No Minister

Posts Tagged ‘Income Tax

The slow blade penetrates the richest Democrats

In this post – US Government cuts spending by $5 trillion – I’d already taken a look at the fighting going on inside the Democrat Party over their insane spending plans.

Insane because these multi-trillion dollar plans came on top of previous multi-trillion dollar plans already passed and on top of the “normal” government budget of $6 trillion plus.

Since that post the infrastructure bill ($1.2 trillion) has been passed by the US Senate and signed into law – thanks to help from The Stupid Party (GOP). The majority of the money is never going to be spent on what is actually infrastructure; roads, bridges, water works and so forth. The Progressive wing of the Democrats finally, grudgingly voted for it, accepting that they could no longer hold it hostage to the bill they really wanted, Build Back Better (BBB). They accepted the promises of Schumer and Pelosi that BBB would still pass, all $3.5 trillion of it.

Pelosi did get it through the House (with eleven idiot GOP votes) but it stalled in the Senate thanks to two Democrats: Senators Manchin (WV) and Sinema (AZ), the former in particular.

“President” Biden had already screwed up negotiations before, undercutting both Pelosi and Manchin. But the latest negotiations between he and Manchin were the last straw. While Biden admitted that the negotiations were probably going to go into 2022, he claimed that Manchin had “reiterated support” for the framework’s funding level. But Manchin had never agreed to those numbers – Biden’s statement was just a straight-up lie. That became very obvious when Manchin responded: “The president put out a statement. It’s his statement, not mine,” That’s a very polite hint, but incredibly the White House doubled down on their lie.

That was it. Just to rub salt in the wound, Manchin made the announcement on Fox News.

In addition to not pissing more money against a wall to add to already worrying increases in inflation, and the national debt, there was also one more great reason to celebrate the failure of this monstrosity: no change to the SALT deductions.

SALT you ask? No, it’s not the payment to Roman soldiers (from whence we get the word, salary). S.A.L.T stands for State And Local Taxes and they were a big part of the tax reforms the GOP passed a few years ago under Trump. In the USA when you do your annual tax returns you can deduct from your income the money you’ve paid in State and Local (usually meaning city) taxes before you apply Federal taxes.

It’s basically a tax deduction from the Federal side and it can add up. In Illinois I did appreciate not getting screwed twice for the 3% State Income Tax, and since then it’s gone up to 5%. In California it’s 13% and other Democrat One Party states and cities have followed the same path in introducing and then jacking up their tax rates, all of which are flat taxes. After all, their voters could deduct all that money from the Federal side so who cared – aside from GOP-controlled states that largely have no state income taxes. Let them carry more of the Federal burden while Blue states got on with spending.

In the 2017 tax reform package the GOP finally put a stop to this bullshit by capping the SALT deductions at $10,000. The Blue states howled and have not stopped howling since. Understand that this made no difference to the vast majority of working people in those states, since they didn’t earn enough to reach that threshold and could still deduct SALT as they always had.

But the richest 1% of Democrats, big donors to the Party, were not happy and have banged the drum behind the scenes for years now to eliminate the cap. Being one of these people herself, Nancy Pelosi was eager to help and one of the dirty little secrets of the BBB bill was that it would have eliminated that cap and given them a huge tax break, along with a spending assist to their pals running California, Illinois and New York.

So that’s now also dead. Excellent. Well done to the GOP for having screwed the richest 1%.

In case you’re wondering, Crenshaw is referring to this piece of performative bullshit from a prominent Democrat hypocrite – although to be fair it may be that she’s too dumb to understand this since she voted for the BBB.

Written by Tom Hunter

December 20, 2021 at 12:11 pm

Taxation Fairness

I’ve often seen data from the USA showing the proportions of income and tax but rarely in such a clean, simple format as this graph.

Mind you, if the wealthy continue to flex their privilege they’ll find increasingly little support from the GOP for tax cuts for them, on top of the GOP’s four decade efforts that have created an ever more progressive tax system that, as the graph shows, very much taxes the rich.

See also Why do Millionaires hate Billionaires? and Every Billionaire is a Policy Failure. Those people are not part of the graph since they don’t rely on “income” and are therefore untouched by income tax.

I wonder what the corresponding data for New Zealand is?

Written by Tom Hunter

November 15, 2021 at 12:18 pm

Birth and Taxes

Last year I wrote a little piece about an amusing bit of family history involving taxes, which involved a letter sent to my Dad by the IRD a couple of years after his return from WWII, regretfully pointing out the following:

My records show, and doubtless you will recollect, that at the time of your entry into the armed forces, there was an amount of £9.17.5d owing by you for income tax in respect of income derived during the year ended 31st March 1939.

I thought of this the other day when I saw the following piece of video on Twitter, where a Dad in the USA recorded the reaction of one of his sons getting his first ever paycheque. It becomes obvious that the Dad has a laughing suspicion of what is about to happen as his kid opens the envelope and examines the details.

At one point the kid is so obviously steamed that he has to get out of the car and walk around the back for a bit just to cool off (and perhaps uuter some words under his breath that he doesn’t want Dad to hear). One thing he says is heard clearly:

“So if I earned it, why can’t I get it?”

We’ve all been there kid.

It’s also a video reality of something that P J O’Rourke wrote years ago:

“In 1970, I got a job. It wasn’t much of a job. I was a messenger. But it brought in $150 a week and that was wealth as far as I was concerned. We were paid fortnightly. I waited greedily for my $300. But when my pay envelope arrived I found, after federal, state, and city taxes had been deducted and social security, health insurance, and pension plan payments had been made, only $160 was left.

I began yelling. ‘I’m a revolutionary! I’ve been a revolutionary since I went to college! I’ve demonstrated! I’ve rioted! I’ve done everything I could to overthrow capitalism! And what do I find when I get my first paycheck from a capitalist company? COMMUNISM!!!’

Of course, it was several years before the implications of what I yelled sank in. At that age I wasn’t listening to anyone, myself included.”

Written by Tom Hunter

July 28, 2020 at 12:10 pm

Posted in Economics & Economy, USA

Tagged with , ,

Sudden, Violent Death – and taxes.

With March 31 behind us and May 30 ahead of us, ’tis the season for tax returns, and thus the following story which I put forward for your amusement.

Several years ago, working around the crawlspace under a family house, I found an old ammo box. Undoubtedly purchased from an Army Surplus store, this had apparently been a storage space for some of my parent’s papers, all safe, dry and secure. A quick glance revealed that they were mainly old financial documents; packets organised by year and probably returned from the accountant after each year’s tax workings.

I grabbed one at random and dragged it inside the house, but it was not until a few months ago, while relaxing in the evening with a glass of red wine, that I unwrapped the package and began to work through the documents. Most of it was the simple detritus of a farming business life: invoices and receipts from the likes of machinery suppliers, stock and station agents and so forth. But one paper grabbed my attention because it was from the IRD – in those days the Land and Income Tax Department.

Dated 28th February 1948, the letter opens by explaining to my Dad that the money he’d got from the wool and lambs, which had repaid loans without ever touching his bank account, still counted as income. There’s also some stuff about how legal expenses and stamp duty are not tax deductible. This is not America after all.

But then it becomes fun as the Commissioner of Taxes reveals that they’ve reviewed his files and,  (say it in your best Vogon voice) regrettably must inform Dad that upon being released from the armed forces, they had failed to inform him of his pre-war tax liability.

Turns out he owed income tax for 1939, almost a decade earlier. But it was the language used to inform him in the fifth paragraph that got me: a rendition of bureaucratic understatement so perfect that it’s pity that Sir Nigel Hawthorne is not still alive to read it in the manner of his character, Sir Humphrey Appleby, GCB, KBE, MVO, MA (Oxon):

My records show, and doubtless you will recollect, that at the time of your entry into the armed forces, there was an amount of £9.17.5d owing by you for income tax in respect of income derived during the year ended 31st March 1939.

…and doubtless you will recollect, …

Sure. While Dad was ploughing through North African sand drifts in his Bren Carrier, getting shot up by a fucking Mark IV, captured, dumped in one fucking POW camp after another through Italy, jumping out of transport trains enroute to Germany, damned near dying of blood poisoning and fuck knows what else on the way to recapture in Yugoslavia and a sort of peace in Stalag IVB before it all mercifully comes to an end, I’ll bet it was never far from his mind that he’d gypped the New Zealand Government out of £9. 17. 5d back in 1939, and that he’d better attend to that quick smart as soon as he got home.

The letter goes on to say that many other service members were in the same boat but have since paid up, that the Commissioner is sure Dad would agree that it would be inequitable if some paid and others did not, and that hardship provisions can be applied if necessary.

Which is all fair enough. But FFS, and doubtless you will recollect.

He also points out that his job is to get all members of the community to pay income tax. That ancient notion also brought forth much hearty laughter on my part.

Written by Tom Hunter

May 10, 2019 at 8:45 pm