro and the author of the JFK tax cuts.

    He is also China’s Chief Economic adviser.

    They built an entire university around him.

    • Replies: @Wizard of Oz
  53. Art says:
    @Achmed E. Newman

    Pure capitalism ownership does not work – pure government ownership does not work – we need a system where private consumers and employees end up as the major owners of production.

    Now that’s one of the most confused single sentences I’ve read on economics since I stopped reading stuff written by people in the Feral Gov’t,

    I was not clear – I believe in free market enterprise – enterprises produce goods and services – capitalists produce money for an elite that get richer and richer – taking ever bigger slices of the economic pie.

    One does good for humanity – the other NOTHING.

    We want enterprise to be owned by local folks not some greedy bastards in Wall Street.

    Think Peace — Art

    • Replies: @Achmed E. Newman
  54. @map

    Do you regard the creation of the Euro as being something anyone should be admired for? I recall that the former head of the Australian Treasury wrote a trenchant criticism at the time of its creation of the folly of the Euŕo’s creation without budgetary union, so its problems were forseeable and forseen.

    Do you not distinguish between to so called Keynesians (incuding Richard Nixon: “we are all Keynesians now”) and the great and worldly wise fact driven genius John Maynard Keynes? He would have been horrified (though not altogether surprised) by the 60s and 70s politicians who produced stagflation and borrowed to send tbemselves back into office.

    His eloquence in the 30s slowly made the obvious clear to policy makers, namely that if there is a lack of confidence to spend and invest and great unemployment of people and plant politicians had better find ways of restoring the general confidence to spend by arranging for investment and other spending to occur. His 1930s prescriptions were not prescriptions for the 60s (financing another war with debt without pain for the citizen-consumer) and 70s.

    I have known many gold bugs, mostly dead or dormant today. Can you see any way in which any kind of gold standard could be restored now? What kind? It is clear that the original guarantee (always dependent on the faith that the banks could actually cope with a “run” in the banks) that one could swap one’s bank issued for gold at a long term legally set price is anachronitic and that some kind of gold exchange side would have to be (re)constructed. What kind?

    You do realise I assume that gold notoriously fails the tests of the definition of money as a measure and as a store of value? Given the wild swings in the $US price since the early 1970s what price would you be happy to have your savings valued at?

    • Replies: @map
  55. MarkinLA says:

    The single barometer for how tax cuts are functioning is the stock market. The market is going higher because of the anticipatory effects of Trump’s tax cut proposals.

    Then why was it going up for Obama. Anything any economist says is total BS. The market is going up because there is no place else for money to go. Now how do you prove which is correct? You can’t.

    • Replies: @map
  56. map says:
    @Wizard of Oz

    Mundell intended that the Euro operate as a standard unit of account and wanted it to facilitate trade throughout the continent. The fact that the Euros mismanage the currency is not his fault.

    Keynes is hardly fact-driven. He even lacked any commentary on the roaring 20’s of the United States, the perfect example of how well supply-side economics worked in producing that boom.

    You don’t need a gold exchange. In fact, you don’t need to hold any gold on hand at all to run a gold standard. In the case of the US, you want tax cuts to grow the US economy to a massive clip without expanding the money supply. This will increase the value of the dollar while reducing the dollar value of gold. When gold falls to $1,000 an ounce, the President would then announce a gold standard fixed at that price. The Federal Reserve then engages its open-market bond-buying/selling activities to hold the dollar’s value to this gold price.

    A thousand bucks is a good price because it represents the long run 30 year moving average of gold.

    This is a far superior system to what is done now…where the Fed announces increases or decreases in the Federal Funds Rate willy-nate and blowing up economies in the process.

  57. map says:

    The economy is blowing tops because the Federal Reserve is messing with interest rates. It cause the economy to blow in 2007 and, when the Fed corrected, the market managed to recovery…but not before millions of people were hurt by Fed stupidity.

  58. @Art

    I think we’re close to being in agreement, but lot of the free market wants investment money. How will you start a new restaurant, as a newbie say, who doesn’t already have money in hand, without a loan? I’ve got nothing against a free market in money too. That means interest rates left the hell alone (KILL THE FED) to rise or fall to the market rate, meaning what rate is a good “price” to pay for getting money ahead in time.

    You need capitalists. You just can’t have capitalists that are in cahoots with big government and big banks to screw over the little guys and little enterprises. That only can happen when the government is fairly large. Our country did not always have this monstrous Feral beast over us.

    Thanks for the reply.

  59. @map

    The single barometer for how tax cuts are functioning is the stock market. The market is going higher because of the anticipatory effects of Trump’s tax cut proposals.

    The stock market apparently does not rate the likelihood of World War III over the Koreas very highly, but if Trump’s tax cut proposals are good for the S&P 500, they are unlikely to be of much benefit to working people.

    We are still waiting for the cheaper health insurance with lower deductibles and cheaper drugs with everybody covered beautifully. That is what Trump ran on. Perhaps the new tax plan could make all health care premiums and payments for deductibles and for drugs eligible for individual taxpayer tax deductions even if taxpayers are taking the standard deduction. With a bit of luck this would abolish the need for health care insurance altogether and a free market could operate in which patients would negotiate whatever prices they wished to pay for services. Medical practices and labs and hospitals could then sell annual subscriptions to patients and cut out the middle man altogether.

  60. scrivener3 says: • Website

    Scary to read the comments. I suspect part of the reason we are in decline is people have little understanding of capitalism so they are misunderstanding some of our problems.

    Corporations to not exist to provide jobs. No one wants a job. If you want a job, go volunteer at Goodwill, they have work for you to do, directions to follow, schedules for you to abide by. What you want is a money, and corporations exist to make money.

    Corporations make money in a free society by creating value – they consume some value, like employee’s labor, raw materials, machines, office space, etc. Then they sell the goods that they have created. A balance sheet accounts for all the value used up by the corporation and all the value people voluntarily gave it for the goods it produced. Hopefully the later number is larger than the former. That profit is value created by the enterprise.

    Spare me the bank that made bad loans bailed out by Uncle Sam, that is not an example of capitalism in any way; that is simply political pull. Don’t cough up the defense contractor, they are paid by government that gets its funds through threat of guns and jail time, and currency debasement.

    Most people cannot create much value. Most people rent their muscles and limited intelligence to someone else who can create value. Most people need a job to make a living. But corporations do not exist to provide jobs. That’s the role of a corporation in the USSR or Argentina and it is value destruction instead of value creation.

    • Replies: @bomag
  61. bomag says:

    Corporations make money in a free society by creating value

    If you believe this after experiencing modern corporate America as practiced, you may be too far gone to save.

    • Replies: @olde reb
  62. Alden says:

    A lot of people just look at that $ 4,000 a month paycheck reduced to $ 2,300 by the numerous deductions and call it all taxes.

  63. olde reb says:

    I would think that without corporations (with an opportunity to obtain additional financing without contributing unskilled labor), we would still be riding horses. However, corporations controlling corporations is a completely different animal.

    The example of East India was more Al Capone than a corporate body.

  64. olde reb says:

    I submit that a corporation that does not create value must either receive a government subsidy or it will go out of business. Shareholders either want a dividend/profit or they sell their worthless shares.

  65. E-Man says:

    “The sons and daughters of the supper wealthy are undeserving of all that wealth. They are not quality people – they have not proven themselves. They should not have the power that goes with all that wealth.”

    First of all, who are you to decide who is and isn’t deserving of anything? If I’m rich it’s my right to decide if I want to leave all my money for my children, so much for being pro-choice. Secondly, what exactly makes them “worthy” or “unworthy”? And if they’re undeserving of their parent’s wealth, what makes the government worthy to claim that? Or what makes you or poor people worthy of someone else’s success?

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