The stories you want. The opinions that matter.
No, thanks
Tag: gary cohn
Republicans Demand “Date Certain” For End To Pandemic Measures

Republicans Demand “Date Certain” For End To Pandemic Measures

Conservatives are fed up with social distancing to slow the coronavirus. After days of them demanding a fixed date for the end of the COVID-19 crisis, Donald Trump basically endorsed their demands on Sunday night.

On Friday, Rep. Chip Roy (R-TX) penned a National Review piece called “America Needs a Date Certain.” In it, he wrote that “our government’s response has put thousands of American businesses on the brink of insolvency, and millions are now jobless” and predicts that this will “only continue unless the government provides certainty of action.”

“The most important thing we need to do — right now — is to announce a date to signal our economic restart, get folks back to work, and build the confidence we need to get capital flowing,” Roy demanded. “Perhaps that date should be around April 1. Perhaps it should be April 15. In consultation with our nation’s health experts, the federal government must announce a date within the coming weeks, no later.”

His fellow Texas Republican, Rep. Dan Crenshaw, endorsed the call, tweeting Friday, “We MUST do everything in our power to provide a reasonable, health-informed, date for when Americans can safely return to regular economic activity in their communities.”

An array of conservative media commentators spent the weekend echoing the demand.

Fox News host Laura Ingraham tweeted Friday, “The uncertainty for businesses, parents and kids is just not sustainable.” On Monday, she added, “Even another week of this will mean millions more out of work, massive damage to businesses big and small, rental incomes, families at every income level, horrific pain and suffering. But if we knew this was almost over, recovery would be easier.”

Conservative columnist Josh Hammer tweeted Sunday, “This will not end well for capitalism. It will not end well for the rule of law. It will not end well for republican self-governance. Unless it is all shepherded to an end quickly and efficiently, as soon as is remotely feasible.”

And former Trump adviser Gary Cohn asked, “Is it time to start discussing the need for a date when the economy can turn back on?”

Late Sunday night, Donald Trump joined in.

“WE CANNOT LET THE CURE BE WORSE THAN THE PROBLEM ITSELF. AT THE END OF THE 15 DAY PERIOD, WE WILL MAKE A DECISION AS TO WHICH WAY WE WANT TO GO!” he tweeted.

He followed his own tweet with a series of retweets of supporters agreeing that everyone should get back to normal in 15 days.

With testing still at a minimum in the United States and not everyone practicing social distancing, epidemiologists have no idea when the crisis will actually start to slow.

The surgeon general predicted on Monday, “This week, it’s going to get bad.”

Published with permission of The American Independent Foundation.

Photo credit: Gage Skidmore

The GOP Tax Plan’s Mega Gift To Some of Trump’s Richest Appointees

The GOP Tax Plan’s Mega Gift To Some of Trump’s Richest Appointees

Reprinted with permission from ProPublica.

There are times that you run across something that’s so preposterous that it’s hard to believe it’s true. But in this case, it is.

I’m talking about the multiple — and permanent — set of tax breaks that some of the Trump administration’s mega-wealthy appointees and their heirs stand to get if the estate tax repeal in the House Republicans’ tax bill becomes law.

The appointees I’m talking about are those with a net worth above $11 million (which is a lot of them) who sold assets that the Office of Government Ethics said would pose conflict-of-interest problems in their new gigs.

Combine the rules that cover such sales with terms of the proposed estate tax repeal, and these people get a multilevel, multigenerational bonanza. A gift that would keep on giving (and giving and giving).

I couldn’t believe what I was reading, and figured that I might be overly eager to uncover gifts to the ultra-rich in the House tax cut bill, which is by no means tax reform because it hurts millions of taxpayers in my home state of New Jersey and other places that aren’t reliably Republican, but bestows plenty of breaks on big businesses and the rich. So I asked tax expert Bob Willens of Robert Willens LLC, whom I’ve consulted for decades, to show me where I was making a mistake.

It turned out that Willens couldn’t believe what he was reading, either, when he parsed the proposed estate tax repeal provisions. “I had to read that about eight times,” Willens told me. “It defies description. It’s unheard of. It’s unbelievable.”

Now, let me show you why. And why mega-wealthy Trump appointees and their heirs would get level after level after level of tax goodies, even more than regular rich people would get.

Under Section 1043 of the tax code, enacted in 1989, eligible federal appointees (such as an energy secretary who owns oil stocks) who sell conflict-posing assets and reinvest the proceeds in something permissible, such as an index mutual fund, don’t owe any tax until the replacement asset is sold. At that point, they pay taxes on the total gain in, to use our example, the mutual fund they bought with the proceeds of the assets they had to sell. In other words, the only benefit they get under current law is a deferral in their capital gains taxes. They don’t get to permanently escape taxes.

I have no problem with this tax deferral, by the way. I don’t think people should have to shell out serious money in order to work for the government. If they happen to benefit by being able to diversify their portfolios on a tax-deferred basis, the way former ExxonMobil chief executive Rex Tillerson could diversify out of his Exxon stock and long-time Goldman Sachs executive Gary Cohn could diversify out of his Goldman holdings, that doesn’t bother me, either.

Besides, until now people who have gotten very large Section 1043 tax deferrals have been almost certain to be wealthy enough to trigger estate tax — no, it’s not a “death tax,” it applies to only about 1 in 500 estates — when they die. Some 99.8 percent of estates don’t pay tax because about $5.5 million of assets are exempt from estate tax for a single person, and about $11 million for a married couple.

Now, watch where the outrageous part comes in. Under current law, heirs have to pay estate tax based only on the value of the inherited assets on the day the person who bequeathed them died. They don’t have to pay a penny on the assets’ gains while the dearly departed owned them. (The adjustment is known as a “basis step-up” in tax jargon.) But of course, the estate has to pay estate tax of 40 percent of the amount by which the inherited assets exceed the $5.5 million/$11 million threshold. The tax-free basis step-up allows heirs to avoid having to pay both capital gains tax and estate tax on the assets they inherit, which strikes me as a reasonable thing.

However, under the Republican plan’s estate tax repeal, not only would heirs collect everything tax-free, but they would also get a tax-free basis step-up in the assets they inherit. By contrast, when the estate tax was repealed for a year in 2010 as part of the George Bush tax cut bill, the step-up in basis was largely negated, which stopped heirs from getting a mega-windfall.

I assumed that would be the case in whatever plan the Republicans proposed this time. In fact, I predicted that in a January article that I wrote with Cezary Podkul, then a ProPublica colleague, currently a Wall Street Journal reporter.

We felt that even if the estate tax were repealed, the heirs of Donald Trump’s appointees would be subject to capital gains tax when they sold the assets their benefactors had acquired to solve conflict-of-interest problems.

Besides, even Trump, who campaigned on eliminating the estate tax, wasn’t proposing that heirs get a totally free ride. He was proposing something — details of which were never made clear — that seemed to involve estates paying capital gains tax on unrealized gains above $10 million.

That idea of taxing estates in any way seems to have disappeared entirely from Trump’s public statements these days. And I realize now that I was naïve to think that Trump might ever promote anything that might cost him or his family any money.

To return to where I started, I’m just astounded by the multiple tax breaks Trump appointees and their heirs stand to get if the House version of estate tax repeal becomes law. So is Bob Willens, the tax expert.

“You get to diversify tax-free,” he said, a tone of wonder in his voice. “Then you get to bequeath your portfolio tax-free. And the most amazing part is that your heirs get to step up their basis in the inherited assets tax-free.”

A great deal for these people. A terrible deal for the rest of us, who would have to pick up the tab for it.

ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for their newsletter.

Trump Tax Plan: Exploding Deficits And Bonanzas For the Super-Rich

Trump Tax Plan: Exploding Deficits And Bonanzas For the Super-Rich

 

WASHINGTON (Reuters) – President Donald Trump unveiled a one-page plan on Wednesday proposing deep U.S. tax cuts, many for businesses, that would make the federal deficit balloon if enacted, drawing a cautious welcome from fiscal conservatives and financial markets.

While the proposed tax cuts would please those helped by them, such as multinational corporations and wealthy taxpayers, Trump’s package fell far short of the kind of comprehensive tax reform that both parties in Washington have sought for years.

As his milestone 100th day in office on Saturday nears, Trump has been scrambling to show progress on his agenda. The Trump tax plan, though meager in detail, matched up closely with the promises he made during his victorious 2016 election campaign.

Investors, who had been awaiting tax-plan details for months, largely shrugged off the news, with many saying it was still short on specifics and faced a long road to enactment. “Wake me up when something actually gets signed into law,” said Greg McBride, chief financial analyst at Bankrate.com in West Palm Beach, Florida

Only Congress can make major tax law changes, and Democrats immediately attacked the Republican president’s plan as fiscally irresponsible.

“President Trump’s tax plan is short on details and long on giveaways to big corporations and billionaires,” said Nancy Pelosi, the top Democrat in the House of Representatives.

House Speaker Paul Ryan, Senate Majority Leader Mitch McConnell and the top Republicans on the congressional tax-writing committees welcomed the Trump proposals, while leaving space for details to change as legislation evolves.

“The principles outlined by the Trump administration today will serve as critical guideposts” as Congress and the administration work on tax changes, they said in a statement.

U.S. stocks pared gains on Wednesday after the plan was unveiled. While Wall Street has been optimistic about the prospect of corporate tax cuts since Trump’s election in November, the stocks rally has stalled lately because of a lack of clarity about Trump’s policies and concern over his failure to push through a healthcare bill.

The benchmark Dow Jones industrial average of blue-chip stocks <.DJI> on Wednesday closed down one-tenth of 1 percent.

Some analysts said investors were aware of the long road ahead before any tax bill is passed.

“We have a pretty good idea that he (Trump) is targeting lower corporate taxes, lower individual taxes and a simplification of the process, but all that is in an ideal world,” said Andre Bakhos, managing director at Janlyn Capital in Bernardsville, New Jersey.

In the plan, unveiled at the White House by Trump economic adviser Gary Cohn and Treasury Secretary Steve Mnuchin, Trump proposed cutting to 15 percent both the income tax rate paid by public corporations and that paid by “pass-through” businesses, including partnerships, S corporations and sole proprietorships.

The top corporate rate is now 35 percent, though few multinational companies pay it, thanks to loopholes that allow them to lower their effective tax rates. Despite this, corporations have pushed for a tax rate cut for many years, and Trump has obliged.

The top rate for pass-throughs, which account for most small businesses, is 39.6 percent, the same top rate paid by individuals. Unlike corporations, the profits of “pass-through” businesses flow directly onto their owners’ tax returns.

In another concession to long-standing demands from corporate America, Trump called for bringing corporate profits being held offshore by multinationals into the country at a rate well below the current 35 percent rate now owed on “repatriated” earnings. He did not say what that rate would be, but said the administration was working with Congress on a low rate.

About $2.6 trillion in profits are being held tax-exempt abroad by U.S. multinationals under a rule that says they are only taxable if brought into the United States.

If enacted, the repatriation tax holiday would produce a one-time surge in government revenue. If it were dedicated to infrastructure spending, it could attract votes from Democrats.

The plan also urged adoption of a “territorial” corporate tax system that would largely exempt foreign profits of U.S.-based corporations from federal taxation.

Ryan expressed optimism about Trump’s plan, even though it excluded a “border adjustment” tax on imports he has promoted. That idea was part of initiatives floated by House Republicans as a way to offset revenue losses resulting from steep tax cuts.

For average U.S. taxpayers, Trump proposed help by doubling the standard deductions for individuals who do not itemize; simplifying tax returns by reducing the number of tax brackets to three from seven; and providing unspecified tax relief for families with child and dependent care expenses.

The Trump tax plan also called for repealing inheritance taxes on estates and the alternative minimum tax, both measures that would help a handful of wealthy taxpayers.

Trump’s laundry list of tax cuts would reduce revenues for the U.S. government, which is already running a deficit and deeply in debt. He offered few proposals to offset those losses.

Democrats and fiscal-hawk Republicans will be concerned about how much Trump’s proposals would expand the deficit. To minimize that, Republicans will rely heavily on “dynamic scoring,” an economic modeling method that attempts to predict economic growth and new tax revenues resulting from tax cuts.

Mnuchin said the revenue losses would also be offset by killing many tax loopholes. He said at a briefing that Trump’s plan would kill most tax deductions, except those for charitable giving, retirement savings, and mortgage interest.

Cohn said at the briefing that one deduction on Trump’s chopping block is for state and local tax payments, which is estimated to cost the U.S. Treasury $96 billion this year. Ending it would raise about that much in revenue.

Such a move would hurt high-tax states, which tend to vote Democratic, such as New York and California, where the state and local tax deduction is a major item, said some tax analysts.

Like all of Trump’s proposals, this one would face intense scrutiny in Congress.

The number two Democrat in the Senate, Dick Durbin, attacked the Trump tax plan proposal and the fact that the billionaire New York real estate developer had declined to make public his personal tax returns.

“President Trump should release his own tax returns if he wants to have any credibility in a debate about America’s tax code,” Durbin said. Mnuchin said on Wednesday that Trump did not intend to release his tax returns.

(Additional reporting by Steve Holland, David Lawder, Doina Chiacu, Eric Walsh; Writing by Doina Chiacu and Frances Kerry; Editing by Kevin Drawbaugh, Jonathan Oatis and Peter Cooney)

IMAGE: National Economic Council Director Gary Cohn (L) and Treasury Secretary Steven Mnuchin end their breifing after unveiling the Trump administration’s tax reform proposal in the White House briefing room in Washington, U.S, April 26, 2017. REUTERS/Kevin Lamarque

Pay For Play? Consider Donald Trump’s Crony Cabinet

Pay For Play? Consider Donald Trump’s Crony Cabinet

Only Donald Trump would continue sponsoring campaign-style rallies, a full month after Election Day. And only Trump’s most fervent followers, the zealots who still show up to hear him gloat at those “thank you” events, would continue to chant “Drain the swamp!” at his command — when he is so obviously emptying that swamp into the White House swimming pool.

The bad joke of 2016 is that Trump routinely perpetrates every one of the offenses charged against Hillary Clinton, whether invented or plausible, yet escapes all the blaming and shaming that fell so heavily upon her. The starkest example is the contrast between the Clinton Foundation, an enormous force for good that was falsely accused of wrongdoing in countless stories, columns, and broadcasts, and the Trump Foundation, a vainglorious vehicle for tax evasion that has confessed to unlawful self-dealing and remains barred from doing business by authorities in its home state.

But it is the Clintons’ reputation that suffered damage, even as Trump and his family remain unscathed.

During the campaign, Trump shrieked “pay for play!” to defame the Clintons over and over again, without proof. But now he is doling out top positions in government to the patrons of his campaign, his businesses, and even his foundation. To Trump, a post in his cabinet is not a commitment of trust granted on behalf of the people, but a plum to bestow on any crony who once did him a favor.

The most wanton example is designated Treasury secretary Steven Mnuchin, a political and financial opportunist who predicted months ago that if he raised enough campaign money, then Trump would reward him with precisely this powerful post. Imagine the outrage if Clinton had appointed someone like Mnuchin — a former top executive of Goldman Sachs who ruthlessly exploited government bailouts and crushed poor homeowners in the wake of the financial crisis — after he had raised millions of dollars for her campaign and predicted his payoff.

The hair on every pundit and anchor across America would simultaneously burst into flame.

But when those same media sages watch Trump appoint Mnuchin, they shrug and comment wryly on his Goldman pedigree. Trump senior adviser Steve Bannon is from Goldman as well, of course — and on December 9, Trump chose Gary Cohn, the Wall Street mammoth’s chief operating officer, to head the National Economic Council.

As someone observed, it’s as if Trump will be giving a speech to Goldman Sachs every time he addresses a White House meeting.

Another billionaire financial operator elevated by Trump is Wilbur Ross, a “vulture” capitalist who got to know the real estate mogul when Trump was going bust, bigly, in Atlantic City. It was Ross who gave him the most important boost of his business career. Rather than force him into a personal bankruptcy that would have destroyed his career (and saved us from his impending presidency), Ross persuaded the banks that owned Trump to let him survive.

That was a bad decision for many of Trump’s creditors, who saw their companies ruined, but years later turned out to be a good decision for Ross — who will soon wield influence over major policy decisions affecting trade and industry as Commerce secretary. Of course, Ross too made large donations to Trump’s campaign.

Then there’s Linda McMahon, the former wrestling executive and failed Republican Senatorial candidate from Connecticut just appointed by Trump to run the Small Business Administration. Promoting a fake sport may not qualify her to operate an important agency. And her family company has many embarrassing moments in its past, including the unlamented XFL. McMahon has no experience in government at all, but she does possess even more important credentials: She and husband Vince donated $5 million to the Trump Foundation between 2009 and 2014, and $6 million to a Trump SuperPAC this year.

Pay for play? Hillary Clinton never did anything nearly so brazen, as Senator, secretary of state, or candidate. But for the man who can get away with everything, his crony cabinet is only the beginning.