Since 47 percent of the benefits of the proposed tax bill go to the richest one percent, and the very rich, like Donald Trump, will get an enormous bonanza from ending the estate tax and other provisions, many people thought the goal of Republicans with this tax bill was to give more money to the rich people who finance their campaigns. Thankfully, the New York Times is there to correct this mistaken impression.
The NYT told readers that the Republican tax proposals are an:
“…effort to clean up the tax code, close loopholes and secure bigger tax cuts for all.”
Fortunately, we have the NYT to explain the Republicans’ motives. Certainly, based on the evidence in the public domain, almost everyone would have thought they were just trying to give money to the rich.
Since 47 percent of the benefits of the proposed tax bill go to the richest one percent, and the very rich, like Donald Trump, will get an enormous bonanza from ending the estate tax and other provisions, many people thought the goal of Republicans with this tax bill was to give more money to the rich people who finance their campaigns. Thankfully, the New York Times is there to correct this mistaken impression.
The NYT told readers that the Republican tax proposals are an:
“…effort to clean up the tax code, close loopholes and secure bigger tax cuts for all.”
Fortunately, we have the NYT to explain the Republicans’ motives. Certainly, based on the evidence in the public domain, almost everyone would have thought they were just trying to give money to the rich.
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That is the question millions are asking after she made this assertion in a segment on Morning Edition today. Economists would usually look to evidence that budget deficits are creating too much demand in the economy, such as a rising inflation rate and/or high interest rates. Both interest rates and inflation are at historically low levels, with inflation consistently running below the Federal Reserve Board’s 2.0 percent target. Based on these facts, it is not clear what could be the basis of Liasson’s assertion.
In some cases, people point to the interest on the debt as a burden placed on our children. This is misleading since some of our children (or at least Bill Gates’ children) will be receiving this interest. However, even this measure does not suggest a major problem. Currently, interest payments on the debt, after netting out money refunded by the Federal Reserve Board (the government pays interest on the bonds held by the Fed, which is then refunded to the Treasury) are less than 0.8 percent of GDP. They were more than 3.0 percent of GDP in the early 1990s.
Also, if anyone is concerned about the burden imposed by these future payments, they should also be concerned about the much larger commitments the government makes when issuing patent and copyright monopolies in order to finance innovation and creative work. In the case of prescription drugs alone, the added expense of patents and related protections comes to close to $370 billion a year, or almost 2.0 percent of GDP.
Adding in the costs from these monopolies in medical equipment, software, and other sectors would almost certainly double this amount. Anyone seriously concerned about burdens on future generations would have to be noting the burdens created by patent and copyright monopolies, which swamp any plausible interest burden of the debt. The fact this is never mentioned suggests that burdens on our kids are not a major concern for people complaining about budget deficits.
That is the question millions are asking after she made this assertion in a segment on Morning Edition today. Economists would usually look to evidence that budget deficits are creating too much demand in the economy, such as a rising inflation rate and/or high interest rates. Both interest rates and inflation are at historically low levels, with inflation consistently running below the Federal Reserve Board’s 2.0 percent target. Based on these facts, it is not clear what could be the basis of Liasson’s assertion.
In some cases, people point to the interest on the debt as a burden placed on our children. This is misleading since some of our children (or at least Bill Gates’ children) will be receiving this interest. However, even this measure does not suggest a major problem. Currently, interest payments on the debt, after netting out money refunded by the Federal Reserve Board (the government pays interest on the bonds held by the Fed, which is then refunded to the Treasury) are less than 0.8 percent of GDP. They were more than 3.0 percent of GDP in the early 1990s.
Also, if anyone is concerned about the burden imposed by these future payments, they should also be concerned about the much larger commitments the government makes when issuing patent and copyright monopolies in order to finance innovation and creative work. In the case of prescription drugs alone, the added expense of patents and related protections comes to close to $370 billion a year, or almost 2.0 percent of GDP.
Adding in the costs from these monopolies in medical equipment, software, and other sectors would almost certainly double this amount. Anyone seriously concerned about burdens on future generations would have to be noting the burdens created by patent and copyright monopolies, which swamp any plausible interest burden of the debt. The fact this is never mentioned suggests that burdens on our kids are not a major concern for people complaining about budget deficits.
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Both the NYT and Washington Post articles on the battle over the succession and the Consumer Financial Protection Bureau (CFPB) neglected to mention the legislative history around the creation of the CFPB. There were competing sections on the order of succession in the event of the director’s departure in the House and Senate versions.
One specified that the normal procedure on vacancies, in which the president gets to appoint an acting director, would be followed. The other had language indicating that the deputy director would become acting director until a new director was approved by Congress. This was the language that was used in the final bill. That supports the interpretation of the Democrats that the deputy director should fill in as acting director until Trump nominates a person to be director and that person is approved by Congress.
Both the NYT and Washington Post articles on the battle over the succession and the Consumer Financial Protection Bureau (CFPB) neglected to mention the legislative history around the creation of the CFPB. There were competing sections on the order of succession in the event of the director’s departure in the House and Senate versions.
One specified that the normal procedure on vacancies, in which the president gets to appoint an acting director, would be followed. The other had language indicating that the deputy director would become acting director until a new director was approved by Congress. This was the language that was used in the final bill. That supports the interpretation of the Democrats that the deputy director should fill in as acting director until Trump nominates a person to be director and that person is approved by Congress.
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Okay, that’s not quite what the NYT said. Instead, an article on the impact of ending the tax deduction for state and local income taxes told readers:
“Eliminating the deduction has long been a goal of many Republican lawmakers, who view the tax break as a subsidy that poorer red states provide to richer blue ones that spend heavily on government services.”
Contrary to what the NYT tells us, their reporters really don’t know how Republican lawmakers “view” the tax break. However, for some reason they couldn’t just tell us what they say, they had to pretend to know what they think.
How about if reporters just stuck to telling us what politicians say and do and not pretend to read their minds? Then, we would all have something to be thankful for next Thanksgiving.
Okay, that’s not quite what the NYT said. Instead, an article on the impact of ending the tax deduction for state and local income taxes told readers:
“Eliminating the deduction has long been a goal of many Republican lawmakers, who view the tax break as a subsidy that poorer red states provide to richer blue ones that spend heavily on government services.”
Contrary to what the NYT tells us, their reporters really don’t know how Republican lawmakers “view” the tax break. However, for some reason they couldn’t just tell us what they say, they had to pretend to know what they think.
How about if reporters just stuck to telling us what politicians say and do and not pretend to read their minds? Then, we would all have something to be thankful for next Thanksgiving.
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It’s amazing how so many reporters feel the need to tell us what politicians really think. Sorry, but I don’t believe they know.
The example this time is a piece reporting on how 2018 may be a wave election with defeats for the Republicans comparable to what the Democrats experienced in 2010. It concludes by discussing the effort to shove through a tax bill before the end of the year:
“Republicans do not think the tax bill will be a political albatross once voters gain a fuller appreciation of its advantages. Of course, that is exactly what Democrats thought about the health care bill at this point in 2009.”
It’s entirely plausible that Republicans don’t say that they think the bill is a political albatross. After all, what would that look like? Would members of the House and Senate be telling reporters:
“…we know the public hates this bill because it gives so much money to rich people, but these are our campaign contributors and we have to come through for them. Furthermore, even if we lose our election, they will pay us millions of dollars a year to work for them as lobbyists.”
If something like this were, in fact, the case it is extremely unlikely that Republican politicians would be saying it to NYT reporters. It is far more likely that they would be uttering nonsense about how the tax bill is really good for the country and that people will come to realize this after it is approved.
Competent reporters would just tell readers what the politicians say. They would not try to tell us what the politicians actually believe, since they don’t know.
It’s amazing how so many reporters feel the need to tell us what politicians really think. Sorry, but I don’t believe they know.
The example this time is a piece reporting on how 2018 may be a wave election with defeats for the Republicans comparable to what the Democrats experienced in 2010. It concludes by discussing the effort to shove through a tax bill before the end of the year:
“Republicans do not think the tax bill will be a political albatross once voters gain a fuller appreciation of its advantages. Of course, that is exactly what Democrats thought about the health care bill at this point in 2009.”
It’s entirely plausible that Republicans don’t say that they think the bill is a political albatross. After all, what would that look like? Would members of the House and Senate be telling reporters:
“…we know the public hates this bill because it gives so much money to rich people, but these are our campaign contributors and we have to come through for them. Furthermore, even if we lose our election, they will pay us millions of dollars a year to work for them as lobbyists.”
If something like this were, in fact, the case it is extremely unlikely that Republican politicians would be saying it to NYT reporters. It is far more likely that they would be uttering nonsense about how the tax bill is really good for the country and that people will come to realize this after it is approved.
Competent reporters would just tell readers what the politicians say. They would not try to tell us what the politicians actually believe, since they don’t know.
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The NYT had a good piece discussing the potential impact of capping the mortgage interest deduction and property taxes on the housing market; however, the piece missed an important way in which the Republican tax bills would reduce the benefits of the mortgage interest deduction. The piece notes that doubling the standard deduction will reduce the number of people who itemize and therefore benefit from the mortgage interest deduction.
But both bills also end the deduction for state and local income taxes. Without this deduction, most homeowners will have few other deductions apart from their mortgage interest and whatever is allowed for property taxes. These deductions will be less for almost everyone than their standard deduction ($24,000 for a couple). This means that they would just take the standard deduction and the mortgage interest deduction would be of no value to them. (The Tax Policy Center projects that just over 5 percent of tax filers would still itemize their deductions if these changes in the tax code are put into effect.)
In fact, even if they still chose to itemize the mortgage interest deduction will be far less valuable under this new code. Suppose that they had $10,000 in property taxes that are deductible and pay $15,000 a year in mortgage interest and have no other deductions. Since the combined total of $25,000 exceeds the $24,000 standard deduction, it would pay for this couple to itemize; however, the benefit is much smaller.
Their benefit from itemizing is just the difference between their itemized deductions and the standard deduction. In this case, this difference reduces their taxable income by $1,000, saving them $250 on their taxes if they are in the 25 percent bracket. If we still had a $12,000 standard deduction, their itemized deductions would be reducing their taxable income by $13,000, saving them $3,250 on their taxes.
In short, by raising the standard deduction and reducing the number of itemized deductions that are available, the Republican tax proposals will be hugely reducing the value of the mortgage interest deduction even if they follow the Senate bill and don’t reduce the cap on deductible interest.
Addendum
Thanks to Robert Salzberg for calling my attention to the Tax Policy Center projection.
The NYT had a good piece discussing the potential impact of capping the mortgage interest deduction and property taxes on the housing market; however, the piece missed an important way in which the Republican tax bills would reduce the benefits of the mortgage interest deduction. The piece notes that doubling the standard deduction will reduce the number of people who itemize and therefore benefit from the mortgage interest deduction.
But both bills also end the deduction for state and local income taxes. Without this deduction, most homeowners will have few other deductions apart from their mortgage interest and whatever is allowed for property taxes. These deductions will be less for almost everyone than their standard deduction ($24,000 for a couple). This means that they would just take the standard deduction and the mortgage interest deduction would be of no value to them. (The Tax Policy Center projects that just over 5 percent of tax filers would still itemize their deductions if these changes in the tax code are put into effect.)
In fact, even if they still chose to itemize the mortgage interest deduction will be far less valuable under this new code. Suppose that they had $10,000 in property taxes that are deductible and pay $15,000 a year in mortgage interest and have no other deductions. Since the combined total of $25,000 exceeds the $24,000 standard deduction, it would pay for this couple to itemize; however, the benefit is much smaller.
Their benefit from itemizing is just the difference between their itemized deductions and the standard deduction. In this case, this difference reduces their taxable income by $1,000, saving them $250 on their taxes if they are in the 25 percent bracket. If we still had a $12,000 standard deduction, their itemized deductions would be reducing their taxable income by $13,000, saving them $3,250 on their taxes.
In short, by raising the standard deduction and reducing the number of itemized deductions that are available, the Republican tax proposals will be hugely reducing the value of the mortgage interest deduction even if they follow the Senate bill and don’t reduce the cap on deductible interest.
Addendum
Thanks to Robert Salzberg for calling my attention to the Tax Policy Center projection.
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Yes, David Brooks actually said this. The context is his column noting the complaints against the big tech companies. After going through the list Brooks tells readers:
“The political assault on this front [against the monopoly power of the big tech companies] is gaining steam. The left is attacking tech companies because they are mammoth corporations; the right is attacking them because they are culturally progressive. Tech will have few defenders on the national scene.”
It is hard to believe that anyone with even a passing knowledge of U.S. politics could say something so ridiculous. Tech has hundreds of billions of dollars to throw at politicians, think tanks and other academics, and to buy media outlets in addition to the Internet sites it already controls.
Everywhere outside of David Brooks’ World, people respond to money. The one thing we can be absolutely certain of is that there will no shortage of prominent individuals happy to defend tech on the national scene. My guess is that the tech giants won’t see the need to follow Brooks’ agenda as the only road to salvation. They are more likely to just buy up another think tank or two.
Yes, David Brooks actually said this. The context is his column noting the complaints against the big tech companies. After going through the list Brooks tells readers:
“The political assault on this front [against the monopoly power of the big tech companies] is gaining steam. The left is attacking tech companies because they are mammoth corporations; the right is attacking them because they are culturally progressive. Tech will have few defenders on the national scene.”
It is hard to believe that anyone with even a passing knowledge of U.S. politics could say something so ridiculous. Tech has hundreds of billions of dollars to throw at politicians, think tanks and other academics, and to buy media outlets in addition to the Internet sites it already controls.
Everywhere outside of David Brooks’ World, people respond to money. The one thing we can be absolutely certain of is that there will no shortage of prominent individuals happy to defend tech on the national scene. My guess is that the tech giants won’t see the need to follow Brooks’ agenda as the only road to salvation. They are more likely to just buy up another think tank or two.
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