Connect with us

Americas

Republican Tax Reform: A Windfall If Done Right – Updated

Saurabh Malkar

Published

on

Tax reform will be the litmus test for Republicans and President Trump and will be decisive in determining the latter’s re-election. With repealing and replacing Obamacare now relegated to the shed and progress on the border wall looking sluggish, tax cuts across the board might become the ace in the hole.

November 2 saw the unveiling of the new tax reform bill, entitled ‘Tax Cuts and jobs Act of 2017,’ in the Congress (House of Representatives). The New York Times did a great round up of the bill and what it entails, if it were to pass through the Congress and signed into law.

In a move to streamline the tax brackets in individual income tax, the new bill sets out four easy brackets, some of which involve merger of existing brackets. The bill also revises the income ranges for the brackets. Under the new bill, the top tax rate will be applied to households making $1 million and above as compared to $480,050 under the existing structure, thus relieving the burden on six digit earners. While low income earners ($0 – $19,000) will be taxed at 12%, up 2 percentage points from the existing 10%, a larger child tax credit for low income families might make up for the earnings lost in the mark-up.

Repealing the estate tax, which might double the amount of tax exempted inherited wealth to $11 million, seems like a huge windfall for the rich. Critics of the tax reform bill will and have certainly used this giveaway to label the bill as ‘tax cuts for the rich.’

But the real bonanza lies in the bill’s proposal to double the standard deduction – fraction of income immune from taxation. This is applicable to all but married couples with multiple children.

On the other hand, the bill proposes to eliminate local and state tax deductions – a move touted to negatively affect blue state residents more than red state residents, as the former have higher taxes. Could this be an attempt to pressure blue states into reducing their state and local taxes? The next few weeks might answer this question.

Pass-through businesses (sole proprietorships, partnerships, and S corporations) will be taxed at a new single tax rate – 25%. Although a fine streamlining measure, the flat tax rate seems high given the fact that most of pass-through businesses are small and medium enterprises that operate domestically and contribute a lion’s share to the economy. Taxing them lower than the proposed flat tax rate for corporations might make it reasonable and might win over at least one Senate Republican – Sen. Ron Johnson (R-Wis). Winning Senate Republicans over is critical for the passage of the bill, as we shall see later.

The corporate tax rate, under the bill, will be slashed to 20% from the current 35% – one of the highest in the world. The 35% tax rate doesn’t include taxes imposed by the state and local councils. The existing tax burden means more and more US corporations park their money abroad in ‘tax havens.’ The only way to lure that money back and earn taxes on it is to become competitive and incentivize firms to hold their money in the US. The change will have to be coupled with closure of all possible tax loopholes to make sure that the new policy delivers the proposed goodies.

The connection between tax relief to corporations and job creation and better wages is tenuous, yet widely leveraged. But it sounds sanguine and gets the masses to rally around such proposals – an indirect measure to influence the voting patterns of the elected representatives.

On the other hand, there might be some wisdom in cutting taxes for small businesses in a bid to create jobs, as these businesses hire locally and cannot replace human labor with automation due to the high costs of the latter. That’s one more reason to lower the tax rate for pass-through businesses.

The Senate has its own version of tax reform, which if passed, will need to be reconciled with the House version. The Senate version agrees with the House version on most of the key elements. Notable differences include further lowering taxes on overseas profits, an unreasonable tax to begin with, as the profits were made elsewhere and probably have been taxed locally.

The Senate has also added a repeal of Obamacare’s individual mandate that requires everyone to get health insurance or else pay a tax penalty. This is a huge boon for those who don’t want to buy health insurance or can’t afford the ever-increasing costs of O-care. This might also save the government some money, as there will be fewer people requiring health subsidies. The Congressional Budget Office (CBO) estimates that repealing the individual mandate will earn the federal government $338 billion in revenue, which it would otherwise spend on health subsidies.

On a conspiratorial note, the Senate’s repeal of the mandate might be a cloaked attempt to gradually chip away at Obamacare.

The tax bill has passed the House and is awaiting the Senate’s consensus over its own version, following which the complicated ‘reconciliation’ process will begin. Although the tax bill made it through the House without breaking a sweat, its Senate counterpart might have to struggle, given the fact that the Democrats are unanimously opposed to it and only three Republicans need to vote ‘nay’ for the Senate version to fizzle out. Given the current mood, the Senate version seems to be hanging by a thin thread.

(The story is developing and so will the commentary. Check back periodically for updates.)

(Update: December 18, 2017)

President Trump must come through on his promises on tax, economic growth, jobs, and employment and the tax reform bill seems like the ace card. If nothing else, this bill upon passage will grant him the much-needed brownie points.

The bill sailed safe through the House and recently, the Senate voted on it. Here’s a brief, yet comprehensive, outline of the bill that passed the Senate.

The individual income tax remains tiered and progressive, but the brackets have been adjusted such that the highest rate (37%) is applicable to those earning half a million or above. Whether middle and upper middle-income families save the extra income, spend it, or invest it depends on a host of factors, including interest rates, stock market, and real estate. Nonetheless, it’s a significant tax cut for the middle class and a re-definition of the middle class through re-sizing of tax brackets.

A similar trend is seen in the alternative minimum tax (AMT) – a provision to ensure that individuals contribute their fair share – depending on how you define fair share. The trigger point for AMT and the threshold for phase-out have been scaled up significantly to move this burden to higher income individuals/couples, while lessening the burden on middle-income earners.

The bill is also a giant tax cut for corporations of all sizes – a point that has been used to malign the proposal as a ‘tax cut for the wealthy.’ Corporate tax will be diminished to 21% beginning 2018 and corporate AMT will be repealed. Repatriation of earnings will attract a modest 15.5% tax, which seems like an effort to not only lure businesses to keep their domestic earnings in the US, but to also move their overseas revenues stateside. Whether this move will deliver the proposed outcome depends on not just the tax rate, but also cost of compliance and scrutiny and any other regulations that may or may not burden the corporations. As I have said before, whether this influx of money will translate into more jobs is a highly questionable premise.

Business owners will have another means to increase their tax-free income – the pass through deduction of 20% applicable until $315,000 for joint filers and half that for single filers.

Repeal of Obamacare individual mandate, i.e. the unconstitutional requirement and the resultant penalty, stays.

The Senate version has left in state and local tax deductions, but has capped their net value at $10,000. This is a departure from the House version that proposed a complete repeal. A complete repeal could adversely affect the lives of mostly blue state residents and might perhaps, put pressure on state and local governments to reduce spending/taxation. If the House provision in this regard is rolled back to make way for the Senate provision, the chances of blue states controlling the growth of their governments seem fewer.

Mortgage interest deductible has been reduced to loans of $750,000. Upon researching into this scheme, I am not entirely convinced about its prudence. The deductible is just a means by which the government fiddles with the real estate market, contributing to a bubble. A total repeal of this deductible will be in line with free market principles.

The threshold for medical expense deduction has been brought down to 7.5%, which is a relief for the elderly and those with chronic illnesses. Additional measures to moving towards a free-market for healthcare hold the promise of making healthcare affordable for all.

The tax brackets for estate tax have been re-sized to re-define middle income families and to also provide relief to upper middle class. In addition, a sunset date has been put on this provision leaving room for amend.

The bill is currently being looked over for resolution of differences, following which it will reach the President’s desk. Trump has signaled his support for the bill and it is certain it will receive his assent.

Overall, although Republicans in Congress and representatives of Trump administration have skirted being quizzed about the windfalls the bill brings for the wealthy, it is increasingly clear that that tax reform bill is a tax cut for almost all.

The coming few weeks will be critical in deciding the direction of the economy for the next few years.

(Update: December 20, 2017)

The tax-reform bill passed the Senate 51-48 in a party-line vote. Sen. John McCain of Arizona was absent during the vote on account of medical circumstances. The cost of the bill is estimated to be $1.5 trillion over the next 10 years, i.e. individuals and corporations, in total, will save about one and a half trillion dollars over the next decade.

An ex-dentist and a business graduate who is greatly influenced by American conservatism and western values. Having born and brought up in a non-western, third world country, he provides an ‘outside-in’ view on western values. As a budding writer and analyst, he is very much stoked about western culture and looks forward to expound and learn more. Mr. Malkar receives correspondence at saurabh.malkar[at]gmail.com. To read his 140-character commentary on Twitter, follow him at @saurabh_malkar

Continue Reading
Comments

Americas

Decoding Pompeo’s words at US senate

Mohammad Ghaderi

Published

on

The CIA Director Mike Pompeo, who is nominee for Secretary of State, has recently mentioned meaningful words in his hearing at the Senate on Iran and the nuclear deal. In his words, he acknowledged that Iran was not after nuclear weapons even before the nuclear deal, nor will be in the future.

On the other hand, he has announced that he is seeking to fix and correct the nuclear deal with Iran! This is while the US President Donald Trump is scheduled to announce his final decision on Iran’s nuclear deal by May 12. “I want to fix this deal,” Pompeo said. “That’s the objective. I think that’s in the best interest of [the United States].”

At his recent Senate hearing, Pompeo has emphasized that as CIA Director, he didn’t find any evidences that Iran has violated the nuclear deal. At the same time, he believes that Tehran can’t expand its program shortly after the US withdrawal from the nuclear accord. He emphasized that his goal is to correct the nuclear deal with Iran. Pompeo said:

“If there’s no chance that we can fix it, I will recommend to the president (Trump) that we do our level best to work with our allies to achieve a better outcome and a better deal,” he said. “Even after May 12, there’s still much diplomatic work to be done.”

A simple decoding of Pompeo’s remarks suggests that, despite the opposition to the nuclear accord, he is trying to deal differently with this issue as the future US Secretary of State. Some analysts also believe that Pompeo has adopted such an approach to face the US Senators’ relative opposition to the White House’s withdrawal from the JCPOA (Joint Comprehensive Plan of Action).

In any case, according to Pompeo, Donald Trump may not make a final decision on the nuclear deal with Iran on May 12, and he will continue to consult with his European allies on what he calls “fixing the flaws of the JCPOA”.

Pompeo’s remarks indicate that the White House hasn’t come to a determined and clear decision on how to deal with the JCPOA yet. On the other hand, numerous consultations by representatives of the four countries, the United States, France, Britain and Germany, continues in silence.

Western sources have argued that these countries are consulting on the three controversial issue, namely “the Sunset clauses”, “limiting Iran’s missile power” and “extensive inspections of Iran’s military sites”. These sources claimed that the only remaining disagreement between the four countries is over deletion of the so-called Sunset clauses from the nuclear deal, and thus putting permanent limitations on Iran’s nuclear program.

Pompeo is currently the CIA director, and ironically, he was one of the foremost critics of the Iran nuclear deal when he served as a House Republican from Kansas. Trump fired Secretary of State “Rex Tillerson” over the raised disagreements, and picked Pompeo as his successor in March, just two months before the deadline on May 12 to decide whether to bring back sanctions that former President of the United States waived when the JCPOA was first implemented.

Before this, many Western politicians and analysts saw the nomination of Mike Pompeo for secretary of state by Trump as a sign of Washington’s withdrawal from the nuclear deal. Beyond that, John Bolton’s appointment as US national security advisor also sent a clear message to the international system that Trump is about to pull out of the nuclear deal with Iran.

John Bolton is now silent about the fate of the JCPOA! The silence seems very meaningful at the current time. It’s obvious that John Bolton is one of the main opponents of the nuclear deal with Iran, and he doesn’t even believe in negotiating with the European Troika on maintaining the JCPOA.

The important question, however, is whether Bolton’s silence reflects the continuing paradoxical and vague approach of the US towards the JCPOA? Or did Trump ask him to be silent in this regard and wait for the final results of their talks with Europe?

American senators still don’t have a clear picture of Trump’s final decision about the JCPOA. Meanwhile, some Republican senators like “Rand Paul” and “Jeff Flake” are worried about the costs and consequences of Trump’s decision to refuse joining other members of P5+1.

Most US senators tried not to mention the nuclear deal with Iran in their speeches during recent weeks. This is while some senators such as “Tom Cotton” and “Ted Cruz” strongly encourage Donald Trump’s government to pull out of the nuclear deal with Iran.

First published at our partner Mehr News Agency

Continue Reading

Americas

How Wikipedia Lies

Eric Zuesse

Published

on

The Flight 93 National Memorial near Shanksville, Pennsylvania

Did you know that Vice President Dick Cheney admitted that on 11 September 2001 he, as President George W. Bush’s brief stand-in during the 9/11 attacks that hit the World Trade Center and the Pentagon, issued an order (and it was carried out) to shoot down United Airlines Flight 93 while it was in the air near Pittsburgh? If what he said at the time was true, then the standard ‘historical’ account of the plane’s having been brought down as a result of action by the passengers, would be concocted, not history at all.

Here is the video-clip of V.P. Cheney on 9/11, making this claim and explaining why he gave that order: 

The Wikipedia article on Flight 93 provides the standard account, and fails even so much as just to mention the Vice President’a assertion and explanation that he provided on national TV at the time of the 9/11 events.

So: I edited the Wikipedia article by adding a sentence at the end of its opening paragraph, and by following that sentence with a brief second paragraph, and here is that entire two-sentence addition:

Vice President Dick Cheney alleged that he gave the order to shoot down Flight 93, and explained why when asked about it by Chris Wallace of Fox News as shown in this film-clip

Consequently, the account given below of what brought the plane down — an account inconsistent with what Cheney said — could be entirely false. 

On the web browser that I was using, the addition showed as having been successfully made in the Wikipedia article. However, to be sure, I opened the URL in a different browser, and this time my addition was absent. I then went back to the “Edit” page” and this time to the “View history” page, and clicked there on “(talk)” and found this message, which I saw virtually immediately after I had thought that I had inserted the new information:

Hello, I’m Shellwood. I wanted to let you know that I reverted one of your recent contributions —specifically this edit to United Airlines Flight 93— because it did not appear constructive. 

No other explanation for blocking my addition was provided. “Shellwood” was there saying that mentioning, and linking to the video of Cheney saying, that allegation, which Cheney made on 9/11 about how Flight 93 came down, is not “constructive” to Wikipedia-readers who want information about Flight 93.

Previously, even the BBC published the fact that Wikipedia is edited by the CIA.

Anyone who reads the present article is hereby welcomed to try making the same addition to that Wikipedia article, and I hope that one of the readers here will be able to get it accepted by the editors of that site, so that Wikipedia can be made at least moderately trustworthy, on at least that one article. Perhaps if enough people try, then Wikipedia will come to recognize that Wikipedia’s modus operandum isn’t merely a very successful system of propaganda, but that it’s also something of a PR problem for Wikipedia, which they’ll need to do something about, if they’re to be able to survive (or at least retain their credibility) at all. Blocking inclusion in an article, of a fact that disproves part of the ‘history’ (and here the most important part) which is told in that article, is unacceptable in anyone’s eyes.

As of today, April 20th, the Wikipedia article on Flight 93 does make one, and only one, mention of Cheney:

Vice President Dick Cheney, in the Presidential Emergency Operations Center deep under the White House, upon learning of the premature crash, is reported to have said, “I think an act of heroism just took place on that plane.”[2]

The link there, [2], goes to a CNN article, likewise published on 11 September 2001, which likewise presents Cheney as saying that he ordered the shoot-down of Flight 93:

After the planes struck the twin towers, a third took a chunk out of the Pentagon. Cheney then heard a report that a plane over Pennsylvania was heading for Washington. A military assistant asked Cheney twice for authority to shoot it down.

“The vice president said yes again,” remembered Josh Bolton, deputy White House chief of staff. “And the aide then asked a third time. He said, ‘Just confirming, sir, authority to engage?’ And the vice president — his voice got a little annoyed then — said, ‘I said yes.'” 

The phrase that Wikipedia is quoting from Cheney, “I think an act of heroism just took place on that plane,” appears later in that CNN article, out of context, when one of Cheney’s aides attributes the statement to Cheney, but, since CNN provided no context for it, no reader can intelligently interpret what it had been referring to, if, in fact, the aide did say that Cheney did say it.

Wikipedia grabbed that out-of-context, possibly apocryphal, Cheney-statement, and constructed their ‘history’ of the plane’s crash, upon it, despite the fact that Cheney, on 9/11, clearly stated that he had ordered Flight 93 to be shot down, and that the order was executed — in other words: despite the fact that Wikipedia’s account of what brought that plane down is incontrovertibly false, even on the basis of the most reliable evidence that Wikipedia itself links to on that matter. Such a ‘history’ is fiction.

So: any reader at the Wikipedia article who clicks onto its sources, can easily know that though the Wikipedia article presents a ‘history’ in which actions by passengers onboard Flight 93 caused the plane to crash there, that ‘history’ is fake, not at all real (though some allegations in that Wikipedia article might happen to be true).

This means that only readers who click through to sources can even possibly come anywhere near to knowing anything that’s at all reliable about the history of our time. And, of course, the longer that any event recedes into history, the more immovably fixed the lies become as being ‘history’. We live actually in a world of lies. If modern ‘history’ is fake, then ancient ‘history’ is even more so. What about the Bible? What about even recently written ‘history’ books?

If Wikipedia is the best that ‘the market’ can come up with for ‘a free press’ in a ‘democracy’, then democracy isn’t at all possible. Something vastly better than this is definitely needed. What’s displayed here isn’t democracy at all: it’s merely ‘democracy’. This means that all of the military invasions by ‘democratic’ countries (such as America), against other countries, are the actions by dictatorships, not actions against dictatorships (as is always claimed).

So, it’s actually rather easy to document that 1984 — the reality, and not merely the novel — has, indeed, arrived, in our time.

However, at least in our time, we possess — for the very first time in all of history — the ability to access, merely a click away, an allegation’s actual source, at least in articles such as the present one (since all sources here are linked). The people living in ancient times who were not themselves aristocrats (the people making the key governmental decisions) were unalterably 100% vulnerable to being deceived by aristocrats’ and clergies’ lies, deceived into doing whatever those decision-makers wanted to manipulate them into doing — such as “fighting for God and country!” Unfortunately, the percentage of today’s people who care enough to be skeptical of whatever other people are trying to sell, and to dig deeper than the mere assertions, even just to click onto a link, is too tiny for democracy to be able to function. Unless they become the majority, “democracy” will remain merely a word, not yet even near to being the reality, anywhere.

That, for example, explains why, despite common realities such as this, “74% [of Americans] view Israel favorably, vs. 21% for Palestinian Authority”. In order for the national aristocracy to control its mass of voters, it must first deceive its mass of voters; and, in America, they’re deceived, and have been so, for decades, at least.

Continue Reading

Americas

Poll Shows Americans Support the Invasion of Syria – What they Misunderstand About that War

Eric Zuesse

Published

on

The first even marginally trustworthy poll of American “registered voters” regarding the April 14th U.S.-and-allied missiles-invasion of Syria, shows an overwhelming 66% supporting the invasion (36% “Strongly” and 30% “Somewhat), and only 23% opposing (8% “Strongly” and 11% “Somewhat”).

When the 1,995 U.S. registered voters were asked further, in this Morning Consult / Politico poll, “How confident are you that the airstrikes in Syria will prevent the Syrian government from using chemical or biological weapons again?” only 30% are “confident” (8% “Very” and 22% “Somewhat”) and 57% are not (21% not “at all” and 35% “not too”). Obviously, all of the 30% who are “confident” on that are also believing that the Syrian government has been “using chemical or biological weapons” and the 57% who aren’t “confident” are expecting the Syrian government to continue using such weapons; but the only other option that the pollster offered was “Don’t know / No opinion” and perhaps any respondents who disbelieved the U.S. government’s allegations that the Syrian government has been using such weapons would have to be among the 12% who said “Don’t know / No opinion” (or else such respondents would have quit answering at that point, which was 3 questions into a 7-question poll: the stupid polling organization excluded even the possibility that a respondent believed the Syrian government’s denials that it had used such weapons — that’s how little consideration was offered regarding even the merest possibility that this invasion had been punishment of a non-guilty nation by guilty invaders: zero).

This invasion, like the one a year earlier, occurred when the U.S. and its allies said that Syria was guilty but didn’t provide any evidence of that, and when Syria and its allies said that those charges were lies and that the ‘rebels’ whom the U.S. and its allies supported had actually set up the incident in order for the U.S. and its allies to invade and overthrow the government. These invasions were lawless — based upon no legal process other than brute accusations, like in any common lynching or other mob-‘justice’.

The fact that this poll did not show close to 100% contempt by the American people regarding what the U.S. government and its two allies, UK and France, had just done, indicates not only that the American people are astoundingly ignorant that the U.S. and its allies are international outlaws and warmongers (which makes sense for a nation that invaded and destroyed Iraq 2003, Libya 2011 and has been trying to do it since 2011 in Syria), but that they are also astoundingly misinformed as to which side in this war is guilty, and which side is not. (Hint: It’s certainly not Assad, who is simply defending Syrian sovereignty over Syrian territory.) According to the standards that were set in place by the Nuremberg Tribunals following World War II, in which invasions for any other purpose than national self-defense are war-crimes, it’s not only the lie-based invasion and destruction of Iraq 2003, and the 2011 invasion and destruction of Libya, that constitute international war-crimes — there’s simply no power that’s enforcing international law: not policing, not prosecuting, not judging, and not legislating, at all, any such thing. The international outlaw regimes, U.S. and its allies, are simply international gangsters, and the American public overwhelmingly are bored about the whole thing, don’t really care whether they are the Nazis of today (and the U.S. government is even proud to be it, not only under Trump, but under Obama before him — all accepted, not resisted in any way, by the American public).

Poll-findings like this implicate the American public, and not only the American government, in such mega-crimes. Even the clear-cut national experience of having been lied into Iraq 2003 hasn’t taught the American people that we live in a gangster-regime. And now this regime has destroyed even the last vestiges of the authority that the U.N. once had.

Ironically, the core voter-base for the war-criminal U.S. President Trump seem to have strongly opposed the latest invasion. But, to judge from this latest actual poll in the matter, the American public strongly supports that invasion. Apparently, Americans can’t learn from even the most blatant experiences, such as having been lied into destroying Iraq in 2003 — a country that, like Syria, and like Libya, had never attacked, nor even threatened to attack, the U.S.

Continue Reading

Latest

Middle East18 hours ago

A Mohammedan Game of Thrones: Iran, Saudi Arabia, and the Fight for Regional Hegemony

Authors: James J. Rooney, Jr. & Dr. Matthew Crosston* The people in the United States didn’t think well of those...

Middle East19 hours ago

Might Trump Ask Israel to Fund America’s Invasion-Occupation of Syria?

On 16 April 2018, the internationally respected analyst of Middle-Eastern affairs, Abdel Bari Atwan, headlined about Trump’s increasingly overt plan...

Economy21 hours ago

Financial Inclusion on the Rise, But Gaps Remain

Financial inclusion is on the rise globally, accelerated by mobile phones and the internet, but gains have been uneven across...

Newsdesk22 hours ago

ADB Operations Reach $32.2 Billion in 2017- ADB Annual Report

The Asian Development Bank (ADB) Annual Report 2017, released today, provides a clear, comprehensive, and detailed record of ADB’s operations,...

Middle East24 hours ago

Trump lacks proper strategy towards Middle East, Syria

About five years ago, when former US President Barack Obama spoke of a military strike in Syria, Zbigniew Brzezinski, former...

Tech1 day ago

The Ethical and Legal Issues of Artificial Intelligence

Ethics and law are inextricably linked in modern society, and many legal decisions arise from the interpretation of various ethical...

Middle East1 day ago

US: No Restitution to Syria

On April 22nd, an anonymous U.S. “Senior Administration Official” told a press conference in Toronto, that the only possible circumstance...

Newsletter

Trending

Copyright © 2018 Modern Diplomacy