Elizabeth Warren's Wealth Tax Contains The Germ Of A Decent Idea

Elizabeth Warren is trying to crowd the left lane of the Democratic primary race with her recently unveiled wealth tax. Some soundbites of my thinking:

As one of her proponents explains, the US tax code allows unrealized capital gains to go untaxed. This has been a big driver of the recent wealth surge, as Bezos, Gates and Zuckerberg can attest. But if untaxed capital gains is "the problem" why not address that? Change tax rules to force recognition of unrealized capital gains above some wealth threshold. Taxing wealth has dubious Constitutional validity (although John Roberts is smart enough to rationalize whatever he wants). Taxing income has a longer history and mark to market on capital gains is already used by financial institutions and individuals trading futures and index options (see tax straddles).

A high threshold and deferred payment of the tax liability will prevent the sort of cash flow crunch also addressed in the estate tax for closely held businesses - we don't want Ma and Pa Kent to be forced to sell the farm because they have a big unrecognized gain on the value of their land. Many of us also don't want Jeff Bezos to lose control of Amazon just to pay his taxes. A mechanism to allow deferred payment over, eg, ten years (the estate tax deferral is fourteen years) should leave folks plenty of time to work out the financing. Another benefit to the deferred payment idea: if a household has a mark to market gain of $20 million this year but a loss next year of $10 million, there is no need to write them a refund check; just adjust their deferred taxes due.

Of course, some folks out there DO want Bezos to lose control of Amazon, after which they would like to decide on a public flogging. The idea of taxing the rich is not exactly novel. The battle lines were drawn centuries ago between those who think wealth is attributable to the exploitation of others and those who believe in free markets and free people. For better or (mostly) worse, a lot of tired old arguments by unreconstructed Marxists and Socialists who believe that Wealth Is Evil will be trotted out yet again, and yet again they will persuade only the already-convinced.

Greg Mankiw pushes back, wondering who Taylor Swift exploited en route to her $300 million. Same question about JK Rowling of Harry Potter fame and fortune. Then again, if Warren could have stopped George Lucas in his tracks after "Return of the Jedi", she might have had my vote. Bygones.

On to some details. Here are proponents of a wealth tax explaining the problem with the deferred recognition, often forever (stepped-up basis at death), of capital gains:

ITEP

The U.S. Needs a Federal Wealth Tax

Another, closely related problem with relying on income taxes is that much of the income received by the richest Americans is “unrealized capital gains” which are not taxed. When the value of an asset rises, for all practical purposes that increase in value is income for the owner of the asset, but our current laws do not tax this income until the asset is sold. (In other words, capital gains on an asset are not “realized” until the asset is sold.)

This means that wealthy individuals who own a disproportionate share of all assets can defer paying tax on much of their income for years, allowing their wealth to grow much more rapidly. Meanwhile, most income of working Americans (income like wages or interest on a savings account) is taxed annually.[7]

While this may seem like an arcane matter, it allows the net worth of the wealthiest to build up much more rapidly and substantially. For example, one tax expert estimated in 2015 that Warren Buffett, whose net worth was then nearly $70 billion, would have been worth $9.5 billion if his capital gains had been taxed each year regardless of whether assets were sold.[8]

Well, OK - if the problem is that we are not recognizing that capital gains income, the obvious solution would be to recognize it, rather than taxing a bunch of other stuff.

I understand that fairness and logic will find no traction with the "Wealth Is Evil" crowd, but the rest of us might look at this upcoming example and see some problems:

Imagine Susan and John are co-founders of HotTech Inc. They each hold founder's shares worth $100 MM. The shares don't pay a dividend so their taxable income is basically their salary, which is small.

So far, we see two people who had an idea, took some risks that paid off, created jobs and value, and are doing very well. Or, they're evil because they underpaid their workers and relied on basic research financed by the US government, not to mention taxpayer-funded roads. Not important right now, because their paths are about to diverge.

Susan sells her $100 MM, pays $20MM in capital gains taxes and puts the remaining $80MM in a money market fund yielding 2%. Her annual taxable interest income is now $1.6MM, so put her down for another $0.6MM in Federal taxes on that.

John holds his shares, so his taxes remain tiny.

Now, hit them both with the Warren Wealth Tax. Susan, having already paid $20MM and owing $0.6 per annum, will pay an additional 2% on $30MM, or another $0.6MM per year. Over ten years that sums to $32MM.

John will pay 2% on $50MM, or $1MM per year. Over ten years that sums to - no calculators, please - $10MM.

Susan pays $32MM, John pays $10MM. This is fair, logical or desirable why? If the 20% capital gains tax is Susan's "fair share" and she has paid it, why keep taxing her on her wealth? If the income from her investments is an issue, well, she is paying tax on that too. Why keep taxing the poor woman?

Well, because Wealth Is Evil, sure. But other reasons?

Well, maybe that 20% capital gains rate is "too low". It does represent some compromise between our desire to encourage capital formation and risk taking on the one hand without allowing absurd concentrations of wealth on the other. And maybe we have tipped too far in one direction. All debatable, but that is not likely to be the debate we get.

On the other hand, this debate may not be hopeless! Here is just what we did NOT expect - common sense from a Matt Yglesias Voxsplainer:

Warren’s proposal, of course, is for a progressive wealth tax in which the 2 percent rate does not apply to the first $50 million and the 3 percent rate only kicks in when you have more than $1 billion, so nobody would actually be taxed that much. The operation of the tax would, however, exert a dramatic gravitational pull on large fortunes and tend to pull them down to the tax thresholds.

That’s especially true because the mere existence of the wealth tax would, on the margin, encourage wealthy individuals to dissipate their fortunes on charitable giving and lavish consumption. If you try to horde wealth the government is going to tax it, so you might as well spend it.

This is, in turn, exactly the standard economic case against wealth taxes. In a very basic, stripped-down view, the accumulation of capital (buildings, machinery, business equipment, etc.) leads to higher wages and living standards. A wealth tax, by discouraging the accumulation of financial capital, could also discourage the accumulation of physical capital and thus lead to lower wages and living standards.

Most everyone agrees that a highly simplified two-factor model of how the economy works is not accurate, but the extent to which a wealth tax appears even remotely attractive will hinge on whether you think it’s a decent approximation of the real world or a wild fantasy cooked-up to serve the self-interest of plutocrats.

Wait, what? Capital formation is a Good Thing and deferring taxes on capital gains might encourage it? Fortunately, I was sitting down when I read this.

Let's segue to macroeconomics briefly, with Paul Krugman as a launching pad. I mostly agree with his point on individual incentives, subject to some jeering in which I will later engage:

Wouldn’t it hurt incentives? Probably not much. Think about it: How much would entrepreneurs be deterred by the prospect that, if their big ideas pan out, they’d have to pay additional taxes on their second $50 million?

Fair enough, but what about the overall economy? I will guess that whatever wealth tax is paid will come exclusively out of savings. *IF* the government uses the tax revenue to reduce the deficit (under President Howard "Half Caf Venti" Schultz) then private savings has gone down, national savings has gone up, and not much else will happen.

But let's suppose President Warren gets that tax revenue. She will surely spend it on new programs, as per her mandate from the voters. Standard economics will describe that as a fiscal stimulus.

Now, in 2009 the conversion of savings to spending would have been a great idea. But in 2019? Well, the unemployment rate is low (as is labor force participation, so where are we really?) and the Fed is worried that the US economy is near full throttle. They may choose to offset fiscal stimulus with monetary tightening. The effect of higher interest rates will be to discourage investment and consumption.

So, hmm - even though John and other would-be entrepreneurs still have that gold-rush gleam in their eyes, the Fed is making the pursuit of their dreams more difficult, and total investment is falling. Is that a Good Thing? Debatable!

That is my stab at the macroeconomics, anyway - a tax that discourages capital formation, however slightly, reduces capital formation. Or so I think. The pundit with a Nobel doesn't address that. And yes, I'm with you - I too would rather know what he thinks. And he may be thinking what I am wondering - maybe the world has too much savings and fiscal stimulus in the US can create jobs here or elsewhere.

Or one might argue that the wealth tax can't be timed - it will be a long term feature of the US economy. We will be just a mite less friendly to capital formation and it won't hurt us.

I did promise some jeering. An obvious guess is that the $50MM threshold is just an opening bid. Once the principal is established, that threshold will be moving down, not up. It may even reach the point where Warren (net worth variously estimated at $8MM to $18MM) is paying it. Even Prof. Krugman of the lucrative book deals may be asked to pay up! Keep in mind - unless you're talking to Jeff Bezos, the definition of wealth is "more than I've got". The Wealth Is Evil crowd will never lack for ideas on how to spend Other People's Money, and they will never believe that if you can pluck one feather from the goose laying the golden eggs you shouldn't push your luck and pluck ten.

As to the level of compliance with a wealth tax, the discussion seems optimistic. Matt Yglesias does note that the OECD countries have been scaling back their wealth taxes. Paul Krugman offers this:

Would such a plan be feasible? Wouldn’t the rich just find ways around it? Saez and Zucman argue, based on evidence from Denmark and Sweden, both of which used to have significant wealth taxes, that it wouldn’t lead to large-scale evasion if the tax applied to all assets and was adequately enforced.

That is actually pretty comical. Saez and Zucman are both French and have focused on the economics of wealth so the odds are pretty good they are familiar with the debacle of the French wealth tax. Let's say, compliance was less than hoped for, as many of the targeted rich simply left the country. The tax has now been scaled back to include real estate (harder to relocate abroad) but not financial assets. Why is the French experience not talked up by wealth tax advocates? Well, I have my guess.

And I have to clip these stories: first, from 2014 the French stab at a top income bracket of 75%:

France forced to drop 75% supertax after meagre returns

François Hollande’s unpopular tax changes that imposed a 75% rate on earnings above €1m (£780,000) will quietly disappear into the history books from Thursday.

...

Although supported by the left, the reform sparked accusations of an anti-business agenda. After the “supertax” was announced in September 2012 the government was accused of shooting itself in the foot by risking an exodus of high-profile personalities. Business leaders expressed fears that investors would pull out of France.

France’s richest man, Bernard Arnault, the chief executive of luxury group LVMH, took out Belgian nationality, and the actor Gérard Depardieu also moved across the border to Belgium before obtaining Russian citizenship.

High-earning French footballers threatened strike action, while league bosses warned they would no longer be able to attract world class players.

Why can't the US be more like France?

And from 2017, their wealth tax:

Exodus of the richest: Wealth tax is forcing 12,000 millionaires PER YEAR out of France, says Prime Minister as he lowers tariffs for the better off

• Prime Minister Edouard Philippe says change in tax on wealth is necessary
• In 2016 alone, some 12,000 millionaires left France - highest in the world
• French wealth tax currently applies to personal assets over 1.3 million euros
• President Macron's new tariffs will only apply to real eastate over 1.3m euros 

Per this story, more tax exiles were fleeing France than China. Again, why can't the US be more like France and stop with the stupid ideas?

EXHORTATION: Don't dump on Warren because of her faux Native heritage scam; dump on her because of her faux medical bankruptcy scam. Gail Heriot, Todd Zywicki and Megan McArdle cast light into this darkness years ago.

Comments

[matt - deplore me if you must]

first!

[MissMarple2]

The wealth tax would soon involve not only stocks, savings, and real estate, but items like jewelry, art, and antiques.

They would hire assessors and appraisers to inspect homes, require jewelers to report sales of expensive bracelets and necklaces, form a department of art and antique appraisal, and on and on. The market for rental and vacation properties would diminish.

AND, the threshold would creep lower every year. Pretty soon there would be a tax on every poor schlub's engagement ring.

I don't like politics based on envy, which is what this is. Suckers for this type of thing always think that the tax means they will get some of the proceeds. Nope. It will get distributed to democrat cronies.

[Buckeye]

I could handle struggling with John or Susan's tax avoidance decision:)

[Old Lurker]

So if my founders shares in my startup company, based I guess on what the market paid for non-founder shares, are worth $100M when Warren applies her wealth tax based on that $100M valuation and I sell enough shares to pay that tax this year...what happens when my idea becomes a bust and the value of my shares fall to zero a year later. Does warren give me my tax back?

In commercial real estate, huge properties go up and down in value with every single uptick or downtick in Interest Rates on US Bonds. That's how the market establishes the value of shopping centers and office building every day.

So same question, if one day because interest rates are ZIRP my properties might be worth a gazillion, but when ZIRP ends they will go back to some natural value...why should I have paid a tax at the artificial peak paper value?

Bad juju comes from this entire train of thought.

[MissMarple2]

https://www.amgreatness.com/2019/01/28/against-trump-three-years-later/

Good article.

[rich]

this is such a fantastic idea that i detect the stench of the ryan and the gope ...

[Threadkiller]

From a tweet posted earlier

women with a chance at becoming the first female POTUS. 1 rose to fame because of her marriage to a serial sexual abuser. 1 became a figure because she was the mistress of the mayor of S.F., & 1 achieved her success largely by pretending to be a Native American.

Staining the Glass Ceiling.

[rich]

can't someone have an unrealized capital gain on a work of art, a coin collection, a car ...

(the progressives and gopes actual goal 401ks, savings accounts, and home values ...)

[henry]

Why don't we tax any govt agency that has more than 100 employees 10% of the employees over 100, and 20% of employees over 500. Spending is our problem as TM points out above.

[Old Lurker]

Susan sold her shares, locked in her valuation, converted it to cash, and paid the Gains tax for gaining that certainty.

John kept his shares because as valuable as they seemed today, his faith in his ability and his faith in his country encouraged him to keep his chips on the table and HIS capital in the economy (not like Susan's now dead cash under her mattress), in the hope that someday John's value would be a lot higher. During that time the economy benefits from all of his economic activity and if he guesses right, some day the Gains Tax will be a lot higher than had he followed Susan.

That's how it works.

When Paul Allen got sick and sold a bunch of his MS stock, he knew Bill Gates might go on to make the shares he sold worth way more than when he sold them, which of course they did. But Allen wanted some certainty and less volatility for personal reasons and paid two prices to get that: he paid the Gains Tax, and he gave up any future appreciation Bill Gates might have produced for the shares he sold.

That's how it works.

Change those rules and be careful what you ask for.

[James D.]

Um...no.

NO, let me clarify. Fuck, no.

While I appreciate the time and effort TM put into his analysis, the idea should be a non-starter from word one for anyone who actually believes in, you know, individual freedom or any of the other stuff this country was founded on.

No wealth tax, period. Just no. Don't try to justify it or explain it or water it down. Kill the goddamned idea in the crib...just like the Democrats like to do to actual human infants.

[Neo]

NRO has a piece the other day comparing Warren's wealth tax to a "civil seizure".

Must say that just might be right.

On the other hand, an economist was ask just what kind of tax would "tax the rich" without failing too much on the shoulders of the middle class, as is usually the case. The answer .. a personal property tax .. much like a wealth tax.

[James D.]

Oh, and if you're quoting Matt Yglesias, then you've lost me. Why do you give that lying, hate-filled, bigoted, lunatic creep any attention at all?

[James D.]

Oh, and just to answer one of the claims of the whole thing - unrealized capital gains are NOT income. By definition, if you don't realize them, you can't use the money for anything.

And as OL notes, by keeping them unrealized, the value of those gains can grow more quickly...but it can also decrease. You are taking a calculated risk by keeping them unrealized - ask anyone whose portfolio was heavy into Enron a few years ago, for example.

It's all about envy, and destructive socialism, and no sane, decent person should be entertaining the idea for a millisecond.

[Buckeye]

The rich can afford to buy lots of attack ads in the next election cycle.

Go long on advertising agency stock:)

[Old Lurker]

It all comes down to Static v Dynamic.

To a Prog, wealth and even flows are a static economic state of being. If you are rich and I am not, just transfer some of your wealth to me and all will be good.

Ditto as to flows. To a Prog, the amount of profit flowing through the Macro system is immune to any change in all the other variables. So doubling a tax rate, to them, will have no effect whatsoever of the flows, so double the cash will flow to the government forever.

Of course neither is true.

Susan ran to cash and got out of the economy for personal reasons. John did the opposite also for personal reasons. Both of them considered the variables including taxes in making those decisions, and the market makes millions of those same decisions every single day. And in so doing the size of the Wealth Pie grows and grows. Freeze it and eat it, then next week you will have a smaller pie. Duh.

Ditto income flows. Laffer and Trump and JFK all proved that lower taxes on income produces more investment and then more income, such that the tax take at a lower rate but on a larger income flow results in, duh, more taxes collected.

These are not complicated concepts.

But they absolutely define the difference between Them and Us.

[henry]

Roger Stone follies in DC:

Zoe Tillman @ZoeTillman
17m

It appears Roger Stone's lawyers are now taking steps to make sure they can appear in court — a local counsel who does belong to the DC federal court bar just entered an appearance

https://twitter.com/ZoeTillman/status/1090271565973868544

[Account Deleted]

The losers that can't get a budget done & can't get their core legitimate functions done...... spend their time & effort scheming how to get more of OUR money.

[MissMarple2]

https://www.washingtonexaminer.com/opinion/the-unstoppable-envoy

This is about Richard Grenell, who has proven to be a very valuable asset to President Trump.

[GUS]

It amazes me that ANYONE, including Mr Maguire, would CONSIDER anything ELIZABETH WARREN has to say. She is not an honest person. She is NOT an honest person.

[MissMarple2]

https://dailycaller.com/2019/01/24/democrats-breaking-with-leadership/?utm_medium=Social&utm_campaign=atdailycaller&utm_source=Twitter

Support for the border wall.

[henry]

Manu Raju
@mkraju

Lindsey Graham told me that he is urging Trump to raise the DEBT LIMIT along with a deal to keep open the government by the Feb. 15 deadline. Asked if Trump would move off the $5.7B for the wall, he said there’s no reason to if he agrees to raise the debt ceiling.

[Old Lurker]

In case it is not obvious, don't overlook the fact that since John only has his founder shares, when Warren wants her annual tax, he has no choice but to sell enough shares to pay his Warren Tax. Sooner or later John will no longer own enough shares to control the company and at some point he will not bother with that company any longer. That story has been lived throughout the ages as genius founders are driven from the companies they created.

We really want to go down that road?

[MissMarple2]

Old Lurker,

It wouldn't surprise me if that was part of the plan, with wealthy democrats waiting to buy shares and eventually take control.

[MissMarple2]

Here's some good news (sort of):

The Hill
‏Verified account @thehill
1h1 hour ago

JUST IN: Jeff Flake says he will not run for president in 2020, signs on as CBS contributor http://hill.cm/tKNsaYp

[James D.]

We really want to go down that road?

Well, the Democrat Party, the MSM, a non-trivial segment of the GOP, and 48% or so of the electorate certainly seem like they do.

[Old Lurker]

Graham "Asked if Trump would move off the $5.7B for the wall, he said there’s no reason to if he agrees to raise the debt ceiling."

First of all, I thought the Dems and GOPe emasculated the Debt Ceiling as a restraining tool?

Secondly, what Graham means is if the money is just borrowed, who cares how much is spent. That right there is how the Dems and GOPe got us $22T in debt in the first place, and how the current fiscal year has Treasury borrowing another $1T (announced yesterday) to cover the expected $897B deficit Trump and Congress are producing as we speak.

Thanks Lindsay.

[Captain Hate]

Will they shitcan the estate taxes if this happens? Or will John "FISA Court" Roberts let everything go to Hell?

[Captain Hate]

Jeff Flake should be exiled to Zimbabwe.

[Old Lurker]

MM, that of course is their fatal flaw. They assume that all the wealth and all the income "just happens". Take Henry Ford out of Ford in the early days and tell me how big Ford Motor would have become. Take Andrew Carnegie and JP Morgan out of steel, or John Rockefeller out of oil back in the steep part of their S Curves and report back to me how much wealth and income would never have been created.

[Tom Maguire]

1 achieved her success largely by pretending to be a Native American.

Don't let her Lying Weaseldom about her heritage obscure her Lying Weaseldom about medical bankruptcies, which greatly elevated her profile.

I will credit Gail Heriot, Todd Zywicki and Megan Mcardle with leading the pushback on Warren's "research".

[henry]

CH, it's all the government's money... we just get to play with it for a while longer.

[Old Lurker]

Cap'n has an existing tax ever been taken away when a new tax is added to the mix?

[henry]

Zoe Tillman @ZoeTillman
3m

The goverment has requested no change in release conditions for Stone - he'll be released on the $250K bond. He's due back in court on Feb. 1 at 1:30pm. Special counsel prosecutor Jeannie Rhee noted they're handling the case jointly with the DC US attorney's office

[Tom Maguire]

JUST IN: Jeff Flake says he will not run for president in 2020, signs on as CBS contributor...

I don't want to spoil it by clicking the link - please tell me the headline is "Flake Out!".

(Lie if you have to...)

[hrtshpdbox]

You can't tax cap gains annually, it would be an unnecessary disaster to try. If you "mark to market" stock portfolios every Dec 31, holders will pay tax on unrealized gains one year, have a new cost basis going into the following year, and could very likely be entitled to a cap loss the following Dec 31. And, of course, as of now taxpayers can only declare a 3 grand cap loss per year - that would have to go out the window. As far as I can see, annual cap gains and losses on open holdings would be the same nightmare with asset classes other than securities. It's just nonsense, the kind of thing liberals never think through.

[henry]

TM, you could claim that headline in a new post. ;)

[Old Lurker]

The only theory that works for us is for Trump to run against all Dems and GOPe both in 2020 since together they ARE the Swamp. Flake and Romney both would serve as a useful punching bag for Trump to paint them all with the same brush. We have learned from reality that having all the levers of government, but with some held by GOPe, is the same as having no control.

Bring it.

[MissMarple2]

Old Lurker,

What we need are some ads with plain truth about this stuff, pointing out the following:

1. Higher taxes on the wealthy do not mean lower taxes on the middle class. (Use charts.) Point out that it is instead spent on new programs.

2. Point out that most new programs are simply ways to funnel money to donors and create jobs for the busybodies.

3. Use the destruction of the New England boat-building industry as an example of what happens when you penalize luxury purposes.

I am sure I could think of more. People in this country have zero understanding of finance and taxes, making them perfect marks for the democrats.

[MissMarple2]

Purposes should be purchases. Auto-correct fail.

[Narciso79]

Gollum was signed on by rupert pupkin, despite his ethical travails.

[sbwaters]

This kerfuffle is premised on the idea that government needs moar money. Really? Really?!

Rather than get people on government programs, goal of public officials should be to reduce the need for such programs, reducing the cost of government.

Still waiting for the #MSM to ask presidential candidates about that.

[henry]

for those keeping score:

Jeremy Barr @jeremymbarr
49m

Recent political contributor additions:

CNN: John Kasich, Andrew Gillum, Mia Love, Luis Gutierrez
CBS News: Jeff Flake
NBC News/MSNBC: Claire McCaskill
Fox News: Dan Bongino

[Neo]

ask anyone whose portfolio was heavy into Enron a few years ago, for example

I can see Liz Warren getting snookered by the tax writing committee's and a provision for "wealth loss" being inserted.
I'm sure writing off unrealize capital losses would have a real constituency on Wall Street.

[Old Lurker]

The trouble of course, MM, is that all the slick communication in the world will not change your daughter or my sister.

[hrtshpdbox]

And they tried to portray Trump as a big meanie for calling out Love for her lack of support. I guess she gets to live her dream now.

[Old Lurker]

Don't get snookered into thinking that all wealth is like "listed stocks" which can be converted to cash for taxes on April 14 each year.

What if my only asset is an office building worth gazillions...how do I pay my Warren Tax?

What if my only wealth is that Renoir I inherited from Grandmother...how do I pay my Warren Tax?

What if my only asset is the family farm?

[James D.]

Rather than get people on government programs, goal of public officials should be to reduce the need for such programs, reducing the cost of government.

Absolutely. Unfortunately, the goal of pretty much all public officials actually is to increase the need for such programs, thus increasing the need for (and salaries of) public officials.

[hrtshpdbox]

What if my only asset is the family farm?

Whether it would be something as preposterous as trying to get an accurate valuation every year and taxing (or deducting) gain (or loss) accordingly, or just breaking up the farm at the owner's death (if they don't have a spouse to leave it to) to pay death tax, it's just flat out wrong. Warren's plan would be nuts, the existing death tax if just a way for the government to tax the same income twice.

[hrtshpdbox]

*is* just a way

[sbwaters]

Exactly, OL. My parents spent years trying to get ready to pay estate taxes that otherwise would have required a newspaper fire sale.

One thing is certain. The government, powered by know-nothings, will get in the way.

In the 1940s we started our area’s first FM radio station. Later the government made us sell it. More recently they decided newspapers can own broadcast stations again. Sigh.

[cathyf]

Three words: 1991 Luxury Tax

https://www.washingtonpost.com/archive/opinions/1991/12/31/luxury-tax-everybody-loses/11141980-feda-4982-a43e-8fb4189e7b9a/?utm_term=.a36c118eefa1

The week leading up to Congress's adjournment usually offers C-SPAN viewers a few treats, but this year's Best Irony in a Floor Speech Award should go to Senate Majority Leader George Mitchell, the commanding general in the Democratic Party's class war, for his eloquent support of a resolution in favor of repealing the excise tax on yachts.

"Whatever may have been the theoretical reason for advancing {the boat tax} . . . it has proven in its implementation not to have worked as intended," Mitchell said, "in behalf of the many thousands of people in my state and in other states who have been adversely affected."

The majority leader wasn't talking about thousands of adversely affected rich people, but blue-collar boat builders who've lost their jobs because the so-called "luxury" tax on boats has resulted in slumping sales beyond what could be expected in a recession.

[MissMarple2]

Old Lutker,

Your point about the Renoir and the family farm goes to my first reply at the top of this thread.

They will NOT let those assets escape being part of the valuation, and they will have government appraisers to pour over every single thing people own.

I wonder how those millionaire rappers would feel when their bling gets assessed and they have to sell it to pay a tax.

Yes, I know your sister and my daughter won't get it. I did have some luck with the abortion bill in New York but she is still in the "health of the mother" thing and I told her what anonamom had said. She still believes that stupid propaganda. I did bring up the organ harvesting and she was horrified at the thought of that, so there might be hope.

My sister, the retired Catholic art teacher, called me this morning and she is upset at how many of her old students who have gone to Catholic schools for 12 years are spouting this stuff.

[hrtshpdbox]

Trump needs to let Kellyanne Conway go because her husband just has too much crazy.

[Old Lurker]

The reason for the Ledge is that so so many things like these are blatantly obvious to us but are completely contrary to what the other side "thinks" (feels). You can't split the difference, just as you cannot mix white and black and still have white, and increasingly the other side, running on emotions only, is immune to learning the reality that will result if they get what they want.

[Thomas Collins]

If you think taxes are complicated now, with mark to market, taxes will be even more complicated. Which assets will be marked to market? Only liquid ones? Will financial accounting mark to market rules be followed? How about business assets that receive capital gains treatment under section 1231 of the Internal Revenue Code? Of course, after a couple of years, whatever the original rules are, we'll have exceptions and credits and deductions enacted. Then in a downturn, we'll have more exceptions enacted with complicated phaseout rules.

Of course, the tax lawyers will be blamed for all this complexity, even though, to the extent tax lawyers have engaged in any legislative suggestions, the suggestions have typically been to simplify taxes.

[henry]

The White House @WhiteHouse
1m

"Two duffel bags filled with 17 rifles, shotguns, handguns, and ammunition were found" on a Texas ranch near the border and confiscated by officials.

Secure borders mean fewer drugs and fewer weapons. 45.wh.gov/8V3xFi

[Old Lurker]

MM "They will NOT let those assets escape being part of the valuation, and they will have government appraisers to pour over every single thing people own."

No MM, if history is the guide, they will start off exempting those things to get it through, just like the Income Tax was only what, 1% and then only on a gazillion in income.

Then as Iggy points out all the time, as soon as owners learn that non liquid assets like paintings are exempt, great wealth will come out of cash, stocks and bonds and go into paintings or tulip bulbs, deflating the former and inflating the latter.

Golly. I wonder how that ends?

[Thomas Collins]

I am amused about how these discussions take place among politicians and opinion influencers without thought as to how general rules actually must be converted to legislative language. Time to petition OL to have an extra supply of adult beverages on The Ledge.

[MissMarple2]

https://www.sebgorka.com/three-weeks-is-not-a-surrender/

Pretty good article.

[clarice]

I'm waiting for someone to propose taxing the billions in college endowments and other "non profits" like the Rockefeller and Ford foundations which keep growing like topsy with no oversight. We head more and more into a Medieval social structure with these foundations taking the place of the rich Abbeys which were a government onto themselves.

[Old Lurker]

TC "general rules actually must be converted to legislative language" and then from laws into detailed regs and forms.

[Old Lurker]

Clarice "I'm waiting for someone to propose taxing the billions in college endowments..."

Let's have a race.

Will that happen before or after someone proposes that each layer of government restrict its spending to some definable numerical limit like % of GDP or whatever. "Restrict Spending" being the novel concept.

[henry]

Julie Kelly @julie_kelly2
12m

World shocked that Weekly Standard refugees end up at CNN

https://twitter.com/julie_kelly2/status/1090291804132556801

[Thomas Collins]

Re OL's comment about more funds going into wealth tax exempt assets. When that happens, tracing rules will be enacted, with various exceptions. More regulations and IRS administrative pronouncements. Some states will follow suit, but not all will piggyback, so we'll have a separate set of rules in many states. Then let's have a tax credit for the value of carbon reduction assets held by a taxpayer. Defining carbon reduction assets will take another dozen or so pages in the Internal Revenue Code, and will require about fifty more pages of Treasury Regulations. More scotch, please, OL.

[Old Lurker]

It is hell being you and me, TC.

[Thomas Collins]

Ah, as OL says, the forms. Form 666: Information Return Concerning Increase in Carbon Emission Enhancement Assets. I can't wait for that one.

[Old Lurker]

And just yesterday we were talking about the NY abortion law.

https://www.foxnews.com/world/ten-children-in-tanzania-kidnapped-and-killed-for-their-body-parts-authorities-say

[James D.]

Golly. I wonder how that ends?

It ends with followers of Warren and AOC et al reenacting all across the country the scene in "Dr. Zhivago" when the Gromeko family home is looted by the communists.

[MissMarple2]

https://www.lifenews.com/2019/01/29/city-council-condemns-new-york-legalizing-abortions-up-to-birth-after-disabled-man-says-abortion-is-murder/

Small city in New York wants to be a sanctuary city for the unborn.

[MissMarple2]

https://www.americanthinker.com/blog/2019/01/ruth_bader_ginsburg_watch_nears_the_end_of_its_second_month.html#.XFBggJbrvNw.twitter

[Tom R]

Simple question that I hope someone here has the legal knowledge to answer.

Does Trump have the authority as POTUS to see the unredacted version of Rosenstein's SC appointment letter to Mueller OR does Rosenstein have the authority as the ranking law enforcement official (thanks to Sessions recusal) to prevent Trump from seeing the redacted parts?

[clarice]

OL. I think it's albino kids.All cultures are the same, no?
MM, how are the unborn kids supposed to make it to the sanctuary cities?

[MissMarple2]

https://apnews.com/00b90ac3e97a41c3b3c078855b32d75f?utm_source=Twitter&utm_medium=AP&utm_campaign=SocialFlow

LAS VEGAS (AP) — The FBI has concluded its investigation into the deadliest mass shooting in modern U.S. history without determining a motive.

The FBI makes the conclusion in a report given to The Associated Press on Tuesday. After nearly 16 months, the agency says it can’t determine why gunman Stephen Paddock killed 58 people and injured nearly 900 others in October 2017.

=====================================

There is more, but I am left unimpressed with the FBI, once again.

[MissMarple2]

clarice,

1. None of these abortions allowed in the city.

2. Haven for women who are being pressured to have abortions.

[James D.]

MM, the FBI would have to step up its performance about 10,000% for me to raise my opinion of it and its employees as high as "unimpressed."

[Tom R]

The blue on blue uncivil war will be fun to watch.

https://thehill.com/homenews/house/427364-some-dems-float-idea-of-primary-challenge-for-ocasio-cortez

[MissMarple2]

Just found out my brother-in-law is in the hospital out at the VA. He's been having shortness of breath and his cardiologist couldn't seem to find anything, so he drove himself out there yesterday and checked in.

The VA here in Indianapolis is run well and they are very nice to him. They are going to run a bunch of tests and see if they can find out the cause.

[Captain Hate]

Trump needs to let Kellyanne Conway go because her husband just has too much crazy.

Yes to this. Speaking of blondes, Ol' Yeller skewered the backstabbing scarecrow last night, pointing out how she'd formerly championed Fat RINO Bastard, which I knew, and Mutt Rombley,which I didn't but makes perfect sense.

[Ignatz Ratzkiwatzki]

The typical prog pea and thimble scam;
The state in the form of the fed and the bureaucracy rig the system through basically insane policies and produce what is hard to dismiss as a massive increase in income inequality. Simultaneously they jack government spending through the roof.
Planned result? Massive public debt which requires massive new taxes and massive fake wealth doled out to the connected while the middle stagnates.
Who can possibly save us from this state created crisis? Why the state, that's who. It promises to take back some of the fake wealth it gave to the connected to rescue the stagnated middle.

Do the noble progs ask anything in return? Only that meager payment they always crave; total political power and all of our freedoms and autonomy. A small price to pay for their benevolence.

[D]

No one should be taxed twice on anything. Agree with TC and OL.
They worked hard for what they have and government shouldn’t be permitted to take it away.

[James D.]

Trump needs to let Kellyanne Conway go because her husband just has too much crazy.

She needs to let her husband go. No decent person would publicly undermine and embarrass a loved one the way he's doing to her.

[D]

MM:
Will pray for him.
I pray for a Democrat challenger to AOC.

[henry]

Cardinal Dolan in the NY Post:

https://twitter.com/SohrabAhmari/status/1090265482349834242

[James D.]

Ig, that's the problem with ALL leftist policies.

They are ALL designed to reduce the ability of the individual to run their own life, and to increase the wealth and power and influence and reach of the government. It's baked into every leftist idea, in every area.

That's why there really can't ever be ANY compromise with the left.

[James D.]

Dolan is pathetic. If you read the whole piece, he ends it by whining that, basically, "I publicly support 98% of your policies, why are you being so mean to me?"

I have zero respect for him.

[Account Deleted]

Democrats can shove their tax plans up their "collective" black hole.

[henry]

We have that law in WI... not sure what happened to it.

The law requires every doctor who performs abortions to have admitting privileges at a local hospital. It would leave only one doctor to provide abortions in a state where 10,000 women seek the procedure each year, according to the plaintiffs.

https://www.cnbc.com/2019/01/29/eyes-on-kavanaugh-and-gorsuch-as-supreme-court-weighs-abortion-law.html?__source=twitter%7Cmain

[MissMarple2]

Thanks, maryrose!

He's a good guy - retired Marine officer and Vietnam vet.

[Old Lurker]

Clarice "All cultures are the same, no?"

You know, Clarice, that has been the central theme of all my rants for the last few years here. It really is as simple as the fact that human nature is universal and has not changed in 10,000 years or so. We have almost 5,0000 of some written human history and at least 2,000 years pretty well documented history from human interactions from just about every corner of the world from which a reasonable student of any of that can draw some conclusions of causes and effects.

Since 1789, there really has been nothing new under the sun.

[henry]

Maduro isn't giving up:

The Wall Street Journal @WSJ
46s

Venezuela's government accused the U.S.-supported opposition leader of undermining the country's economy and launched an investigation into him

[clarice]

https://www.americanthinker.com/blog/2019/01/venezuelan_dictator_nicolas_maduro_seems_to_be_soiling_himself_about_now.html

Dolan's a celebrity Cardinal who keeps the money flowing .

[Ignatz Ratzkiwatzki]

There hasn't been anything new under the sun since Cain and Abel.
Greed, envy and lust and the willingness to go to any length to feed them are eternal.
The only improvement has been the efficiency of the abattoir and the feed trough.

[D]

OL:
So true!
I will watch Chicago for future results.
It sounds like a movie plot with wearing wires and bringing down politicians in the business for half a century

[clarice]

https://www.washingtonexaminer.com/washington-secrets/shock-poll-democratic-swing-districts-back-wall-trump-immigration-offer

[Tom R]

One huge difference between this blog and CTH.

Sundance is on a crusade trying to promote his latest conjecture based on Nunes assumptions and he is moderating comments to his threads. Someone posted a comment they believed Mueller wore a wire in his FBI job interview with Trump and Rosenstein. I replied back asking how did Mueller get past the Secret Service security scanners wearing the wire. The post said "This post is waiting moderation". I went back today and can't find it so I assume Sundance deleted the post.

If you read the comments in the thread pretty much all of the comments are in lock step agreement with Sundance's assumptions. Surely there has to be more of his readers than me who see thru the holes in his logic? I wouldn't be surprised if he is deleting all the comments that counter his assumptions.

[Extraneus]

This idea is like an expanded property tax, which itself is inherently unfair.

I used to sit my little niece on my lap and explain stuff like this.

"So if the government is responsible to plow the road when it snows, and it costs $1000 to plow and there are 10 houses on the road, each house pays $100, right?"

"Right!"

"No, wrong. We have a pool, so we pay more than the the neighbors who don't have a pool. Doesn't it seem fair that people who have pools should pay more for snow plowing than people who don't?"

"No!"

"That 'a girl."

And now she's a Christian legal warrior in NYC.

[jimmyk]

Elizabeth Warren's Wealth Tax Contains The Germ Of A Decent Idea

Sigh. How about using some of this creative energy to come up with clever ways to shrink government, rather than new ways to feed the growing beast?

On the specifics: There's no good economic reason for taxing capital gains at all. People already pay taxes on income from assets, and they've already paid taxes on the income that was the source of the savings that was used to make the investments. Enough already.

Since seems politically necessary to tax all this stuff, the lower the better. If they're going to tax unrealized capital gains, than cut the rate to 5 percent. It will probably generate be revenue neutral.

[MissMarple2]

https://www.conservativereview.com/news/veto-override-house-republican-suggests-congress-will-overrule-trump-another-shutdown/

Romney, of course, along with others.

[jimmyk]

Let me try that last paragraph again:

Since it seems politically necessary to tax all this stuff, the lower the better. If they're going to tax unrealized capital gains, than cut the rate to 5 percent. It will probably be revenue neutral.