Sunday, July 2, 2023

death and taxes, part 2

 

As we travel through life, the times when we get together with the largest number of our relatives are weddings and funerals.

We got to most weddings when we are in our 20’s and 30’s, and we are generally in our 70’s when we got to the most funerals.

Since only 6% of all marriages make it to 50 years, the golden anniversary celebrations are rare, but I’ve been to some. At this point, the total is 2, and one of those was ours, although we do know a few other folks who made it that far.

 As my parents got older, they started paying more attention to funeral notices. During 2020, I did the same, simply because there were so many of them. We had a handful of friends and relatives that did not make it to 70, but we’re approaching the time when we know more people who will wind up in obituary notices, since the average life expectancy is 73.5 for men, and 79.3 for women.

I had 3 relatives (on both sides) who lived to be 95. Since yesterday’s doctor visit showed good results, I may live that long too.

https://www.cdc.gov/nchs/fastats/life-expectancy.htm

It’s been said that they only things you can’t avoid in life are death and taxes – and taxes have been in the news again lately because of the negotiations over our debt limit. (Our current debt is 129% of our GDP, largely due to COVID. In 2019, the ratio was 100.9%)

https://www.macrotrends.net/countries/USA/united-states/debt-to-gdp-ratio

Without wading into the minefield of politics too much, all I’ll add at this point is to say that our deficit problems are not caused by excessive spending, but by insufficient revenue.

The editorial board of the Washington Post had a few ideas this morning, but before I list them for you, you need to consider how we got to where we are now.

 Grover Norquist has never held public office, but he has had a profound effect on our country’s finances.

Grover Glenn Norquist (born October 19, 1956) is an American political activist and tax reduction advocate who is founder and president of Americans for Tax Reform, an organization that opposes all tax increases. A Republican, he is the primary promoter of the Taxpayer Protection Pledge, a pledge signed by lawmakers who agree to oppose increases in marginal income tax rates for individuals and businesses, as well as net reductions or eliminations of deductions and credits without a matching reduced tax rate. Prior to the November 2012 election, the pledge was signed by 95% of all Republican members of Congress and all but one of the candidates running for the 2012 Republican presidential nomination

https://en.wikipedia.org/wiki/Grover_Norquist

Not all members of the Republican Party are as insane as the House Freedom Caucus, but even the one who aren’t crazy are reluctant to raise taxes. I’ve done extensive research on tax cuts, and have concluded that tax cuts do NOT grow the economy.

The best “bang for your buck” is food stamps, but there aren’t many Republicans who will admit that. Here’s more details on that:

https://tohell-andback.blogspot.com/2013/05/food-for-thought.html

 Here’s a few ideas from the Post:

Unless Americans are willing to live with a substantially smaller military, reduced Social Security payments, more crowded classrooms and other diminishments in what their government provides, lawmakers need to find about $2 trillion in additional tax revenue over the coming decade, on top of the money-saving budget reforms that we have detailed elsewhere.

 

Congress’s task is to raise the money without dulling efficiency and warping incentives to grow, innovate and work.

 

As we noted in our recommendations for shoring up entitlement programs, one potential reform is raising the cap on wage earnings subject to Social Security taxes. Another is closing a loophole exempting pass-through businesses — such as sole proprietorships, partnerships and S corporations, which are not subject to corporate income taxes — from paying Medicare taxes on their investment profits. Here are some other ideas:

 The most effective tax systems have limited exemptions. An abundance of exemptions can distort investment decisions and give a leg up to those who can afford expensive tax advice. Take the estate tax. Currently, individuals may pass up to about $13 million of stock, real estate or other assets to heirs tax-free, an amount that would have been inconceivable in the 1990s. Moving the line back to $5 million, where it was in 2010, would raise more than $100 billion in revenue in the next decade, while still exempting all but less than one-half of 1 percent of estates.

 

Similarly, lawmakers could end the “stepped-up basis loophole.” This allows a person inheriting an asset — say, a share of stock — to pay tax only on the asset’s gains in value since the death of the person who passed it on. A family, therefore, could hold on to that share for decades, even as it rose in value, but then pay tax on only a fraction of the accumulated gains at selling. Ending this loophole would generate more than $100 billion in the next decade.

 

Congress could eliminate the “carried interest loophole,” too. This allows private equity and hedge fund managers to treat their incomes as investment profits, so they get to pay the far-lower capital gains tax on their incomes rather than the income tax that ordinary wage-earners do. Taxing gains as income would raise about $14 billion over the next decade and promote fairness in the tax system.

 

President Biden has already announced his support for allowing some of Mr. Trump’s 2017 tax cuts to expire on time in 2025, letting the marginal income tax rate on the top earners return to 39.6 percent. This is the same rate that was in place for much of the 1990s. Reversing tax cuts for some of those a little lower on the income scale could raise more revenue. Boosting rates for those in the top three tax brackets would call on married couples making more than about $364,000 a year to contribute more. For context: Lawmakers set the income cutoff to receive the first round of covid relief payments at $150,000 for a married couple.

 

Mr. Trump also gave companies the largest cut to the corporate income tax rate in U.S. history. Even many business leaders were surprised when Republicans reduced it from 35 percent to 21 percent. A rate in the 25 to 28 percent range would keep the United States competitive with global rivals. Going to 25 percent would bring in roughly $500 billion over the next decade.

 

A carbon tax would raise revenue and help shift society away from carbon-intensive products by making them more expensive, spurring businesses and consumers to find the cheapest and easiest way to avoid polluting. Some kind of mass rebate system would have to accompany a carbon tax to ensure that it does not fall hardest on low-income earners. But many plausible carbon tax proposals include such a rebate and would still generate large amounts of money for deficit-cutting. Discouraging pollution and raising money, a carbon tax would be economically efficient and fair, asking those responsible for emissions to bear some of the social costs of pollution.


No one likes to pay higher taxes. But wise and targeted increases are essential to fiscal stability. Changes are clear and within reach. The longer Congress waits, the harder it will be to repair the compounding damage.

 

https://www.washingtonpost.com/opinions/2023/06/30/united-states-taxes-trump-tax-cut-reform/

The Washington Post has won more than 70 Pulitzer Prizes, second only to the New York Times, which has won nearly 100. The two pares are two of the six that I read on a daily basis.

Today’s column is the first of a series that the Post plans to publish about the debt problem.

If you still need more information about taxes, you may remember that I wrote about the same topic roughly 3 years ago:

https://tohell-andback.blogspot.com/2020/09/death-and-taxes.html

No matter where you live, there are always going to people who feel that taxes are too high. Compared to the rest of the world, though, our taxes are actually quite low.

The most expensive corporate tax rate can be found in Brazil, which has a rate of 40%. In comparison, the corporate tax rate in America is only 21%. Despite that low rate, 19 of America’s largest companies paid little or no taxes last year.

https://en.wikipedia.org/wiki/List_of_countries_by_tax_rates

 The highest individual tax rate is found in Belgium, which has a marginal rate of 79.5%. Second highest if Finland, which has a marginal rate of 66%. Oddly enough, Finland has been ranked the happiest country in the world for six years in a row.

https://www.forbes.com/sites/laurabegleybloom/2023/03/20/ranked-the-20-happiest-countries-in-the-world-in-2023/?sh=322af0d579c2Our

 All of our national problems would be easier to solve if we were all better educated. The masthead of the Washington Post reads “Democracy Dies in Darkness”. In view of the fact that 9 of the top 10 news shows are on FOX ( which actually is not registered as a news channel) things will be slow to improve.

https://www.adweek.com/tvnewser/here-are-the-top-rated-cable-news-shows-for-june-2022/510130/




 

 

 


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