Category Archives: Taxes

State Corporate Tax Receipts Just Crashed The Most Since The Recession, by Tyler Durden

Put corporate tax receipts on the stack of indicators flashing yellow for the economy. From Tyler Durden at zerohedge.com:

After flatlining for the past year, US income tax receipts – both at the federal government and on a state and local level – have been disappointing, and have posted a sharp drop since the start of the year, which is “sounding an alarm about the health of the US economy” in BofA’s words (in addition to the countless other alarms about the health of the economy, which however are ignored due to the record stock market).

As Bank of America highlights something we warned about last September, according to the Rockefeller Institute and CBO, US federal income tax receipts have come in about 3% below expectations this year.

Digging deeper, the disappointment was largely in personal current tax receipts, with withheld tax receipts showing little growth over the prior two quarters. The story is a bit different for state and local governments where personal tax receipts were fairly stable, but there was a significant decline in tax receipts for corporate income.

In fact, corporate income tax receipts fell a sharp $7bn in 1Q, the biggest drop since the recession. Since corporate income tax receipts only make up about 14% of the total, there was still a modest gain in overall state and local tax receipts. While there has been particular weakness of late, the trend through last year was weak; according to the Rockefeller Institute, total state tax collections grew only 1.2% in FY16 (declined in real terms), the weakest performance since 2010.

In an attempt to explain away this otherwise troubling development, the CBO has proposed that the weakness in tax receipts may reflect the shift of taxpayer income into later years on the anticipation of legislation to reduce tax rates, which however is looking increasingly unlikely. Presumably this would have the biggest effect on high income and high net-worth individuals. And this will matter for the aggregate figures as the top 1% of earners account for almost 40% of federal personal income tax receipts.

To continue reading: State Corporate Tax Receipts Just Crashed The Most Since The Recession

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Per Capita Taxes Have More Than Doubled Since JFK, by Terence P. Jeffrey

Maybe the reason the economy has been so sluggish is because productive people have to keep turning an increasing portion of what they earn to the government. No, that couldn’t be it. From Terence P. Jeffrey at cnsnews.com:

Real federal taxes per capita have more than doubled since John F. Kennedy served as president — and argued for lower taxes.

In 1961, the fiscal year Kennedy was elected, the federal government collected about $94.388 billion in taxes, according to the Office of Management and Budget. The population that year was about 183,691,481, according to the Census Bureau. That meant federal tax revenues equaled about $514 per capita — or $4,121 in 2016 dollars.

By 1965, the fiscal year Lyndon Johnson beat Barry Goldwater, the federal government collected about $116.817 billion in taxes from a population of about 194,302,963. That year federal taxes equaled about $601 per capita — or $4,578 in 2016 dollars.

In fiscal 2016, according to OMB, the federal government collected about $3.268 trillion in taxes. That equaled about $10,114 for each of the 323,127,513 people in the country.

Per capita federal taxation in fiscal 2016 was 121 percent more than it was in 1965 and 145 percent more than it was in 1961.

In 1961, when Kennedy took office, federal taxes consumed 17.2 percent of gross domestic product, according to OMB. By 1965, they were down to 16.4 percent.

In 2012, then President Barack Obama was seeking re-election, and federal taxes consumed 15.3 percent of GDP. But by 2016, they had climbed to 17.8 percent. This year, according to OMB, they will hit 18.1 percent.

Is that a good deal for America?

Fifty-five years ago, when taxes were less than half what they are now per capita and consumed a smaller share of the economy, President Kennedy, a Democrat, believed Americans deserved a better deal.

In 1961, the economy grew at 2.6 percent — the same as it did in 2016. But Kennedy did not think that was good enough. He wanted more growth. He believed lower taxes was the path to it.

To continue reading: Per Capita Taxes Have More Than Doubled Since JFK

California Governor Jerry Brown Slams Taxpayers As “Free Loaders” For Opposing Higher Taxes, by Mac Slavo

People who earn their money and don’t want to turn it over to the government are now freeloaders. Talk about the corruption of language. From Mac Slavo at shtfplan.com:

Millions of Californians are outraged by a recent bill that would increase the state’s gas tax by 12 cents per gallon, and increase vehicle license fees by $50 per year. All told, the plan amounts to a $52 billion tax hike. The proposal has since been passed in the state’s legislature, despite the fact that a majority of Californians opposed the bill. The tax is so controversial that state senator Josh Newman, who helped it pass, may face a recall election in the near future.

Amid this outrage, California Governor Jerry Brown defended the senator and the gas tax in a recent speech, during which he revealed how much disdain he has for middle class voters who are tired of being taxed to death.

Republicans say budget cuts should be made to fund road maintenance. A failed GOP plan proposed last year would have tapped into cap-and-trade money used to lower greenhouse gas emissions, cut Caltrans positions and eliminated other positions that have been vacant. It identifies other funding sources, but doesn’t specify what programs would be cut if that money was diverted to roads.

Brown said the plan is unrealistic.

“The freeloaders — I’ve had enough of them,” Brown said, adding that the approved tax and fee hikes bring those charges to the level they were 30 years ago if adjusted for inflation. “They have a president that doesn’t tell the truth and they’re following suit.”

Of course, it isn’t just a few Republican senators who don’t want the tax hike. Polls have shown that more than half of Californians oppose it. I suppose they’re a bunch of freeloaders right?

And what he doesn’t say, is that California already has some of the highest taxes in the nation. Californians already give so much money to the government, and yet the state has some of the worst roads in the country. California doesn’t have a problem with people who aren’t willing to pay their fair share to keep the state’s infrastructure functional.

To continue reading: California Governor Jerry Brown Slams Taxpayers As “Free Loaders” For Opposing Higher Taxes

The Soft Underbelly of Scandinavian “High-Tax Happy-Capitalism”, by Charles Hugh Smith

With enough debt, anyone can be happy…for a while. From Charles Hugh Smith at oftwominds.com:

Central planning based on central-bank inflated debt-asset bubbles works until it doesn’t.
A media mini-industry touts Scandinavia’s “happiness” as the result of its high-tax, generous welfare state-capitalism. This mini-industry conveniently fails to report the soft underbelly of Scandinavia’s “High-Tax Happy-Capitalism”: The high-tax, generous welfare model is just as dependent on unsustainable credit bubbles as every other version of state-capitalism.
The glossy surface story goes like this: state-capitalism creates a happy, secure society if taxes are high enough to fund generous social welfare benefits for everyone. People are happy to pay the higher taxes because they value the generous benefits they receive.
The story has an implicit message: every state-capitalist society could become happy if only taxes were raised high enough to fund generous social welfare for all. There are many versions of this narrative, for example, the appealing (but financially impractical) “tax the robots” funded Universal Basic Income (UBI) that I have repeatedly debunked.
Put another way: state-managed capitalism works just great if high earners and companies pay high enough taxes to fund a rebalancing of wealth and income via social welfare transfers.
The reality is quite different from this glossy PR narrative. The Scandinavian economies have pursued the same unsustainable debt-bubble “fix” for their structural insolvency as other state-managed nations.
As the charts below reveal, the “happy” Scandinavian nations are now dependent on unprecedented debt/housing bubbles inflated by extreme monetary stimulus. The script is the same as in every other monetary “experiment” intended to create the illusion of solvency in an insolvent system: lower interest rates to zero (or below-zero if you’re really desperate), juice the financial system with liquidity/ easy credit, and base your measures of financial “health” on housing bubbles and other debt-based gimmicks. (Charts courtesy of the Acting Man blog)

Seattle Mayor Wants To Tax Diet Soda To Fight “White Privileged Institutionalized Racism” by Tyler Durden

How can you take such people seriously? From Tyler Durden at zerohedge.com:

Back in February, Seattle’s Mayor Ed Murray called for a 2 cent per ounce tax on sugary soft drinks in order to “improve Seattle’s educational opportunities for students of color.”  Per Lynx Media, the tax was expected to raise some $16 million per year.

Of course, when someone on his staff pointed out that a tax on sugary drinks would disproportionately impact the minorities that he was apparently trying to help, Murray knew that something drastic had to happen.  So that’s when he decided to launch a new attack against the most recognizable symbol of “white privileged institutionalized racism” on the planet:  DIET SODA!

Per the Seattle Times:

The changes were recommendations that emerged when staff from the mayor’s office and the office of Councilmember Tim Burgess studied disparate impacts the tax could have on people with low incomes and on people of color, according to Murray.

That work involved conversations with community advocates, public-health professionals and business owners, according to the mayor. After Murray’s initial announcement, some suggested the exclusion of beverages with artificial sweeteners would be unfair because affluent white people tend to consume more diet drinks.

And while we suspect that many of our readers who frequently enjoy diet sodas didn’t realize they were racist, trust Ed Murray when he says that you most certainly are…and he’s going to tax you for it.

And now that Democrats have found a way to directly tax “white privilege,” we suspect we’re going to see a whole lot more diet soda taxes. 

To continue reading; Seattle Mayor Wants To Tax Diet Soda To Fight “White Privileged Institutionalized Racism”

Using Persuasion to Create Assets Out of Nothing, by Scott Adams

Scott Adams continues with his unique take on President Trump. From Adams on a guest post at theburningplatform.com:

Yesterday President Trump unexpectedly said he would be “honored” to meet North Korea’s Kim Jung-un.

And that’s how a Master Persuader creates an asset out of nothing.

I’ll explain.

By holding out the possibility of meeting with Kim Jung-un, President Trump has conjured out of thin air a virtual “asset” that he can use for negotiating with North Korea. I’m sure the North Korean leader would like the international respect and recognition that such a meeting would confer. Best of all, Jung-un could use that future meeting as evidence for his citizens that he stared-down America and negotiated a great deal in which we remove some of our military assets while they end their nuclear weapons program. Or something like that.

The point is that President Trump created this “asset” out of nothing but persuasion. Now Kim Jung-un has something to gain, and something to lose. And that option simply didn’t exist a week ago.

Do you think this was a unique situation?

Consider that President Trump has already built a border wall with Mexico out of nothing but persuasion. Immigration from Mexico is down more than 50% just from Trump’s persuasion alone. I suppose we will get something like a physical wall someday too. But for now, Trump’s Wall of Persuasion is doing a lot of work.

Now take a look at the stock market. Optimism about a Trump presidency has increased the value of the stock market by a gazillion dollars (approximately) since election day. In other words, President Trump’s persuasion created a lot of something out of nothing. Again.

To continue reading: Using Persuasion to Create Assets Out of Nothing

Damn the Deficits, Huge Tax Cuts Ahead! by Peter Schiff

Annual deficits may ratchet up to the $2 trillion a year range if President Trump’s proposed tax cuts go through. From Peter Schiff at europac.com:

Donald Trump has made good on one of his most audacious campaign promises by submitting what he describes as the biggest tax cut in U.S. History. For once, at least, this does not appear to be Trumpian braggadocio. It really may be the mother of all tax cuts. But if passed, what may this bunker buster do to the economy? While I have rarely met a tax cut I didn’t like, this one just may be more likely to send the economy into a downward spiral than it is to send up to orbit.
As I mentioned in my January commentary, Donald Trump’s big-spending, tax-cutting campaign rhetoric threatened to make him the biggest borrower in presidential history. He comes to office at a particularly vulnerable time for budget dynamics. After contracting by nearly two thirds from 2010 to 2015 (from the mind-bending $1.3 trillion to the merely enormous $438 billion), the Federal deficit started expanding again in 2016, moving up to $587 billion (Govt. Publishing Office, Office of Management & Budget (OMB). Current projections have it going up nearly every year over the next two decades. The Congressional Budget Office expects it to permanently surpass $1 trillion annually by 2021 or 2022. But these ominous forecasts were made well before anyone thought Trump had a snowball’s chance of ever becoming president. Now that he is in the office, those projections will be the floor. The ceiling is anyone’s guess.
The forecasts assume that the taxing and spending laws in place during the Obama Administration won’t change. The steep increase in projected deficits towards the end of this decade and into the next is largely driven by the retirement of the Baby Boom generation, which will lead to simultaneous increases in entitlement spending and decreases in tax revenue. This brick wall has been hiding in plain sight for decades but the can-kickers in Washington have serially failed to do anything to avert the inevitable collision. 
(These forecasts also optimistically assume that the economy never again enters recession, inflation never again rears its ugly head, and that our creditors never get concerned enough about our growing debt to demand a premium for the risk of financing it.)