“The State and Local Tax (SALT) deduction cap, part of the 2017 Tax Cuts and Jobs Act (TCJA), placed a $10,000 limit on the amount of state and local taxes that can be deducted from federal taxable income. This move predominantly affected high earners in high-tax states like New York, California, and many others that are Democratic strongholds.
That’s a tax hike on the rich. This shouldn’t bother Democrats, who are usually happy to demonstrate their egalitarian chops by clamoring for that very thing. Yet this time, by demanding repeal of the SALT cap, they are on the front lines of a battle to restore tax breaks for the rich. As it turns out, when affluent Californians and Northeasterners felt the pinch, Democrats were ready to cha-cha for tax relief.”
“Electric power customers typically pay more if they use more. Under a new law, customers of California’s three largest private utilities will be charged a fixed fee based on their incomes, not just how much power they use. The chief motivation behind this scheme is to provide some relief to low-income customers who are being hammered by escalating electricity rates as the Golden State transitions from fossil fuels to wind and solar power.”
“the value of the investments in energy efficiency already made by millions of Californians will be undercut. For example, consider a high income customer who has put in better insulation, bought energy-sparing appliances, or even installed a solar energy system and thereby cut his monthly electric bill to $50 per month. His cost for electricity is now $600 annually. The 42 percent cut in his rates lowers that to $348 per year, but the total fixed fee is $1,536. That results in more than tripling his bill to $1,884 annually.*”
“If your net wealth is approximately $135,000 or more and you live in Norway, you’ve long been subject to a 0.85 percent wealth tax. That rate has, as of this year, been hiked to 1.1 percent by the center-left government, and even more gobs of cash will be taken from rich people worth roughly $1.8 million, who will be taxed at a rate of 1.3 percent.
Unfortunately for the Norwegian lefties—and their American counterparts who argue for similar taxes to be instituted here—this wealth tax hasn’t really generated the revenue they’d expected. It has instead resulted in rich people boarding their superyachts and leaving those fjords behind forevermore.
Per the Norwegian newspaper Dagens Næringsliv, 30 of the country’s multimillionaires and billionaires left the country last year in advance of the wealth tax hike. “This was more than the total number of super-rich people who left the country during the previous 13 years, it added,” noted The Guardian. “Even more super-rich individuals are expected to leave this year because of the increase in wealth tax in November, costing the government tens of millions in lost tax receipts.””
“To qualify for a credit, an E.V.’s “final assembly” must occur in North America. If that sounds complicated for a consumer to figure out, the Department of Energy recommends searching individual cars by Vehicle Identification Number (VIN) “to identify a vehicle’s build plant and country of manufacture.” Past that, at least 40 percent of the battery’s minerals and 50 percent of its components must be sourced either from the U.S. or a country with which it has a “free trade agreement.” Those numbers will go up each year until they reach 80 percent and 100 percent, respectively. Meeting only one percentage requirement and not the other qualifies for half of the credit ($3,750).
The rules were written to exclude China. But China owns or controls the overwhelming majority of materials used in E.V. batteries. Not to mention, the European Union also lacks a free trade agreement with the United States. According to the Energy Department, only 14 vehicle models qualify for the full credit: five from Chevrolet, four from Tesla, two from Ford, and one each from Cadillac, Chrysler, and Lincoln. Some others qualify for half-credits due to sourcing requirements—for example, Ford manufactures the Mustang Mach-E’s battery in Poland—but American companies noticeably account for every single qualifying vehicle.
That’s a great deal for those four companies—Ford, General Motors, Stellantis, and Tesla—but a bad deal for everybody else. Numerous foreign automakers sell E.V.s in the U.S. but are disqualified from tax credits unless they build the vehicles domestically using parts sourced in a very specific way. Meanwhile, two versions of the Chevrolet Bolt—which uses outdated battery technology and was briefly taken off the market in 2021 when its batteries were catching on fire—qualify for the full tax credit under the new rules. So even though a consumer might find the similarly priced Nissan Leaf to be more reliable, a $7,500 tax credit might sway them away from it. That would be a boon to Chevrolet’s bottom line as it still gets to charge full price for the car, and the U.S. government will reimburse the purchaser at tax time.”
“In a 2019 paper, economists Jeffrey Liebman and Daniel Ramsey ran through the changes the US would have to make to adopt this system of exact-withholding. Under this approach, used by the UK, Japan, and others, “the majority of taxpayers do not need to file tax returns. Instead, these countries use withholding systems in which the correct amount of tax is withheld during the year.”
That could be us — so why isn’t it? They offer four big aspects of the US tax code that prevent it.
The first is the complex system of benefits for families with children. Creating a simple monthly child benefit would solve that.
The second is that capital income like interest and stock capital gains aren’t “taxed at the source”: your broker doesn’t automatically tax, say, 30 percent of the proceeds from selling stock and send it to the IRS. Creating a flat tax on capital imposed at the source would eliminate filing requirements for most people with this kind of income.
Third is the numerous deductions in the tax code. Most of these, like the mortgage interest or charitable deductions, don’t come up much in VITA because it’s almost always more advantageous for clients to claim a standard deduction — but things like the education credits do come up, and removing them would simplify our clients’ lives.
Fourth and most important is eliminating joint returns and moving to individual-based taxation. Joint filing makes precise withholding much more difficult because employers would need to know the earnings of each of their employees’ spouses in order to withhold correctly. If everyone’s taxed as an individual, then eliminating joint filing wouldn’t mean couples would have to file two returns: They’d have to file zero because precise withholding would be possible.”
“Taxpayers fronted nearly $500 million for a new professional football stadium in Minneapolis that opened just seven years ago. Now, they could be on the hook for as much as $280 million more in ongoing maintenance costs over the next decade.”
“Another reason why these public projects so rarely “pay for themselves” is that cities often grant huge property tax breaks to the stadiums. In New York City, for example, a recent report from the city’s Independent Budget Office found that the four major stadiums in the Big Apple—Barclays Center, Citi Field, Madison Square Garden, and Yankee Stadium—are exempt from roughly $377 million in annual property taxes.
While Madison Square Garden’s situation is weird and unique, the other three stadiums are exempt because they “were all built on publicly owned land that is exempt from property taxes,” according to the IBO report. But there’s nothing actually “public” about a stadium—they’re not parks that anyone can visit whenever they’d like or use for a variety of purposes—and cities should stop engaging in the fiction that they are.”
“Taxpayers are forced to cover stadium construction costs with the promise of economic growth that doesn’t materialize, then sometimes get hit up for ongoing maintenance costs that can’t be covered by the economic growth that didn’t materialize, and all this happens while the supposedly public stadiums are not generating property tax revenue to help offset their public costs. It’s a bad deal for just about everyone—except for the stadium design firms that get to decide how much extra cash taxpayers will have to pony up to maintain a facility that’s still basically brand new.”
“In one scenario outlined by the CBO, Congress would have to cut 86 percent of all discretionary spending if it wanted to balance the budget by 2033 without touching the military, veterans programs, or entitlements like Social Security and Medicare. In a slightly altered version of that same scenario in which the Trump tax cuts were not allowed to expire as intended in 2025, Congress would have to cut 100 percent of discretionary spending—and the country would still face a $20 billion deficit.”
“it should be clear that any attempt at bringing the federal budget deficit under control must kill (or at least wound) the Republicans’ sacred cows of military spending, entitlements, and the recent Trump tax cuts. Right now, however, leading Republicans including former President Donald Trump and Speaker of the House Kevin McCarthy (R–Calif.) have vowed to keep Social Security out of any long-term spending deals. Rep. Jim Banks (R–Ind.) has promised to oppose any bill that cuts defense spending.
As for the tax cuts, they’re technically temporary—a gimmick that allowed Republicans to game the CBO’s scoring of the tax cut bill—but keeping the lower individual income tax rates in place past 2025 is a top priority for Republicans.”
“the CBO’s numbers aren’t partisan and neither is the blame for America’s massive budget deficits. These latest projections only reveal how difficult the choices ahead will be. If Republicans are serious about trying to balance the budget, there can be no more sacred cows.”
Fiscal Policy – The Economic Lowdown Podcast Series Federal Reserve Bank of St. Louis. https://www.stlouisfed.org/education/economic-lowdown-podcast-series/episode-21-fiscal-policy How Can Fiscal Policy Help Reduce Inflation? Peter G. Peterson Foundation. 2023 3 7. https://www.pgpf.org/blog/2023/03/how-can-fiscal-policy-help-reduce-inflation US history lesson: Taxes on rich people helped to beat inflation (and