To listen to my detailed analysis of the US House of Representatives’ just announced tax bill this past week,
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http://prn.fm/alternative-visions-trump-tax-cuts-2-0-facts-ideology-consequences-11-03-17/
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SHOW ANNOUNCEMENT
Dr. Rasmus dissects the just announced US House of Representatives’ version of the Trump Tax Cuts. The ‘tax cut shell game’ is explained. The main elements of the business tax cuts under the House proposal are described, including corporate rate, virtual ending of US multinational offshore taxation, retention of carried interest, inversions, and other business deduction tax loopholes. Personal income tax cuts targeting high end brackets, the AMT, Estate Tax, personal exemptions, carried interest and standard deductions provisions are reviewed. How middle class households will pay for the corporate and high income household cuts are explained, including deductions elimination, elimination of credits, and coming cuts in healthcare (medicare-medicaid), food stamps, education, etc. to pay for it. House claims of $1.5 trillion hit to the budget is really at least twice that amount. Discussion concludes with a critique of the ideological themes used by Trump/House (and ever since Reagan) to justify the cuts and sell them to the country: including the supply side economic nonsense that tax cuts create jobs, that they will be passed on to workers to raise wages, and will lead to greater economic growth and tax revenues, that US business pays the highest taxes in the world and can’t compete, and that the measures proposed amount to a ‘tax code reform’, not another tax cut for the rich and their businesses. (Next week: how Trump’s appointment of Powell means no change of the Fed’s policy of providing virtually free money to bankers and investors, and a continued subsidization of the banking system by the State).
Dr. Jack Rasmus @drjackrasmus
Jack Rasmus 
I WILL APPRECIATE COMMENTS:
ANY POLITICIAN PROMOTING “REPATRIATION” SHOULD GO DIRECTLY TO JAIL, i.e., DO NOT PASS GO, DO NOT COLLECT $200
We are being told, by many politicians and commentators who represent themselves as being knowledgeable in economics and politics, that 2 to 5 trillion dollars of corporate profits are offshore and the mantra is that Congress should provide an incentive for corporations to bring home (repatriate) those profits for the purpose of stimulating our economic growth.
The story is that corporations would have to pay a “penalty” if they were to repatriate those profits in the normal course of business. The “penalty” would be the income taxes they owe on those offshore profits.
Why should a corporation’s offshore tax liability be called a penalty? Simple answer is that it is not a penalty and should not be characterized as a “penalty”. It is federal income tax, which has been deferred. Why has it been deferred? Congress passed legislation permitting subsidiaries, which operate and make profits offshore, to defer the federal income taxes assessed on that income until they pay dividends to the domestic parent corporation. That ability to defer taxes provides an advantage to these subsidiaries versus domestic operations, which doesn’t make any sense.
This deferral “feature” enables offshore operations to defer payment of tax obligations, in perpetuity, which is an incentive for our multi-national corporations to produce offshore, to the detriment of domestic operations, which reduces our nation’s economics, including reducing our employment.
In 2004, Congress legislated a “repatriation” holiday whereby those profits repatriated were assessed only 5.25% rather than the 35% owed, thus Congress benefitted these corporations to the detriment to U.S. taxpayers and negatively affected our national debt. The effect was to reduce the taxes owed by 85%. In essence Congress appears to have participated in an embezzlement of the taxpayers for the benefit of the multi-national corporations.
The solution to this nonsense is to repeal the special dispensation provision given to multi-national corporations, which would benefit our economics, whereby, at the minimum:
1. Corporations would pay their taxes on offshore profits.
2. Eliminate this incentive to produce offshore.
3. Reduce our national debt.
4. Stops the conspiracy of embezzling from non-multi-national corporate taxpayers and the United States.
5. Increase employment.
Whereas this deferral “concept” is damaging to our nation, some of these same people are beginning to advocate for the complete elimination of federal taxes on offshore profits by promoting the concept of “territorial” taxation whereby taxes are only paid in the nation producing profits.
ANY politician advocating the continuance of this deferral or total elimination of taxes on offshore operations should be charged with conspiracy to defraud and embezzle the United States of America.
We, the People, have the right to believe that Congress should legislate laws that benefit our nation.
It appears that Congress has stimulated the morphing of our nation from “Of the People, by the People, and for the People” to “Of, by and for corporations”, beginning with ERISA in 1974 (esoteric).
In regards to “Main Street” and “Wall Street”, Congress must direct most, if not all, of its energies to “Main Street”. Wall Street is a derivative of Main Street. Since ERISA, the reverse has been done, i.e., the emphasis has been placed upon Wall Street.
mz, Sep. 25, 2017
mikiesmoky@aol.com
A very important post and as with so many important things our ruthlessly regressive tax system is invisible. I remember back in the day, in the 1950s, my mother attending league of women voters meetings and discussing progressive taxation versus regressive taxation. That issue has entirely disappeared from any political discourse.
http://www.taxpolicycenter.org/briefing-book/how-does-corporate-income-tax-work The following isexcerpted from above Tax Policy Center link: “Taxablecorporate profits are equal to a corporation’s receipts less allowabledeductions—including the cost of goods sold, wages and other employeecompensation expenses, interest, nonfederal taxes, depreciation, andadvertising. US resident multinationals pay tax on their worldwideprofits, but tax on the profits of their controlled foreignsubsidiaries is deferred until those profits are repatriated (thatis, paid back as dividends) to the US parent corporation. To avoid doubletaxation, US multinationals may claim a credit for taxes paid toforeign governments on income earned abroad, but only up to their UStax liability on that income. US-based corporations owned by foreignmultinational companies face the same US corporate tax rules on their profitsfrom US business activities as do US-owned corporations.” Threekey points: 1. Corporations are taxedon their worldwide profits. 2. Taxes on their foreignsubsidiaries are deferred. 3. Taxes paid to foreigngovernments may be taken as tax credit against their US liability. Discussionof each of the above : 1. Rational, logical, andappropriate 2. That provides an incentive tooperate foreign subsidiaries, since federal tax liabilities are “never”paid. Congress had a reason to legislate this, i.e., politicalcontributions. Why should Congress penalize domestic operations, sincethose operations employ our citizens? This nonsensical legislationis what has caused this “repatriation” larceny. That legislationmust be reversed. The insidious presentation of”repatriation” is being massively mischaracterized. HadCongress not passed legislation to defer taxes on offshore income, there wouldbe not need to invent the insidious concept of repatriation. Thoseadvocating repatriation suggest it will reduce the “penalty” forbringing offshore income to the U.S.. The so-called penalty is theoffshore federal income tax liability, which had been deferred, i.e., had itnot been deferred, the nonsensical term, repatriation” would notexist. 3. And the beat goeson. This offers substantiation that many, if not most, of ourproblems are rooted in Congress. This is another disadvantage todomestic operations, since a domestic corporation takes states’ income taxes asa tax “deduction”, whereas the taxes on foreign earnings are taken as a taxcredit, which is worth about 3 times as much as a deduction. Foreigntaxes are analogous to state taxes and should be taken as a deduction. Canit get worse? Oh, yeah! Now, Congress is contemplatingeliminating the “deferral” by instituting a “territorial” tax system, wherebyno taxes are assessed to foreign operations. Whyshould Congress penalize domestic operations, since those operations employ ourcitizens? That nonsensical legislation is the cause of this“repatriation” larceny. Why has Congress passedlegislation that damages domestic operations, which damages economics withinthe US, including the reduction of employment? Where are theinvestigative reporters, i.e., do we have an honest, objective, and functionalFourth Estate? Additional discussion: Are there rational,logical, and economic reasons that a business be assessed income taxes? A business has revenueand expenses; direct (i.e., inherent to its operations)and indirect (not on the books) expenses (such as the expensesnecessary to have educated and healthy employees, roads to enable, access, publicservices, etc.). Thus, it appears the answer is an unequivocalyes. The current 35% rate mayor may not be optimal. Contemplating the “costsversus benefits” concept, reducing that 35% rate doesn’t makesense. See: http://writerbeat.com/articles/16980-EQUITABLE-TAX-RECONFIGURATION-PLUS-would-create-gt-4-GDP-growth-and-4-6-million-jobs-per-year We are told thatreducing federal corporate taxes from 35% to 20% will make our domesticcorporate activities more competitive. That is a falseassertion. A company’s reduction of its direct costs toproduce will make it more competitive. Taxes could be reducedto 1% and if a domestic business cannot achieve pretax income, that 1% tax ismeaningless. President Trump hassaid, on many occasions, that China has “taken” millions of ourjobs. That is untrue. We have “given’ the jobsto China and elsewhere. The part of PresidentTrump’s plan to reduce federal corporation taxes to 20% is ludicrous and mustbe eliminated. Anyone who advocates a reduction of taxes owed by foreignsubsidiaries should be charged under RICO statutes as conspiring to embezzlefrom the U.S. in favor of these offshore obligations. Any questions andcomments will be, sincerely, appreciated. Thank you, mz mikiesmoky@aol.com November 9, 2017 818.988.2792
Michael Zitterman mikiesmoky@aol.com