Author Archives: Mike Livingston

Seriously Misleading Tax Reform Act Posts

Yes, I’m probably going to anger a few folks, but I just can’t seem to let some of these frequent posts go unanswered. Why? It’s probably because I’m old, cranky, and don’t have a high tolerance for BS. You folks know who you are, because you keep regurgitating the Democrat talking points from the popular sources and any other possible source of disinformation. [Don’t believe a word I say – read the actual Tax Bill – I included the link at the bottom of the post]

TAX REFORM ACT

By a 51-48, strictly along party lines, the US Senate has passed a GOP-backed tax reform package that will cut taxes for more than 80 percent of all Americans (raising taxes on a tiny, disproportionately wealthy fraction), benefit small businesses, and make America’s extraordinarily high corporate tax rate — both statutory and effective — far more internationally competitive.”

Let’s start with what it isn’t — It’s not a giant step toward tax reform. As a matter of fact, it has some serious flaws, some of these changes don’t solve a darn thing, except as a political attempt by the Republicans to say, we got something done. It does however help many that its intended.

The main things it won’t solve; the national debt, it may even add to it, but that’s not its major flaw because the only way that problem will go away is through serious reductions in spending and assessing what our priorities are as a nation. I can tell you, if these politicians ever did get serious about debt reduction, the howling would be heard in other countries.

The other point I will make is there’s never going to be a perfect tax bill. Many people have been arguing for a Fair Tax system for years. It’s been rejected. It’s not a matter of how strongly you feel about it, the fact is, it’s never going to be passed, primarily because the left would see it as a regressive tax.

Now lets talk about what bothers me with so many Social Media posts on this topic.

The Democrat strategy wasn’t one of, lets bring our proposal forward to see what the public thinks. It was about class envy, trying to create a public opinion that only the evil rich will be the main beneficiaries, while everyone else has to take up the burdens of the national debt.

According to the CBO, the ~ 39% (combined federal and average of state and local rates), United States has the highest marginal corporate tax rate in the OECD and the third highest in the world. I can almost hear the collective eyes roll on this point. So what you may think? These corporate fat cats need to pay more. We’re tired of Corporate welfare, etc.

Let’s start with the basics of what a corporation is, and isn’t. It’s not the heirs of the Walmart stores (Waltons), the Koch brothers, Mobil Oil, whomever. A corporation is legal identification of a business. A means to hold together a business, control it as a single entity, totally separate from individual officers & staff who may come and go. When a corporation is taxed, it’s the entire business, which passes the costs of taxes on to it’s customers along with all the other expenses. So, if you’re mad at a company, you really just pass that litigation and taxation cost to all of its customers. Of course if a company can charge at a consistent rate, even if it can lower it’s overall operations cost, it’s going to make greater profits. This disturbs some people, but it’s a simple fact.

This is where the tax bill was trying to alter the playing field for corporations to keep making profits, but also, for the large ones to reconsider their overseas management / tax havens. Yes, the large ones do place their offices in more favorable taxed countries. The Republicans want them to move back, and if you recall, President Trump talked to several major automakers and other large industries early on, to bring back more domestic jobs. Yes, I know Trump has clothing in offshore manufacturing. Don’t look for absolute perfection.

Here’s the thing that keeps getting ignored, there are over 100 times more small businesses than large ones. They pay the same tax rate and they’re also the ones that overall employ more people than those with over 500 employees. So if you have just a handful of employees, a reduction from the mid 30% down to a low 21% is going to help. That’s the real focus of the bill, not the political party claim to it’s minions… `Republicans just want to create tax giveaways to the rich.`

President Barack Obama called for a reduction in our uncompetitive corporate tax rate. His proposed cut was smaller and structured different than the Republicans bill, but Obama agreed the existing rate was too high.

The anti-Trump analysts quickly weigh in. It reminds me of the Great Karnak. Lets see if any of their predictions come true. One thing that could be counted on even before this is passed, the annual debt is going to rise at just over the $1 Trillion level. It hasn’t a thing to do with the new tax act even though they want to tie the two together. The problem is and always has been, spending at a rate far greater than revenues.

  • The Tax Policy Center found that the bill would only boost GDP by 0.7% in 2018, well short of growth promised by Republicans.
  • The bill would also add $1.23 trillion to the federal deficit over 10 years, even when adding in new revenue from economic growth.

About 70 percent of all US taxpayers currently take the standard deduction. This deduction will approximately double in the newly passed bill.

Independent analyses found that the proposal would (a) result in net tax reduction for average taxpayers and households across all five income groups, including middle-income families, (b) create nearly one million new, full-time American jobs, and (c) boost US economic growth. The average household of four people, based on national median income, would save nearly $1,200 on their tax bill next year.

Does the new law cut Medicare or stop payment for certain cancer treatments? The short answer is no. There were OMB provisions passed well before Donald Trump took office, which have triggers altering the funding to Medicare should spending levels exceed specific thresholds. * Paul Ryan stated that if this were to happen, Congress would act to prevent this from occurring.

What does that have to do with cancer treatment? In 2013, when Medicare faced an automatic 2 percent cut under the sequester, some cancer clinics told the Washington Post that they couldn’t afford to continue administering pricey chemotherapy drugs and still stay in business. The Post‘s Sarah Kliff wrote: “Cancer patients turned away from local oncology clinics may seek care at hospitals, which also deliver chemotherapy treatments.”

“Oncology clinics are again concerned about a potential cut to payments they receive from Medicare for these cancer drugs.” The Community Oncology Alliance, a nonprofit advocacy group for these practices, said in a Nov. 30th press release, that a further cut “will reduce access and increase costs for patients.”.

Once again, this was politics being played out through Democrat sympathetic news organizations. Designed to stir up the base, it did so for a while. This is not what the tax bill would do. There’s certainly concern, however, about the pay-go spending cut trigger and the potential impact.

* McConnell and Ryan issued a joint statement on Dec. 1, saying Congress would waive the pay-go requirement.

The sunset provision was necessary to meet the Byrd Rule requirement (adopted in 1985 and amended in 1990) that only allows Senate legislation to be passed with a simple majority if it does not result in net tax cuts beyond a 10-year period (otherwise, it requires 60 votes to prevent a legislation-stopping filibuster).

1986 was a marquee year for tax reform. Back then, Republicans controlled the White House and the Senate, and Democrats controlled the House. Neither party was in a position to dictate the terms, and any legislation passed was, by definition, a compromise. The result was the Tax Reform Act of 1986, signed into law by President Reagan on October 22, 1986.” The Hill 27 August 2012

References:

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Economic Tomfoolery

Economic ignorance allows us to fall easy prey to political charlatans and demagogues.” ~ Dr. Walter Williams

The world economy is six times larger than it was half a century ago, growing at an annual rate of 4 percent during the period. New technologies have paved the way for more efficient production systems in a wide range of industries and promoted economic growth. From 1965 to 2013, the average annual growth rate of world GDP per capita was about 2 percent, and in more than half of the past 50 years, the world grew faster than this average. As a result, global per capita GDP more than doubled between 1965 and 2013 despite a major increase in population.” ~ IMF

Judged by the huge strides that people all over the world have made in overcoming poverty and want, it is only a slight exaggeration to say that little of economic consequence happened before the last three centuries. Before that, most of the world not only took poverty for granted, but also assumed that little could be done about it. Even the most optimistic early writers could not imagine that more than a few percent of the population would ever be well off; they thought that the best we could do for the masses would be to minimize their suffering on Earth.
~ econlib.org

Poverty and inequality

Money - ResourcesThe world population grew from 3 billion in 1965 to about 7 billion in 2013, but the global economy grew faster than the world population, leading to a better standard of living for the average world citizen.” ~ IMF

Life expectancy grows even though the population growth rate decreased.

The average world citizen is richer than ever thanks to the growth the global economy has enjoyed over the past 50 years. However, the benefits of this growth have not been equally distributed—the result is enduring poverty and inequality.” ~ IMF

When we read about the great civilizations of ancient Egypt and Rome or of the Aztecs and the Incas, we tend to compare them with the empires of Britain or the growth of the United States. This comparison, judged in economic terms, is highly misleading. Although the great civilizations in Egypt and Rome were able to construct big buildings, the vast majority of their citizens, by today’s standards, were dirt poor.” ~ econlib.org

Why is that true? Technology advancements play a big part. Certainly having sufficient energy, clean water, and food supply, along with IMF is governed by and accountable to the 189 countriesa lack of strife, all play important roles. Governments do play a huge role. The most drastic comparison between how governments function are North and South Korea. The basis of economic circumstances for each country are similar however their respective governments are vastly different in the level of control they apply to their population. The short summary is that North Korea is a highly controlled, central managed economy, whereas South Korea allows more individualized control and free markets. Of course embargoes by the west exacerbate North Korea’s problems.

China and Honk Kong

When the United Kingdom’s lease ended on Hong Kong in 1999, China was handed a jewel in that region of the world. Having traveled and transacted business there before the change over, I saw a vibrant overall economy with a significant amount of freedom. Evidently, China found they didn’t want to kill the golden goose, and incorporated many of the free market ideas from this island economy.

The IMF states, more than a billion people, mostly in sub-Saharan Africa and south Asia, are in extreme poverty. What they claim are some of the causes, are more along social-democrat ideology, rather than the obvious. Those who live within the borders of despotic, highly centralized, corrupt governments, suffer the most with inequality and poverty. It’s free market economies and those who have governments with less corruption, less emphasis on large military’s that are the biggest winners.

It’s popular to condemn greed but it’s greed that gets wonderful things done. When I say greed, I don’t mean stealing, fraud, misrepresentation, and other forms of dishonesty. I mean people trying to get as much as they can for themselves. We don’t give second thought to the many wonderful things that others do for us.“ ~ Dr. Walter Williams

People in the education and political establishments pretend they’re not motivated by such “callous” motives as greed and profits. These people “care” about us but which areas of our lives do we derive the greatest pleasures and have the fewest complaints, and which areas do we have the greatest headaches and complaints? We tend to have a high satisfaction level with goods and services like computers, cell phones, movies, clothing and supermarkets. These are areas were the motivation is greed and profits. Our greatest dissatisfaction are in areas of caring and no profit motive such as public education, postal services, and politics.” ~ Dr. Walter Williams

.. economics studies the consequences of decisions that are made about the use of land, labor, capital and other resources that go into producing the volume of output which determines a country’s standard of living. Those decisions and their consequences can be more important than the resources themselves, for there are poor countries with rich natural resources and countries like Japan and Switzerland with relatively few natural resources but high standards of living.” ~ Dr. Thomas Sowell

Economic Equality

Economic equality is firstly a false concept. It ignores market fundamentals as basic as water level & gravity, meaning different inputs are going to produce different outcome. I’ve heard advocates of basic income for all. Their belief is the economy would improve as everyone would at least have enough to sustain themselves and would increase demand for goods and services.

When aspiring entrepreneurs are brought into the TV reality show, Shark Tank, they present their product or service, then asked a series of questions. The “Sharks” are successful entrepreneurs in their own right. Their goal is to get a return on their investment and own a piece of the next big business idea. Three things should be obvious to the casual observer.

  • You need to be prepared with a good idea with market research.
  • Capital will flow to you from those with greater wealth.
  • The government doesn’t create wealth.

There’s an ongoing effort to counter marketplace realities with explanations and statistics stating “trickle down economics” doesn’t benefit anyone. A simple catch phrase or populist econo-babble doesn’t negate the basics behind economic success.

  • a market with less barriers and cost will be more successful.
  • products & services must be sufficiently desirable for people to want to engage in trade.
  • in order to launch and maintain a product or service in the marketplace startup and working capital must be obtained.

If you want to place a coined phrase on this process, trickle down is sometimes used, because like water, capital flows from places of sufficiency or even excess to those who have skills, products, or services that are sought after. Despite the efforts of the IMF to post their claims to the contrary, they owe their existence to the wealth produced by prosperous nations, primarily the United States.

What is the IMF?

The IMF was created in 1945, with the goals of fostering global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world. the IMF is governed by and accountable to the 189 countries that make up its near-global membership.foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.

The IMF has had two recent disgraced leaders, Dominique Strauss-Kahn was charged with allegedly brutally attacking a New York hotel maid, Nafissatou Diallo on 14 May 2011. The charges were dismissed at the request of the prosecution which described serious doubts in Diallo’s credibility and inconclusive physical evidence. The physical evidence indicated a sexual encounter but did not prove use of force or non-consent. Strauss-Kahn admitted his liaison with Diallo was a moral fault and described it as “inappropriate” but that it did not involve violence, constraint or aggression. He said that Diallo had lied and that he had no intention of negotiating with her over a civil suit she had filed against him. The suit was later settled for an undisclosed amount, but subsequently reported to have been $1.5 million.
In his defense, Diallo had previously fabricated a detailed story of being gang raped by soldiers in Guinea, which was later found to be untrue.

The next Managing director of the IMF, Christine Lagarde, was found guilty of criminal charges on 19 December 2016. She was linked to the misuse of public funds dating to her time as France’s finance minister. She didn’t serve jail time or have to pay a fine. She maintained her innocence throughout the trial, calling the charges politically motivated. The IMF has stood by her, and her IMF biographical page doesn’t mention this case or conviction.

References

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The Constant Hum of Net-Neutrality?

I’m reading a lot of the “voices of reason”, telling us their hope for a brighter, better, fairer, more economical, world-wide-web is through FCC regulation. If only we do this one little thing, ask our representative’s for more regulation. As a matter of principle, and all that is net-holy, we need to demand more regulations, we have to get more bureaucrats to control this nightmare of an Internet that soon can befall us, without extensive government guidance.

When someone makes an extraordinary claim, they should be obligated to demonstrate their claim is real.

cartoon-people-clappingNet neutrality The common perception of net neutrality is positive. It’s supposed to require Internet service providers to treat all on-line content the same. They can’t deliberately speed up or slow down traffic from specific websites, block sites, or applications, nor can they put their own content at an advantage over rivals.

The claim “The elimination of the FCC enforcing net neutrality will give big cable companies control over what we see and do on-line. If corporations get their way, they’ll allow widespread throttling, blocking, censorship, and extra fees.”

Net neutrality advocates portray a problem, then without proper examination of facts, they want the government to control the Internet. Their proposals lack the essential explanations of, over what time period a remedy should occur, the cost, or how their regulations are going to monitor and insure the problem(s) were fixed.

Meanwhile a host of complaints, which almost any service provider routinely responds, are cited as hypothetical problematic issues.  Except where criminal conduct has been involved, there are no examples of any Internet-service provider preventing its customers from viewing content on-line. Comcast attempted to “throttle” or slow down access to certain data packets a decade ago; they were blasted in the court of public opinion and soon relented.

beware-false-claims-2There’s an illusion that somehow government can control enterprise better than individual companies. Nowhere can such a claim be demonstrated by facts, yet many persist we need more, not less government intervention. There’s a disconnect on how speeds and feeds would be monitored for each type of Internet application and entertainment source.

Having been involved with data communications over 30 years and responsible for managing the speed as well as the perceptions of individual users, complaints are the daily norm. In many instances a problem stems from user perceptions, equipment malfunction, and purposeful attacks on companies and infrastructure through clever hacking.

One of the frequent claims by those advocating net neutrality are that service providers will raise rates without government regulation. I know for reasonable certainty two things will occur in regard to pricing.

  •  price increases and advertisement revenue claw back is already in the works.
  •  regulations, monitoring, and compliance with increased government regulations most certainly will increase the cost to the consumer.

Google has an 88 percent share of the search-engine market. Facebook has a 77 percent share of mobile social media. Amazon, controls 70 percent of e-book sales, how would government effectively manage their access and cost to use with additional regulation?

If anything, net neutrality is a lose-lose scenario. Access that we take for granted would invariably be slower because providers would have to be increasingly watchful of data flow. Throttling techniques, (packet shaping) would be necessitated. Costs to the end-user would increase.

Summary

The Internet is made up of billions of users, millions of individual pieces of equipment, passed through complex routing by thousands of companies. We’ve seen exponential growth since 1994. Video tape rentals were the usual source for on demand entertainment. Facebook, YouTube, Twitter, and even Google were created during this period. The flexibility, adaptability, and skills required to meet this growth were all done without government supervision. You can almost guarantee if the government had been supervising, we would be still using ISDN or dial-up, waiting for connection, and certainly not getting video on demand.

“When I took office, only high energy physicists
had ever heard of what is called the World Wide
Web… Now even my cat has its own page.”
Bill Clinton

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