VIDEO: Alex Epstein — Harvard Business School Fireside Chat

A few weeks ago I was joined by my favorite energy economist, Michael Lynch, for a fireside chat hosted by Harvard Business School. It was a great discussion and the audience asked a lot of thoughtful questions. You can now view the video of that event:


Mr. Epstein Goes to Washington

I’ll be in DC the week of November 27 to share my approach to reframing the energy debate with some high-level officials. It looks like I’ll be speaking to the Congressional Coal Caucus on Wednesday, November 29. On November 30, I’ll be speaking at the Crossroads IV: Energy and Climate Policy Summit in Washington, D.C. The event is presented by the Texas Public Policy Foundation and the Heritage Foundation and includes some of the world’s leading scientists, policy makers, entrepreneurs, and energy experts. I will be speaking on the moral case for fossil fuels. The event is nearly sold out, but there will be a waiting list. You can find more information at https://www.crossroads-summit.com.


ALSO: Whenever you’re ready, here are 3 ways I can help your organization turn non-supporters into supporters and turn supporters into champions.

  1. Hire me to speak at your next event.
  2. Fill out the free Constructive Conversation Scorecard to assess where you are and where you want to be in your one-on-one communications. Email it back to me and I’ll send you my step-by-step Constructive Conversation System that will enable you to talk to anyone about energy.
  3. Hold a Constructive Conversation workshop.

For the last two years I have been testing and refining an approach to one-on-one conversations that anybody can use. I call it the Constructive Conversation Formula. If you have between 5-20 people who interact frequently with stakeholders and want custom guidance on how to win hearts and minds, just reply to this email and put “Workshop” in the subject line.

Senate Tax Force Aims for Obamacare

“I don’t know if I can live on my income or not,” comic strip writer Bob Thaves joked. “The government won’t let me try it.” But Republicans might, if their twin tax plans can survive the twists and turns of a House and Senate debate. A good House plan got even better, thanks to House Ways and Means Chairman Kevin Brady (R-Texas), who heeded conservatives’ concerns and honed the language on the Johnson Amendment, adoption tax credit, and marriage penalties. After some thoughtful revisions, his bill, the Tax Cuts and Jobs Act is headed to the floor as early as tomorrow.If there’s trouble ahead, House leaders are confident it won’t be on their side of the Capitol. “It’s probably the most unified we’ve been in a while,” Rep. Doug Collins (R-Ga.) told reporters about Thursday’s vote. “We all have our issues, and we know the Senate is going to do something different. But I think everyone is very focused, and we know we need to get this thing done.”

Collins was right about the Senate doing something different. Late yesterday, Senate Finance Chairman Orrin Hatch (R-Utah) announced that Republicans were tweaking their bill to take on an old foe: the Obamacare individual mandate. In a major departure from their first draft (and the House plan), GOP leaders decided this was the perfect time to attack the IRS’s punishment for Americans who refuse to buy insurance. In doing so, Hatch argued, “We not only ease the financial burdens already associated with the mandate, but also generate additional revenue to provide more tax relief to [middle-class] individuals.” The benefits are two-fold: taxpayers aren’t fined for making a personal decision about health care, and the Senate has more money to offset other tax reforms.

That’s key for Republicans, who unlike the House, are working under much stricter budget rules. Under the reconciliation process (which lets them pass the bill with a simple majority instead of the regular 60), GOP leaders have to find a way to “pay for” their plan, and zapping the individual mandate would free up about $338 billion over the next 10 years. Senator Hatch knows that if fewer people are forced to buy insurance, then fewer people will be applying for federal subsidies to pay for it. That saves GOP leaders a lot of money, which it’s decided to use for an even better causes: like the child tax credit.

Thanks to the persistence of Senators Mike Lee (R-Utah) and Marco Rubio (R-Fla.), the modified Senate bill doubles the child tax credit to $2,000 from the initial $1,650. FRC, along with other conservatives, had been pushing for this increase for months. Now, that work is paying off. “Good news for working families,” Rubio tweeted. “The Senate #TaxCut bill now has #ChildTaxCredit at 2K. We are making progress.” Hopefully, the GOP finds a way to make the change permanent, since the text, as it’s currently written under reconciliation rules, would expire in 2025.

The Left’s pro-abortion crowd has gone hysterical over an education tax deduction, the ability of expectant parents’ to contribute to their future children’s education. The Left insists that this is some radical new way of undermining abortion, which is interesting since it has nothing to do with it. Yet still, NARAL calls it “dangerous” to let families save for college early. Affirming this language, claims Ilyse Hogue would “lay the foundation for ‘personhood,’ the idea that life begins at conception thus granting a fetus in utero legal rights.” But guess what? That foundation was already laid in the Unborn Victims of Violence Act, which, Hogue may be interested to know, uses the same terminology.

As most people know, the real debate on these provisions will be in three weeks or so, when the two chambers conference together and hash out their differences. Until then, Americans will watch and wait — hoping, as we all do, that Republicans can finally offer families some much-needed relief from Uncle Sam.


Tony Perkins’ Washington Update is written with the aid of FRC senior writers.


Also in the November 15 Washington Update:

U.S. Strayed by USAID

Bible Speeches Make the Week Strong

Taxpayers Get a Win Over Sports Stadium Cronies

As the Houston Astros enjoy their World Series victory, taxpayers across the country have a reason of their own to celebrate this week.

Buried in the tax reform bill is a provision that fixes an egregious loophole that sends billions in tax preferences to private sports stadium construction.

The current tax code allows billion-dollar sports franchises—such as the (soon-to-be) Las Vegas Raiders—to use tax-exempt municipal bonds to build their stadiums.

Whereas interest generated by corporate bonds is taxable by the federal government, municipal bond interest is tax-exempt, allowing municipal bonds to command comparatively lower interest rates.

Tax-exempt municipal bonds are generally reserved for public-use infrastructure projects, such as roads, schools, and water systems. But due to a loophole in the tax code, sports franchises have been able to prolifically exploit this tax preference to construct their private stadiums.

Since 2000, at least 36 stadiums have been financed with tax-exempt bonds, amounting to a total tax subsidy of $3.2 billion due to lower financing costs.

Worse still, the foregone federal revenues from this carve-out are even greater—amounting to $3.7 billion. This is because the subsidy is inefficient, allowing high-income earners to capture some of the benefits.

While proponents of this tax break claim that sports stadiums create jobs and economic growth, studies detailing subsidies for sports stadiums repeatedly show no effect or even a drag on economic growth in the overall metropolitan area in which the stadium was constructed.

Building on a bipartisan effort to eliminate this handout to special interests, congressional leaders took the admirable step of eliminating the option of tax-exempt financing for any sports stadium in section 3604 of the tax reform bill.

While the provision eliminates just one of the many crony features of the current tax code, ending the tax preference for sports stadiums is a clear win for all federal taxpayers, regardless of which team they support.

COMMENTARY BY

Portrait of Michael Sargent

Michael Sargent is a policy analyst for transportation and infrastructure in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation. Twitter: 

A Note for our Readers:

Trust in the mainstream media is at a historic low—and rightfully so given the behavior of many journalists in Washington, D.C.

Ever since Donald Trump was elected president, it is painfully clear that the mainstream media covers liberals glowingly and conservatives critically.

Now journalists spread false, negative rumors about President Trump before any evidence is even produced.

Americans need an alternative to the mainstream media. That’s why The Daily Signal exists.

The Daily Signal’s mission is to give Americans the real, unvarnished truth about what is happening in Washington and what must be done to save our country.

Our dedicated team of more than 100 journalists and policy experts rely on the financial support of patriots like you.

Your donation helps us fight for access to our nation’s leaders and report the facts.

You deserve the truth about what’s going on in Washington.

Please make a gift to support The Daily Signal.

City’s Illegal Alien Defense Fund Gives $17,500 to Terrorist Front Group

Ohio’s capital city has launched a defense fund for illegal immigrants facing deportation and thousands of taxpayer dollars will go to the local chapter of a terrorist front group that promotes itself as a Muslim civil rights organization. The pot of cash is known as Columbus Families Together Fund and the Council on American Islamic Relations (CAIR), a national organization that serves as the U.S. front for the Palestinian terrorist group Hamas, will be among the recipients.

CAIR was founded in 1994 by three Middle Eastern extremists (Omar Ahmad, Nihad Awad, and Rafeeq Jaber) who ran the American propaganda wing of Hamas, known then as the Islamic Association for Palestine. In 2008 CAIR was a co-conspirator in a federal terror-finance case involving the Hamas front group Holy Land Foundation. Read more in a Judicial Watch special report that focuses on Muslim charities. Top FBI counter terrorism chiefs have described CAIR as an entity that not only promotes terrorism, but also finances it. One group has dedicated itself to documenting CAIR’s extensive terrorist ties which include a top official sentenced to 20 years in prison for participating in a network of militant jihadists, another convicted of bank fraud for financing a major terrorist group, a board member who was a co-conspirator in the 1993 World Trade Center bombing and a fundraiser identified by the U.S. Treasury Department for financing Al Qaeda.

Allocating public funds to assist illegal aliens with their legal problems is bad enough, but giving some of the cash to a group like CAIR is like pouring salt on the wound. The effort started when Donald Trump got elected president. Columbus City Councilwoman Elizabeth Brown vowed to help illegal immigrants fight deportation and posted this on her social media account on January 30: “In Columbus, we stand with immigrants! This morning I announced Council’s commitment to a legal defense fund to support our refugees and immigrants as they face an onslaught of new hurdles to keep their families together. I’m excited to get to work. Who wants to help?”

Last week the Columbus City Council made it official, establishing the new legal defense fund with a $185,000 infusion to help provide legal services to the area’s illegal aliens and their families. The money will go to various nonprofits that will also “educate detained immigrants on their rights under immigration law,” according to a local newspaper report. A nonprofit called Advocates for Basic Legal Equality Inc. will get the largest chunk of city money, the article reveals, but other groups will also benefit. Priority will go to Columbus-area illegal aliens facing deportation in Cleveland Immigration Court and preference will be given to cases involving children. CAIR will receive $17,500 to provide “legal services that help keep families together in the central Ohio immigrant and refugee communities.” This includes “know your rights” education sessions in Columbus that will cover encounters with federal immigration agents. Brown, the councilwoman behind the effort said “we’re sending a signal here tonight. We value our immigrants. We welcome you. We know that the demonization of immigrants throws them into the shadows and makes a class of silent victims. We won’t allow it.”

City leaders feel an obligation to protect immigrant and refugee families in Central Ohio from the financial and emotional devastation that results from aggressive immigration enforcement, according to a document describing the Columbus Families Together Fund. “The wellbeing of our immigrant communities is intertwined with the city’s overall wellbeing,” the document states. “Ultimately, Columbus is a safer, more just, and more economically vibrant city for everyone when we address the needs of all our residents.” It also says that, because an intact family is one determining factor in economic self-sufficiency and long-term child success, the city will also pay for additional services that help keep immigrant and refugee families together.

Columbus is not alone in allocating public funds to help those in the country illegally after the Trump administration announced a harder line on immigration enforcement. Last year two major U.S. cities that have long offered illegal aliens sanctuary allocated millions of dollars to help them avoid deportation. A few days after the Chicago City Council approved a $1.3 million legal defense fund to assist illegal aliens facing deportation, official in Los Angeles unveiled a similar program with a $10 million infusion.

EDITORS NOTE: Readers may donate to Judicial Watch by clicking here.

Realtors and Homebuilders Put Profits Over Middle Class

By Peter J. Wallison & Edward J. Pinto

Two powerful lobbying groups that advertise themselves as helping Americans buy homes have announced that they will oppose the Republican tax plan. Their reason? Because it will lower housing costs. Seldom have any denizens of “the Swamp” shown their true colors quite so flagrantly.

For years, the National Association of Realtors and the National Association of Home Builders were strong supporters of Fannie Mae and Freddie Mac, two government-backed mortgage companies, because (they argued) the government subsidies these firms received would create affordable housing for the middle class. That was their stated reason. The real rationale, as they have now made clear, is that Fannie and Freddie’s policies drove up housing prices, thereby increasing their members’ profits.

When the Republican tax plan made them choose between helping the middle class to buy homes and reducing their members’ profits, they chose profits. Doubling the standard IRS deduction while reducing or eliminating deductions for state and local taxes would discourage would-be homebuyers from purchasing more expensive homes. Since both the Realtors and the builders earn more from selling bigger homes amid rising prices, they simply oppose any tax plan that does not help inflate housing costs.

Their analysis is instructive. If large numbers of taxpayers use the new—and much higher—standard deduction in the Republican plan, they will not be eligible to use the mortgage interest deduction in calculating offsets to the cost of the home. This will induce them to be more cautious in what they spend. A bigger and more costly home will not necessarily mean a bigger tax deduction. Accordingly, the Realtors and homebuilders would suffer a reduction in profits.

The same thing is true for the state and local tax deduction, which applies to local property taxes. If this deduction is reduced, homebuyers will not take into account the “savings” they would receive from deducting large state and local taxes on a bigger home. This will also reduce their spending on the home, and this too will mean less profit for the Realtors and homebuilders.

The financial crisis in 2008 was the result of government housing policies—strongly backed by both the Realtors and homebuilders—that encouraged and sometimes even demanded reductions in underwriting standards so that more Americans with modest incomes could buy homes. The result was a massive housing boom, which drove up prices for first-time homebuyers. By 2007, housing was unaffordable for people of modest means, no matter how concessionary the mortgage terms. The crash in housing values that followed caused many Americans—who bought houses at inflated prices they couldn’t afford—to lose their homes.

The Realtors and homebuilders, however, did wonderfully well in the booming market before 2007, profiting from the unprecedented rise in housing prices. They want this market back, and since government housing policies haven’t changed since the financial crisis—the crisis was blamed on the banks rather than housing policies—they are on the way to getting what they want. If you want to know what crony capitalism looks like, this is it.

Among other things, Fannie, Freddie (and the Federal Housing Administration) are still doing what they did before the crisis: keeping down payments low—often at 3 percent or less—so that buyers can buy bigger and more expensive homes by borrowing more. Once again, home prices are booming. This puts buyers in danger of eventual foreclosure because of a loss of a job, divorce or illness. But by the time that happens, Realtors and homebuilders have been fully paid. If this keeps up, another housing bust, and possibly another financial crisis, cannot be avoided.

The Realtors and homebuilders are afraid that the GOP tax plan will have the effect of stabilizing housing prices. Although this would be an obvious benefit for young homebuyers trying to purchase their first—or second—homes, it’s wholly undesirable for the builders and real estate agents. All of which raises one central question, which should be in the minds of all Americans—including members of Congress—when they consider the coming tax debate: Whose side are these people on?

RELATED ARTICLES: 

GOP’s tax bill cancels $23 billion in credits claimed by illegal immigrants – Washington Times

GOP Tax Plan Would Revitalize US Economy, Give Significant Tax Relief

Why Democrats Are Obsessed With Wealth Inequality

Trump’s Economic Adviser Explains How You Benefit From Tax Reform

EDITORS NOTE: This column originally appeared in Real Clear Politics.  Peter J. Wallison is a senior fellow at the American Enterprise Institute. Edward J. Pinto is a resident fellow at the American Enterprise Institute.

House GOP Unveils Details of Tax Reform Bill

The details of the Republican tax reform plan released Thursday mostly reflect the goals laid out by President Donald Trump, including cutting the corporate tax rate and keeping a sharper focus on middle-class tax cuts, meaning an extra $1,182 per year for a median-income family.

The tax plan would keep the income tax rate for the wealthiest earners at the 39.6 percent rate. Trump and Republicans in Congress initially talked about reducing the number of tax brackets from the current seven down to three, but more recently talked of a fourth bracket for the wealthy.

As expected, the plan would cut the U.S. corporate tax rate, the highest in the industrialized world, from 35 percent to 20 percent.

“With this plan, we are getting rid of loopholes for special interest and we are making things simple,” House Speaker Paul Ryan, R-Wis., said Thursday in a press conference. “ … This is our chance to ensure that American families don’t just get by, they get ahead in this country.”

The plan released Thursday by House Republicans caps the amount people can write off in state taxes at $10,000. Many conservatives contend the write-off encourages high-tax states to continue to hike taxes and forces low-tax states to subsidize them.

For a small business on Main Street, the tax reform bill means savings of about $3,000 per year, while the typical median-income family of four earning $59,000 annually will see a tax cut of $1,182, noted Rep. Kevin Brady, R-Texas, the chairman of the House Ways and Means Committee, which writes tax laws.

“That’s your money,” Brady said. “You earned it and you deserve to keep it.”

Further, the plan will not affect retirement plans, even though some talk had surfaced about a cap on tax savings from 401(k) plans.

The tax plan also reportedly caps the mortgage deduction rate at $500,000, a drop from $1 million.

Tax reform leads Trump’s legislative agenda, and was made considerably easier after the Senate and House passed a budget resolution last month, meaning the tax reform proposal could be approved without a supermajority in the Senate. Trump hopes to attract some support from moderate Democrats to sign the bill before the end of the year.

In a statement, Trump said:

My tax reform priorities have been the same since Day One: bringing tax cuts for hardworking, middle-income Americans; eliminating unfair loopholes and deductions; and slashing business taxes so employers can create jobs, raise wages, and dominate their competition around the world. …

The special interests will distort the facts, the lobbyists will try to save their special deals, and some in the media will unfairly report on our efforts. But my administration will work tirelessly to make good on our promise to the working people who built our nation and deliver historic tax cuts and reforms—the rocket fuel our economy needs to soar higher than ever before.

Other elements of the plan released by the House have been talked about for months.

The first $12,000 of income for individuals would be tax-free under the plan, up from $6,350. For couples, the first $24,000 of income will be tax-free.

Trump’s daughter and presidential adviser, Ivanka Trump, has championed a child tax credit increase, which would increase from $1,000 to $1,600.

The plan calls for repealing the alternative minimum tax, which requires many taxpayers to calculate their tax liability more than once. The tax was initially intended to prevent abuse by the very wealthy, but ended up affecting millions of middle-class tax filers.

House Majority Leader Kevin McCarthy, R-Calif., said the tax reform bill could be the most important legislation members will vote on, considering tax reform hasn’t happened since 1986.

The plan was also unveiled on the seventh anniversary of the Republicans retaking the House of Representatives in 2010, McCarthy added.

“This plan will bring money sitting overseas back to America,” McCarthy said. “This is about tax cuts. This is about America first. This is about the future.”

Portrait of Fred Lucas

Fred Lucas

Fred Lucas is the White House correspondent for The Daily Signal. Send an email to Fred. Twitter: @FredLucasWH

A Note for our Readers:

Trust in the mainstream media is at a historic low—and rightfully so given the behavior of many journalists in Washington, D.C.

Ever since Donald Trump was elected president, it is painfully clear that the mainstream media covers liberals glowingly and conservatives critically.

Now journalists spread false, negative rumors about President Trump before any evidence is even produced.

Americans need an alternative to the mainstream media. That’s why The Daily Signal exists.

The Daily Signal’s mission is to give Americans the real, unvarnished truth about what is happening in Washington and what must be done to save our country.

Our dedicated team of more than 100 journalists and policy experts rely on the financial support of patriots like you.

Your donation helps us fight for access to our nation’s leaders and report the facts.

You deserve the truth about what’s going on in Washington.

Please make a gift to support The Daily Signal.

Trump Is Quietly Deregulating All the Things

And the media is staying silent.

Brittany Hunter

by  Brittany Hunter

Most people alive in America today have probably never had the experience of sending a telegram. There are a host of reasons for this, the main one being that the telegram stopped being fashionable decades ago as burgeoning technology replaced its use in the modern world. The very last Western Union telegram was sent 11 years ago.

Over a decade too late, the FCC has finally decided to end burdensome regulations that stifled telegraph technology. As Reuters reported:

AT&T Inc, originally known as the American Telephone and Telegraph Company, in 2013 lamented the FCC’s failure to formally stop enforcing some telegraph rules.

‘Regulations have a tendency to persist long after they outlived any usefulness and it takes real focus and effort to ultimately remove them from the books even when everyone agrees that it is the common sense thing to do,’ the company said.”

Regulations are far easier to create than they are to dismantle. As Milton Friedman said, “Nothing is so permanent as a temporary government program.” Yet lately, there has been an undeniable trend of repealing these types of regulations, the likes of which America hasn’t seen since the Reagan Administration. And in the spirit of giving credit where credit is due, this current regulatory rollback is due largely to President Donald Trump.

Setting a New Record

Ronald Reagan left many legacies during his duration in the White House. And while many were less than praiseworthy—the War on Drugs springs to mind—he did accomplish some deregulation.

In fact, during the Reagan presidency, both the Federal Register and federal regulations decreased by more than one-third. And as impressive as this record surely was, it’s already been broken by Donald Trump.

Upon taking office, Donald Trump signed an executive order telling federal agencies that they must cut two existing regulations for each new regulation proposed. Contained within this executive order was the demand that each federal agency create a task force with the explicit purpose of finding regulations worth slashing. This act was intended to help the newly sworn-in president reach his promise of cutting 70 percent of all federal regulations.

While the talk of regulatory cuts is typical red meat rhetoric, the left was obviously less than pleased with this executive order. A coalition of left-leaning organizations even joined together in February and sued Trump on the grounds that his executive order would potentially “block or force the repeal of regulations needed to protect health, safety, and the environment, across a broad range of topics – from automobile safety, to occupational health, to air pollution, to endangered species.” But the lawsuit did not scare Trump away from his objective.

When Obama had been in office as long as Trump currently has, regulations were 28 percent higher. But since taking office, Trump has repealed hundreds of these regulations.

And when it comes to regulations in general, the score speaks for itself. During the same point of time of their respective presidencies, Obama’s regulatory tally was at 1,737 while Trump’s is 1,241. And while Reagan’s own regulatory cuts were admirable, they still don’t compare with Trump’s if you judge them by the same timeframe.

Earlier this October, Trump announced his plans to further cut taxes along with red tape that negatively impacts both businesses and consumers. According to CEI, the current level of federal regulatory burdens have amounted to nearly $2 trillion. And while business owners may pay the initial costs, it will inevitably trickle down to the consumer. When overhead costs are raised on entrepreneurs, that cost must must be made up for somewhere. And as CEI also estimates, these hidden costs can account for about $15,000 per household in any given year.

As the 2017 fiscal year came to a close this month, the White House also released its initiative to cut more red tape to jumpstart the economy. Obviously, the “do nothing” method is a far cry from Obama’s overbearing regulatory intervention.

However, while this rhetoric is pleasing to much of the American public, which is fed up after almost a decade of a stagnating economy, Congress has yet to act on any substantial reform in either the House or the Senate.

Still, the White House has continued its efforts to encourage regulatory relief by pushing for three specific reform efforts, listed by CEI’s Clyde Wayne Crews as follows:

  1. Trump’s January executive order requiring agencies to eliminate at least two rules for every new regulation adopted, and that they ensure net new regulatory costs of zero;
  2. A sweeping  Reorganization Executive Order that requires the Office of Management and Budget to submit a plan aimed at streamlining and reducing the size of the administrative state generally. This plan will set the tone for Trump’s budget proposal next year.
  3. memorandum from the new Office of Information and Regulatory Affairs (OIRA) administrator Neomi Rao directing agencies, for the first time as far as I can tell, to propose an overall incremental regulatory cost allowance for the agency in the new edition of their “Unified Agenda” on regulations. This report will appear in the fall. Prior editions, since the 1980s, would label rules as “economically significant,” but never has there been such a “regulatory budget.” Rao says, “OMB expects that each agency will propose a net reduction in total incremental regulatory costs for FY 2018.”

But what is, perhaps most interesting is how silent the media has been. Usually, the media doesn’t miss an opportunity to criticize the president, making it all the more strange that these massive regulation rollbacks have managed to slip under the radar.

The Importance of Economic Liberty

Without economic liberty there can be no general freedom.

Just as it is important to give credit where credit is due, it is also important to acknowledge that excelling in one area does not negate one’s terrible behavior in another. The appointment of Jeff Sessions by itself is enough of a reason to be wary of Trump. Especially given Sessions’ obsession with reigniting the drug war in a time when public opinion is overwhelmingly trending in the opposite direction. Though in many capacities this makes one of Trump’s weak points similar to Reagan’s.

And the Sessions issue is just one of many. Diplomacy also appears to be one of Trump’s weak points. Taunting a world leader who is threatening to use nuclear arms against your country may not be the wisest idea, but that hasn’t stopped Trump from referring to Kim Jong Un as “Rocket Man” at the height of tensions. And in general, President Trump’s hawkish foreign policy has made a mockery of candidate Trump’s non-interventionist rhetoric.

But increasing economic freedom is no small feat. If there is any doubt of this, just look how long it took to deregulate the telegraph industry. Without economic liberty there can be no general freedom, which is precisely why Trump’s pushback against the regulatory state is so important.

Our modern economy has no doubt been burdened by regulations that have held back the market and prevented others from even entering the workforce. So as hard as Trump is to stomach most of the time, these regulatory scale-backs are cause for celebration.

Brittany Hunter

Brittany Hunter

Brittany Hunter is an associate editor at FEE. Brittany studied political science at Utah Valley University with a minor in Constitutional studies.

Will Highways Become Obsolete?

Technology’s rapidly changing landscape will transform the way we travel in the next decade, much less the next half century. Sure as the sun rises, private innovators like Elon Musk will ensure outmoded travel will be obsolete in the near term. So, toll roads and the long arm of government attempting to manage our morning commute through toll ‘managed’ lanes won’t be necessary.

blue_logo
By Terri Hall

New modes of transport could replace the need for cars, sooner rather than later.

You’d think it’s counterproductive for Elon Musk to support something that could eliminate the need for his own Tesla self-driving cars, but innovators tend to be on the cutting edge of new technologies and Hyperloop One is certainly worth watching.

Hyperloop is a new form of transportation that propels a pod (whether people or cargo) through a tube across an elevated track using magnetic levitation technology. The company claims it could take a passenger from Houston to Dallas in under 30 minutes — at airline speeds of 620 MPH without turbulence or drag — at a fraction of the cost. At least that’s how it’s being promoted.

That beats high speed rail systems, including the one being planned by Japan-based Texas Central Railway, whose speeds top out at 205 MPH. The advantage of a Hyperloop type of system over the traditional high speed rail is it would not require the massive taking of rural land, eliminating the ‘eminent domain for private gain’ problem, since it’s elevated and could potentially be built within existing highway real estate. Nor would a Hyperloop create the noise problems of high speed trains because it’s inside a tube without air drag.

Hyperloop One has announced the ten teams for its Global Challenge representing the U.S., UK, Mexico, India, and Canada along with winning routes it chose from a field of hundreds of applicants to move forward with prototypes and feasibility studies, with one route set for Dallas-Laredo-Houston.

The company conducted its first successful test in July 2017, and it will continue to test the technology for longer distances and at greater and greater speeds. It plans to have a system fully operational by 2020. The company has already raised $160 million for the task.

While Hyperloop technology could transform the future of transportation, it still has many of the challenges of traditional highspeed rail. How do you get passengers from the outskirts of urban centers to their final destinations inside city centers? So far, Uber and rideshare companies have solved the door-to-door problem just fine without the fancy-dancy, hi-tech Hyperloop track. But to some extent, ridesharing contributes to the road congestion. Hyperloop would bypass it.

The Colorado Department of Transportation (CDOT) has already entered into an agreement with AECOM to explore Hyperloop’s feasibility to help address the state’s mobility issues. The open question remains, who’s going to pay for such a system? Will it be entirely private funding? Aren’t the Colorado taxpayers footing at least part of the bill by entering into a public-private partnership (P3), a controversial contracting method often considered corporate welfare?

Ready for the Jetsons?

Uber announced its plans to use Dallas as its test market for a new flying car.

Your read that right. It’s called Uber Elevate and it would create a fleet of cars that can do vertical takeoff and landing or VTOLs. One of the reasons the company chose Dallas as its testing ground is its high concentration of aviators, with Southwest Airlines, American Airlines, and Bell Helicopter based there.

Jeff Holden, Uber’s Chief Product Officer says it expects to begin testing as early as 2020. While many skeptics quickly emerged with the obvious concerns about commuters encountering the same potential for congestion while in the air along with safety concerns for those who have no experience in flying, the meteoric rise of drone users demonstrates the capacity for such new flying technologies to find a niche, if not a mass market in the future.

Out with the Old, In with the New

With the White House and state highway departments scurrying to enter into long-term P3 contracts for toll roads, it’s seems so yesterday when taking the vast possibilities of new technology and travel innovations into consideration. Just a few years ago, driverless cars were all the rage and many thought that would take driving into the 21st century — and it will, with the potential to use platooning vehicles and driver-to-driver communications to eliminate much of today’s urban congestion. While new technologies like the Hyperloop and flying cars seemed like outlandish futuristic pipe dreams even a decade ago, real companies and real investors are putting up serious cash to make the unthinkable a reality to help solve the endless scourge of road congestion.

So, note to policy makers. Before you rush into 50-99-year sweetheart deals with private, mostly foreign toll operators using today’s limited old school data and thinking, buyer beware.

Technology’s rapidly changing landscape will transform the way we travel in the next decade, much less the next half century. Sure as the sun rises, private innovators like Elon Musk will ensure outmoded travel will be obsolete in the near term. So, toll roads and the long arm of government attempting to manage our morning commute through toll ‘managed’ lanes won’t be necessary.

Bureaucrats need not apply.


TERRI HALL

Terri Hall is the founder of Texans Uniting for Reform and Freedom (TURF), which defends against eminent domain abuse and promotes non-toll transportation solutions. She’s a home school mother of ten turned citizen activist. Ms. Hall is also a contributor to SFPPR News & Analysis of the Conservative-Online-Journalism Center at the Washington-based Selous Foundation for Public Policy Research.

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Former Clinton HUD Secretary Calls for More Tolls …

Texas’ first foreign-owned toll road handed …

Obamacare Subsidies Are Unconstitutional

The subsidies for Obamacare were never constitutional, and we shouldn’t ignore that just because Trump got rid of them.

Gary M. Galles

by  Gary M. Galles

Last week, President Trump issued an executive order instructing the heads of Health and Human Services and the Treasury to stop making ACA subsidy payments to 6 million people who qualified for them.

Calumny and challenges quickly followed. Attorneys general in 18 states quickly sued that the order was unjustified. That same group has now also asked for a restraining order to stop it. California Attorney General Xavier Becerra, one of the 18, called it irresponsible and illegal.

Blowing Constitutional Smoke

Trump’s challengers are blowing constitutional smoke. Every federal program requires two steps before it can spend money. Congress must authorize it and appropriate the money for it. Both steps are necessary. And the Constitution could not be clearer on the second step: “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.” However, the money for the ACA subsidy payments was never congressionally authorized.

So where did the subsidy money come from? President Obama simply ignored the constraints of the Constitution when it got in his way. He instructed the heads of Health and Human Services and the Treasury to divert money appropriated for other programs, but he left unspecified which programs were to be cut. Why leave that unspecified? If a specified program was raided, Congress and the beneficiaries of that program would have a clear cause of action to prevent it. It could be judicially enjoined immediately. But somehow, Obama’s failure to specify where funds would come from, even though every possible diversion would be unconstitutional, and delegation of the dirty work to cabinet members was supposed to shield the President and his signature legislation from constitutional scrutiny long enough (given the slow-grinding wheels of justice) to make it a fait accompli.After that, the bet was that the subsidies would be politically impossible to undo, even if the courts eventually ruled against them, because members of the House and Senate would then authorize the money to continue the subsidies, too afraid of the electoral consequences of taking away what millions of people had already been given unconstitutionally.

Supporters of that game plan to finalize getting around the Constitution also chimed in. For instance, law professor Nicolas Bagley (“Trump’s disastrous war on the ACA,” Los Angeles Times, 10/16) advocated that we should just ignore the violation of the Constitution. Even though the administrative decision to commit subsidy funds from other programs when Congress wouldn’t appropriate the money was known to be unconstitutional, he argued that we should ignore that, because he claimed Trump’s “constitutional rhetoric is pure pretext” to sabotage the ACA. That is, we should just fall in line with Obama’s illegal administrative commitments because Trump’s closer adherence to the Constitution than law lecturer Obama lines up with his belief ACA is a bad deal. In other words, Trump’s opposition to ACA justifies maintaining Obama’s constitutional violation in implementing the ACA.

Constraining Government

Such a conclusion may deserve a place in a “how not to interpret Constitutional law” illustration, but it does not deserve serious consideration. However, that argument, and the plan it supports, seems to be winning the day. The subsidies that millions have gotten used to having already hardened into a sense of entitlement, un-swayed by inconvenient Constitutional restraints, which, with the flames fanned by Democrats, have cowed many ACA opponents into proposals to provide the money (of course, “just temporarily,” even though, as Milton Friedman pointed out long ago about New York city’s “temporary” World War II rent controls, “there is nothing so permanent as a temporary government program”).What we are seeing is another lesson in the art of creating an end run around the Constitution’s protections for Americans against their government overstepping its enumerated powers. And it is hardly the first time, even for the ACA. Remember the penalties for not having insurance under the ACA plan? It was emphatically claimed to not be a tax, but a regulation (and hence not counted against the ACA in fiscal scoring), but Chief Justice Roberts’ 5-4 majority decision found the ACA constitutional only because it really was a tax, which Congress has the power to impose, when a regulation to mandate that Americans must purchase something would have been unconstitutional.

With such a vivid current illustration of the evisceration of the Constitution joining many more that we have already seen, Americans should be learning (or, perhaps better, re-, re-, re-, re-learning) a very important lesson on the importance of keeping government within its Constitutional powers to protect our freedoms from abuse at its hands. However, it remains to be seen whether we will.

Gary M. Galles

Gary M. Galles

Gary M. Galles is a professor of economics at Pepperdine University. His recent books include Faulty Premises, Faulty Policies (2014) and Apostle of Peace (2013). He is a member of the FEE Faculty Network.

The Facts About Who Pays the Most in Taxes in America

Politicians exploit public ignorance. Few areas of public ignorance provide as many opportunities for political demagoguery as taxation.

Today some politicians argue that the rich must pay their fair share and label the proposed changes in tax law as tax cuts for the rich.

Let’s look at who pays what, with an eye toward attempting to answer this question: Are the rich paying their fair share?

According to the latest IRS data, the payment of income taxes is as follows.

The top 1 percent of income earners, those having an adjusted annual gross income of $480,930 or higher, pay about 39 percent of federal income taxes. That means about 892,000 Americans are stuck with paying 39 percent of all federal taxes.

The top 10 percent of income earners, those having an adjusted gross income over $138,031, pay about 70.6 percent of federal income taxes.

About 1.7 million Americans, less than 1 percent of our population, pay 70.6 percent of federal income taxes. Is that fair, or do you think they should pay more?

By the way, earning $500,000 a year doesn’t make one rich. It’s not even yacht money.

But the fairness question goes further. The bottom 50 percent of income earners, those having an adjusted gross income of $39,275 or less, pay 2.83 percent of federal income taxes.

Thirty-seven million tax filers have no tax obligation at all. The Tax Policy Center estimates that 45.5 percent of households will not pay federal income tax this year.

There’s a severe political problem of so many Americans not having any skin in the game. These Americans become natural constituencies for big-spending politicians. After all, if you don’t pay federal taxes, what do you care about big spending?

Also, if you don’t pay federal taxes, why should you be happy about a tax cut? What’s in it for you? In fact, you might see tax cuts as threatening your handout programs.

Our nation has a 38.91 percent tax on corporate earnings, the fourth-highest in the world. The House of Representatives has proposed that it be cut to 20 percent—some members of Congress call for a 15 percent rate.

The nation’s political hustlers object, saying corporations should pay their fair share of taxes. The fact of the matter—which even leftist economists understand, though they might not publicly admit it—is corporations do not pay taxes.

An important subject area in economics is called tax incidence. It holds that the entity upon whom a tax is levied does not necessarily bear its full burden. Some of it can be shifted to another party.

If a tax is levied on a corporation, it will have one of four responses or some combination thereof. It will raise the price of its product, lower dividends, cut salaries, or lay off workers. In each case, a flesh-and-blood person bears the tax burden.

The important point is that corporations are legal fictions and as such do not pay taxes. Corporations are merely tax collectors for the government.

Politicians love to trick people by suggesting that they will impose taxes not on them but on some other entity instead. We can personalize the trick by talking about property taxes.

Imagine that you are a homeowner and a politician tells you he is not going to tax you. Instead, he’s going to tax your property and land.

You would easily see the political chicanery. Land and property cannot and do not pay taxes. Again, only people pay taxes. The same principle applies to corporations.

There’s another side to taxes that goes completely unappreciated. According to a 2013 study by the Virginia-based Mercatus Center, Americans spend up to $378 billion annually in tax-related accounting costs, and in 2011, Americans spent more than 6 billion hours complying with the tax code.

Those hours are equivalent to the annual hours of a workforce of 3.4 million, or the number of people employed by four of the largest U.S. companies—Wal-Mart, IBM, McDonald’s, and Target—combined.

Along with tax cuts, tax simplification should be on the agenda.

COMMENTARY BY

Portrait of Walter E. Williams

Walter E. Williams is a professor of economics at George Mason University

A Note for our Readers:

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We Hear You: The IRS, the Rich, the Nanny State, Republicans, Trump, and Tax Reform

Editor’s note: As you probably noticed, The Daily Signal has made tax reform a focus of our coverage and commentary. Here is some of what you’ve had to say on the topic in recent weeks. Be sure to write us at letters@dailysignal.com—Ken McIntyre

Dear Daily Signal: Regarding Rachel del Guidice’s story about the family of ranchers in North Dakota, I am a land surveyor and I get involved in forced sales because they need a survey to transfer property (“Tax Reform a ‘Big Deal’ to Mom Who Wants to Keep Ranch in the Family”).

I watched a farmer lose the farm he spent his childhood helping his parents build. They had over 400 acres, and when the government was finished they had 125 acres. The government set the value at $16,000 per acre because much of the surrounding land was sold as 5-acre tracts, never considering the capital investments to develop that 5-acre lot. When they sold, the land brought only $3,000 per acre, it’s proper value.

Talk about chasing your tail. And the attorneys told them it would cost just as much to fight the government in court. Hard to compete when the opposition sets all the rules and declares all the values. The government is not about doing the right thing; it is about gaining revenues so politicians can buy votes to stay in office and send along that criminal enterprise share to the elites. They will use whatever means possible.

You either pay the government or you pay that attorney friend of the government. All that matters is that they claim enough that they get their share. Washington has become a criminal enterprise. Extortion is their game, a game that includes being poverty pimps and accounting thugs.—Robert Joseph Shannon

If we were to return to a constitutional taxation system and forcing a runaway federal government to live within its means, we wouldn’t have this problem.  A “progressive” income tax is one of the 10 planks of the communist manifesto.—Richard Ely

I’m a tax CPA. I can come up with ideas to satisfy most concerns. As a staunch conservative, and one who recently paid out some estate (death) tax, I am actually not for elimination of it, as charity is a huge benefactor in estate planning.—Jim Fisher

This is a simple proposition: The estate/death tax amounts to double taxation. Anyone think that having to pay double taxes up front is fair or appropriate (aside from our communist/socialist/leftist comrades)? Of course not. The capital gains tax punishes everyone, and is again another form of double taxation.

Taxes to federal, state, and local entities should be based on a once-a-year assessment of income, without all the loopholes, etc. The government should downsize and live within its means (tax revenue) and eschew any further loans.—Derek Dubasik

Could someone please tell me why the government taxes an individual when he or she dies? Isn’t this a double tax on the property the individual had? Don’t people pay taxes on the income they make each year? How about the equipment they buy during that year? The land that is bought, is it not taxed each year by the government?

I’m curious because when my father-in-law passed in 1987, he was a teacher at a Christian university who had written some study guides. He was not classified as being rich, he was faithful to give unto Caesar that which was Caesar’s and unto the Lord that which was the Lord’s.

He was worth $750,000. We met with his lawyer after the funeral, and he told us everything was being handled by the firm: his savings and checking accounts at the bank for personal use, his accounts for his book income. All of which he already had paid taxes on. His house, the land it sat on, his car (a 1975 Dodge), his clothes, furniture, and lawn tools were all listed to be taxed by the government again, because he died.

We received a registered letter a short time later with a check for $35,000, which we had to pay taxes on, and a list of the worth the government had placed on everything.

So it is not just the rich who are hit twice with a tax, it is every person who dies.—Paul Newnum

Dear Daily Signal: About Rachel del Guidice’s report, “Conservatives Call for Tax Reform to ‘Put Small Businesses Back at Heart of Economy’”: You are what you say—or tweet. We could believe in tax reform for small business if the evidence was pro-small business. It’s not.

The bill passed in the House by Speaker Paul Ryan repealing the Affordable Care Act showed no tax reform for health care, no tax reform for the middle class, only tax benefits for the superrich.

So excuse us progressives if we don’t believe tax reform will enhance middle class workers in any way, aside from sabotaging affordable health care through removing the tax penalty for not enrolling in any health program, and the unwarranted shift of $800 billion from states’ Medicaid funding to fat cats who don’t need it.

Consistency isn’t Trump’s strength, but we must believe what our “lying eyes” see—not small business tax reform by Republicans.—Bill Lemoine

Laws are equal for all citizens with the exception of tax law, which punish more the ones who produce more, simply because they have more. If every citizen pays the same amount of tax, there would be no overspending, open budget, waste, poor administration of resources, socialism or communism, permanent welfare, lazy people, Obamacare, Bernie Sanders, Obama, Hillary, or the Democratic Party.—Felipe Solanet

Dear Daily Signal: So, Mr. President, how many jobs are created by the middle class (“Trump: Rich Would Pay Same or More Under Tax Reform”)? Just asking. Time to ante up and fulfill all your campaign promises. Otherwise you are just another political blowhole being sucked into the swamp you pledged to drain. Don’t doubt me. Facts are stubborn things.—Jim Fuscaldo

It’s about time. Just because you live on dividends, it does not mean you’re wealthy. My dad was killed at 35; we lived on dividends from family savings. We paid the highest tax rate possible on $50-a-week income. We need a tax that treats everyone equal, as long as the source is legal.—Elaine Whitmore Cary

“The wealthy” is too vague a term for me to get my head around. Wealth is so relative. Living in the Northeast earning over $250,000 a year, you feel like you can barely keep all the plates spinning. That same figure out in central Idaho would be a fortune. No one pays $15,000 a year in local property taxes for their domicile on a few acres in central Idaho, but try owning a few acres in New Jersey and it’s a whole different thing.—Vladimir Petrovich

Ideally, there should not be an income tax on the people at all; it violates the Constitution as written. But since there is one, it should be equal across the board for everyone and businesses should all have the same tax rate. Otherwise we could consider it favoritism.—Taryl Gibson


Dear Daily Signal: Taxes have been out of control for a long time (“Tax Reform Will ‘Help Everyone,’ Small Business  Owner Says”). When a citizen has to hire professionals to fill out a “simple” tax return, something is wrong.—Jann Leger

Yes, if Congress ever gets it done. Abolish the IRS, have a flat tax. No one has what it takes to make that happen, so the richest and the poorest continue to win on taxes and the middle class pays.—Diana Vanvleet

Dear Daily Signal: Regarding Fred Lucas’ report, I agree that tax credits are a bad idea, even though the philosophy of credits was famously championed by Ronald Reagan (“Trump Says Tax Reform Could Create ‘Millions and Millions of Jobs’”).

I cannot see the IRS as being capable of handling welfare, and taxes are not the place for social engineering. It would work better to increase the personal deduction, remove all other deductions, and just charge a flat tax after that.

It is automatically progressive; you make more, you pay more. But it removes the incentive that so many high earners have for hiding income. For instance, the rental properties we own are worth more as a tax shelter than as an investment. If we pay off the loans, our income soars and we are screwed with taxes.—Bill Tanksley

Around 75 to 100 percent of the corporate tax rate is paid by workers through lower wages . The variation depends on the type of corporation, size, and so on. The personal income tax is a direct cut into American pockets, so how does lowering it not leave people with a bigger paycheck?

This would cause less favoritism through a simpler tax code and more fairness for small businesses and middle class Americans. Especially when most of the deductions, tax credits, and such are traded with a lower rate. The compliance cost and the sheer amount of evasion is already high.

Revenue neutrality is only 0.9 percent above baseline for the corporate tax cut.—Rune-André Tørresdal

Mr. President, we the people don’t wish to be disappointed by our government concerning tax reform either. We already enjoyed that surprise with Sen. John McCain concerning health care reform. If I was the president or a senator, I wouldn’t count on McCain not doing his maverick routine once again.—Cathy Ann Turner

God bless President Trump! There are far more of us with him than are not with him. The media lies, and that’s the simple truth.—Claire Montaina Larson

Didn’t Trump also state that he was going to build a wall and Mexico was going to pay for it, and he was going to fix health care and no one would be without, and he was going to be too busy working to play golf?  Sheep, keep on sheeping.—Chris Ori

Dear Daily Signal: You don’t value what you don’t pay for, is my thought in reading Rachel del Guidice’s report (“Paul Ryan Calls for Tax Reform, Letting Americans ‘Keep More of Your Own Money’”). Our tax system is the greatest teacher of irresponsibility we have. The 47 percent not paying taxes are plundering our country. The only fair outcome is to have everyone pay the same percentage of income tax.

Our socialist Congress can’t or won’t see that they are ruining America. They want their cut of the robbery more than they want to protect America.

Leaving the means of the successful in their own hands is the only intelligent way to lift the general welfare. This step of enlightenment and away from disrespect of personal property is before us.—Michael Watson

House Speaker Paul Ryan calls for tax reform? What does he think his president has been calling for? Ryan is a politically deaf RINO. Get rid of him at the midterm. Give us a flat tax, and take away that congressional power over those of us who they are supposed to be serving.—Aubrey Yancey

We don’t need tax reform. We need to dump the entire IRS code. We don’t need an income tax. A consumption, or  sales, tax is what is needed. I would much rather pay taxes on what I spend than what I earn.

HR 25 and SB 19 (the fair tax legislation in Congress) would rid us of the IRS and the lobbyists who have created the onerous tax code we now suffer with. It would benefit lower-income families with the prebate on the “necessities of life,” it would eliminate the corporate tax, it would eliminate the inheritance tax, it would eliminate filing taxes with the IRS.

There would no longer be 50 percent of the nation not paying their taxes. Read the plan before you criticize.—Robert Davis

Dear Daily Signal: Too many of our lawmakers in the House and Senate have been there way too long and think they have forever to get things done (“Conservative Leader Says Congress Must Make Good on ‘Bold’ Tax Reform”). They should have retired years ago. Term limits in Congress is the only way things will change.

Tax reform is so overdue. Don’t even consider the European or Canadian way of taxing. Get Obamacare repealed and get a basic tax reform pushed through as you know you will never get Democrats’ acceptance.—Bonnie Clarke

A flat tax is a mistake. We really should have some type of  progressive tax rate that imposes higher taxes on individuals and institutions that benefit greatly from public resources. How many companies would survive without access to an educated workforce?

Wealthy and successful European nations have high sales taxes/VAT taxes, which are regressive but seem to get the job done. I think the deduction for mortgage interest payments should be eliminated completely. It disproportionately benefits the wealthy and large borrowers, and promotes excessive investment in homes by those who are able to afford it.

It will be interesting to see what the Republican majority in Congress comes up with; they did such a good job with the repeal of Obamacare. But Trump promised us “the biggest tax cut ever,” so I have no doubt that is coming very soon. I’m not sure how they will square that with reducing the deficit, but I’m sure the Republican majority will figure out that part too.—John Levin

I wouldn’t mind a flat tax of 7 percent for individuals and corporations—and this includes welfare, which is income. Only deductions would be mortgage interest (legal residence) and contributions. We also need to eliminate government waste and reduce the deficit.

Do we really need the energy and education departments? State issues, so move them to the states. Eliminate red tape. Read former Sen. Tom Coburn’s book “Back in Black.” Interesting. We need more Dr. No’s in Congress.—Tony Jenkins


Dear Daily Signal: Unless the “reform” consists of implementing a flat tax or some form of the fair tax, first proposed by the advocacy group Americans for Fair Taxation, I don’t want to hear about it  (“Trump’s Treasury Secretary Says Tax Reform Will Happen Within the Year”).

Anything else is just more of the same: The government confiscating far too much of our hard-earned money to finance its ever more grandiose, ever more controlling, ever more irresponsible, delusional, and dangerous socio-political ambitions.

The fact that Marc Short, the White House director of legislative affairs, is touting another allegedly “bipartisan” congressional effort and saying he thinks Democrats are “excited for tax reform as well” is hardly reassuring to anyone with a brain and even a modicum of historical perspective. This latest attempt at tax reform may —if it ever gets off the ground—leave us slightly less enslaved. But slaves of the state we still will be.—Dale Allen Steinke

Dear Daily Signal: Regarding Adam Michel’s commentary, “Republicans Just Made Tax Reform More Difficult,” if our brave young soldiers waited for the perfect time to storm the hill, we would still be sitting on the beaches of Normandy. Grow a pair and move now, as we voted you the power to make bold moves.

As “Old Sarge” would say, “If you storm that hill, young men, you may get shot; but if you don’t, I certainly will shoot you.” The meaning of this story is move forward or we voters will certainly give you the ax.

We are bone-tired of your campaign double talk and excuses. We have itchy voting fingers. That isn’t thunder you hear all over America, it’s conservatives turning over every stone looking for honest conservatives to primary you cowards. To hell with you RINOs. We will find some true conservatives to take a stand if you will not.—Malcolm Harbison

As an extreme liberal, I can find little in Adam Michel’s commentary article on tax reform that I can disagree with. It certainly would be better than the current chaos the Trump administration is causing.

And no, there is nothing even socialistic about the Democrats’ agenda. Even extreme liberals like me do not even approach the classic definition of socialism: a political and economic theory of social organization that advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole.—John Roberts

So there you have it. The GOP insists on playing by the rules (revenue neutral) and gets nothing done, while the Democrats move mountains with lies, fraud, bribery, extortion, and intimidation. So we will keep ratcheting left until we all are told to wear the hammer and sickle.—Anthony Alfero

Spending our hard-earned dollars was never the problem. Spending our hard-earned dollars on waste, special interests, and corruption is and was the problem. There has to be an expose on how the Senate and House govern themselves.

Exempting themselves from Obamacare is just the tip of the iceberg. Many consider themselves elitists: smarter, richer, and with more influence and control than you or I. And in many ways, they are just that. The rules and laws members of the House and Senate have passed to govern themselves are a disgrace. Reform taxes, please, but look to how any new tax laws will affect them and their cohorts.—Maureen McKenna

Congress is not about Democrats or Republicans; we have been taxed beyond human endurance to support illegal aliens, refugees, and welfare, and to make the majority of Congress richer, by taxing hardworking citizens. Enough is enough.—Charlie Pena

COMMENTARY BY

Portrait of Ken McIntyre

Ken McIntyre, a 30-year veteran of national and local newspapers, serves as senior editor at The Daily Signal and The Heritage Foundation’s Marilyn and Fred Guardabassi Fellow in Media and Public Policy Studies. Send an email to Ken. Twitter: .

Trump Pulls the Plug on Private Toll Roads, Centerpiece of Infrastructure Plan

Trump’s reversal on public-private partnerships (P3s) came suddenly to most folks, even inside the beltway, given that Transportation Secretary Elaine Chao was still pushing tax incentives to attract private investment as the core of the Trump infrastructure plan as of August 30. Now the focus becomes how to pay to fix the country’s infrastructure, absent P3s and tolls. While our focus should be on building freeways NOT tollways, let’s start by taking a look at the gas tax and why it hasn’t kept pace with the needs of the driving public; could this be due to political gas tax diversions combined with taxpayer distrust?

blue_logo
By Terri Hall 

It’s big news for taxpayers, but for the special interests who have been pushing public-private partnerships (P3s) and toll roads as the way to fund $1 trillion in upgrades to America’s infrastructure, not so much. Maybe President Donald Trump realized the political consequences. In any event, he officially pulled the plug on P3s as the centerpiece to his infrastructure plan.

The president said simply, “They don’t work.”

Trump mentioned it in a meeting with members of the House Ways and Means Committee as he met with lawmakers to discuss tax reform. Citing the failure of the Interstate-69 P3 contract done under then-Governor of Indiana Mike Pence, the state recently had to sever the contract, take over the project, and issue its own debt to get it finished.

Interstates like I-69 were conceived as thoroughfare-legs to facilitate the NAFTA Superhighway to enhance global trade routes in North America through the U.S., Canada, and Mexico.

There were a host of problems relying on P3s and federal incentives to attract private investors. First, only projects that generate some sort of revenue attract private investors — hence ‘toll roads’. Second, giving out further federal tax incentives was likely to benefit projects that were already underway, not generate new investment. Plus, the feds have been generously doling out taxpayer-backed loans and bonds to guarantee the private investors’ losses and the track record of failure is well-documented.

P3s also give private investors exclusive, long-term monopolies designed to extract the highest possible toll from the traveling public, while requiring taxpayers to foot the bill for most potential threats to private entity’s profits. For instance, such contracts contain non-compete provisions that limit or prohibit the expansion of free routes surrounding the privatized toll lanes, deliberately slow speeds on the free routes and increase speeds on the toll lanes, force taxpayers to pay the private operators for any uncollectable tolls, and most P3 contracts used public funds to subsidize them (including every single P3 toll project in Texas).

But that’s just the tip of the iceberg.

To read Terri Hall’s full column please click here.

Terri Hall

Terri Hall is the founder of Texans Uniting for Reform and Freedom (TURF), which defends against eminent domain abuse and promotes non-toll transportation solutions. She’s a home school mother of ten turned citizen activist. Ms. Hall is also a contribuutor to SFPPR News & Analysis of the Conservative-Online-Journalism Center at the Washington-based Selous Foundation for Public Policy Research.

The Numbers Are in: Social Security Robs the Working Poor

The Social Security Administration’s own numbers reveal that a private investment pays more than Social Security.

Tom Eddlem

by  Tom Eddlem

Back in 2011, investment guru Warren Buffett famously complained in the New York Times that his secretaries were paying higher federal payroll tax rates than he was:

Our leaders have asked for ‘shared sacrifice.’ But when they did the asking, they spared me…. what I paid was only 17.4 percent of my taxable income – and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.”

Buffett used some creative accounting for his numbers; he used only “taxable income,” which means he didn’t count all the deductions his employees were using to write off their income taxes. For middle-class workers making about $75,000 per year, that’s typically a heavy percentage of their income. Moreover, for the tax rates Buffett claimed applied to his assistants, they must have been paid in the range of $200,000 per year or more.

Despite Buffett’s accounting trickery, there was a level of truth to his complaint: the burden of Social Security and Medicare payroll taxes does fall almost exclusively upon the poor and middle classes. And Buffett acknowledged this fact in his New York Times op-ed:

The mega-rich pay income taxes at a rate of 15 percent on most of their earnings but pay practically nothing in payroll taxes. It’s a different story for the middle class: typically, they fall into the 15 percent and 25 percent income tax brackets, and then are hit with heavy payroll taxes to boot.”

The Questionable Benefit of Paying Those Heavy Taxes

Buffett was correct to claim the poor and middle class pay heavy payroll taxes for the Social Security program. But do the poor and middle classes receive benefits from Social Security compared to the “investment” the federal government requires they make?

The Social Security Administration’s website now allows its “customers” to enter income numbers over a career and pull out a precise benefit level. So it’s relatively easy today for anyone to contrast private investments with Social Security benefit levels with an unprecedented level of precision. (This author has run the numbers several times before in the past few decades using the SSA’s PIA calculator application.)

While it has long been known that middle class and wealthy people do not profit by “investing” their money in Social Security compared with a private retirement fund, the impact of Social Security upon a worker trapped in a minimum wage job throughout his career has been left uncalculated – until now.Thus, the following question can be answered authoritatively:

Is it possible for a minimum wage worker to do better putting his money into Social Security than if he were allowed to invest his money in a private fund earning interest at the same rate as the S&P 500?

And the answer is this: No, it’s not possible. In every conceivable scenario, the private fund pays more than Social Security to the minimum wage worker.

The Numbers Don’t Lie

Consider the case of a person who works 50 weeks per year, 40 hours per week at the legal minimum wage, beginning in 1970 and retiring at the end of 2017.

Only the Old Age and Survivors’ Assistance proportion of the Social Security tax can be added to the private fund, not Disability Insurance or Medicare, which in 2017 is 10.6 percent of total income (out of the 15.3 percent total tax imposed upon the self-employed). The worker must purchase a term insurance policy with a private fund to cover the “survivors” part of the risk in the Social Security program, and (to keep things fair) a 0.75 percent “management fee” is deducted from the retirement account annually.

Most couples in that salary range are actually two-income families.

At the end of his career, the minimum wage worker ends up with a retirement fund of $262,551.02 from the wages he otherwise would have paid into the Social Security “trust fund.”

From this account, a person could safely withdraw just over seven percent per year, with the fund replenishing itself in perpetuity without losing value – meanwhile, the S&P has grown at just over 11 percent annually, and inflation has been a little less than four percent during the same last 50 years. That’s an average monthly income of over $1,500, adjusted upwards for inflation over time, it is far more than the $974.00 that the Social Security Administration’s website claims it will pay its customers.

The numbers favor a private account even if one uses favorable circumstances for receiving Social Security, with a single income earner in a two-couple household where the spouse gets half the Social Security benefit of the wage-earner. The spousal benefit increases the monthly Social Security payment to $1,461.00, while the private fund remains the same at $1,579.68.

And this scenario is highly unlikely: A couple with just one worker making the legal federal minimum wage is a rarity; most couples in that salary range are two-income families. In a two-income minimum wage family, the private fund pays $3,159.36 versus a $1,948 monthly benefit from Social Security. In every family scenario, whether single, married with one income or married with two incomes, the difference is that Social Security is cheating poor retirees out of several hundred thousand dollars in benefits (see table below).

Single or Married, Alike

All three family scenarios assume a 2017 bull market with earnings of 10.62 percent increase in S&P 500-based private fund for 2017 (based upon YTD as of August 23). But what if the retirement date is at the bottom of a 2008-level stock market crash? Even in that scenario (in calendar year 2008, nearly 37 percent of the S&P 500’s value was erased by the bear market), every possible permutation of family arrangement makes more total money from the private fund than from Social Security. Whether single earners, two-income couples, and one-income couples, all make more than Social Security in a private fund.

There’s only one artificial scenario that could be constructed where Social Security could claim to be of partial benefit to a poor family. If:

  1. The minimum wage worker retires at the bottom of a 2008-style recession, and
  2. One were to count only monthly payments (not discounting a death benefit of the value of $166,588.62 in the recession-reduced private fund), and
  3. It is a single-income married family.

Then, Social Security pays a slightly higher monthly benefit. Over a typical benefit lifespan – 256 months for women and 215 months for men – Social Security’s monthly payments make up for nearly two-thirds of the death benefit in a private fund.

When the leftist mainstream media reported about Warren Buffett’s column, they focused exclusively upon the income tax proportion of the tax burden. They ignored how Buffett’s column acknowledges that Social Security and Medicare payroll taxes are not “contributions” to a “trust fund” to care for workers, akin to private sector 401k plans, but are instead regressive taxes imposed upon the working classes.

This admission belies a political establish core tenet of faith that goes back to the New Deal, that Social Security serves as an investment to protect poor and middle-class workers and is not as a general revenue tax. Buffett’s essay busted that myth by correctly claiming that Social Security impoverishes working people with general revenue taxation.

But even if one assumes Social Security taxes are an “investment” made by the poor for their retirement like a 401k plan, the numbers provided by the Social Security Administration itself reveal it’s still a financial rip-off for the very poorest of the working poor.

Tom Eddlem

Tom Eddlem

Thomas R. Eddlem is a freelance writer who has been published in more than 20 periodicals, and a high school history and economics teacher. He’s the author of Primary Source American History, available on TeachersPayTeachers.com and his blog is located at teddlem.blogspot.com.